<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 23, 1996.
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
ARVIN INDUSTRIES, INC. ARVIN CAPITAL I
(EXACT NAME OF REGISTRANT AS (EXACT NAME OF REGISTRANT AS SPECIFIED IN
SPECIFIED IN ITS CHARTER) ITS CHARTER)
INDIANA DELAWARE
(STATE OR OTHER JURISDICTION OF (STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION) INCORPORATION OR ORGANIZATION)
35-0550190 TO BE APPLIED FOR
(IRS EMPLOYER IDENTIFICATION NO.) (IRS EMPLOYER IDENTIFICATION NO.)
ONE NOBLITT PLAZA
BOX 3000
COLUMBUS, INDIANA 47202-3000
(812) 379-3000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
RONALD R. SNYDER
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
ARVIN INDUSTRIES, INC.
ONE NOBLITT PLAZA
BOX 3000
COLUMBUS, INDIANA 47202-3000
(812) 379-3000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO: PAUL W. THEISS
FREDERICK L. HARTMANN MAYER, BROWN & PLATT
SCHIFF HARDIN & WAITE 190 SOUTH LASALLE STREET
7200 SEARS TOWER CHICAGO, ILLINOIS 60603
CHICAGO, ILLINOIS 60606 ---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practical after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED
MAXIMUM
PROPOSED MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE OFFERING PRICE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED (1) PER UNIT (2) (2) (3) FEE
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<S> <C> <C> <C> <C>
Preferred Securities of Arvin
Capital I....................... $100,000,000 $30,304
Junior Subordinated Deferrable
Interest Debentures of Arvin
Industries,
Inc. (4)........................
Guarantees of Preferred
Securities of Arvin Capital I by
Arvin Industries, Inc. (5)......
</TABLE>
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(1) Such indeterminate number of Preferred Securities of Arvin Capital I, and
such indeterminate principal amount of Junior Subordinated Deferrable
Interest Debentures of Arvin Industries, Inc., as may be issued at
indeterminate prices.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457. The aggregate public offering price of the Preferred
Securities of Arvin Capital I and the Junior Subordinated Deferrable
Interest Debentures of Arvin Industries, Inc. registered hereby will not
exceed $100,000,000.
(3) Exclusive of accrued interest and distributions, if any.
(4) The Junior Subordinated Deferrable Interest Debentures will be purchased
by Arvin Capital I with the proceeds of the sale of the Preferred
Securities and may later be distributed to the holders of Preferred
Securities upon a dissolution of Arvin Capital I. No separate
consideration will be received for the issuance of the Junior Subordinated
Deferrable Interest Debentures. Pursuant to Rule 457, no separate fee is
payable with respect to the Junior Subordinated Deferrable Interest
Debentures.
(5) Includes back-up undertakings, consisting of obligations of Arvin
Industries, Inc. to provide certain indemnities in respect of, and pay and
be responsible for certain expenses and debts of Arvin Capital I. No
separate consideration will be received for the Guarantees or any back-up
undertakings. Pursuant to Rule 457, no separate fee is payable with
respect to the Guarantees.
---------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED DECEMBER 23, 1996
PROSPECTUS
4,000,000 PREFERRED SECURITIES
ARVIN CAPITAL I
(LOGO)
% TRUST ORIGINATED PREFERRED SECURITIESSM ("TOPRSSM")
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
ARVIN INDUSTRIES, INC.
-----------
The % Trust Originated Preferred Securities (the "Preferred Securities")
offered hereby represent preferred undivided beneficial interests in the assets
of Arvin Capital I, a statutory business trust created under the laws of the
State of Delaware (the "Trust"). Arvin Industries, Inc., an Indiana corporation
("Arvin" or the "Company"), will directly or indirectly own all the common
securities (the "Common Securities" and, together with the Preferred
Securities, the "Trust Securities") representing undivided beneficial interests
in the assets of the Trust. The Trust exists for the sole purpose of issuing
the Preferred Securities and Common Securities and investing the
(continued on next page)
-----------
SEE "RISK FACTORS" COMMENCING ON PAGE 9 OF THIS PROSPECTUS FOR CERTAIN
INFORMATION RELEVANT TO AN INVESTMENT IN THE PREFERRED SECURITIES, INCLUDING
THE PERIOD AND CIRCUMSTANCES DURING AND UNDER WHICH PAYMENTS OF DISTRIBUTIONS
OF THE PREFERRED SECURITIES MAY BE DEFERRED AND THE RELATED UNITED STATES
FEDERAL INCOME TAX CONSEQUENCES OF SUCH DEFERRAL.
Application will be made to list the Preferred Securities on the New York
Stock Exchange, Inc. (the "New York Stock Exchange"). If so approved, trading
of the Preferred Securities on the New York Stock Exchange is expected to
commence within a 30-day period after the date of this Prospectus. See
"Underwriting."
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
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<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE (1) COMMISSION (2) TRUST (3)(4)
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<S> <C> <C> <C>
Per Preferred Security........... $25.00 (3) $25.00
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Total............................ $100,000,000 (3) $100,000,000
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</TABLE>
(1) Plus accrued distributions, if any, from , 1997.
(2) The Trust and the Company have agreed to indemnify the several Underwriters
against certain liabilities, including liabilities under the Securities Act
of 1933, as amended. See "Underwriting."
(3) In view of the fact that the proceeds of the sale of the Preferred
Securities will be invested in the Subordinated Debentures, Arvin has
agreed to pay to the Underwriters, as compensation (the "Underwriters'
Compensation") for their arranging the investment therein of such proceeds,
$ per Preferred Security (or $ in the aggregate); provided, that such
compensation for sales of 10,000 or more Preferred Securities to a single
purchaser will be $ per Preferred Security. Therefore, to the extent of
such sales, the actual amount of Underwriters' Compensation will be less
than the aggregate amount specified in the preceding sentence. See
"Underwriting."
(4) Expenses of the offering which are payable by Arvin are estimated to be
$ .
-----------
The Preferred Securities offered hereby are offered severally by the
Underwriters, as specified herein, subject to receipt and acceptance by them
and subject to their right to reject any order in whole or in part. It is
expected that delivery of the Preferred Securities will be made only in book-
entry form through the facilities of The Depository Trust Company, on or about
, 1997.
-----------
MERRILL LYNCH & CO. LEHMAN BROTHERS
DEAN WITTER REYNOLDS INC.
A.G. EDWARDS & SONS, INC.
PAINEWEBBER INCORPORATED
SALOMON BROTHERS INC
-----------
The date of this Prospectus is , 1996.
SM "Trust Originated Preferred Securities" and "TOPrS" are service marks of
Merrill Lynch & Co., Inc.
<PAGE>
(continued from previous page)
proceeds thereof in an equivalent amount of % Junior Subordinated Deferrable
Interest Debentures due 2037 (the "Subordinated Debentures") of Arvin. Upon an
event of default under the Declaration (as defined herein), the holders of the
Preferred Securities will have a preference over the holders of the Common
Securities with respect to payments in respect of distributions and payments
upon liquidation, redemption and otherwise.
Holders of the Preferred Securities are entitled to receive cumulative cash
distributions at an annual rate of % of the liquidation amount of $25 per
Preferred Security, accruing from the date of original issuance and payable
quarterly in arrears on March 31, June 30, September 30, and December 31 of
each year, commencing , 1997 ("distributions"). The distribution
rate and the distribution and other payment dates for the Preferred Securities
will correspond to the interest rate and interest and other payment dates on
the Subordinated Debentures, which, along with interest and principal payments
received on the Subordinated Debentures, will be the only assets of the Trust.
As a result, if principal or interest is not paid on the Subordinated
Debentures, no amounts will be paid on the Preferred Securities. The payment
of distributions out of moneys held by the Trust and payments on liquidation
of the Trust or the redemption of Preferred Securities, as set forth below,
are guaranteed by the Company (the "Guarantee") if and to the extent the Trust
has funds available therefor. The Company's obligations under the Guarantee,
taken together with its back-up undertakings, consisting of obligations of the
Company (including the obligation to pay expenses of the Trust) as set forth
in the Declaration, the Indenture (as defined herein) and the Subordinated
Debentures issued to the Trust, provide a full and unconditional guarantee by
the Company of payments due on the Preferred Securities. See "Effect of
Obligations Under the Subordinated Debentures and the Guarantee" and
"Description of the Guarantee." If the Company does not make principal or
interest payments on the Subordinated Debentures as a result of the Company's
election to extend the interest payment period on the Subordinated Debentures
as described below, or otherwise, the Trust will not have sufficient funds to
make distributions on the Preferred Securities, in which event the Guarantee
will not apply to such distributions until the Company has made such principal
or interest payments. The obligations of the Company under the Subordinated
Debentures are unsecured and will be subordinate and junior in right of
payment, to the extent set forth herein, to all existing and future Senior
Indebtedness (as defined herein) of the Company. At September 29, 1996, the
aggregate amount of Senior Indebtedness was approximately $472 million. The
Company's obligations under the Subordinated Debentures will also be
effectively subordinated to all existing and future obligations of Arvin's
subsidiaries.
The Company has the right to defer payments of interest on the Subordinated
Debentures by extending the interest payment period on the Subordinated
Debentures, from time to time, for up to 20 consecutive quarters (each, an
"Extension Period") provided that no Extension Period may extend beyond the
Maturity Date (as defined herein). If interest payments are so deferred,
distributions on the Preferred Securities will also be deferred. During any
Extension Period, distributions will continue to accrue with interest thereon
(to the extent permitted by applicable law) at an annual rate of % per annum
compounded quarterly, and during any Extension Period, holders of Preferred
Securities will be required to include deferred interest income in their gross
income for United States federal income tax purposes in advance of receipt of
the cash distributions with respect to such deferred interest payments. There
could be multiple Extension Periods of varying lengths throughout the term of
the Subordinated Debentures. See "Risk Factors--Option to Extend Interest
Payment Period" and "--Tax Consequences of Extension of Interest Payment
Period," "Description of the Subordinated Debentures--Option to Extend
Interest Payment Period," and "United States Federal Income Taxation--Original
Issue Discount."
The Subordinated Debentures are redeemable prior to maturity at the option
of the Company (i) in whole or in part, from time to time, on or after
, 2002, or (ii) at any time in whole (but not in part) upon the
occurrence and continuation of a Tax Event (as defined herein). If the Company
redeems Subordinated Debentures, the Trust must redeem Trust Securities having
an aggregate liquidation amount equal to the aggregate principal amount of the
Subordinated Debentures so redeemed at $25 per Preferred Security plus accrued
and unpaid distributions thereon to the date fixed for redemption (the
"Redemption Price"). See "Description of the Preferred Securities--Mandatory
Redemption" and --"Tax Event Redemption." The outstanding Preferred Securities
will be redeemed upon maturity of the Subordinated Debentures. The
Subordinated Debentures mature on , 2037.
At any time, the Company will have the right to dissolve the Trust and,
after satisfaction of liabilities to creditors of the Trust as required by
applicable law, cause the Subordinated Debentures to be distributed to the
holders of the Trust Securities, on a pro rata basis, in liquidation of the
Trust. If the Company elects to dissolve the Trust and thereby causes the
Subordinated Debentures to be distributed to holders of the Trust Securities
in liquidation of the Trust, the Company will use its best efforts to have the
Subordinated Debentures listed on the New York Stock Exchange or on such other
exchange as the Preferred Securities are then listed. See "Description of the
Preferred Securities--Distribution of the Subordinated Debentures."
In the event of the involuntary or voluntary liquidation, dissolution,
winding up or termination of the Trust, the holders of the Preferred
Securities will be entitled to receive for each Preferred Security, solely out
of the assets of the Trust available for distribution to such holders, after
payment (or provision for payment) of all liabilities to creditors, a
liquidation amount of $25 plus accrued and unpaid distributions thereon
(including interest thereon) to the date of payment, unless, in connection
with such liquidation, dissolution, winding up or termination, the
Subordinated Debentures are distributed to the holders of the Preferred
Securities. See "Description of the Preferred Securities--Liquidation
Distribution upon Dissolution."
---------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT LEVELS ABOVE THOSE THAT MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN
THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING TRANSACTIONS, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE>
AVAILABLE INFORMATION
This Prospectus constitutes a part of a combined Registration Statement on
Form S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") filed by Arvin and the Trust with the Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Trust Securities, the Subordinated
Debentures and the Guarantee (the "Offered Securities"). This Prospectus does
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 SEC. Reference is made to the Registration Statement and to
the exhibits relating thereto for further information with respect to the
Company, the Trust and the Offered Securities. Any statements contained herein
concerning the provisions of any document filed as an exhibit to the
Registration Statement or otherwise filed with the SEC or incorporated by
reference herein are not necessarily complete, and, in each instance,
reference is made to the copy of such document so filed for a more complete
description of the matter involved. Each such statement is qualified in its
entirety by such reference.
Arvin 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 SEC.
Reports, proxy statements and other information filed by Arvin with the SEC
may be inspected and copied at the public reference facilities maintained by
the SEC at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the SEC's Regional Offices located at Suite 1400, Citicorp Center, 500 West
Madison Street, Chicago, Illinois 60661 and at the 13th Floor, Seven World
Trade Center, New York, New York 10048. Copies of such material may be
obtained from the public reference section of the SEC, 450 Fifth Street, N.W.
Washington, D.C. 20549, at prescribed rates. Such reports, proxy statements
and other information concerning Arvin may also be inspected at the offices of
the New York Stock Exchange, 20 Broad Street, New York, New York 10005 and the
Chicago Stock Exchange, 440 South LaSalle Street, Chicago, Illinois 60605, on
which exchanges certain of the Company's securities are listed. Such
information may also be accessed electronically by means of the SEC's home
page on the World Wide Web located at http://www.sec.gov.
No separate financial statements of the Trust have been included or
incorporated by reference herein. Arvin does not believe that such financial
statements would be material to holders of the Preferred Securities because
(i) all of the voting securities of the Trust will be owned, directly or
indirectly, by Arvin, a reporting company under the Exchange Act, (ii) the
Trust has no independent operations but exists for the sole purpose of issuing
securities representing undivided beneficial interests in the assets of the
Trust and investing the proceeds thereof in Subordinated Debentures issued by
Arvin, and (iii) the obligations of the Trust under the Preferred Securities
are, if and to the extent that the Trust has funds available to meet such
obligations, fully and unconditionally guaranteed by Arvin. See "Description
of the Subordinated Debentures" and "Description of the Guarantee."
The Trust is not currently subject to the informational reporting
requirements of the Exchange Act. The Trust will become subject to such
requirements upon the effectiveness of the Registration Statement, although it
intends to seek and expects to receive exemptions therefrom.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by Arvin with the SEC pursuant to
the Exchange Act are incorporated herein by reference:
1. Arvin's Annual Report on Form 10-K for the year ended December 31,
1995;
2. Arvin's Quarterly Reports on Form 10-Q for the quarters ended March
31, 1996, June 30, 1996 and September 29, 1996; and
3. Arvin's two Current Reports on Form 8-K, both dated May 10, 1996.
All documents subsequently filed by Arvin pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to
the termination of the offering of the Preferred Securities offered
3
<PAGE>
hereby, shall be deemed to be incorporated by reference in this Prospectus and
to be a part hereof from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
Arvin will provide without charge to each person to whom a copy of this
Prospectus has been delivered, on the written or oral request of such person,
a copy of any or all of the documents referred to above which have been or may
be incorporated in this Prospectus by reference (other than exhibits to such
documents which are not specifically incorporated by reference into the
information that this Prospectus incorporates). Requests for such copies
should be directed to John W. Brown, Vice President--Public Relations, Arvin
Industries, Inc., P.O. Box 3000, Columbus, Indiana 47202-3000, telephone 812-
379-3000.
4
<PAGE>
PROSPECTUS SUMMARY
This summary is qualified in its entirety by the more detailed information
and financial statements appearing elsewhere, or incorporated by reference, in
this Prospectus.
THE COMPANY
Arvin Industries, Inc. is a leading worldwide manufacturer of vehicle exhaust
systems and ride control products for both original equipment and replacement
customers. Since its founding in 1919, Arvin has grown through internal
development, acquisitions and a number of international joint ventures. At
September 29, 1996, the Company had total assets of approximately $1.4 billion
and shareholders' equity of approximately $415 million.
THE TRUST
The Trust is a statutory business trust created under Delaware law pursuant
to (i) a declaration of trust executed by the Company as sponsor (the
"Sponsor") of the Trust and the trustees of the Trust (the "Trustees") and (ii)
the filing of a certificate of trust with the Secretary of State of the State
of Delaware on December 18, 1996. The Trust exists for the exclusive purposes
of (i) issuing and selling the Preferred Securities and Common Securities, (ii)
using the gross proceeds from the sale of the Trust Securities to acquire the
Subordinated Debentures and (iii) engaging in only those other activities
necessary or incidental thereto. All of the Common Securities will be directly
or indirectly owned by the Company. The Common Securities will rank pari passu,
and payments will be made thereon pro rata, with the Preferred Securities,
except that, if a Declaration Event of Default (as defined herein) has occurred
and is continuing, the rights of the holders of the Common Securities to
payment in respect of distributions and payments upon liquidation, redemption
and otherwise will be subordinated to the rights of the holders of the
Preferred Securities. The Company will acquire Common Securities in an
aggregate liquidation amount equal to at least 3% of the total capital of the
Trust.
The Trust's affairs will be conducted by the Trustees appointed by the
Company as the holder of all of the Common Securities. The Company, as the
holder of the Common Securities will be entitled to appoint, remove or replace
any of, or increase or reduce the number of, the Trustees. The duties and
obligations of the Trustees shall be governed by the Declaration (as defined
herein). The Trust will initially have three Trustees. Two of the initial
Trustees (the "Administrative Trustees") will be employees or officers of or
otherwise affiliated with the Company. The third initial Trustee (the
"Institutional Trustee") will be Wilmington Trust Company, which shall act as
institutional trustee and as indenture trustee for the purposes of compliance
with the provisions of Trust Indenture Act of 1939, as amended. The Company
will pay all fees and expenses related to the Trust and the offering of the
Trust Securities.
The principal corporate trust office of the Institutional Trustee, Wilmington
Trust Company, is at Rodney Square North, 1100 North Market Street, Wilmington,
Delaware 19890, Attention: Corporate Trust Administration. The address for the
Trust is c/o Arvin Industries, Inc., the Sponsor of the Trust, at the Company's
corporate headquarters located at One Noblitt Plaza, Box 3000, Columbus,
Indiana 47202-3000; telephone 812-379-3000.
5
<PAGE>
THE OFFERING
Preferred Securities Offered. 4,000,000 % Trust Originated Preferred
Securities evidencing preferred undivided beneficial interests in the assets of
the Trust. Holders of the Preferred Securities will be entitled to receive
cumulative cash distributions at an annual rate of % of the liquidation
amount of $25 per Preferred Security, accruing from the date of original
issuance and payable quarterly in arrears on March 31, June 30, September 30
and December 31 of each year commencing on , 1997. The distribution
rate and the distribution and other payment dates for the Preferred Securities
will correspond to the interest rate and interest and other payment dates on
the Subordinated Debentures, which, along with interest and principal payments
received on the Subordinated Debentures, will be the only assets of the Trust.
As a result, if principal or interest is not paid on the Subordinated
Debentures, no amounts will be paid on the Preferred Securities. See "Risk
Factors--Ranking of Subordinate Obligations under the Guarantee and
Subordinated Debentures" and "Description of the Preferred Securities."
Subordinated Debentures. The Trust will invest the proceeds from the issuance
of the Preferred Securities and Common Securities in an equivalent amount of %
Subordinated Debentures of the Company. The Subordinated Debentures will rank
subordinate and junior in right of payment to all Senior Indebtedness of Arvin.
The Company's obligations under the Subordinated Debentures will also be
effectively subordinated to all existing and future obligations of Arvin's
subsidiaries. There are no terms that limit Arvin's ability to incur additional
Senior Indebtedness. See "Description of the Subordinated Debentures--
Subordination."
Guarantee. Payment of distributions out of moneys held by the Trust, and
payments on liquidation of the Trust or the redemption of Preferred Securities,
are guaranteed by Arvin if and to the extent the Trust has funds available
therefor. If the Company does not make principal or interest payments on the
Subordinated Debentures, the Trust will not have sufficient funds to make
distributions on the Preferred Securities, in which event the guarantee shall
not apply to such distribution until the Trust has sufficient funds available
therefor. See "Description of the Guarantee" and "Effect of Obligations under
the Subordinated Debentures and the Guarantee." The obligations of Arvin under
the Guarantee are subordinate and junior in right of payment to all other
liabilities of Arvin and pari passu with the most senior preferred stock, if
any, issued from time to time by the Company. See "Risk Factors--Ranking of
Subordinate Obligations under the Guarantee and Subordinated Debentures" and
"Description of the Guarantee."
Right to Defer Interest. The Company has the right to defer payments of
interest on the Subordinated Debentures by extending the interest payment
period on the Subordinated Debentures, from time to time, for up to 20
consecutive quarters. If interest payments on the Subordinated Debentures are
so deferred, distributions on the Preferred Securities will also be deferred.
During any Extension Period, distributions will continue to accrue with
interest thereon (to the extent permitted by applicable law) as described
herein. There could be multiple Extension Periods of varying lengths during the
term of the Subordinated Debentures. During an Extension Period, holders of
Preferred Securities will be required to include deferred interest income
allocated to their Preferred Securities in their gross income (as original
issue discount ("OID")) even though the cash payments attributable thereto have
not been made. See "Description of the Subordinated Debentures--Option to
Extend Interest Payment Period" and "United States Federal Income Taxation--
Original Issue Discount."
Redemption. The Subordinated Debentures are redeemable by the Company (in
whole or, from time to time, in part) on or after , 2002, or at any
time, in whole but not in part, upon the occurrence of a Tax Event. If the
Subordinated Debentures are redeemed, the Trust must redeem Trust Securities
having an aggregate liquidation amount equal to the aggregate principal amount
of the Subordinated Debentures so redeemed. The Trust Securities will be
redeemed upon maturity of the Subordinated Debentures. See "Description of the
Preferred Securities--Mandatory Redemption" and "--Tax Event Redemption."
Right to Dissolve the Trust. At any time, the Company will have the right to
dissolve the Trust and, after satisfaction of liabilities to creditors of the
Trust as required by applicable law, cause the Subordinated Debentures to be
distributed to the holders of the Trust Securities in liquidation of the Trust.
If the Subordinated
6
<PAGE>
Debentures are distributed to the holders of the Preferred Securities, the
Company will use its best efforts to have the Subordinated Debentures listed on
the New York Stock Exchange or on such other exchange as the Preferred
Securities are then listed. See "Description of the Preferred Securities--
Distribution of the Subordinated Debentures."
Use Of Proceeds. The proceeds from the sale of Preferred Securities by the
Trust will be invested in the Subordinated Debentures of the Company. The
Company expects to use a portion of the net proceeds from the sale of such
Subordinated Debentures to the Trust to repay approximately $ million of
short-term bank borrowings incurred in connection with the Company's December
27, 1996 redemption of its outstanding 7 1/2% Convertible Subordinated
Debentures due 2014 and for general corporate purposes. Such general corporate
purposes may include the Company's exercise of options (which are exercisable
beginning in early 1997) to purchase the remaining ownership interests in
several entities conducting business in the European automotive components
markets. If the Company exercises the options, the amount of payments required
will not be known for several months, but is currently expected to be
approximately $30 million. Until net proceeds are used for this purpose, they
may be applied to reduce the Company's outstanding short-term bank borrowings.
The Company's short-term bank borrowings at , 1996 bear interest at a
weighted average interest rate of percent and are due .
7
<PAGE>
SUMMARY FINANCIAL INFORMATION
The following summary financial information should be read in conjunction
with the consolidated financial statements of the Company and notes thereto
included in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995. See "Incorporation of Certain Documents by Reference." The
summary operating results, financial position and cash flow information for and
as of the end of each of the fiscal years in the five-year period ended
December 31, 1995, are derived from the audited consolidated financial
statements of the Company. Amounts for 1994 and prior periods have been
restated for discontinued operations. The summary operating results, financial
position and cash flow information for and as of the end of each of the nine-
month periods ended September 29, 1996 and October 1, 1995 have been derived
from the unaudited consolidated financial statements of the Company and in the
opinion of management include all adjustments which are necessary to present
fairly the operating results, financial position and cash flow of the Company
for the periods and at the dates presented. Except for the restructuring and
special charges and credits described in the Company's Quarterly Report on Form
10-Q for the quarter ended September 29, 1996 and in the Company's Annual
Report on Form 10-K for the year ended December 31, 1995, all such adjustments
are of a normal recurring nature. The summary financial information for the
nine-month period ended September 29, 1996 is not necessarily indicative of the
results to be expected for the full year ending December 29, 1996.
<TABLE>
<CAPTION>
AT OR FOR THE
NINE-MONTH
PERIOD ENDED AT OR FOR THE FISCAL YEAR ENDED
------------------- --------------------------------------------------
SEPT. 29, OCT. 1, DEC. 31, JAN. 1, JAN. 2, JAN. 3, DEC. 29,
1996 1995 1995 1995 1994 1993 1991
--------- -------- -------- -------- -------- -------- --------
(DOLLARS IN MILLIONS)
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING RESULTS (1)
Net sales.............. $1,652.0 $1,465.9 $1,966.4 $1,849.5 $1,640.8 $1,587.2 $1,373.4
Operating income (2)... 93.4 69.8 99.5 104.1 113.1 107.9 77.5
Net interest expense... 29.3 31.5 41.2 40.1 33.0 34.1 36.5
Earnings from
continuing operations. 28.3 10.5 17.9 24.6 38.4 36.4 17.9
FINANCIAL POSITION
Cash and equivalents... $ 25.7 $ 56.2 $ 15.2 $ 11.1 $ 35.1 $ 6.4 $ 5.5
Total assets........... 1,429.8 1,341.0 1,291.0 1,231.5 1,175.5 1,110.6 1,086.2
Total debt............. 416.0 460.8 402.3 441.4 440.1 409.1 369.9
Shareholders' equity... 414.8 395.3 395.1 396.3 420.6 398.4(3) 374.1
CASH FLOW
Depreciation and
amortization.......... $ 58.9 $ 56.9 $ 74.9 $ 78.2 $ 70.0 $ 68.9 $ 63.8
Capital expenditures
(net)................. 48.1 61.6 98.6 103.7 82.7 98.6 72.6
RATIOS
Operating income margin
(2)................... 5.7% 4.8% 5.1% 5.6% 6.9% 6.8% 5.6%
Operating income(2)/Net
interest expense...... 3.2 to 1 2.2 to 1 2.4 to 1 2.6 to 1 3.4 to 1 3.2 to 1 2.1 to 1
Total debt/Operating
income (2)............ 4.5 to 1 6.6 to 1 4.0 to 1 4.2 to 1 3.9 to 1 3.8 to 1 4.8 to 1
Total debt/Total
capitalization........ 48.1% 51.8% 48.5% 50.7% 49.3% 50.3% 49.1%
</TABLE>
- --------
(1) From continuing operations.
(2) Reflects income from continuing operations prior to expenses unrelated to
segments.
(3) The Company adopted FAS 106 and FAS 112 in 1992 and recorded a $33.5
million charge net of tax, which is not reflected in operating income but
is reflected in shareholders' equity.
8
<PAGE>
RISK FACTORS
Prospective purchasers of Preferred Securities should consider carefully all
of the information contained in this Prospectus including the information in
the documents incorporated by reference and, in particular, should evaluate
the specific factors set forth below for risks involved with an investment in
the Preferred Securities.
RANKING OF SUBORDINATE OBLIGATIONS UNDER THE GUARANTEE AND SUBORDINATED
DEBENTURES
The Company's obligations under the Guarantee are unsecured and will be
subordinate and junior in right of payment to all other liabilities of Arvin
and pari passu with the most senior preferred stock, if any, issued from time
to time by Arvin. The obligations of the Company under the Subordinated
Debentures are subordinate and junior in right of payment to all present and
future Senior Indebtedness of Arvin and pari passu with obligations to or
rights of Arvin's general unsecured creditors other than holders of Senior
Indebtedness. As of September 29, 1996, Senior Indebtedness aggregated
approximately $472 million. The Company's obligations under the Subordinated
Debentures will also be effectively subordinated to all existing and furture
obligations of Arvin's subsidiaries. There are no terms in the Preferred
Securities, the Subordinated Debentures or the Guarantee that limit Arvin's
ability to incur additional indebtedness, including indebtedness that ranks
senior to the Subordinated Debentures and the Guarantee. See "Description of
the Guarantee--Status of the Guarantee" and "Description of the Subordinated
Debentures--Subordination."
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If a Declaration Event of Default occurs and is continuing, then the holders
of Preferred Securities would rely on the enforcement by the Institutional
Trustee of its rights as a holder of the Subordinated Debentures against
Arvin. In addition, the holders of a majority in liquidation amount of the
Preferred Securities will have the right to direct the time, method, and place
of conducting any proceeding for any remedy available to the 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 a holder of
the Subordinated Debentures. If the Institutional Trustee fails to enforce its
rights with respect to the Subordinated Debentures held by the Trust to the
fullest extent permitted by law, any record holder of Preferred Securities may
institute legal proceedings directly against the Company to enforce the
Institutional Trustee's rights under such Subordinated Debentures without
first instituting any legal proceedings against such Institutional Trustee or
any other person or entity. In addition, 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 Subordinated Debentures on the
date such interest or principal is otherwise payable (or in the case of
redemption, on the redemption date), then a record holder of Preferred
Securities may directly institute a proceeding against the Company for
enforcement of payment to such holder of the principal of or interest on the
Subordinated Debentures having a principal amount equal to the aggregate
liquidation amount of the Preferred Securities held by such holder (a "Direct
Action") on or after the respective due dates specified in the Subordinated
Debentures. In connection with such Direct Action, Arvin will be subrogated to
the rights of such record holder of Preferred Securities to the extent of any
payment made by Arvin to such holder of Preferred Securities in such Direct
Action. The record holder in the case of the issuance of one or more global
Preferred Securities certificates will be The Depository Trust Company acting
at the direction of the beneficial owners of the Preferred Securities. See
"Description of the Preferred Securities--Declaration Events of Default."
TRUST DISTRIBUTIONS DEPENDENT ON THE COMPANY'S PAYMENTS ON SUBORDINATED
DEBENTURES
The Trust's ability to make distributions and other payments on the
Preferred Securities is entirely dependent upon the Company making interest
and other payments on the Subordinated Debentures. If the Company does not
make payments on the Subordinated Debentures for any reason, including as a
result of the Company's election to defer the payment of interest on the
Subordinated Debentures by extending the interest payment period on the
Subordinated Debentures, the Trust will not make payments on the Trust
Securities. In such an event, holders of the Preferred Securities would not be
able to rely on the Guarantee because distributions
9
<PAGE>
and other payments on the Preferred Securities are subject to the Guarantee
only if and to the extent that the Trust has funds available therefor. See
"Description of the Guarantee--General" and "Effect of Obligations under the
Subordinated Debentures and the Guarantee."
FACTORS AFFECTING PRODUCTION VOLUMES; CYCLICALITY
Historically, the North American and European automotive industries have
experienced periodic, cyclical downturns, most recently in the 1991-92
calendar years in North America and in the 1993-94 calendar years in Europe.
No assurance can be given as to when the next cyclical downturn will occur or
as to the duration or severity thereof. North American production and European
production, which accounted for approximately 58% and 32%, respectively, of
the Company's consolidated sales in fiscal 1995, could face a significant
decline in production volumes as a result of rising interest rates, a general
economic downturn, rising fuel prices or general fuel unavailability,
legislative changes, environmental concerns, emissions and safety issues,
labor and/or trade disruptions or other factors. In addition, a prolonged
strike at a major original equipment customer of the Company would likely
result in a significant decline in original equipment production volumes. A
significant decline in such production volumes as a result of a strike, the
loss of a principal customer or any of the other factors described above could
have a material adverse effect on the Company and consequently on its ability
to make payments on the Subordinated Debentures.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
The Company has the right under the Indenture to defer payments of interest
on the Subordinated Debentures by extending the interest payment period at any
time, and from time to time, on the Subordinated Debentures. As a consequence
of such an extension, quarterly distributions on the Preferred Securities
would be deferred (but despite such deferral, to the extent permitted by law,
would continue to accrue with interest thereon compounded quarterly) by the
Trust during any such extended interest payment period. The Company has the
right to defer payments of interest on the Subordinated Debentures, from time
to time, but no Extension Period may be more than 20 consecutive quarters or
extend beyond the Maturity Date (as defined herein) of the Subordinated
Debentures. There could be multiple Extension Periods of varying lengths
during the term of the Subordinated Debentures. In the event that the Company
exercises its right to defer interest payments, then, prior to the payment of
all accrued interest on outstanding Subordinated Debentures, (a) the Company
shall not declare or pay any dividend on, or make any distribution with
respect to, or redeem, purchase or acquire, or make a liquidation payment with
respect to, any of its capital stock, (b) the Company shall not, directly or
indirectly, and shall not allow any of its subsidiaries to, 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 Subordinated Debentures, and (c) the Company shall not make guarantee
payments with respect to the foregoing (other than pursuant to the Guarantee);
provided, however, that the restriction in clause (a) above does not apply (i)
to repurchases or acquisitions of common shares of the Company as contemplated
by any employment arrangement, benefit plan or other similar contract with or
for the benefit of employees, officers or directors entered into in the
ordinary course of business, (ii) as a result of an exchange or conversion of
any class or series of the Company's capital stock for common shares, provided
that such class or series of the Company's capital stock was outstanding prior
to the date upon which the Company gives notice of its election of such
Extension Period, (iii) to 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, provided
that such capital stock or security was outstanding prior to the date upon
which the Company gives notice of its election of such Extension Period, or
(iv) to the payment of any stock dividend by the Company where the dividend is
paid in the form of the same stock as that on which the dividend is paid.
Prior to the termination of any such Extension Period, the Company may further
extend the interest payment period; provided that each Extension Period, if
any, may not exceed 20 consecutive quarters or extend beyond the Maturity Date
of the Subordinated 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. At the end of the
Extension Period, Arvin will pay all interest accrued and unpaid on the
Subordinated Debentures to the holders
10
<PAGE>
in whose names the Subordinated Debentures are registered on the first record
date after the end of the Extension Period. The Company has no current
intention of exercising its right to defer payments of interest by extending
the interest payment period on the Subordinated Debentures. However, should the
Company determine to exercise such right in the future, the market price of the
Preferred Securities is likely to be adversely affected. See "Description of
the Preferred Securities--Distributions" and "Description of the Subordinated
Debentures--Option to Extend Interest Payment Period."
TAX CONSEQUENCES OF EXTENSION OF INTEREST PAYMENT PERIOD
Should the Company exercise its right to defer payments of interest by
extending the interest payment period, each holder of Preferred Securities will
accrue income (as original issue discount ("OID")) in respect of the deferred
interest allocable to its Preferred Securities for United States federal income
tax purposes. Such income will be allocated but not distributed to holders of
the Preferred Securities. As a result, each such holder of Preferred Securities
will recognize income for United States federal income tax purposes in advance
of the receipt of cash and will not receive the cash from the Trust related to
such income if such holder disposes of its Preferred Securities prior to the
record date for the date on which distributions of such amounts are made. A
holder that disposes of its Preferred Securities during an Extension Period,
therefore, might not receive the same return on its investment as a holder that
continues to hold its Preferred Securities. In addition, as a result of the
existence of the Company's right to defer interest payments, the market price
of the Preferred Securities (which represent an undivided beneficial interest
in the Subordinated Debentures) may be more volatile than other securities on
which OID accrues that do not have such rights. See "United States Federal
Income Taxation--Original Issue Discount."
TAX EVENT REDEMPTION
Upon the occurrence of a Tax Event, the Company will have the right to redeem
the Subordinated Debentures, in whole (but not in part), in which event the
Trust will redeem all outstanding Trust Securities. See "Description of the
Preferred Securities--Tax Event Redemption."
DISTRIBUTION OF THE SUBORDINATED DEBENTURES
At any time, the Company will have the right to dissolve the Trust and, after
satisfaction of the liabilities to creditors of the Trust as required by
applicable law, cause the Subordinated Debentures to be distributed to the
holders of the Preferred Securities in liquidation of the Trust. Under current
United States federal income tax law and interpretation and assuming, as
expected, that the Trust is treated as a grantor trust, a distribution of the
Subordinated Debentures should not be a taxable event to holders of the
Preferred Securities. Should there be a change in law, a change in legal
interpretation, a Tax Event or other circumstances, however, the distribution
could be a taxable event to the holders of the Preferred Securities. In
addition, a dissolution of the Trust in which holders of the Preferred
Securities receive cash would be a taxable event to such holders. See "United
States Federal Income Taxation--Receipt of Subordinated Debentures or Cash upon
Dissolution of the Trust."
There can be no assurance as to the market prices for the Preferred
Securities or the Subordinated 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,
whether pursuant to the offer made hereby or in the secondary market, or the
Subordinated Debentures that a holder of Preferred Securities may receive on
dissolution and liquidation of the Trust, may trade at a discount to the price
that the investor paid to purchase the Preferred Securities offered hereby.
Because holders of Preferred Securities may receive Subordinated Debentures
upon any election by the Company to dissolve the Trust and cause the
Subordinated Debentures to be distributed to the holders of the Preferred
Securities, prospective purchasers of Preferred Securities are also making an
investment decision with regard to the Subordinated Debentures and should
review carefully all the information regarding the Subordinated Debentures and
the Company contained in this Prospectus. See "Description of the Preferred
Securities--Distribution of the Subordinated Debentures" and "Description of
the Subordinated Debentures."
11
<PAGE>
PROPOSED TAX LAW CHANGES
On March 19, 1996, the Revenue Reconciliation Bill of 1996 (the "Bill"), the
revenue portion of President Clinton's fiscal 1997 budget proposal, was
released. The Bill would, among other things, treat as equity, instruments
issued by a corporation that have a maximum term of more than 20 years and
that are not shown as indebtedness on the consolidated balance sheet of the
issuer. The above-described provisions of the Bill were proposed to be
effective generally for instruments issued on or after December 7, 1995.
However, on March 29, 1996, the Chairmen of the Senate Finance and House Ways
and Means Committees issued a joint statement (the "Joint Statement") to the
effect that it was their intention that the effective date of the President's
legislative proposals, if adopted, would be no earlier than the date of
appropriate Congressional action. In addition, subsequent to the publication
of the Joint Statement, Senator Daniel Patrick Moynihan and Representatives
Sam M. Gibbons and Charles B. Rangel wrote letters to Treasury Department
officials concurring with the views expressed in the Joint Statement. Under
current law, the Subordinated Debentures will be treated as indebtedness of
the Company and the Company will be able to deduct interest on the
Subordinated Debentures beneficially held by the holders of the Preferred
Securities. However, if the provision of the Bill regarding a 20-year term is
enacted with retroactive effect with regard to the Subordinated Debentures,
the Company will not be entitled to an interest deduction with respect to the
Subordinated Debentures. There can be no assurance that current or future
legislative proposals, adverse judicial decisions, final legislation or
official administrative pronouncements will not affect the ability of the
Company to deduct interest on the Subordinated Debentures, giving rise to a
Tax Event which would permit the Company to cause the redemption of the
Preferred Securities prior to , 2002 (the first date on which the
Company would otherwise be able to cause a redemption of the Preferred
Securities). See "Description of the Preferred Securities--Tax Event
Redemption" and "United States Federal Income Taxation."
PREPAYMENT CONSIDERATIONS
At the option of the Company, the Subordinated Debentures may be redeemed,
in whole or in part, at any time on or after , 2002, at a
redemption price equal to 100% of the principal amount to be redeemed plus any
accrued and unpaid interest to the redemption date. See "Description of the
Subordinated Debentures--Optional Redemption." Investors in the Preferred
Securities should assume that the Company will exercise its redemption option
if the Company is able to refinance at a lower interest rate or it is
otherwise in the interest of the Company to redeem the Subordinated
Debentures. If Subordinated Debentures are redeemed, the Trust must redeem
Trust Securities having an aggregate liquidation amount equal to the aggregate
principal amount of Subordinated Debentures so redeemed. See "Description of
the Preferred Securities--Mandatory Redemption."
LIMITED VOTING RIGHTS
Holders of Preferred Securities will have only limited voting rights,
primarily in connection with directing the activities of the Institutional
Trustee as the holder of the Subordinated Debentures. Such holders will not be
entitled to vote to appoint, remove or replace, or to increase or decrease the
number of, the Trustees. Voting rights with respect to Trustee matters are
vested exclusively in the holder of the Common Securities. See "Description of
the Preferred Securities--Voting Rights."
TRADING PRICE
The Preferred Securities may trade at a price that does not fully reflect
the value of accrued but unpaid interest with respect to the underlying
Subordinated Debentures. A holder who disposes of his Preferred Securities
between record dates for payments of distributions thereon will be required to
include accrued but unpaid interest on the Subordinated Debentures through the
date of disposition in income as ordinary income (i.e., OID), and to add such
amount to his adjusted tax basis in his pro rata share of the underlying
Subordinated Debentures deemed disposed of. To the extent the selling price is
less than the holder's adjusted tax basis (which will include, in the form of
OID, all accrued but unpaid interest), a holder will recognize a capital loss.
Subject
12
<PAGE>
to certain limited exceptions, capital losses cannot be applied to offset
ordinary income for United States federal income tax purposes. See "United
States Federal Income Taxation--Original Issue Discount" and "--Sales of
Preferred Securities."
ABSENCE OF PUBLIC MARKET FOR SECURITIES
Since the Preferred Securities will be newly issued, there is no current
market for them. The Company will apply for listing of the Preferred
Securities on the New York Stock Exchange, but there can be no assurance that
the applicable listing requirements of such exchange will be met. There can be
no assurance that there will be an active trading market for the Preferred
Securities.
THE TRUST
Arvin Capital I is a statutory business trust created under Delaware law
pursuant to a declaration of trust, dated as of December 18, 1996, and the
filing of a certificate of trust with the Secretary of State of the State of
Delaware on December 18, 1996. Such declaration will be amended and restated
in its entirety (as so amended and restated, the "Declaration") by execution
of an Amended and Restated Declaration of Trust substantially in the form
filed as an exhibit to the Registration Statement of which this Prospectus is
a part. The Declaration will be qualified as an indenture under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). Upon issuance
of the Preferred Securities, the purchasers thereof will own all of the
Preferred Securities. See "Description of the Preferred Securities."
Simultaneously with the issuance of the Preferred Securities, Arvin will
acquire Common Securities in an aggregate liquidation amount equal to at least
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 gross proceeds of the
Trust Securities in the Subordinated Debentures and (iii) engaging in only
those other activities necessary or incidental thereto. The Trust has a term
of approximately 55 years, but may dissolve earlier as provided in the
Declaration.
Pursuant to the Declaration, the number of Trustees will initially be three.
Under the Declaration, Arvin, as holder of a majority in liquidation amount of
the Common Securities, will have the right to increase or decrease, from time
to time, the number of Trustees. The Declaration further provides, however,
that there must always be (i) one Trustee which is either a resident of the
State of Delaware or an entity which has its principal place of business in
Delaware (the "Delaware Trustee"), (ii) at least one Trustee who is an
employee or officer of, or is affiliated with, Arvin (an "Administrative
Trustee"), and (iii) one Trustee which is a financial institution with
combined capital and surplus of at least $50,000,000 and which acts as
institutional trustee and as indenture trustee for purposes of compliance with
the Trust Indenture Act. The same entity may serve as Delaware Trustee and
Institutional Trustee. Initially, Wilmington Trust Company, a Delaware banking
corporation, will be the Institutional Trustee until removed or replaced by
the holder of the Common Securities. For purposes 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 Debt
Trustee (as defined herein) under the Indenture. See "Description of the
Guarantee" and "Description of the Preferred Securities--Voting Rights."
The Institutional Trustee will hold title to the Subordinated 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 of a
holder of Subordinated Debentures under the Indenture. 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 Subordinated 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 (subject to the terms of the
Declaration) to appoint, remove or replace any Trustee and to increase or
decrease the number of Trustees; provided, that (i) if the Institutional
Trustee does not have its principal place of business in Delaware, the number
of Trustees shall
13
<PAGE>
be at least three, and (ii) there will always be at least one Administrative
Trustee, one Institutional Trustee which satisfies the requirements of the
Trust Indenture Act, and one Trustee who, if a natural person, is a resident
of Delaware or, if not a natural person, is an entity which has its principal
place of business in Delaware, as required under the Delaware Business Trust
Act (the "Trust Act"). Arvin will pay all fees and expenses related to the
Trust and the offering of the Trust Securities. See "Description of the
Subordinated Debentures--Miscellaneous."
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 Trust Act and the Trust Indenture Act. See "Description of
the Preferred Securities."
THE COMPANY
OVERVIEW
Arvin is a diversified international manufacturer and supplier of automotive
parts and a variety of other products through operating entities in the U.S.
and numerous other countries. The Company is a worldwide leader in automotive
exhaust systems and ride control products for the original equipment ("OE")
and replacement markets. The Company's consolidated revenues were
approximately $2 billion in fiscal 1995.
Since its founding in 1919, Arvin has grown through internal development,
acquisitions and a number of international joint ventures. In recent years,
the Company's strategy has been to strengthen its automotive parts businesses
by achieving a mix of sales to both original equipment manufacturers ("OEMs")
and replacement market parts suppliers on a global basis. Recently, management
has implemented a series of strategic initiatives to increase the Company's
global competitive position within the automotive parts marketplace.
The Company classifies its business based on the two primary markets it
serves: Automotive Original Equipment and Automotive Replacement. In fiscal
1995, Arvin derived approximately 68% of its total revenues from the OE
market, with the remaining 32% coming from replacement market sales.
THE AUTOMOTIVE ORIGINAL EQUIPMENT SEGMENT
The principal products and primary customers of the Automotive Original
Equipment segment are set forth below. The Company believes that it is the
leading exhaust system supplier to OE customers in North America and Europe,
and among the top three OE ride control suppliers in these markets.
<TABLE>
<CAPTION>
PRINCIPAL PRODUCTS PRIMARY CUSTOMERS
------------------ -----------------
<S> <C> <C>
Exhaust Systems Chrysler Nissan
--Mufflers Fiat Renault
--Exhaust and Tail Pipes Ford Saturn
--Catalytic Converters General Motors TRW (airbag sensors)
--Tubular Manifolds Honda Toyota/Nummi
Ride Control Products Mazda Volkswagen/SEAT
--Shock Absorbers Mercedes Benz Volvo
--Struts Mitsubishi
Gas Springs
Vacuum Actuators
Metal Tubular Parts
Coated Coil Steel and Aluminum
Press-Molded Thermoplastics
Vinyl-Metal Stampings
</TABLE>
14
<PAGE>
Arvin's OE segment has undergone a significant transformation in the last
decade, moving to a fully integrated engineering, development and production
operation. This transformation has been driven by the shift in customer
requirements and a change in the capabilities required to be a successful,
long term participant in this market.
Arvin competes with other independent parts suppliers and with
manufacturers' captive parts operations. The Company has significantly
enhanced its delivery capabilities geographically since the late 1980s through
both acquisitions and the formation of a number of international joint
ventures. Arvin believes that its aggressive capital spending program has
resulted in world-class manufacturing operations, capable of delivering
outstanding value and quality to its customers.
THE AUTOMOTIVE REPLACEMENT SEGMENT
The principal products, brand names and primary customers of the Automotive
Replacement segment are set forth below. The Company believes that it is among
the top two replacement exhaust and ride control manufacturers in both North
America and Europe.
<TABLE>
<CAPTION>
PRINCIPAL PRODUCTS BRAND NAMES PRIMARY CUSTOMERS
------------------ ----------- -----------------
<S> <C> <C>
Mufflers Mufflers Retailers
Maremont Sears
Exhaust and Tail Pipes Cherry Bomb Canadian Tire
TIMAX Pep Boys
Catalytic Converters ANSA AutoZone
ROSI
Shock Absorbers TESH Wholesale Distributors
Parts, Inc.
MacPherson Struts Shock Absorbers United Auto Parts
Gabriel General Parts
Gas Springs
Gas Springs Installers
Strong Arm Meineke
Kwik-Fit
</TABLE>
The Company's replacement market operations compete with both OEMs and
independent suppliers in North America and Europe, and serve the market
through its own sales force as well as a network of manufacturers'
representatives. The Company's competitive position has been enhanced by
rigorous attention to lead time reduction, with some product offerings
dropping from seven days to about one day. The foregoing has enabled the
Company to increase its order fill rate and to provide quick order turnaround
through more responsive manufacturing operations. These enhanced manufacturing
processes have also had a positive impact on the cost and quality of the
product.
15
<PAGE>
CAPITALIZATION
The following table sets forth the actual capitalization of the Company at
September 29, 1996, and as adjusted to reflect the application of the
estimated net proceeds from the sale of the Preferred Securities. See "Use of
Proceeds." The table should be read in conjunction with the Company's
consolidated financial statements and notes thereto included in the documents
incorporated by reference herein. See "Incorporation of Certain Documents by
Reference."
<TABLE>
<CAPTION>
AT SEPTEMBER 29,
1996
---------------------
ACTUAL AS ADJUSTED
-------- -----------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Short-term debt (including current maturities of long-
term debt).............................................. $ 59,650 $ 23,453
Long-term debt:
Capitalized lease obligations.......................... 3,899 3,899
7.94% notes due 2005................................... 50,000 50,000
6 7/8% notes due 2001.................................. 74,904 74,904
9.8%-9.9% medium term notes due 1998................... 45,000 45,000
10% medium term notes due 2000......................... 49,768 49,768
7 1/2% convertible subordinated debentures due 2014.... 63,803 --
9 1/8% sinking fund debentures due 2017................ 28,424 28,424
10 3/8% euro-sterling notes due 2018................... 36,541 36,541
Other.................................................. 3,962 3,962
-------- --------
Total long-term debt..................................... 356,301 292,498
Company-obligated mandatorily redeemable preferred
securities of trust
subsidiary (1).......................................... -- 100,000
Shareholders' equity:
Capital stock:
Common shares ($2.50 par value)........................ 60,681 60,681
Capital in excess of par value......................... 207,784 207,784
Retained earnings...................................... 211,717 210,794
Cumulative translation adjustment...................... (24,991) (24,991)
Common shares in treasury (at cost).................... (40,359) (40,359)
-------- --------
Total shareholders' equity............................... 414,832 413,909
-------- --------
Total capitalization..................................... $830,783 $829,860
======== ========
</TABLE>
- --------
(1) As described herein, the sole asset of the Trust will be the % Junior
Subordinated Deferrable Interest Debentures due 2037 of Arvin with a
principal amount of approximately $103,100,000, and upon redemption of
such debt, the Preferred Securities will be mandatorily redeemable.
RATIOS OF EARNINGS TO FIXED CHARGES AND
EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED DIVIDENDS
The following table sets forth the Company's ratio of earnings to fixed
charges and ratio of earnings to combined fixed charges and preferred stock
dividends for the periods indicated:
<TABLE>
<CAPTION>
NINE-MONTH PERIOD
ENDED FISCAL YEAR ENDED
----------------- -----------------------------------------
SEPT. 29, OCT. 1, DEC. 31, JAN. 1, JAN. 2, JAN. 3, DEC. 29,
1996 1995 1995 1995 1994 1993 1991
--------- ------- -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to
Fixed Charges.......... 2.3 1.6 1.6 1.8 2.5 2.3 1.7
Ratio of Earnings to
Combined Fixed Charges
and Preferred
Dividends.............. 2.3 1.6 1.6 1.8 2.5 1.9 1.3
</TABLE>
16
<PAGE>
For purposes of calculating the ratios, "earnings" consist of earnings from
continuing operations before income taxes, adjusted for the portion of fixed
charges deducted from such earnings. "Fixed charges" consist of interest on
all indebtedness (including capital lease obligations and capitalized
interest), amortization of debt expense and the percentage of rental expense
on operating leases deemed representative of the interest factor. The ratios
of earnings to fixed charges, before special charges, for the nine months
ended September 29, 1996 and October 1, 1995 were 2.5 and 1.9 to 1,
respectively. The ratios of earnings to fixed charges, before the
restructuring and special charges, for the 1995 and 1994 fiscal years were 1.9
and 2.4 to 1, respectively. The above computations do not include any fixed
charges related to the Company's guarantee of debt for Calspan SRL
Corporation. The debt guarantee was $18.0 million at September 29, 1996 and
$21.7 million at December 31, 1995.
A statement setting forth the computation of the unaudited ratios of
earnings to fixed charges and earnings to combined fixed charges and preferred
dividends is filed as an exhibit to the Registration Statement of which this
Prospectus is a part.
ACCOUNTING TREATMENT
The financial statements of the Trust will be consolidated with the
Company's financial statements with the Preferred Securities accounted for and
captioned in the consolidated balance sheet directly above shareholders'
equity.
USE OF PROCEEDS
The Trust will use all proceeds from the sale of the Preferred Securities to
purchase the Subordinated Debentures from the Company. Arvin intends to use
the net proceeds from the sale of the Subordinated Debentures to repay
approximately $ million of short-term bank borrowings incurred in
connection with the Company's December 27, 1996 redemption of its outstanding
7 1/2% Convertible Subordinated Debentures due 2014, and for general corporate
purposes. Such general corporate purposes may include the Company's exercise
of options (which are exercisable beginning in early 1997) to purchase the
remaining ownership interests in several entities conducting business in the
European automotive components markets. If the Company exercises the options,
the amount of payments required will not be known for several months, but is
currently expected to be approximately $30 million. Until net proceeds are
used for this purpose, they may be applied to reduce the Company's outstanding
short-term bank borrowings. The Company's short-term bank borrowings at
, 1996 bear interest at a weighted average interest rate of
percent and are due .
DESCRIPTION OF THE PREFERRED SECURITIES
The Preferred Securities will be issued pursuant to the terms of the
Declaration. The Declaration will be qualified as an indenture under the Trust
Indenture Act. The Institutional Trustee, Wilmington Trust Company, will act
as indenture trustee under the Declaration for purposes of compliance with the
provisions of the Trust Indenture Act. The terms of the Preferred Securities
will include those stated in the Declaration (including the annex and exhibits
thereto), and those required to be made part of the Declaration by the Trust
Indenture Act. The following summary of the principal terms and provisions of
the Preferred Securities does not purport to be complete and is subject to,
and qualified in its entirety by reference to, the Declaration (a copy of
which is filed as an exhibit to the Registration Statement of which this
Prospectus is a part), the Trust Act and the Trust Indenture Act.
GENERAL
The Declaration authorizes the Administrative Trustees to issue, on behalf
of the Trust, the Trust Securities, which represent undivided beneficial
interests in the assets of the Trust. The Common Securities will have
17
<PAGE>
equivalent terms to and will rank pari passu, and payments will be made
thereon on a pro rata basis, with the Preferred Securities, except that upon
the occurrence and during the continuance of a Declaration Event of Default
(as defined herein), 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 Preferred Securities. In addition, holders of the Common Securities have
the exclusive right (subject to the terms of the Declaration) to appoint,
remove or replace any of the Trustees. All of the Common Securities will be
directly or indirectly owned by the Company.
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 hold the
Subordinated Debentures purchased by the Trust for the benefit of the holders
of the Trust Securities. The payment of distributions out of money held by the
Trust, and payments upon redemption of the Preferred Securities or liquidation
of the Trust, are guaranteed by Arvin to the extent described under
"Description of the Guarantee." The Guarantee, when taken together with the
back-up undertakings, consisting of obligations of the Company (including the
obligation to pay expenses of the Trust) set forth in the Declaration, the
Indenture and the Subordinated Debentures issued to the Trust, provide a full
and unconditional guarantee by the Company of the Preferred Securities. The
Guarantee will be held by Wilmington Trust Company, the Guarantee Trustee, for
the benefit of the holders of the Preferred Securities. The Guarantee only
covers payment of distributions when the Company has made the corresponding
payment of interest or principal on the Subordinated Debentures held by the
Trust. In the absence of such payment of interest or principal, the remedy of
a holder of Preferred Securities is to vote to direct the Institutional
Trustee to enforce the Institutional Trustee's rights as the holder of the
Subordinated Debentures or, under certain circumstances, to take direct action
against the Company. See "--Declaration Events of Default," "--Voting Rights,"
"Description of the Guarantee" and "Effect of Obligations under the
Subordinated Debentures and the Guarantee."
DISTRIBUTIONS
Distributions on the Preferred Securities will be fixed at a rate per annum
of % of the stated liquidation amount of $25 per Preferred Security.
Distributions in arrears for more than one quarter will (to the extent
permitted by applicable law) bear interest thereon from and including the last
day of such quarter at the rate per annum of % thereof compounded
quarterly. The term "distributions" 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, and for any period shorter than a full quarter, on the basis of the
actual number of days elapsed in such 90-day quarter.
Distributions on the Preferred Securities will be cumulative, 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 available for payment, and will be made by the
Institutional Trustee, except as otherwise described below. Distributions
payable in the first payment period will be computed on the basis of
days.
Arvin has the right under the Indenture to defer payments of interest on the
Subordinated Debentures by extending the interest payment period from time to
time on the Subordinated Debentures, which right, if exercised, would defer
quarterly distributions on the Preferred Securities (although to the extent
permitted by law, such distributions would continue to accrue with interest
since interest would continue to accrue on the Subordinated Debentures) during
any such Extension Period. The Company has the right to defer payments of
interest on the Subordinated Debentures, from time to time, for up to 20
consecutive quarters, provided that no Extension Period may extend beyond the
Maturity Date of the Subordinated Debentures. There could be multiple
Extension Periods of varying lengths during the term of the Subordinated
Debentures. In the event that the Company exercises this right, then during
any Extension Period (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, (b) the Company
shall not, directly or indirectly, and shall not allow any
18
<PAGE>
of its subsidiaries to, 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 Subordinated Debentures,
and (c) the Company shall not make any guarantee payments with respect to the
foregoing; provided, however, that the restriction in clause (a) above does
not apply (i) to repurchases or acquisitions of common shares of the Company
as contemplated by any employment arrangement, benefit plan or similar
contract with or for the benefit of employees, officers or directors entered
into in the ordinary course of business, (ii) as a result of an exchange or
conversion of any class or series of the Company's capital stock for common
shares, provided that such class or series of the Company's capital stock was
outstanding prior to the date upon which the Company gives notice of its
election of such Extension Period, (iii) to 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, provided that such capital stock or security was outstanding
prior to the date upon which the Company gives notice of its election of such
Extension Period, or (iv) to the payment of any stock dividend by the Company
where the dividend is paid in the form of the same stock as that on which the
dividend is being paid. Prior to the termination of any such Extension Period,
the Company may further extend the interest payment period; provided that each
Extension Period, if any, may not exceed 20 consecutive quarters and may not
extend beyond the Maturity Date of the Subordinated Debentures. Upon the
termination of any Extension Period and the payment of all amounts then due,
Arvin may commence a new Extension Period, subject to the above requirements.
See "Description of the Subordinated 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 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.
Distributions on the Preferred Securities must be paid on the dates payable
to the extent that the Trust has funds available for the payment of such
distributions in the Property Account. The Trust's funds available for
distribution to the holders of the Preferred Securities will be limited to
payments received from Arvin on the Subordinated Debentures. See "Description
of the Subordinated Debentures." The payment of distributions out of moneys
held by the Trust is guaranteed by Arvin to the extent set forth under
"Description of the Guarantee." The Guarantee, when taken together with the
back-up undertakings, consisting of obligations of the Company (including the
obligation to pay expenses of the Trust) as set forth in the Declaration, the
Indenture and the Subordinated Debentures issued to the Trust, provides a full
and unconditional guarantee by the Company of the Preferred Securities.
Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the books and records of the Trust on the relevant
record dates, which, as long as the Preferred Securities remain in global
form, will be one Business Day (as defined below) prior to the relevant
payment dates. Such distributions will be paid through the Institutional
Trustee who will hold amounts received in respect of the Subordinated
Debentures in the Property Account for the benefit of the holders of the Trust
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 Issuance--The Depository Trust Company." In the event that the Preferred
Securities do not continue to remain in global 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 Administrative Trustees, which dates shall be at least one Business Day
but less than 60 Business Days prior to the relevant payment dates.
Distributions payable on any Preferred Securities that are not punctually paid
on any distribution payment date, as a result of the Company's having failed
to make a payment under the Subordinated Debentures, will cease to be payable
to the person in whose name such Preferred Securities are registered on the
relevant record date, and such defaulted distribution will instead be payable
to the person in whose name such Preferred Securities are registered on the
special record date or other specified date determined in accordance with the
Indenture. In the event that any date on which distributions are to be made on
the 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
19
<PAGE>
such date. A "Business Day" shall mean any day other than a day on which state
or federal banking institutions in New York, New York or Wilmington, Delaware,
are authorized or required by law to close.
MANDATORY REDEMPTION
The Subordinated Debentures will mature on , 2037, and may be
redeemed, in whole or in part, at any time on or after , 2002,
or at any time in whole (but not in part) upon the occurrence of a Tax Event.
See "Description of the Subordinated Debentures." Upon the repayment of the
Subordinated Debentures, whether at maturity or upon redemption, the proceeds
from such repayment or redemption shall simultaneously be applied to redeem
Trust Securities having an aggregate liquidation amount equal to the aggregate
principal amount of the Subordinated Debentures so repaid or redeemed at the
Redemption Price; provided, that holders of Trust Securities shall be given
not less than 30 nor more than 60 days notice of such redemption. See
"Description of the Subordinated Debentures--Optional Redemption." In the
event that fewer than all of the outstanding Trust Securities are to be
redeemed, the Trust Securities will be redeemed pro rata to each holder
according to the aggregate liquidation amount of Trust Securities held by the
relevant holder in relation to the aggregate liquidation amount of all Trust
Securities outstanding. See "--Book-Entry Issuance--The Depository Trust
Company" for a description of procedures of The Depository Trust Company in
the event of redemption.
TAX EVENT REDEMPTION
"Tax Event" means that the Administrative Trustees shall have received an
opinion of an independent tax counsel experienced in such matters to the
effect that, as a result of (a) 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 or (b) any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment or change
is effective or such pronouncement or decision is announced on or after the
date of original issuance of the Preferred Securities, there is more than an
insubstantial risk that (i) the Trust is, or will be within 90 days after the
date thereof, subject to United States federal income tax with respect to
interest accrued or received on the Subordinated Debentures, (ii) the Trust
is, or will be within 90 days after the date thereof, subject to more than a
de minimis amount of taxes, duties or other governmental charges, or (iii)
interest payable to the Trust on the Subordinated Debentures is not, or within
90 days of the date thereof, will not be deductible, in whole or in part, by
the Company for United States federal income tax purposes.
If, at any time, a Tax Event shall occur and be continuing, the Company
shall have the right, upon not less than 30 nor more than 60 days notice, to
redeem the Subordinated Debentures, in whole (but not in part), for cash
within 90 days following the occurrence of such Tax Event, and, following such
redemption, all Trust Securities shall be redeemed by the Trust at the
Redemption Price.
DISTRIBUTION OF THE SUBORDINATED DEBENTURES
At any time, the Company will have the right to dissolve the Trust and,
after satisfaction of the liabilities to creditors of the Trust as required by
applicable law, cause the Subordinated Debentures to be distributed to the
holders of the Trust Securities in liquidation of the Trust. Under current
United States federal income tax law and interpretation and assuming, as
expected, that the Trust is treated as a grantor trust, a distribution of the
Subordinated Debentures should not be a taxable event to holders of the
Preferred Securities. Should there be a change in law, a change in legal
interpretation, a Tax Event or other circumstances, however, the distribution
could be a taxable event to the holders of the Preferred Securities. In
addition, a dissolution of the Trust in which holders of the Preferred
Securities receive cash would be a taxable event to such holders. See "United
States Federal Income Taxation--Receipt of Subordinated Debentures or Cash
upon Dissolution of the Trust."
If the Subordinated Debentures are distributed to the holders of the
Preferred Securities, the Company will use its best efforts to cause the
Subordinated Debentures to be listed on the New York Stock Exchange or on such
other exchange as the Preferred Securities are then listed.
20
<PAGE>
After the date for any distribution of Subordinated Debentures upon
dissolution of the Trust, (i) the Preferred Securities will no longer be
deemed to be outstanding, and (ii) the record holders of the Preferred
Securities will receive a registered global certificate or certificates
representing the Subordinated Debentures to be delivered upon such
distribution in exchange for the Preferred Securities held by such holders.
There can be no assurance as to the market prices for either the Preferred
Securities or the Subordinated Debentures that may be distributed in exchange
for the Preferred Securities if a dissolution and liquidation of the Trust
were to occur. Accordingly, the Preferred Securities that an investor may
purchase, whether pursuant to the offer made hereby or in the secondary
market, or the Subordinated Debentures that an investor may receive if a
dissolution and liquidation of the Trust were to occur, may trade at a
discount to the price that the investor paid to purchase the Preferred
Securities offered hereby.
On March 19, 1996, the Bill, the revenue portion of President Clinton's
fiscal 1997 budget proposal, was released. The Bill would, among other things,
treat as equity, instruments issued by a corporation that have a maximum term
of more than 20 years and that are not shown as indebtedness on the
consolidated balance sheet of the issuer. The above-described provisions of
the Bill were proposed to be effective generally for instruments issued on or
after December 7, 1995. However, on March 29, 1996, the Chairmen of the Senate
Finance and House Ways and Means Committees issued the Joint Statement to the
effect that it was their intention that the effective date of the President's
legislative proposals, if adopted, would be no earlier than the date of
appropriate Congressional action. In addition, subsequent to the publication
of the Joint Statement, Senator Daniel Patrick Moynihan and Representatives
Sam M. Gibbons and Charles B. Rangel wrote letters to Treasury Department
officials concurring with the views expressed in the Joint Statement. Under
current law, it is likely that the Subordinated Debentures will be treated as
indebtedness of the Company and the Company will be able to deduct interest on
the Subordinated Debentures beneficially held by the holders of the Preferred
Securities. However, if the provision of the Bill regarding a 20-year term is
enacted with retroactive effect with regard to the Subordinated Debentures,
the Company will not be entitled to an interest deduction with respect to the
Subordinated Debentures. There can be no assurance that current or future
legislative proposals, adverse judicial decisions, final legislation or
official administrative pronouncements will not affect the ability of the
Company to deduct interest on the Subordinated Debentures, giving rise to a
Tax Event which would permit the Company to cause the redemption of the
Preferred Securities prior to , 2002 (the first date on which
the Company would otherwise be able to cause a redemption of the Preferred
Securities). See "--Tax Event Redemption" and "United States Federal Income
Taxation."
REDEMPTION PROCEDURES
The Trust may not redeem fewer than all of the outstanding Preferred
Securities unless all accrued and unpaid distributions have been paid on all
Preferred Securities for all quarterly distribution periods terminating on or
prior to the date of redemption.
If the Trust gives a notice of redemption in respect of Preferred Securities
(which notice will be irrevocable), then, by 12:00 noon, New York City time,
on the redemption date, provided that Arvin has paid to the Institutional
Trustee a sufficient amount of cash in connection with the related redemption
or maturity of the Subordinated Debentures, the Trust will irrevocably deposit
with the Depositary (as defined herein) funds sufficient to pay the applicable
Redemption Price and will give the Depositary irrevocable instructions and
authority to pay the Redemption Price to the holders of the Preferred
Securities. See "--Book-Entry Issuance-- The Depository Trust Company." If
notice of redemption shall have been given and funds deposited as required,
then, immediately prior to the close of business on the date of such deposit,
distributions will cease to accrue and all rights of holders of the Preferred
Securities so called for redemption will cease, except the right of the
holders of such Preferred Securities to receive the Redemption Price but
without interest on such Redemption Price. 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 that is a Business Day (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
21
<PAGE>
the Company fails to repay the Subordinated Debentures on maturity or payment
of the Redemption Price in respect of Preferred Securities is improperly
withheld or refused and not paid either by the Trust, or by Arvin pursuant to
the Guarantee, distributions on such Preferred Securities will continue to
accrue at the then applicable rate from the original redemption date to the
date of payment, in which case the actual payment date will be considered the
date fixed for redemption for purposes of calculating the Redemption Price.
In the event that fewer than all of the outstanding Preferred Securities are
to be redeemed, the Preferred Securities will be redeemed as described under
"--Book-Entry Issuance--The Depository Trust Company."
If a partial redemption of the Preferred Securities would result in the
delisting of the Preferred Securities by a national securities exchange or
other organization on which the Preferred Securities are then listed, the
Company, pursuant to the Indenture, will only redeem the Subordinated
Debentures in whole and, as a result, the Trust may only redeem the Preferred
Securities in whole.
Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws), Arvin 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.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary liquidation, dissolution,
winding-up or termination of the Trust (each, a "Liquidation"), holders of the
Preferred Securities will be entitled to receive out of the assets of the
Trust, after satisfaction of liabilities to creditors of the Trust as required
by applicable law, distributions in an amount equal to the aggregate of the
stated liquidation amount of $25 per Preferred Security plus accrued and
unpaid distributions thereon to the date of payment (the "Liquidation
Distribution"), unless, in connection with such Liquidation, Subordinated
Debentures in an aggregate stated 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 Preferred Securities have been distributed on a
pro rata basis to the holders of the Preferred Securities in exchange for such
Preferred Securities.
If, upon any such Liquidation, 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 Preferred Securities shall be paid on a pro rata basis. The
holder of the Common Securities will be entitled to receive distributions upon
any such liquidation pro rata with the holders of the Preferred Securities,
except that if a Declaration Event of Default has occurred and is continuing,
the Preferred Securities shall have a preference over the Common Securities
with regard to such distributions.
The Guarantee, when taken together with the back-up undertakings, consisting
of obligations of the Company (including the obligation to pay expenses of the
Trust) as set forth in the Declaration, the Indenture and the Subordinated
Debentures issued to the Trust, provide a full and unconditional guarantee by
the Company of the Preferred Securities.
DISSOLUTION
Pursuant to the Declaration, the Trust shall dissolve upon the earliest of
(i) , 2052, (ii) the bankruptcy of the Sponsor, (iii) 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 obtaining the consent of the holders of at least a majority in
liquidation amount of the Trust Securities or the revocation of the charter of
the Sponsor and the expiration of 90 days after the date of revocation without
a reinstatement thereof, (iv) at the election of the Sponsor, upon
satisfaction of the liabilities of creditors of the Trust as required by
applicable law, provided that all of the Subordinated Debentures shall have
been distributed to holders of the Preferred Securities in liquidation of the
Trust, (v) the entry of a decree of a judicial dissolution of the Sponsor or
the Trust, or (vi) the redemption of all the Trust Securities.
22
<PAGE>
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 Preferred
Securities have been cured, waived or otherwise eliminated. Until such
Declaration Event of Default with respect to the Preferred Securities has 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 with respect to certain matters
under the Declaration, and therefore the Indenture.
Upon the occurrence of an Indenture Event of Default, the Institutional
Trustee, as the sole holder of the Subordinated Debentures, will have the
right under the Indenture to declare the principal of and interest on the
Subordinated Debentures to be immediately due and payable. The principal
amount of the Subordinated Debentures will become immediately due and payable,
without any declaration or other action by the Institutional Trustee or any
other person, upon the occurrence of certain Indenture Events of Default
relating to the voluntary or involuntary bankruptcy of the Company. Each of
the Company and the Administrative Trustees, on behalf of the Trust, are
required to file annually with the Institutional Trustee an officer's
certificate as to the compliance of the Company and the Trust with all
conditions and covenants under the Declaration.
If the Institutional Trustee fails to enforce its rights with respect to the
Subordinated Debentures held by the Trust to the fullest extent permitted by
law, any record holder of Preferred Securities may institute legal proceedings
directly against the Company to enforce the Institutional Trustee's rights
under such Subordinated Debentures without first instituting any legal
proceedings against such Insitutional Trustee or any other person or entity.
In addition, 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,
principal or other required payments on the Subordinated Debentures issued to
the Trust on the date such interest, principal or other payment is otherwise
payable, then a record holder of Preferred Securities may institute a
proceeding directly against the Company for enforcement of payment on
Subordinated Debentures, on or after the respective due dates specified in the
Subordinated Debentures, having a principal amount equal to the aggregate
liquidation amount of the Preferred Securities held by such holder. In
connection with such Direct Action, the Company will be subrogated to the
rights of such record holder of Preferred Securities to the extent of any
payment made by the Company to such record holder of Preferred Securities. The
record holder in the case of the issuance of one or more global Preferred
Securities certificates will be The Depository Trust Company acting at the
direction of the beneficial owners of the Preferred Securities.
VOTING RIGHTS
Except as described herein, under the Trust Act, 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 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 Subordinated Debentures, to (i)
exercise the remedies available under the Indenture with respect to the
Subordinated Debentures, (ii) waive any past Indenture Event of Default that
is waivable under the Indenture, or (iii) exercise any right to rescind or
annul a declaration that the principal of all the Subordinated Debentures
shall be due and payable or consent to any amendment, modification or
termination of the Indenture or the Subordinated Debentures, where such
consent would be required; provided, however, that, where a consent or
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action under the Indenture would require the consent or act of the holders of
greater than a majority in principal amount of Subordinated 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 Subordinated Debentures outstanding. The Institutional Trustee shall
notify all holders of the Preferred Securities of any notice of default
received from the Indenture Trustee with respect to the Subordinated
Debentures. 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 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 the holder of the
Subordinated 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
Subordinated Debentures outstanding. The Institutional Trustee shall not 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 to the effect that, as a result of such action, the Trust will not
fail to be classified as a grantor trust for the purposes of United States
federal income tax.
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 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 Administrative 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
Subordinated 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 Arvin or any entity directly or
indirectly controlling or controlled by, or under direct or indirect common
control with, Arvin, 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--The Depository
Trust Company."
Holders of the Preferred Securities will have no rights to appoint or remove
the Trustees, who may be appointed, removed or replaced solely by Arvin as the
direct or indirect holder of all of the Common Securities.
MODIFICATION OF THE DECLARATION
The Declaration may be modified and amended if approved by the
Administrative Trustees (and in certain circumstances the Institutional
Trustee), provided that, if any proposed amendment provides for, or the
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Administrative Trustees otherwise propose to effect, (i) any action that would
materially adversely affect the powers, preferences or special rights of the
holders of Trust Securities, whether by way of amendment to the Declaration or
otherwise or (ii) the dissolution, winding-up or termination 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 liquidation
amount of the Trust Securities affected thereby; provided, that, if any
amendment or proposal referred to in clause (i) above would materially
adversely affect only the 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 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 for purposes of United States federal income taxation as other
than a grantor trust, (ii) reduce or otherwise materially adversely affect the
powers of the Institutional Trustee in contravention of the Trust Indenture
Act or (iii) cause the Trust to be deemed an "investment company" which is
required to be registered under the Investment Company Act of 1940, as amended
(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 or as otherwise described in the Declaration. The Trust may,
with the consent of the Administrative Trustees and without the consent of the
holders of the Trust Securities 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 of the United States; provided, that (i) if the
Trust is not the survivor, such successor entity either (x) expressly assumes
all of the obligations of the Trust under the Trust Securities or (y)
substitutes for the Preferred 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 Subordinated 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' interests in the new
entity), (vi) such successor entity has a purpose substantially identical to
that of the Trust, (vii) prior to such merger, consolidation, amalgamation or
replacement, Arvin has received an opinion of an 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 Trust Securities
(including any Successor Securities) in any material respect (other than with
respect to any dilution of the holders' interests 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) the Trust will continue to be classified as
a grantor trust for federal income tax purposes, and (viii) Arvin guarantees
the obligations of such successor entity under the Successor Securities at
least to the extent provided by the Guarantee. Notwithstanding the foregoing,
the Trust shall not, except with the consent of holders of 100 percent 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.
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EXPENSES AND TAXES
In the Indenture, the Company has agreed to pay all costs and expenses of
the Trust (including costs and expenses relating to the organization of the
Trust and the offering, sale and issuance of the Trust Securities, the fees
and expenses of the Trustees and the costs and expenses relating to the
operation of the Trust) and to pay any and all taxes and all costs and
expenses with respect thereto (other than United States withholding taxes) to
which the Trust might become subject. The foregoing obligations of the Company
under the Indenture are for the benefit of, and shall be enforceable by, any
person to whom any such debts, obligations, costs, expenses and taxes are owed
(a "Creditor") whether or not such Creditor has received notice thereof. Any
such Creditor may enforce such obligations of the Company directly against the
Company, and the Company has irrevocably waived any right or remedy to require
that any such Creditor take any action against the Trust or any other person
before proceeding against the Company. The Company has also agreed in the
Indenture to execute such additional agreements as may be necessary or
desirable to give full effect to the foregoing.
BOOK-ENTRY ISSUANCE--THE DEPOSITORY TRUST COMPANY
The Depository Trust Company ("DTC") will act as securities depositary (the
"Depositary") for the Preferred Securities. The Preferred Securities will
initially be issued as fully-registered securities registered in the name of
Cede & Co. (DTC's nominee). One or more fully-registered global Preferred
Securities certificates, representing the total aggregate number of Preferred
Securities, will be issued and will be delivered to DTC.
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 Preferred
Securities as represented by a global certificate.
DTC has advised the Company and the Trust that it 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 ("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 in DTC
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, 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
transactions through or maintain a direct or indirect custodial relationship
with a Direct Participant ("Indirect Participants"). The rules applicable to
DTC and its Participants are on file with the SEC.
Purchases of Preferred Securities within the DTC system must be made by or
through Direct Participants, which will receive a credit for the Preferred
Securities on DTC's records. The ownership interest of each actual purchaser
of each Preferred Security ("Beneficial Owner") is in turn to be recorded on
the Direct Participants' 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 Preferred Securities. Transfers of ownership interests in the
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 Preferred
Securities, except in the event that use of the book-entry system for the
Preferred Securities is discontinued.
To facilitate subsequent transfers, all the Preferred Securities deposited
by Participants with DTC are registered in the name of DTC's nominee, Cede &
Co. The deposit of Preferred Securities with DTC and their
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registration in the name of Cede & Co. effect no change in beneficial
ownership. DTC has no knowledge of the actual Beneficial Owners of the
Preferred Securities. DTC's records reflect only the identity of the Direct
Participants to whose accounts such 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 Beneficial
Owners that are 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 that may be in effect from time to time.
Redemption notices will be sent to Cede & Co. If less than all of the
Preferred Securities are being redeemed, DTC will reduce pro rata the amount
of the interest of each Direct Participant the Preferred Securities to be
redeemed in accordance with its procedures.
Although voting with respect to the Preferred Securities is limited, in
those cases where a vote is required, neither DTC nor Cede & Co. will itself
consent or vote with respect to Preferred Securities. Under its usual
procedures, DTC would mail an omnibus proxy 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 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 DTC, 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 holder of a beneficial interest in the
Trust.
Distribution payments on the Preferred Securities will be made 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, as is the case with
securities held for the account of customers in bearer form or registered in
"street name," and will be the responsibility of such Participants and not of
DTC, the Trust or Arvin, subject to any statutory or regulatory requirements
to the contrary that may be in effect from time to time. Payment of
distributions to DTC is the responsibility of the Trust, disbursement of such
payments to Direct Participants is the responsibility of DTC, 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 Preferred Security
certificate will not be entitled to receive physical delivery of Preferred
Securities. Accordingly, each Beneficial Owner must rely on the procedures of
DTC to exercise any rights under the Preferred Securities.
DTC may discontinue providing its services as securities depositary with
respect to the 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, Preferred Securities certificates are required to
be printed and delivered. Additionally, the Administrative Trustees (with the
consent of the Company) may decide to discontinue use of the system of book-
entry transfers through DTC (or any successor depositary) with respect to the
Preferred Securities. In that event, certificates for the Preferred Securities
will be printed and delivered. In each of the above circumstances, the Company
will appoint a paying agent with respect to the Preferred Securities.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that Arvin and the Trust believe to be
reliable, but neither the Company nor the Trust takes responsibility for the
accuracy thereof.
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
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forth in the Declaration and the Indenture, in the terms of the Trust
Securities or in the Trust Indenture Act and, after default, shall exercise
the same degree of care and skill 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 Preferred
Securities, unless offered reasonable indemnity by such holder against the
costs, expenses and liabilities which might be incurred thereby. The holders
of 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 and the Indenture. The
Company and its affiliates may have banking relationships with the
Institutional Trustee in the ordinary course of business.
PAYMENT AND PAYING AGENCY
Payments in respect of the Preferred Securities represented by a Global
Security (as defined herein) shall be made to DTC, which shall credit the
relevant accounts at DTC on the applicable distribution dates. In the event
that the certificates for the Preferred Securities are not in book-entry form,
the Trust will maintain an office or agency in the Borough of Manhattan, New
York, New York, where the Preferred Securities may be presented for payment
("Paying Agent"). If Arvin fails to appoint or maintain another entity as
Paying Agent, the Institutional Trustee will act as such.
In the event that the Preferred Securities do not remain in book-entry form,
registration of transfers of Preferred Securities will be effected without
charge by or on behalf of the Trust, but upon payment (with the giving of such
indemnity as the Administrative Trustees may require) in respect of any tax or
other government charges that may be imposed in relation to it. The Trust will
not be required to register or cause to be registered the transfer of
Preferred Securities after such Preferred Securities have been called for
redemption.
GOVERNING LAW
The Declaration and the Preferred Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
MISCELLANEOUS
The Administrative 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 characterized as other than a
grantor trust for United States federal income tax purposes. The Company is
authorized and directed to conduct its affairs so that the Subordinated
Debentures will be treated as indebtedness of Arvin for United States federal
income tax purposes. In this connection, Arvin and the Administrative Trustees
are authorized to take any action, not inconsistent with applicable law, the
certificate of trust of the Trust or the amended and restated articles of
incorporation of Arvin, that each of the Company and the Administrative
Trustees determine in their 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 Preferred Securities or vary the terms thereof.
Holders of the Preferred Securities have no preemptive or similar rights.
DESCRIPTION OF THE GUARANTEE
Set forth below is a summary of information concerning the Guarantee that
will be executed and delivered by Arvin for the benefit of the holders from
time to time of the Preferred Securities. The Guarantee will be qualified as
an indenture under the Trust Indenture Act. The Guarantee Trustee, Wilmington
Trust Company, will act as independent indenture trustee for Trust Indenture
Act purposes under the Guarantee. The terms of the Guarantee will be those set
forth in the Guarantee and those made part of the Guarantee by the Trust
Indenture
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Act. The summary of certain provisions of the Guarantee does not purport to be
complete and is subject to and qualified in its entirety by reference to the
provisions of the form of Guarantee, a copy of which has been filed as an
exhibit to the Registration Statement of which this Prospectus forms a part,
and the Trust Indenture Act. The Guarantee will be held by the Guarantee
Trustee for the benefit of the holders of the Preferred Securities.
GENERAL
Pursuant to the Guarantee, the Company will irrevocably and unconditionally
agree, to the extent set forth therein, to pay in full to the holders of the
Preferred Securities 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 that the Trust may have or assert. The following
payments or distributions with respect to the Preferred Securities to the
extent not paid by the Trust (the "Guarantee Payments") will be subject to the
Guarantee (without duplication): (i) any accrued and unpaid distributions that
are required to be paid on the Preferred Securities, to the extent the Trust
shall have funds available therefor, (ii) the Redemption Price, including all
accrued and unpaid distributions to the date of the redemption, to the extent
the Trust has funds available therefor, with respect to any Preferred
Securities called for redemption by the Trust and (iii) upon a voluntary or
involuntary dissolution, winding-up or termination of the Trust (other than in
connection with the distribution of Subordinated Debentures to the holders of
Preferred Securities or the redemption of all of the Preferred Securities upon
maturity or redemption of the Subordinated Debentures), the lesser of (a) the
aggregate of the liquidation amount and all accrued and unpaid distributions
on such 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 for distribution to holders of 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 Arvin to the holders of
Preferred Securities or by causing the Trust to pay such amounts to such
holders.
The Guarantee will not apply to any payment of distributions on the
Preferred Securities except to the extent the Trust shall have funds available
therefor. If Arvin does not make interest or principal payments on the
Subordinated 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.
Arvin will also irrevocably and unconditionally agree to 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
the occurrence and during the continuation of an Event of Default under the
Indenture, holders of Preferred Securities under the Guarantee shall have
priority over holders of Common Securities under the Common Securities
Guarantee with respect to distributions and payments on liquidation,
redemption or otherwise.
CERTAIN COVENANTS OF THE COMPANY
In the Guarantee, Arvin will covenant that, so long as any Preferred
Securities remain outstanding, if there shall have occurred any event of
default under the Guarantee or a Declaration Event of Default, then (a) Arvin
shall not declare or pay any dividend on, make any distribution with respect
to, or redeem, purchase or acquire, or make a liquidation payment with respect
to, any of its capital stock, (b) Arvin shall not, directly or indirectly, and
shall not allow any of its subsidiaries to, 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
Subordinated Debentures and (c) the Company shall not make any guarantee
payments with respect to the foregoing (other than pursuant to the Guarantee);
provided, however, that the restriction in clause (a) above does not apply (i)
to repurchases or acquisitions of common shares of the Company as contemplated
by any employment arrangement, benefit plan or other similar contract with or
for the benefit of employees, officers or directors entered into in the
ordinary course of business, (ii) as a result of an exchange or conversion of
any class or series of Arvin capital stock for Arvin common shares, provided
that such class or series of Arvin capital stock was outstanding prior to the
occurrence of such event of default under the Guarantee or such Declaration
Event of Default, (iii) to the purchase of fractional interests in shares of
the Company's capital stock pursuant to
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conversion or exchange provisions of such Company capital stock or the
security being converted or exchanged, provided that such Arvin capital stock
or security was outstanding prior to the occurrence of such event of default
under the Guarantee or such Declaration Event of Default, or (iv) to the
payment of any stock dividend where the dividend is paid in the form of the
same stock as that on which the dividend is paid.
MODIFICATION OF THE GUARANTEE; ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights
of holders of Preferred Securities (in which case no consent of such holders
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. The manner of obtaining any such approval of
holders of the Preferred Securities is set forth under "Description of the
Preferred Securities--Voting Rights." 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.
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 record holder
of Preferred Securities may institute a legal proceeding directly against the
Company to enforce the Guarantee Trustee's rights under the Guarantee without
first instituting a legal proceeding against the Trust, the Guarantee Trustee
or any other person or entity. In addition, if the Company has failed to make
a Guarantee Payment, a record holder of Preferred Securities may directly
institute a proceeding against the Company for enforcement of the Guarantee
for such payment to the record holder of the Preferred Securities of the
principal of or interest on the Subordinated Debentures on or after the
respective due dates specified in the Subordinated Debentures, and the amount
of the payment will be based on the holder's pro rata share of the amount due
and owing on all of the Preferred Securities. The Company has waived 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. The
record holder in the case of the issuance of one or more global Preferred
Securities certificates will be DTC acting at the direction of its Direct
Participants, who in turn will be acting at the direction of the beneficial
owners of the Preferred Securities.
The Company will be required to provide annually to the Guarantee Trustee a
statement as to the performance by the Company of certain of its obligations
under the Guarantee and as to any default in such performance.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, prior to the occurrence of a default, undertakes to
perform only such duties as are specifically set forth in the Guarantee and,
after default, shall exercise the same degree of care and skill 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. The Guarantee
Trustee also serves as Institutional Trustee and Debt Trustee. The Company and
its affiliates may have a banking relationship with the Guarantee Trustee in
the ordinary course of business.
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TERMINATION OF THE GUARANTEE
The Guarantee will terminate as to the Preferred Securities (a) upon full
payment of the Redemption Price of all Preferred Securities, (b) upon
distribution of the Subordinated Debentures held by the Trust to the holders
of all the Preferred Securities, or (c) upon full payment of the amounts
payable in accordance with the Declaration upon dissolution 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.
STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of Arvin and will rank
(i) subordinate and junior in right of payment to all other liabilities of
Arvin, including the Subordinated Debentures, except those liabilities of
Arvin made pari passu or subordinate by their terms, (ii) pari passu with the
most senior preferred stock, if any, now or hereafter issued by Arvin and with
any guarantee now or hereafter entered into by Arvin in respect of any
preferred stock of any affiliate of Arvin, and (iii) senior to Arvin's common
shares. The terms of the Preferred Securities provide that each holder of
Preferred Securities 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 Company to enforce its rights under the guarantee without
instituting a legal proceeding against any other person or entity).
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 SUBORDINATED DEBENTURES
Set forth below is a description of the terms of the Subordinated Debentures
in which the Trust will invest the proceeds from the issuance and sale of the
Trust Securities. The following summary of the principal terms does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, the Indenture, dated as of , 1996, between Arvin
and Wilmington Trust Company, as Trustee (the "Debt Trustee"), as supplemented
by a First Supplemental Indenture, dated as of , 1996 (as so
supplemented, the "Indenture"), the forms of which are filed as Exhibits to
the Registration Statement of which this Prospectus forms a part. The terms of
the Subordinated Debentures will include those stated in the Indenture and
those made a part of the Indenture by reference to the Trust Indenture Act.
Certain capitalized terms used herein are defined in the Indenture.
The Company will have the right, at any time, to dissolve the Trust and,
after satisfaction of the liabilities to creditors of the Trust as required by
applicable law, cause the Subordinated Debentures to be distributed to the
holders of the Trust Securities in liquidation of the Trust. See "Description
of the Preferred Securities--Distribution of the Subordinated Debentures."
If the Subordinated Debentures are distributed to the holders of the
Preferred Securities, Arvin will use its best efforts to have the Subordinated
Debentures listed on the New York Stock Exchange or on such other exchange on
which the Preferred Securities are then listed.
GENERAL
The Subordinated Debentures will be issued as unsecured subordinated debt
under the Indenture. The Indenture does not limit the aggregate principal
amount of debt securities which may be issued thereunder and
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provides that the debt securities may be issued thereunder from time to time
in one or more series. However, the Subordinated Debentures, as a separate
series of debt securities, will be limited in aggregate principal amount to
$103,100,000, such amount being the sum of the aggregate stated liquidation
amount of the Preferred Securities and the Common Securities.
The Subordinated Debentures are not subject to a sinking fund provision. The
entire principal amount of the Subordinated Debentures will mature and become
due and payable, together with any accrued and unpaid interest thereon
including Additional Interest (as defined herein), if any, on ,
2037.
If Subordinated Debentures are distributed to holders of Preferred
Securities in liquidation of such holders' interests in the Trust, the Company
presently anticipates that such Subordinated Debentures will initially be
issued in the form of one or more Global Securities. As described herein,
under certain limited circumstances, Subordinated Debentures may be issued in
certificated form in exchange for a Global Security. See "--Book-Entry and
Settlement." In the event that Subordinated Debentures are issued in
certificated form, such Subordinated Debentures will be in denominations of
$25 and integral multiples thereof and may be transferred or exchanged at the
offices described below. Payments on Subordinated Debentures issued as a
Global Security will be made to DTC, a successor depositary or, in the event
that no depositary is used, to a Paying Agent for the Subordinated Debentures.
In the event Subordinated Debentures are issued in certificated form,
principal and interest will be payable, the transfer of the Subordinated
Debentures will be registrable and Subordinated Debentures will be
exchangeable for Subordinated Debentures of other denominations of a like
aggregate principal amount at the corporate trust office of the Debt Trustee
in Wilmington, Delaware; provided, that payment of interest may be made at the
option of Arvin by check mailed to the address of the persons entitled
thereto. Notwithstanding the foregoing, so long as the holder of any
Subordinated Debentures is the Institutional Trustee, the payment of principal
and interest on the Subordinated 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
Subordinated Debentures protection in the event of a highly leveraged
transaction or similar transaction involving Arvin that may adversely affect
such holders.
SUBORDINATION
The Indenture provides that the Subordinated Debentures are subordinated and
junior in right of payment to all Senior Indebtedness of Arvin, whether now
existing or hereafter incurred. No payment of principal (including redemption
payments, if any), premium, if any, or interest on, the Subordinated
Debentures may be made if (i) any Senior Indebtedness of Arvin is not paid
when due, and any applicable grace period with respect to such default has
ended and such default has not been cured or waived or ceased to exist, or
(ii) the maturity of any Senior Indebtedness of Arvin has been accelerated
because of a default. Upon any payment by or distribution of assets of Arvin
to creditors upon any dissolution, winding-up, liquidation or reorganization,
whether voluntary or involuntary, or in bankruptcy, insolvency, receivership
or other proceedings, all amounts due on all Senior Indebtedness of Arvin must
be paid in full, or payment provided for in money in accordance with its
terms, before the holders of Subordinated Debentures are entitled to receive
or retain any payment. Upon payment in full of all amounts due on Senior
Indebtedness then outstanding, the rights of the holders of the Subordinated
Debentures will be subrogated to the rights of the holders of Senior
Indebtedness of Arvin to receive payments or distributions applicable to
Senior Indebtedness until all amounts owing on the Subordinated Debentures are
paid in full.
The term "Senior Indebtedness" means, with respect to Arvin, (i) the
principal, premium, if any, and interest in respect of (A) indebtedness of
Arvin for money borrowed and (B) indebtedness evidenced by securities,
debentures, bonds or other similar instruments issued by Arvin, (ii) all
capital lease obligations of Arvin, (iii) all obligations of Arvin issued or
assumed as the deferred purchase price of property, all conditional sale
obligations of Arvin and all obligations of Arvin under any title retention
agreement (but excluding trade accounts payable arising in the ordinary course
of business), (iv) all obligations of Arvin for the reimbursement
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on any letter of credit, banker's acceptance, security purchase facility or
similar credit transaction, (v) all obligations of the type referred to in
clauses (i) through (iv) above of other persons for the payment of which Arvin
is responsible or liable as obligor, guarantor or otherwise, (vi) all
obligations of the type referred to in clauses (i) through (v) above of other
persons secured by any lien on any property or asset of Arvin (whether or not
such obligation is assumed by Arvin) and (vii) all obligations of the Company
under guarantees in respect of operating lease payments of its subsidiaries or
under guarantees in respect of the obligations of any trust, partnership or
other entity that has been or is established as a lease financing entity of
the Company ("a Lease Financing Entity") which guarantees were, in either
case, incurred in connection with the issuance by such Lease Financing Entity
of indebtedness or other securities, except in each case for (1) any such
indebtedness that is by its terms subordinated to or pari passu with the
Subordinated Debentures, and (2) any indebtedness between or among the Company
and its affiliates, including all other debt securities and guarantees in
respect of those debt securities (other than guarantees referred to in clause
(vii) above) issued to any trust, or a trustee of such trust, partnership or
other entity affiliated with Arvin that is a financing vehicle of Arvin (a
"financing entity") in connection with the issuance by such financing entity
of securities that are similar to the Preferred Securities. Such Senior
Indebtedness shall continue to be Senior Indebtedness and be entitled to the
benefits of the subordination provisions irrespective of any amendment,
modification or waiver of any term of such Senior Indebtedness.
The Indenture does not limit the aggregate amount of Senior Indebtedness
that may be issued by Arvin. As of September 29, 1996, Senior Indebtedness of
Arvin aggregated approximately $472 million. The Company's obligations under
the Subordinated Debentures will also be effectively subordinated to all
existing and future obligations of Arvin's subsidiaries.
CERTAIN COVENANTS OF THE COMPANY
If (i) there shall have occurred any event that would constitute an
Indenture Event of Default or (ii) Arvin shall be in default with respect to
its payment of any obligations under the Guarantee or the Common Securities
Guarantee, or (iii) Arvin shall have given notice of its election to defer
payments of interest on the Subordinated Debentures by extending the interest
payment period, and such period, or any extension thereof, shall be
continuing, 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, (b) the Company
shall not, directly or indirectly, and shall not allow any of its subsidiaries
to, 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 Subordinated Debentures, and (c) Arvin shall not
make any guarantee payments with respect to the foregoing (other than pursuant
to the Guarantee); provided, however, that the restriction in clause (a) above
does not apply (i) to repurchases or acquisitions of common shares of the
Company as contemplated by any employment arrangement, benefit plan or similar
contract with or for the benefit of employees, officers or directors entered
into in the ordinary course of business, (ii) as a result of an exchange or
conversion of any class or series of the Company's capital stock for common
shares, provided that such class or series of the Company's capital stock was
outstanding prior to the occurrence of such Indenture Event of Default, (iii)
to 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, provided that such capital stock
or security was outstanding prior to the occurrence of such Indenture Event of
Default, or (iv) to the payment of any stock dividend by the Company where the
dividend is paid in the form of the same stock as that on which the dividend
is paid.
For so long as the Trust Securities remain outstanding, Arvin will covenant
(i) to directly or indirectly maintain 100% ownership of the Common Securities
of the Trust; provided, however, that any permitted successor of Arvin under
the Indenture may succeed to the Company's ownership of such Common
Securities, (ii) not to cause, as sponsor of the Trust, or to permit, as
holder of the Common Securities, the dissolution, winding-up or termination of
the Trust, except in connection with a distribution of the Subordinated
Debentures as provided in the Declaration and in connection with certain
mergers, consolidations or amalgamations, each as
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permitted by the Declaration, and (iii) to use its reasonable efforts to cause
the Trust (a) to remain a statutory business trust, except in connection with
the distribution of Subordinated Debentures to the holders of Trust Securities
upon dissolution of the Trust, the redemption of all of the Trust Securities
of the Trust, or certain mergers, consolidations or amalgamations, each as
permitted by the Declaration, and (b) to otherwise continue to be classified
for United States federal income tax purposes as a grantor trust.
OPTIONAL REDEMPTION
Arvin shall have the right to redeem the Subordinated Debentures, (i) in
whole or in part, from time to time, on or after , 2002, or (ii)
at any time in whole (but not in part) within 90 days following the occurrence
of a Tax Event, upon not less than 30 nor more than 60-days' notice, at a
redemption price equal to 100% of the principal amount to be redeemed plus any
accrued and unpaid interest, including Additional Interest, if any, to the
redemption date. See "Description of the Preferred Securities--Tax Event
Redemption." If a partial redemption of the Preferred Securities resulting
from a partial redemption of the Subordinated Debentures would result in the
delisting of the Preferred Securities by such exchange on which the Preferred
Securities are then listed, Arvin may only redeem the Subordinated Debentures
in whole. Arvin is also prohibited from redeeming the Subordinated Debentures
in part unless all accrued but unpaid interest has been paid on all
outstanding Subordinated Debentures for all quarterly interest periods
terminating on or prior to the redemption date.
PROPOSED TAX LEGISLATION
Certain tax law changes have been proposed that may, if enacted, deny
corporate issuers a deduction for interest in respect of certain debt
obligations, such as the Subordinated Debentures. See "United States Federal
Income Taxation--Proposed Tax Law Changes."
INTEREST
Each Subordinated Debenture shall bear interest 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 Subordinated Debenture is registered, subject to certain
exceptions, at the close of business on the Business Day next preceding such
Interest Payment Date. In the event the Subordinated Debentures shall not
continue to remain in book-entry form, Arvin shall have the right to select
record dates, which shall be more than one Business Day 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 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 per 90-day
period. In the event that any date on which interest is payable on the
Subordinated 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.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
Arvin shall have the right at any time, and from time to time, to defer
payments of interest on the Subordinated Debentures by extending the interest
payment period for a period not exceeding 20 consecutive quarters (but not
beyond the maturity date of the Subordinated Debentures), at the end of which
Extension Period, Arvin shall pay all interest then accrued and unpaid
(including any Additional Interest) together with interest thereon compounded
quarterly at the rate specified for the Subordinated Debentures to the extent
permitted by applicable law ("Compound Interest"). In the event the Company
exercises this right, then during any Extension Period, (a) the Company shall
not declare or pay any dividend on, make any distribution with respect to, or
redeem, purchase, acquire or make a liquidation payment with respect to any of
its capital stock, (b) the Company shall not, directly or indirectly, and
shall not allow any of its subsidiaries to, make any payment
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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 Subordinated Debentures and (c) the Company shall not make any
guarantee payments with respect to the foregoing (other than pursuant to the
Guarantee); provided, however, that, the restriction in clause (a) above does
not apply (i) to repurchases or acquisitions of common shares of the Company
as contemplated by any employment arrangement, benefit plan or other similar
contract with or for the benefit of employees, officers or directors entered
into in the ordinary course of business, (ii) as a result of an exchange or
conversion of any class or series of the Company's capital stock for common
shares, provided that such class or series of the Company's capital stock was
outstanding prior to the date upon which the Company gives notice of its
election of such Extension Period, (iii) to the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion
or exchange provisions of such Company capital stock or the security being
converted or exchanged, provided that such capital stock or security was
outstanding prior to the date upon which the Company gives notice of its
election of such Extension Period, or (iv) to the payment of any stock
dividend by the Company where the dividend is paid in the form of the same
stock as that on which the dividend is paid. Prior to the termination of any
such Extension Period, Arvin 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 exceed 20
consecutive quarters or extend beyond the maturity date of the Subordinated
Debentures. Upon the termination of any Extension Period and the payment of
all amounts then due, Arvin may commence a new Extension Period, subject to
the requirements set forth in this section. No interest during an Extension
Period, except at the end thereof, shall be due and payable. At the end of the
Extension Period, Arvin will pay all interest accrued and unpaid on the
Subordinated Debentures, including any Additional Interest and Compound
Interest, to the holders in whose names the Subordinated Debentures are
registered on the first record date after the end of the Extension Period.
Arvin has no present intention of exercising its right to defer payments of
interest by extending the interest payment period on the Subordinated
Debentures. See "--Certain Covenants to the Company."
If the Institutional Trustee shall be the sole holder of the Subordinated
Debentures, Arvin shall give the Administrative Trustees and the Institutional
Trustee notice of its election of such Extension Period at least one Business
Day before the earlier of (i) the date distributions on the Preferred
Securities are payable or (ii) the date the Administrative 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 date or the date such distribution is payable. The Administrative
Trustees shall give notice of Arvin'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 Subordinated Debentures, Arvin shall give the
holders of the Subordinated Debentures notice of its election of such
Extension Period ten Business Days prior to the earlier of (i) the Interest
Payment Date or (ii) the date upon which Arvin is required to give notice to
the New York Stock Exchange (or other applicable self-regulatory organization)
or to holders of the Subordinated Debentures of the record or payment date of
such related interest payment.
ADDITIONAL INTEREST
If at any time the Trust or the Institutional Trustee 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, Arvin will pay as additional
interest ("Additional Interest") on the Subordinated 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 equal the amounts the Trust and the
Institutional Trustee would have received had no such taxes, duties,
assessments or other governmental charges been imposed.
INDENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events, which has occurred and is continuing, constitutes an "Event of
Default" with respect to the Subordinated Debentures:
(a) default in payment of interest on the Subordinated Debentures,
including any Additional Interest in respect thereof, when due and
continuance of such default for a period of 30 days; provided, however,
that a valid extension of the interest payment period by Arvin shall not
constitute a default in the payment of interest for this purpose; or
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(b) default in payment of principal or premium, if any, on the
Subordinated Debentures when due whether at maturity, upon redemption, by
declaration or otherwise; or
(c) failure to observe or perform any other covenant or agreement with
respect to the Subordinated Debentures contained in the Indenture or
established pursuant thereto for 90 days after written notice of such
failure shall have given to Arvin by the Debt Trustee or to Arvin and the
Debt Trustee by the holders of at least 25% in principal amount of the
outstanding Subordinated Debentures; or
(d) certain events of bankruptcy or reorganization of the Company; or
(e) the voluntary or involuntary dissolution, winding-up or termination
of the Trust, except in connection with the distribution of Subordinated
Debentures to the holders of Preferred Securities upon dissolution of the
Trust, the redemption of all outstanding Trust Securities of the Trust and
certain mergers, consolidations or amalgamations permitted by the
Declaration.
The Indenture provides that if an Event of Default described in clauses (a),
(b), (c) and (e) of the preceding paragraph occurs and is continuing with
respect to the Subordinated Debentures, either the Debt Trustee or the holders
of not less than 25% in aggregate principal amount of the outstanding
Subordinated Debentures may declare, by written notice to the Company, the
principal of all of the Subordinated Debentures immediately due and payable.
If an Event of Default described in clause (d) of the preceding paragraph
occurs and is continuing, then the principal amount of the Subordinated
Debentures, together with the principal amount of all other series of debt
securities issued under the Indenture, will become immediately due and
payable, without any declaration or action on the part of the Debt Trustee or
any holder of the Subordinated Debentures.
Under the Indenture, the holders of a majority in aggregate principal amount
of the Subordinated Debentures have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Debt
Trustee with respect to the Subordinated Debentures. The holders of a majority
in aggregate principal amount of the Subordinated Debentures may also waive,
on behalf of the holders of all of the Subordinated Debentures, any past
default, except (i) a default in the payment of principal, premium, if any, 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, and any applicable premium has been deposited with the Debt
Trustee) or (ii) a default in the covenants described in the first paragraph
under "--Certain Covenants of the Company." The holders of a majority in
aggregate principal amount of the Subordinated Debentures may annul any
declaration accelerating the maturity of the Subordinated Debentures made in
accordance with the preceding paragraph and waive the default on which such
acceleration was based if the default has been cured and a sum sufficient to
pay all matured installments of interest, principal due (other than by
acceleration) and premium, if any, on the Subordinated Debentures has been
deposited with the Debt Trustee.
Upon the occurrence of an Event of Default under the Indenture, holders of a
majority in principal amount of the Preferred Securities will have the right
to direct the Institutional Trustee to exercise its rights and remedies under
the Indenture as sole holder of the Subordinated Debentures. In addition, if
the Event of Default is due to the failure of the Company to pay interest or
principal on the Subordinated Debentures, when due, holders of the Preferred
Securities may institute a Direct Action against the Company. See "Description
of the Preferred Securities--Declaration Event of Default," "--Voting Rights,"
and "Effect of Obligations under the Subordinated Debentures and the
Guarantee."
BOOK-ENTRY AND SETTLEMENT
If Subordinated Debentures are distributed to holders of Preferred
Securities in liquidation of such holders' interests in the Trust, the Company
anticipates that the Subordinated 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, Subordinated Debentures represented by the Global Security
will not be exchangeable for, and will not otherwise be issuable as,
Subordinated Debentures in definitive 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.
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The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of such securities in definitive form. Such laws may
impair the ability to transfer beneficial interests in such a Global Security.
Except as provided below, owners of beneficial interests in such a Global
Security will not be entitled to receive physical delivery of Subordinated
Debentures in definitive 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 Subordinated 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 Subordinated Debentures are distributed to holders of Preferred
Securities in liquidation of such holders' interests in the Trust, DTC will
act as securities depositary for the Subordinated Debentures. For a
description of DTC and the specific terms of the depositary arrangements, see
"Description of the Preferred Securities--Book-Entry Issuance--The Depository
Trust Company." As of the date of this Prospectus, the description therein of
DTC's book-entry system and DTC's practices as they relate to purchases,
transfers, notices and payments with respect to the Preferred Securities apply
in all material respects to any debt obligations represented by one or more
Global Securities held by DTC. Arvin may appoint a successor to DTC or any
successor depositary in the event DTC or such successor depositary is unable
or unwilling to continue as a depositary for the Global Securities.
None of Arvin, the Trust, the Institutional Trustee, the Debt Trustee, any
paying agent and any other agent of Arvin, the Institutional Trustee 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 Subordinated Debentures or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
DISCONTINUANCE OF THE DEPOSITARY'S SERVICES
A Global Security shall be exchangeable for Subordinated Debentures
registered in the names of persons other than the Depositary or its nominee
only if (i) the Depositary notifies Arvin 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 or (iii) Arvin, in its sole discretion,
determines that such Global Security shall be so exchangeable. Any Global
Security that is exchangeable pursuant to the preceding sentence shall be
exchangeable for Subordinated Debentures registered in such names as the
Depositary shall direct. It is expected that such directions will be based
upon instructions received by the Depositary from its Participants with
respect to ownership of beneficial interests in such Global Security.
In the event the Subordinated Debentures are not represented by one or more
Global Securities, certificates evidencing Subordinated Debentures may be
presented for registration of transfer (with the form of transfer endorsed
thereon duly executed) or exchange, at the corporate trust office of the Debt
Trustee or such other location designated by Arvin for such purpose with
respect to the Subordinated Debentures without service charge and upon payment
of any taxes and other governmental charges as described in the Indenture.
Arvin has initially appointed the Debt Trustee as security registrar with
respect to the Subordinated Debentures. Arvin may at any time rescind the
designation of any such security registrar or approve a change in the location
through which any such security registrar acts, except that Arvin will be
required to maintain a transfer agent at the place of payment. Arvin may at
any time designate additional transfer agents with respect to the Subordinated
Debentures.
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In the event of any redemption in part, Arvin shall not be required to (i)
issue, exchange or register the transfer of Subordinated Debentures during a
period beginning at the opening of business 15 days before the date of the
mailing of a notice of redemption of less than all of the Subordinated
Debentures and ending at the close of business on the date of such mailing and
(ii) register the transfer of or exchange any Subordinated Debentures called
for redemption.
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting Arvin and the Debt Trustee,
with the consent of the holders of at least a majority in principal amount of
the Subordinated Debentures (and any other series of subordinated debt
securities under the Indenture affected thereby), to modify the Indenture or
any supplemental indenture affecting the rights of the holders of the
Subordinated Debentures; provided that no such modification may, without the
consent of the holder of each outstanding Subordinated Debenture (or, if
applicable, other series of subordinated debt securities) affected thereby,
(i) extend the fixed maturity of the Subordinated Debentures, or 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 or
(ii) reduce the aforesaid percentage of Subordinated Debentures the consent of
the holders of which is required for any such modification without the consent
of the holders of each Subordinated Debenture affected. In the event that the
consent of the Institutional Trustee, as holder of the Subordinated
Debentures, is required with respect to any modification or amendment, the
Institutional Trustee is required, under the Declaration, to request the
direction of the holders of the Trust Securities with respect to such
modification or amendment and to vote on such matter as directed by the
holders of a majority in liquidation amount of the Trust Securities. See
"Description of the Preferred Securities--Voting Rights."
In addition, Arvin and the Debt Trustee may execute, without the consent of
holders of the Subordinated Debentures, any supplemental indenture for certain
other customary purposes, including the creation of any new series of debt
securities.
CONSOLIDATION, MERGER AND SALE
The Company shall not consolidate with, or merge into, any corporation or
convey or transfer its properties and assets substantially as an entirety to
any entity unless (a) the successor entity is a corporation organized under
the laws of any state in the United States or the District of Columbia and
expressly assumes the obligations of the Company under the Indenture, and (b)
immediately thereafter no Event of Default and no event which, after notice or
lapse of time, or both, would become an Event of Default under the Indenture
shall have occurred and be continuing. Upon any such consolidation, merger,
conveyance or transfer, the successor corporation shall succeed to, and be
substituted for, the Company under the Indenture and thereafter the
predecessor corporation shall be relieved of all obligations and covenants
under the Indenture and the Subordinated Debentures.
DEFEASANCE AND DISCHARGE
The Indenture provides that the Company, at the Company's option, will be
discharged from any and all obligations in respect of the Subordinated
Debentures (except for certain obligations to register the transfer or
exchange of Subordinated Debentures, replace stolen, lost or mutilated
Subordinated Debentures, maintain paying agencies and hold moneys for payment
in trust) if the Company deposits, in trust with the Debt Trustee, money or
U.S. government obligations which through the payment of interest thereon and
principal thereof in accordance with their terms will provide money, in an
amount sufficient to pay all the principal of, and interest and premium, if
any, on, the Subordinated Debentures on the dates such payments are due in
accordance with the terms of such Subordinated Debentures. To exercise any
such option, the Company is required to deliver to the Debt Trustee an opinion
of counsel, based upon then applicable U.S. federal income tax law, to the
effect that the deposit and related defeasance would not cause the holders of
the Subordinated Debentures of such series to recognize income, gain or loss
for federal income tax purposes and will be subject to United States federal
income tax on the same amount and in the same manner and at the same times as
would have been the case if such deposit, defeasance or discharge had not
occurred.
38
<PAGE>
GOVERNING LAW
The Indenture and the Subordinated Debentures will be governed by, and
construed in accordance with, the internal laws of the State of New York.
INFORMATION CONCERNING THE DEBT TRUSTEE
The Debt Trustee, prior to default, undertakes to perform only such duties
as are specifically set forth in the Indenture and, after default, shall
exercise the same degree of care and skill as a prudent individual would
exercise in the conduct of his or her own affairs. Subject to such provision,
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 Subordinated
Debentures, unless offered reasonable indemnity by such holder against the
costs, expenses and liabilities which might be incurred thereby; but the
foregoing shall not relieve the Debt Trustee, upon the occurrence of an
Indenture Event of Default, from the obligation to exercise the rights and
powers vested in it by the Indenture and to use, in such exercise, the same
degree of care and skill as a prudent individual would use in the conduct of
his or her own affairs. 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.
The Company and its affiliates may have normal banking relationships with
the Debt Trustee in the ordinary course of business.
MISCELLANEOUS
The Indenture provides that Arvin will pay all fees and expenses related to
(i) the offering of the Trust Securities and the Subordinated Debentures and
(ii) the organization, operation and termination of the Trust, including the
fees and expenses of the Trustees.
The Company will have the right at all times to assign any of its rights or
obligations under the Indenture to a direct or indirect wholly-owned
subsidiary of Arvin; provided that, in the event of any such assignment, Arvin
will remain liable for all such obligations. Subject to the foregoing, the
Indenture will be binding upon and inure to the benefit of the parties thereto
and their respective successors and assigns. The Indenture provides that it
may not otherwise be assigned by the parties thereto.
EFFECT OF OBLIGATIONS UNDER THE
SUBORDINATED DEBENTURES AND THE GUARANTEE
As set forth in the Declaration, the sole purpose of the Trust is to (i)
issue the Trust Securities evidencing undivided beneficial interests in the
assets of the Trust, (ii) invest the proceeds from such issuance and sale in
the Subordinated Debentures and (iii) 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
Subordinated Debentures, such payments will be sufficient to cover
distributions and payments due on the Trust Securities because: (i) the
aggregate principal amount of Subordinated Debentures will be equal to the sum
of the aggregate liquidation amount of the Trust Securities; (ii) the interest
rate and the interest and other payment dates on the Subordinated Debentures
will match the distribution rate and distribution and other payment dates for
the Preferred Securities; (iii) Arvin shall pay any costs, expenses, debts and
obligations (other than with respect to the Trust Securities) related to the
Trust and (iv) the Declaration provides that the Trustees shall not 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 Preferred Securities (to the extent funds therefor
are available) are guaranteed by Arvin as and to the extent set
39
<PAGE>
forth under "Description of the Guarantee." If Arvin does not make interest
and/or principal payments on the Subordinated Debentures purchased by the
Trust, the Trust will not have sufficient funds to pay distributions on the
Preferred Securities. The Guarantee will not apply to the payment of
distributions and other payments on the Preferred Securities unless and until
the Trust has sufficient funds to make such distributions or other payments.
The Guarantee will constitute an unsecured obligation of the Company and will
rank (i) subordinate and junior in right of payment to all other liabilities
of the Company except those made pari passu or subordinate by their terms,
(ii) pari passu with the most senior preferred stock now or hereafter issued
by the Company and with any guarantee now or hereafter entered into by the
Company in respect of any preferred stock of any affiliate of the Company and
(iii) senior to the Company's common shares.
The Guarantee, when taken together with the back-up undertakings, consisting
of obligations of the Company as set forth in the Declaration (including the
obligation to pay expenses of the Trust), the Indenture and the Subordinated
Debentures issued to the Trust, provide a full and unconditional guarantee by
the Company of the Preferred Securities. If the Guarantee Trustee fails to
enforce the Guarantee, any record holder of Preferred Securities may institute
a legal proceeding directly against the Company to enforce the Guarantee
Trustee's rights under the Guarantee without first instituting a legal
proceeding against the Trust, the Guarantee Trustee or any other person or
entity. In addition, if the Company has failed to make a Guarantee Payment, a
record holder of Preferred Securities may directly institute a proceeding
against the Company for enforcement of the Guarantee for such payment to the
record holder of the Preferred Securities of the principal of or interest on
the Subordinated Debentures on or after the respective due dates specified in
the Subordinated Debentures, and the amount of the payment will be based on
the holder's pro rata share of the amount due and owing on all of the
Preferred Securities. The Company has waived 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. The record holder in
the case of the issuance of one or more global Preferred Securities
certificates will be DTC acting at the direction of its Direct Participants,
who in turn will be acting at the direction of the beneficial owners of the
Preferred Securities.
If the Institutional Trustee fails to enforce its rights with respect to the
Subordinated Debentures held by the Trust to the fullest extent permitted by
law, any record holder of Preferred Securities may institute legal proceedings
directly against the Company to enforce the Institutional Trustee's rights
under the Subordinated Debentures without first instituting any legal
proceedings against the Institutional Trustee or any other person or entity.
In addition, 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,
principal or other required payment on the Subordinated Debentures on the date
such interest, principal or other payment is otherwise payable, then a record
holder of Preferred Securities may institute Direct Action against the Company
for enforcement of payment on the Subordinated Debentures on or after the
respective due dates specified in the Subordinated Debentures. To the extent
the Company makes a payment to a record holder of Preferred Securities in
connection with proceedings by such record holder directly against the
Company, the Company will be subrogated to the rights of the record holder of
Preferred Securities to the extent of payments made by the Company to the
record holder. The record holder in the case of the issuance of one or more
global Preferred Securities certificates will be DTC acting at the direction
of its Direct Participants, who in turn will be acting at the direction of the
beneficial owners of the Preferred Securities.
UNITED STATES FEDERAL INCOME TAXATION
GENERAL
In the opinion of Schiff Hardin & Waite, special tax counsel to the Company
and the Trust, the following is a summary of certain of the material United
States federal income tax consequences of the purchase, ownership and
disposition of Preferred Securities. Unless otherwise stated, this summary
deals only with Preferred Securities held as capital assets by holders who
purchase the Preferred Securities upon original issuance ("Initial
40
<PAGE>
Holders"). It does not deal with special classes of holders such as banks,
thrifts, real estate investment trusts, regulated investment companies,
insurance companies, dealers in securities or currencies, tax-exempt
investors, or persons that will hold the Preferred Securities as a position in
a "straddle," as part of a "synthetic security" or "hedge," as part of a
"conversion transaction" or other integrated investment, or as other than a
capital asset. This summary also does not address the tax consequences to
persons that have a functional currency other than the U.S. Dollar or the tax
consequences to shareholders, partners or beneficiaries of a holder of
Preferred Securities. Further, it does not include any description of any
alternative minimum tax consequences or the tax laws of any state or local
government or of any foreign government that may be applicable to the
Preferred Securities. This summary is based on the Internal Revenue Code of
1986, as amended (the "Code"), Treasury regulations thereunder and
administrative and judicial interpretations thereof, as of the date hereof,
all of which are subject to change, possibly on a retroactive basis.
CLASSIFICATION OF THE SUBORDINATED DEBENTURES
In connection with the issuance of the Subordinated Debentures, Schiff
Hardin & Waite, special tax counsel to the Company and the Trust, will render
its opinion generally to the effect that under then current law and assuming
full compliance with the terms of the Indenture (and certain other documents),
and based on certain facts and assumptions contained in such opinion, the
Subordinated Debentures will be classified for United States federal income
tax purposes as indebtedness of Arvin.
CLASSIFICATION OF THE TRUST
In connection with the issuance of the Preferred Securities, Schiff Hardin &
Waite, special tax counsel to the Company and the Trust, will render its
opinion generally to the effect that, under then current law and assuming full
compliance with the terms of the Declaration and the Indenture (and certain
other documents), and based on certain facts and assumptions contained in such
opinion, the Trust will be classified for United States federal income tax
purposes as a grantor trust and not as an association taxable as a
corporation.
Accordingly, for United States federal income tax purposes, each holder of
Preferred Securities generally will be considered the owner of an undivided
interest in the Subordinated Debentures, and each holder will be required to
include in its gross income any OID accrued with respect to its allocable
share of those Subordinated Debentures.
ORIGINAL ISSUE DISCOUNT
Because the Company has the option, under the terms of the Subordinated Debt
Securities, to defer payments of interest by extending interest payment
periods for up to 20 quarters, all of the stated interest payments on the
Subordinated Debentures will be treated as "original issue discount." Holders
of debt instruments issued with OID must include that discount in income on an
economic accrual basis before the receipt of cash attributable to the
interest, regardless of their method of tax accounting. Generally, all of a
holder's taxable interest income with respect to the Subordinated Debentures
will be accounted for as OID, and actual distributions of stated interest will
not be separately reported as taxable income. The amount of OID that accrues
in any month will approximately equal the amount of the interest that accrues
on the Subordinated Debentures in that month at the stated interest rate. In
the event that the interest payment period is extended, holders will continue
to accrue OID approximately equal to the amount of the interest payment due at
the end of the extended interest payment period on an economic accrual basis
over the length of the extended interest period.
Because income on the Preferred Securities will constitute OID, corporate
holders of Preferred Securities will not be entitled to a dividends-received
deduction with respect to any income recognized with respect to the Preferred
Securities.
41
<PAGE>
MARKET DISCOUNT AND BOND PREMIUM
Holders of Preferred Securities other than Initial Holders may be considered
to have acquired their undivided interests in the Subordinated Debentures with
market discount or acquisition premium as such phrases are defined for United
States federal income tax purposes. Such holders are advised to consult their
tax advisors as to the income tax consequences of the acquisition, ownership
and disposition of the Preferred Securities.
RECEIPT OF SUBORDINATED DEBENTURES OR CASH UPON DISSOLUTION OF THE TRUST
At any time, the Company will have the right to dissolve the Trust and,
after satisfaction of liabilities to creditors of the Trust as provided by
applicable law, cause the Subordinated Debentures to be distributed to holders
in exchange for the Trust Securities and in liquidation of the Trust. See
"Description of the Preferred Securities--Distribution of the Subordinated
Debentures." Under current law, such a distribution, for United States federal
income tax purposes, would be treated as a non-taxable event to each holder,
and each holder would receive an aggregate tax basis in the Subordinated
Debentures equal to such holder's aggregate tax basis in its Preferred
Securities. A holder's holding period in the Subordinated Debentures so
received upon dissolution of the Trust would include the period during which
the Preferred Securities were held by such holder. If, however, the related
special event is a Tax Event which results in the Trust being treated as an
association taxable as a corporation, the distribution would likely constitute
a taxable event to holders of the Preferred Securities.
Under certain circumstances described herein (see "Description of the
Preferred Securities"), the Subordinated Debentures may be redeemed for cash
and the proceeds of such redemption distributed to holders in redemption of
their Preferred Securities. Under current law, such a redemption would, for
United States federal income tax purposes, constitute a taxable disposition of
the redeemed Preferred Securities, and a holder could recognize gain or loss
as if it sold such redeemed Preferred Securities for cash. See "--Sales of
Preferred Securities."
SALES OF PREFERRED SECURITIES
A holder that sells Preferred Securities will recognize gain or loss equal
to the difference between its adjusted tax basis in the Preferred Securities
and the amount realized on the sale of such Preferred Securities. A holder's
adjusted tax basis in the Preferred Securities generally will be its initial
purchase price increased by OID previously includable in such holder's gross
income to the date of disposition and decreased by payments received on the
Preferred Securities. Such gain or loss generally will be a capital gain or
loss and generally will be a long-term capital gain or loss if the Preferred
Securities have been held for more than one year.
The Preferred Securities may trade at a price that does not accurately
reflect the value of accrued but unpaid interest with respect to the
underlying Subordinated Debentures. A holder who disposes of his Preferred
Securities between record dates for payments of distributions thereon will be
required to include accrued but unpaid interest on the Subordinated Debentures
through the date of disposition in income as ordinary income, and to add such
amount to his adjusted tax basis in his pro rata share of the underlying
Subordinated Debentures deemed disposed of. To the extent the selling price is
less than the holder's adjusted tax basis (which will include, in the form of
OID, all accrued but unpaid interest) a holder will recognize a capital loss.
Subject to certain limited exceptions, capital losses cannot be applied to
offset ordinary income for United States federal income tax purposes.
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
beneficial owner of Preferred Securities that is not a U.S. person. For
purposes of this discussion, a "U.S. person" means a citizen or resident of
the United States, a corporation or partnership created or organized in the
United States or under the law of the United States or of any State or
political subdivision of the foregoing, any estate whose income is includible
in gross income for U.S. federal income tax purposes regardless of its source
or a "United States Trust." A
42
<PAGE>
"United States Trust" is (a) for taxable years beginning after December 31,
1996, or if the trustee elects to apply the following definition to an earlier
taxable year, any trust if, and only if, (i) a court within the United States
is able to exercise primary supervision over the administration of the trust
and (ii) one or more U.S. trustees have the authority to control all
substantial decisions of the trust, and (b) for all other taxable years, any
trust whose income is includible in gross income for United States federal
income tax purposes regardless of its source.
Under present United States federal income tax law: (i) payments by the
Trust or any of its paying agents to any holder of a Preferred Security who or
which is a United States Alien Holder will not be subject to United States
federal withholding tax; provided that, (a) the beneficial owner of the
Preferred Security does not actually or constructively own 10 percent or more
of the total combined voting power of all classes of stock of Arvin entitled
to vote, (b) the beneficial owner of the Preferred Security is not a
controlled foreign corporation that is related to the Company through stock
ownership, and (c) either (A) the beneficial owner of the Preferred Security
certifies to the Trust or its agent, under penalties of perjury, that it is
not a United States holder and provides its name and address or (B) a
securities clearing organization, bank or other financial institution that
holds customers' securities in the ordinary course of its trade or business (a
"Financial Institution"), and holds the Preferred Security in such capacity,
that certifies to the Trust or its agent, under penalties of perjury, that
such statement has been received from the beneficial owner by it or by a
Financial Institution between it and the beneficial owner and furnishes the
Trust or its agent with a copy thereof; and (ii) a United States Alien Holder
of a Preferred Security will not be subject to United States federal
withholding tax on any gain realized upon the sale or other disposition of a
Preferred Security.
Gain recognized on the disposition of Preferred Securities will be subject
to United States federal income tax if (i) such gain is effectively connected
with a trade or business conducted by such United States Alien Holder within
the United States (in which case the branch profits tax may also apply if the
United States Alien Holder is a foreign corporation), or (ii) in the case of a
United States Alien Holder that is an individual, such United States Alien
Holder is present in the United States for a period or periods aggregating 183
days or more in the taxable year of the sale or exchange and certain other
conditions are met.
If a United States Alien Holder is engaged in a trade or business within the
United States and interest (including original issue discount) and premium, if
any, on Preferred Securities is effectively connected with the conduct of such
trade or business, such United States Alien Holder may be subject to United
States federal income tax on such interest (including original issue discount)
and premium at ordinary federal income tax rates on a net basis (in which case
the branch profits tax may also apply if the United States Alien Holder is a
foreign corporation).
On April 15, 1996, proposed Treasury Regulations (the "Proposed
Regulations") were issued which, if adopted in final form, could affect the
United States taxation of United States Alien Holders, including changing the
certification requirements. The Proposed Regulations are generally proposed to
be effective for payments after 1997, regardless of the issue date of the note
with respect to which such payments were made. It cannot be predicted at this
time whether the Proposed Regulations will become effective as proposed or
what, if any, modifications may be made to them.
PROPOSED TAX LAW CHANGES
On March 19, 1996, the Revenue Reconciliation Bill of 1996, the revenue
portion of President Clinton's fiscal 1997 budget proposal, was released. The
Bill would, among other things, treat as equity, instruments issued by a
corporation that have a maximum term of more than 20 years and that are not
shown as indebtedness on the consolidated balance sheet of the issuer. The
above-described provisions of the Bill were proposed to be effective generally
for instruments issued on or after December 7, 1995. However, on March 29,
1996, the Chairmen of the Senate Finance and House Ways and Means Committees
issued the Joint Statement to the effect that it was their intention that the
effective date of the President's legislative proposals, if adopted, would be
no earlier than the date of appropriate Congressional action. In addition,
subsequent to the publication of the Joint Statement, Senator Daniel Patrick
Moynihan and Representatives Sam M. Gibbons and Charles B. Rangel wrote
letters to
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<PAGE>
Treasury Department officials concurring with the views expressed in the Joint
Statement. Under current law, the Subordinated Debentures will be treated as
indebtedness of the Company and the Company will be able to deduct interest on
the Subordinated Debentures beneficially held by the holders of the Preferred
Securities. However, if the provision of the Bill regarding a 20-year term is
enacted with retroactive effect with regard to the Subordinated Debentures,
the Company will not be entitled to an interest deduction with respect to the
Subordinated Debentures. There can be no assurance that current or future
legislative proposals, adverse judicial decisions, final legislation or
official administrative pronouncements will not affect the ability of the
Company to deduct interest on the Subordinated Debentures, giving rise to a
Tax Event which would permit the Company to cause the redemption of the
Preferred Securities prior to , 2002 (the first date on which
the Company would otherwise be able to cause a redemption of Preferred
Securities) as described more fully under "Description of Preferred
Securities--Tax Event Redemption."
INFORMATION REPORTING TO HOLDERS
Generally, income on the Preferred Securities will be reported to holders on
Forms 1099, which forms should be mailed to holders of Preferred Securities by
January 31 following each calendar year.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, the Preferred Securities
may be subject to a "backup" withholding tax of 31 percent unless the holder
complies with certain identification requirements. Any withheld amounts will
be allowed as a credit against the holder's United States federal income tax,
provided the required information is provided to the Service.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A
HOLDER'S PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH
RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND
DISPOSITION OF THE PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER
STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES
IN UNITED STATES FEDERAL OR OTHER TAX LAWS.
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement"), the Trust has agreed to sell to each of the
underwriters named below (the "Underwriters"), and each of the Underwriters,
for whom Merrill Lynch, Pierce, Fenner & Smith Incorporated, Lehman Brothers
Inc., Dean Witter Reynolds Inc., A.G. Edwards & Sons, Inc., PaineWebber
Incorporated and Salomon Brothers Inc are acting as representatives (the
"Representatives"), has severally agreed to purchase the number of Preferred
Securities set forth opposite its name below. In the Underwriting Agreement,
the several Underwriters have agreed, subject to the terms and conditions set
forth therein, to purchase all of the Preferred Securities offered hereby if
any of the Preferred Securities 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
UNDERWRITER PREFERRED SECURITIES
----------- --------------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...................................
Lehman Brothers Inc.................................
Dean Witter Reynolds Inc............................
A.G. Edwards & Sons, Inc............................
PaineWebber Incorporated............................
Salomon Brothers Inc................................
---------
Total.......................................... 4,000,000
=========
</TABLE>
44
<PAGE>
The Underwriters propose to offer the Preferred Securities in part directly
to the public at the initial public offering price, as set forth on the cover
page of this Prospectus, and in part to certain securities dealers at such
price less a concession of $ per Preferred Security, provided that such
concession for sales of 10,000 or more Preferred Securities to any single
purchaser will be $ per Preferred Security. The Underwriters may allow,
and such dealers may reallow, a concession not in excess of $ per Preferred
Security to certain brokers and dealers. After the Preferred Securities are
released for sale to the public, the offering price and other selling terms
may from time to time be varied by the Representatives.
In view of the fact that the proceeds of the sale of the Preferred
Securities will be used to purchase the Subordinated Debentures of Arvin, the
Underwriting Agreement provides that Arvin will agree to pay as compensation
("Underwriters' Compensation") to the Underwriters for the Underwriters'
arranging the investment therein of such proceeds, an amount in New York
Clearing House (next day) funds of $ per Preferred Security (or $ in the
aggregate) for the accounts of the several Underwriters, provided that such
compensation for sales of 10,000 or more Preferred Securities to any single
purchaser will be $ per Preferred Security. Therefore, to the extent of such
sales, the actual amount of Underwriters' Compensation will be less than the
aggregate amount specified in the preceding sentence.
During a period of 30 days from the date of the pricing of the Preferred
Securities, neither the Trust nor Arvin will, without the prior written
consent of the Representatives, directly or indirectly, sell, offer to sell,
contract to sell, grant any option for the sale of, or otherwise dispose of,
any Preferred Securities, any security convertible into or exchangeable into
or exercisable for Preferred Securities or the Subordinated Debentures or any
debentures substantially similar to the Subordinated Debentures or any equity
securities substantially similar to the Preferred Securities (except for the
Subordinated Debentures and the Preferred Securities offered hereby).
Application will be made to list the Preferred Securities on the New York
Stock Exchange. If approved, trading of the Preferred Securities on the New
York Stock Exchange is expected to commence within a 30-day period after the
date of this Prospectus. The Representatives have advised the Trust that the
Underwriters intend to make a market in the Preferred Securities prior to the
commencement of trading on the New York Stock Exchange. The Underwriters will
have no obligation to make a market in the Preferred Securities, however, and
may cease market making activities, if commenced, at any time.
Prior to this offering, there has been no public market for the Preferred
Securities. In order to meet one of the requirements for listing the Preferred
Securities on the New York Stock Exchange, the Underwriters will undertake to
sell lots of 100 or more Preferred Securities to a minimum of 400 beneficial
holders.
Arvin 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.
Certain of the Underwriters engage in transactions with, and, from time to
time, have performed services for, Arvin in the ordinary course of business.
LEGAL MATTERS
Certain legal matters will be passed upon for the Company and the Trust by
Schiff Hardin & Waite, Chicago, Illinois, and for the Underwriters by Mayer,
Brown & Platt, Chicago, Illinois. Certain matters of Delaware law relating to
the validity of the Preferred Securities will be passed upon by Richards,
Layton & Finger, P.A., Wilmington, Delaware, special Delaware counsel to the
Company and the Trust.
45
<PAGE>
EXPERTS
The financial statements of the Company incorporated in this Prospectus by
reference to the Annual Report on Form 10-K of Arvin Industries, Inc. for the
year ended December 31, 1995 include the financial statements of
Space Industries International, Inc. (an approximately 70% owned subsidiary)
through September 29, 1995, the date of its sale. The financial statements of
the Company have been so incorporated in reliance on the report of Price
Waterhouse LLP, independent accountants, and, with respect to the financial
statements of Space Industries International, Inc. as of January 1, 1995 and
for the years ended January 1, 1995 and January 2, 1994, in reliance on the
report of KPMG Peat Marwick LLP, independent accountants, given on the
authority of such firms as experts in auditing and accounting.
46
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPO-
RATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE TRUST OR THE UN-
DERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL UNDER ANY CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY OR THE TRUST SINCE THE DATE HEREOF. THIS
PROSPECTUS DOES 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>
Available Information..................................................... 3
Incorporation of Certain Documents by Reference........................... 3
Prospectus Summary........................................................ 5
Risk Factors.............................................................. 9
The Trust................................................................. 13
The Company............................................................... 14
Capitalization............................................................ 16
Ratios of Earnings to Fixed Charges And Earnings to Combined Fixed Charges
and Preferred Dividends.................................................. 16
Accounting Treatment...................................................... 17
Use of Proceeds........................................................... 17
Description of the Preferred Securities................................... 17
Description of the Guarantee.............................................. 28
Description of the Subordinated Debentures................................ 31
Effect of Obligations Under the Subordinated Debentures and the Guarantee. 39
United States Federal Income Taxation..................................... 40
Underwriting.............................................................. 44
Legal Matters............................................................. 45
Experts................................................................... 46
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4,000,000
PREFERRED SECURITIES
(LOGO)
ARVIN CAPITAL I
% TRUST ORIGINATED
PREFERRED SECURITIESSM ("TOPRSSM")
GUARANTEED TO THE EXTENT SET
FORTH HEREIN BY
ARVIN INDUSTRIES, INC.
----------------
PROSPECTUS
----------------
MERRILL LYNCH & CO.
LEHMAN BROTHERS
DEAN WITTER REYNOLDS INC.
A.G. EDWARDS & SONS, INC.
PAINEWEBBER INCORPORATED
SALOMON BROTHERS INC
, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
An itemized statement of the estimated amount of the expenses, other than
underwriting discounts and commissions, incurred and to be incurred by Arvin
Industries, Inc. ("Arvin") in connection with the issuance and distribution of
the Securities registered pursuant to this registration statement is as
follows:
<TABLE>
<S> <C>
Securities and Exchange Commission filing fee.................... $30,304
Printing and engraving expenses.................................. *
Accounting fees and expenses..................................... *
Legal fees and expenses.......................................... *
Trustee and agent fees and expenses.............................. *
Rating agency fees............................................... *
Blue sky fees, expenses and legal fees........................... *
Listing Fees..................................................... *
NASD filing fees and expenses.................................... *
Miscellaneous.................................................... *
-------
Total *
=======
</TABLE>
- --------
*To be provided by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article 8 of the Amended and Restated By-Laws of Arvin, as amended, and
Article 10 of its Restated Articles of Incorporation, as amended, both provide
for indemnification of officers and directors of Arvin against expenses
incurred by any of them in certain stated proceedings and under certain stated
conditions.
Chapter 37 of the Indiana Business Corporation Law authorizes every Indiana
corporation to indemnify its officers and directors under certain
circumstances against liability incurred in connection with the defense of
proceedings in which they are made parties, or threatened to be made parties,
by reason of such relationship to the corporation, except where they are
adjudged liable for specific types of negligence or misconduct in the
performance of their duties to the corporation. Chapter 37 also requires every
Indiana corporation to indemnify any of its directors and, unless such
corporation's articles of incorporation provide otherwise, any of its officers
who were wholly successful, on the merits or otherwise, in the defense of any
such proceeding against reasonable expenses incurred by such director in
connection with such proceeding.
Officers and directors of Arvin are presently covered by insurance which
(with certain exceptions and within certain limitations) indemnifies them
against any losses or liabilities arising from any alleged "wrongful act,"
including any breach of duty, neglect, error, misstatement, misleading
statement, omission or other acts done or wrongfully attempted.
The Declaration of Trust of Arvin Capital I (the "Trust") provides that to
the fullest extent permitted by applicable law, the Sponsor shall indemnify
and hold harmless each of the Administrative Trustees of the Trust, any
Affiliate of any such Administrative Trustee, any officer, director,
shareholder, member, partner, employee, representative or agent of any such
Administrative Trustee, or any employee or agent of the Trust or its
Affiliates (each a "Company Indemnified Person"), from and against any loss,
damage or claim incurred by such Company Indemnified Person by reason of any
act or omission performed or omitted by such Company Indemnified Person in
good faith on behalf of the Trust and in a manner such Company Indemnified
Person 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 illegal. The Declaration of Trust
also provides that, to the fullest extent permitted by applicable law,
expenses (including legal fees) incurred by a Company Indemnified Person in
defending any claim, demand, action, suit or proceeding shall, from time to
time, be advanced by the Company prior to the final disposition of such claim,
demand, action suit or proceeding upon receipt by the Company of any
undertaking by or on behalf of the Company Indemnified Person to repay
II-1
<PAGE>
such amount if it shall be determined that the Company Indemnified Person is
not entitled to be indemnified as authorized in the Declaration of Trust. The
Declaration of Trust further provides that no Company Indemnified Person shall
be liable, responsible or accountable in damages or otherwise to the Trust or
any Covered Person (as defined therein) or for any loss, damage or claim
incurred by reason of any act or omission performed or omitted by such Company
Indemnified Person in good faith on behalf of the Trust and in a manner such
Company Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Company Indemnified Person by the Declaration of
Trust or by law, except that a Company Indemnified Person shall be liable for
any such loss, damage or claim incurred by reason of such Company Indemnified
Person's gross negligence or willful misconduct with respect to acts or
omissions. In addition, certain sections of the form of Purchase Agreement
filed as an Exhibit hereto provides for indemnification of the Registrants and
their directors and officers by the underwriters or agents against certain
liabilities, including certain liabilities under the 1933 Act.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S> <C>
1.1* Form of Purchase Agreement for offering of Preferred Secu-
rities
4.1 Certificate of Trust of Arvin Capital I
4.2 Declaration of Trust of Arvin Capital I
4.3 Form of Amended and Restated Declaration of Trust of Arvin
Capital I
4.4 Form of Indenture between Arvin Industries, Inc. and Wil-
mington Trust Company, as Trustee
4.5 Form of Supplemental Indenture between Arvin Industries,
Inc. and Wilmington Trust Company, as Trustee in connec-
tion with the issuance of the Junior Subordinated Defer-
rable Interest Debentures
4.6 Form of Preferred Security Certificate (included in Ex-
hibit 4.3)
4.7 Form of Preferred Securities Guarantee Agreement
4.8 Form of Junior Subordinated Deferrable Interest Debenture
(included in Exhibit 4.5)
5.1* Opinion of Schiff Hardin & Waite
5.2* Opinion of Richards, Layton & Finger, P.A.
8.1* Opinion of Schiff Hardin & Waite
12.1 Computations of Ratio of Earnings to Fixed Charges and Ra-
tio of Earnings to Combined Fixed Charges and Preferred
Dividends
23.1 Consent of Price Waterhouse LLP
23.2 Consent of KPMG Peat Marwick LLP
23.3* Consent of Schiff Hardin & Waite (included in Exhibits 5.1
and 8.1)
23.4* Consent of Richards, Layton & Finger, P.A. (included in
Exhibit 5.2)
24.1 Powers of Attorney (included on the signature page and in
Exhibit 4.2)
25.1* Statement of Eligibility on Form T-1 under the Trust In-
denture Act of 1939, as amended, of Wilmington Trust Com-
pany, as Debt Trustee under the Indenture
25.2* Statement of Eligibility on Form T-1 under the Trust In-
denture Act of 1939, as amended, of Wilmington Trust Com-
pany, as Institutional Trustee under the Declaration of
Trust of Arvin Capital I
25.3* Statement of Eligibility on Form T-1 under the Trust In-
denture Act of 1939, as amended, of Wilmington Trust Com-
pany, as Preferred Guarantee Trustee under the Preferred
Securities Guarantee for the benefit of the holders of
Preferred Securities of Arvin Capital I
</TABLE>
- --------
*To be filed by amendment.
II-2
<PAGE>
ITEM 17. UNDERTAKINGS.
The undersigned registrants hereby undertake:
(a) that, for purposes of determining any liability under the Securities
Act of 1933, each filing of a registrant's annual report pursuant to
Sections 13(a) or 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.
(b) for purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrants pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act of 1933 shall be deemed to be part
of this registration statement as of the time it was declared effective.
(c) 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.
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 provisions described under Item 15 above, 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 such Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrants of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrants will, unless in the opinion of their counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by them is against
public policy as expressed in such Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below appoints Byron O. Pond, Ronald R.
Snyder and Richard A. Smith, or any of them, as such person's true and lawful
attorneys to execute in the name of each such person, and to file, any
amendments to this registration statement that any of such attorneys shall
deem necessary or advisable in connection with the registration of the
securities of the Registrant that are subject to this registration statement,
which amendments may make such changes in such registration statement as any
of the above-named attorneys deems appropriate, and to comply with the
undertakings of the Registrant made in connection with this registration
statement; and each of the undersigned hereby ratifies all that any of said
attorneys shall do or cause to be done by virtue thereof.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT,
ARVIN INDUSTRIES, INC., 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 REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF COLUMBUS AND STATE OF
INDIANA, ON THIS 20TH DAY OF DECEMBER, 1996.
Arvin Industries, Inc.
Byron O. Pond
By: _________________________________
Byron O. Pond
Chairman and Chief Executive
Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Byron O. Pond Chairman and Chief Executive December 20, 1996
____________________________________ Officer
Byron O. Pond
Richard A . Smith Vice President-Finance, December 20, 1996
. __________________________________ Chief Financial Officer
Richard A. Smith and Director
William M. Lowe Controller and Chief December 14, 1996
____________________________________ Accounting Officer
William M. Lowe
Joseph P. Allen Director December 20, 1996
____________________________________
Joseph P. Allen
James K. Baker Director December 16, 1996
____________________________________
James K. Baker
Steven C. Beering Director December 10, 1996
____________________________________
Steven C. Beering
Joseph P. Flannery Director December 12, 1996
____________________________________
Joseph P. Flannery
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
William D. George, Jr. Director December 10, 1996
____________________________________
William D. George, Jr.
Ivan W. Gorr Director December 12, 1996
____________________________________
Ivan W. Gorr
Richard W. Hanselman Director December 20, 1996
____________________________________
Richard W. Hanselman
V. William Hunt Director December 16, 1996
____________________________________
V. William Hunt
Don J. Kacek Director December 20, 1996
____________________________________
Don J. Kacek
Frederick R. Meyer Director December 10, 1996
____________________________________
Frederick R. Meyer
Arthur R. Velasquez Director December 10, 1996
____________________________________
Arthur R. Velasquez
</TABLE>
II-5
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT,
ARVIN CAPITAL I, 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
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN THE CITY OF COLUMBUS AND STATE OF INDIANA, ON
THIS 20TH DAY OF DECEMBER, 1996.
Arvin Capital I
By Arvin Industries, Inc.
Richard A. Smith
By: _________________________________
Richard A. Smith, Vice
President--Finance and Chief
Financial Officer
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
------- ----------- ----------
<C> <S> <C>
1.1* Form of Purchase Agreement for offering of Preferred
Securities
4.1 Certificate of Trust of Arvin Capital I
4.2 Declaration of Trust of Arvin Capital I
4.3 Form of Amended and Restated Declaration of Trust of
Arvin Capital I
4.4 Form of Indenture between Arvin Industries, Inc. and
Wilmington Trust Company, as Trustee
4.5 Form of Supplemental Indenture between Arvin Indus-
tries, Inc. and Wilmington Trust Company, as Trustee
in connection with the issuance of the Junior Subordi-
nated Deferrable Interest Debentures
4.6 Form of Preferred Security Certificate (included in Ex-
hibit 4.3)
4.7 Form of Preferred Securities Guarantee Agreement
4.8 Form of Junior Subordinated Deferrable Interest Deben-
ture (included in Exhibit 4.5)
5.1* Opinion of Schiff Hardin & Waite
5.2* Opinion of Richards, Layton & Finger, P.A.
8.1* Opinion of Schiff Hardin & Waite
12.1 Computations of Ratio of Earnings to Fixed Charges and
Ratio of Earnings to Combined Fixed Charges and Pre-
ferred Dividends
23.1 Consent of Price Waterhouse LLP
23.2 Consent of KPMG Peat Marwick LLP
23.3* Consent of Schiff Hardin & Waite (included in Exhibits
5.1 and 8.1)
23.4* Consent of Richards, Layton & Finger, P.A. (included in
Exhibit 5.2)
24.1 Powers of Attorney (included on the signature page and
in Exhibit 4.2).
25.1* Statement of Eligibility on Form T-1 under the Trust
Indenture Act of 1939, as amended, of Wilmington Trust
Company, as Debt Trustee under the Indenture
25.2* Statement of Eligibility on Form T-1 under the Trust
Indenture Act of 1939, as amended, of Wilmington Trust
Company, as Institutional Trustee under the Declara-
tion of Trust of Arvin Capital I
25.3* Statement of Eligibility on Form T-1 under the Trust
Indenture Act of 1939, as amended, of Wilmington Trust
Company, as Preferred Guarantee Trustee under the Pre-
ferred Securities Guarantee for the benefit of the
holders of Preferred Securities of Arvin Capital I
</TABLE>
- --------
*To be filed by amendment.
<PAGE>
EXHIBIT 4.1
CERTIFICATE OF TRUST
OF ARVIN CAPITAL I
THIS CERTIFICATE OF TRUST of Arvin Capital I (the "Trust"), dated as of
December 18, 1996, is being duly executed and filed by the undersigned, as
trustees, to form a business trust under the Delaware Business Trust Act (12
Del. C. (S) 3801 et seq).
1. NAME: The name of the business trust being formed hereby is "Arvin
Capital I."
2. DELAWARE TRUSTEE: The name and address of the trustee of the Trust
which has its principal place of business in the State of Delaware are as
follows:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
3. EFFECTIVE DATE: This Certificate of Trust shall be effective as of the
date of filing.
IN WITNESS WHEREOF, the undersigned, being the trustees of the Trust, have
executed this Certificate of Trust as of the date first above written.
WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Trustee
By: W. Chris Sponenberg
-------------------
Name: W. Chris Sponenberg
-------------------
Title: /s/ Senior Financial Services Officer
-------------------------------------
/s/ Richard A. Smith
--------------------
Richard A. Smith,
not in his individual capacity
but solely as Trustee
/s/ A.R. Sales
--------------
A. R. Sales,
not in his individual capacity
but solely as Trustee
<PAGE>
EXHIBIT 4.2
DECLARATION OF TRUST
OF
ARVIN CAPITAL I
DECLARATION OF TRUST, dated as of December 18, 1996 (this "Declaration of
Trust"), by and among Arvin Industries, Inc., an Indiana corporation, as
Sponsor, and Richard A. Smith, A.R. Sales, and Wilmington Trust Company, a
Delaware banking corporation, not in their individual capacities but solely as
trustees of the Trust, as defined below (collectively, the "Trustees"). The
Sponsor and the Trustees hereby agree as follows:
1. The trust created hereby shall be known as "Arvin Capital I" (the
"Trust"), in which name the Trustees, or the Sponsor to the extent provided
herein, may conduct the business of the Trust, make and execute contracts, and
sue and be sued.
2. The Sponsor hereby assigns, transfers, conveys and sets over to the
Trustees the sum of $10. The Trustees hereby acknowledge receipt of such amount
in trust from the Sponsor, which amount shall constitute the initial trust
estate. The Trustees hereby declare that they will hold the trust estate in
trust for the benefit of the Sponsor. It is the intention of the parties hereto
that the Trust created hereby constitute a business trust under Chapter 38 of
Title 12 of the Delaware Code, 12 Del. C. (S) 3801 et seq., as it may be amended
from time to time, or any successor legislation (the "Business Trust Act"), and
that this document constitute the governing instrument of the Trust. The
Trustees are hereby authorized and directed to execute and file a certificate of
trust with the Delaware Secretary of State in the form attached hereto.
3. The Sponsor and the Trustees will enter into an amended and restated
Declaration of Trust, satisfactory to each such party and substantially in the
form included as an exhibit to the 1933 Act Registration Statement (as defined
below), to provide for the contemplated operation of the Trust created hereby
and the issuance of the Preferred Securities and Common Securities referred to
therein. Prior to the execution and delivery of such amended and restated
Declaration of Trust, the Trustees shall not have any duty or obligation
hereunder or with respect to the trust estate, except as otherwise required by
applicable law or as may be necessary to obtain, prior to such execution and
delivery, any licenses, consents or approvals required by applicable law or
otherwise.
4. The Sponsor and the Trustees hereby authorize and direct the Sponsor,
as the sponsor of the Trust, (i) to file with the Securities and Exchange
Commission (the "Commission") and execute, in each case on behalf of the Trust,
(a) a Registration Statement on Form S-3 (the "1933 Act Registration
Statement"), including all pre-effective and post-effective amendments thereto,
relating to the registration of the Preferred Securities of the Trust under the
Securities Act of 1933, as amended, and (b) a Registration Statement on Form 8-A
(the "1934 Act Registration Statement"), including all pre-effective and post-
effective amendments thereto, relating to the registration of the Preferred
Securities of the Trust under Section 12(b) of the Securities Exchange Act of
1934, as amended; (ii) to file with the New York Stock Exchange and execute on
behalf of the Trust a listing application and all other applications,
statements, certificates, agreements and other instruments as shall be necessary
or desirable to cause the Preferred Securities to be listed on the New York
Stock Exchange; (iii) to file and execute on behalf of the Trust such
applications, reports, surety bonds, irrevocable consents, appointments of
attorney for service of process and other papers and documents as shall be
necessary or desirable to register the Preferred Securities under the securities
or "Blue Sky" laws of such jurisdictions as the Sponsor, on behalf of the Trust,
may deem necessary or desirable; and (iv) to execute on behalf of the Trust that
certain Underwriting Agreement among
<PAGE>
the Trust, the Sponsor and the Underwriters named in such Underwriting
Agreement, substantially in the form included as an exhibit to the 1933 Act
Registration Statement. In the event that any filing referred to in clauses (i)-
(iii) above is required by the rules and regulations of the Commission, the New
York Stock Exchange or state securities or blue sky laws, to be executed on
behalf of the Trust by the Trustees, Richard A. Smith and A. R. Sales, in their
capacities as Trustees of the Trust, are hereby authorized and directed to join
in any such filing and to execute on behalf of the Trust any and all of the
foregoing, it being understood that Wilmington Trust Company, in its capacity as
Trustee of the Trust, shall not be required to join in any such filing or
execute on behalf of the Trust any such document unless required by the rules
and regulations of the Commission, the New York Stock Exchange or state
securities or blue sky laws. In connection with all of the foregoing, the
Sponsor and each Trustee, other than Wilmington Trust Company, solely in his
capacity as Trustee of the Trust, hereby constitutes and appoints A. R. Sales as
his true and lawful attorney-in-fact, and agent, with full power of substitution
and resubstitution, for the Sponsor or such Trustee or in the Sponsor's or such
Trustee's name, place and stead, in any and all capacities, to sign any and all
amendments, including post-effective amendments, to the 1933 Act Registration
Statement and the 1934 Act Registration Statement, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in connection therewith, as fully to all intents and purposes as the
Sponsor or such Trustee might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his substitute or
substitutes, shall do or cause to be done by virtue hereof.
5. This Declaration of Trust may be executed in one or more counterparts.
6. The number of Trustees initially shall be three (3) and thereafter the
number of Trustees shall be such number as shall be fixed from time to time by a
written instrument signed by the Sponsor which may increase or decrease the
number of Trustees; provided, however, that the number of Trustees shall in no
event be less than three (3); and provided, further that to the extent required
by the Business Trust Act, one Trustee shall either be 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. Subject to the
foregoing, the Sponsor is entitled to appoint or remove without cause any
Trustee at any time. The Trustees may resign upon thirty (30) days prior notice
to the Sponsor.
7. Notwithstanding any other provision of this Declaration of Trust,
Wilmington Trust Company, in its capacity as Trustee of the Trust, shall not be
entitled to exercise any of the powers, nor shall Wilmington Trust Company, in
its capacity as Trustee of the Trust, have any duties and responsibilities of
the other Trustees described in this Declaration of Trust. Wilmington Trust
Company, in its capacity as trustee of the Trust, shall be a Trustee for the
sole and limited purpose of fulfilling the requirements of Section 3807 of the
Business Trust Act.
8. No Trustee, nor any affiliate of any Trustee or any officers,
directors, shareholders, members, partners, employees, representatives or agents
of any Trustee or any employee or agent of the Trust or its affiliates (each, an
"Indemnified Person" and collectively, the "Indemnified Persons"), shall be
liable, responsible or accountable, in damages or otherwise, to the Trust or any
other 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 of Trust or by
2
<PAGE>
law, except that an Indemnified Person shall be 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.
9. To the fullest extent permitted by applicable law, the Sponsor shall
indemnify and hold harmless each Indemnified Person from and against any loss,
damage or claim incurred by such Indemnified Person 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 of Trust, 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 gross negligence or willful misconduct with respect to such
acts or omissions.
10. To the fullest extent permitted by applicable law, 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 Sponsor
prior to the final disposition of such claim, demand, action, suit or proceeding
upon receipt by the Sponsor 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 9.
11. Wilmington Trust Company 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, the Sponsor
and the other Trustees shall have no rights by virtue of this Declaration of
Trust 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. Wilmington
Trust Company shall not 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 Wilmington Trust
Company 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. Wilmington Trust Company may engage or be interested in
any financial or other transactions with the Sponsor or any affiliate of the
Sponsor, or may act on any committee or body of holders of securities or other
obligations of the Sponsor or its affiliates.
12. This Declaration of Trust shall be governed by, and construed in
accordance with, the laws of the State of Delaware (without regard to conflict
of laws principles).
3
<PAGE>
IN WITNESS WHEREOF, the parities hereto have caused this Declaration of
Trust to be duly executed as of the day and year first above written.
ARVIN INDUSTRIES, INC.
as Sponsor
By: /s/ A.R. Sales
------------------------------------
Name: A. R. Sales
----------------------------------
Title: Treasurer
---------------------------------
WILMINGTON TRUST COMPANY
not in its individual capacity
but solely as Trustee
By: /s/ W. Chris Sponenberg
------------------------------------
Name: W. Chris Sponenberg
----------------------------------
Title: Senior Financial Services Officer
---------------------------------
/s/ Richard A. Smith
----------------------------------------
Richard A. Smith,
not in his individual capacity
but solely as Trustee
/s/ A.R. Sales
----------------------------------------
A.R. Sales,
not in his individual capacity
but solely as Trustee
4
<PAGE>
EXHIBIT 4.3
====================================
AMENDED AND RESTATED DECLARATION
OF TRUST
ARVIN CAPITAL I
DATED AS OF _____________, 199__
====================================
<PAGE>
TABLE OF CONTENTS *
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions......................................................... 1
SECTION 1.2 Interpretation...................................................... 6
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.................................... 7
SECTION 2.2 Lists of Holders of Securities...................................... 7
SECTION 2.3 Reports by the Institutional Trustee................................ 7
SECTION 2.4 Periodic Reports to Institutional Trustee........................... 8
SECTION 2.5 Evidence of Compliance with Conditions Precedent.................... 8
SECTION 2.6 Events of Default; Waiver........................................... 8
SECTION 2.7 Event of Default; Notice............................................ 9
ARTICLE III
ORGANIZATION
SECTION 3.1 Name................................................................ 10
SECTION 3.2 Office.............................................................. 10
SECTION 3.3 Purpose............................................................. 10
SECTION 3.4 Authority........................................................... 10
SECTION 3.5 Title to Property of the Trust...................................... 11
SECTION 3.6 Powers and Duties of the Administrative Trustees.................... 11
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees................ 13
SECTION 3.8 Powers and Duties of the Institutional Trustee...................... 14
SECTION 3.9 Certain Duties and Responsibilities of the Institutional Trustee.... 16
SECTION 3.10 Certain Rights of the Institutional Trustee......................... 17
SECTION 3.11 Delaware Trustee.................................................... 19
SECTION 3.12 Execution of Documents.............................................. 19
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities.............. 19
SECTION 3.14 Duration of Trust................................................... 19
SECTION 3.15 Mergers............................................................. 19
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities............................. 21
SECTION 4.2 Responsibilities of the Sponsor..................................... 21
</TABLE>
_____________
* This Table of Contents does not constitute part of the Declaration and shall
not affect the interpretation of any of its terms or provisions.
<PAGE>
<TABLE>
<S> <C>
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees.................................................. 22
SECTION 5.2 Delaware Trustee.................................................... 22
SECTION 5.3 Institutional Trustee; Eligibility.................................. 22
SECTION 5.4 Qualifications of Administrative Trustees and Delaware Trustee
Generally........................................................... 23
SECTION 5.5 Initial Trustees.................................................... 23
SECTION 5.6 Appointment, Removal and Resignation of Trustees.................... 24
SECTION 5.7 Vacancies among Trustees............................................ 25
SECTION 5.8 Effect of Vacancies................................................. 25
SECTION 5.9 Meetings............................................................ 25
SECTION 5.10 Delegation of Power................................................. 26
SECTION 5.11 Merger, Conversion, Consolidation or Succession to Business......... 26
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions....................................................... 26
SECTION 6.2 Payments under Indenture or Pursuant to Direct Actions.............. 26
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities............................. 27
SECTION 7.2 Paying Agent........................................................ 27
ARTICLE VIII
DISSOLUTION OF TRUST
SECTION 8.1 Dissolution of Trust................................................ 28
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities.............................................. 29
SECTION 9.2 Transfer of Certificates............................................ 29
SECTION 9.3 Deemed Security Holders............................................. 29
SECTION 9.4 Book Entry Interests................................................ 30
SECTION 9.5 Notices to Clearing Agency.......................................... 30
SECTION 9.6 Appointment of Successor Clearing Agency............................ 30
SECTION 9.7 Definitive Preferred Security Certificates.......................... 31
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates................... 31
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C>
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability........................................................... 32
SECTION 10.2 Exculpation......................................................... 32
SECTION 10.3 Fiduciary Duty...................................................... 33
SECTION 10.4 Indemnification..................................................... 36
SECTION 10.5 Outside Businesses.................................................. 35
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year......................................................... 36
SECTION 11.2 Certain Accounting Matters.......................................... 36
SECTION 11.3 Banking............................................................. 37
SECTION 11.4 Withholding......................................................... 37
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.......................................................... 37
SECTION 12.2 Meetings of the Holders of Securities; Action by Written Consent.... 39
ARTICLE XIII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Institutional Trustee
and Delaware Trustee................................................ 40
SECTION 13.2 Representations and Warranties of Delaware Trustee.................. 41
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices............................................................. 42
SECTION 14.2 Governing Law....................................................... 43
SECTION 14.3 Intention of the Parties............................................ 43
SECTION 14.4 Headings............................................................ 43
SECTION 14.5 Successors and Assigns.............................................. 43
SECTION 14.6 Partial Enforceability.............................................. 43
SECTION 14.7 Counterparts........................................................ 43
SECTION 14.8 Incorporation by Reference of Annex I............................... 43
</TABLE>
-iii-
<PAGE>
<TABLE>
<S> <C>
ANNEX AND EXHIBITS
ANNEX I TERMS OF SECURITIES.................................................. I-1
EXHIBIT A-1 FORM OF PREFERRED SECURITY CERTIFICATE............................... A1-1
EXHIBIT A-2 FORM OF COMMON SECURITY CERTIFICATE.................................. A2-1
EXHIBIT B SPECIMEN OF DEBENTURE................................................ B-1
EXHIBIT C UNDERWRITING AGREEMENT............................................... C-1
</TABLE>
-iv-
<PAGE>
<TABLE>
<CAPTION>
CROSS-REFERENCE TABLE*
Section of
Trust Indenture Act Section of
of 1939, as amended Declaration
- ------------------- -----------
<S> <C>
310(a)................................................... 5.3(a)
310(c)................................................... Inapplicable
311(c)................................................... Inapplicable
312(a)................................................... 2.2(a)
312(b)................................................... 2.2(b)
313...................................................... 2.3
314(a)................................................... 2.4
314(b)................................................... Inapplicable
314(c)................................................... 2.5
314(d)................................................... Inapplicable
314(f)................................................... Inapplicable
315(a)................................................... 3.9(b)
315(c)................................................... 3.9(a)
315(d)................................................... 3.9(a)
316(a)................................................... Annex I
316(c)................................................... 3.6(e)
</TABLE>
_______________
* This Cross-Reference Table does not constitute part of the Declaration and
shall not affect the interpretation of any of its terms or provisions.
-v-
<PAGE>
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
ARVIN CAPITAL I
THIS AMENDED AND RESTATED DECLARATION OF TRUST (this "Declaration")
dated and effective as of _______________, 199__, by and among Arvin Industries,
Inc., an Indiana corporation, as Sponsor, and __________________,
_____________________, and Wilmington Trust Company, a Delaware banking
corporation, not in their individual capacities, but solely as trustees of the
Trust, as defined below (collectively, the "Trustees"), and the holders, from
time to time, of undivided beneficial interests in the Trust to be issued
pursuant to this Declaration.
WHEREAS, the Trustees and the Sponsor established Arvin Capital I (the
"Trust"), a trust under the Delaware Business Trust Act pursuant to a
Declaration of Trust, dated as of December ___, 1996 (the "Original
Declaration"), and a Certificate of Trust filed with the Secretary of State of
the State of Delaware on December ___, 1996, 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; and
WHEREAS, all of the Trustees and the Sponsor, by this Declaration,
amend and restate each and every term and provision of the Original Declaration.
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Delaware 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.
-----------
(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;
(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
<PAGE>
(f) a reference to the singular includes the plural and vice versa.
"Administrative Trustee" means any Trustee other than the
----------------------
Institutional Trustee and the Delaware Trustee.
"Affiliate" has the same meaning as given to that term in Rule 405 of
---------
the Securities Act or any successor rule thereunder.
"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 a day on which state or
------------
federal banking institutions in New York, New York or Wilmington, Delaware are
authorized or required by law, executive order or regulation 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 a Global Certificate shall be registered 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 ______________, 199__.
------------
"Code" means the Internal Revenue Code of 1986, as amended from time
----
to time, or any successor legislation. A reference to a specific section of the
Code refers not only to such specific section but also to any corresponding
provision of any federal tax statute enacted after the date of this Declaration,
as such specific section or corresponding provision is in effect on the date of
application of the provisions of this Declaration containing such reference.
"Commission" means the Securities and Exchange Commission.
----------
"Common Securities Guarantee" means the guarantee agreement to be
---------------------------
dated as of ________________, 199__ of the Sponsor in respect to the Common
Securities.
"Common Securities" has the meaning specified in Section 7.1.
-----------------
-2-
<PAGE>
"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 Administrative Trustee, (b)
--------------------------
any Affiliate of any Administrative Trustee, (c) any officers, directors,
shareholders, members, partners, employees, representatives, or agents of any
Administrative Trustee or any Affiliate thereof, 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 and the
Preferred Guarantee Trustee shall, at any particular time, be principally
administered, which office at the date of execution of this Declaration is
located at Rodney Square North, 1100 North Market Street, Wilmington, Delaware
19890-0001.
"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 Arvin Industries, Inc. in its capacity as
----------------
issuer of the Debentures under the Indenture.
"Debentures" means the series of Debentures to be issued by the
----------
Debenture Issuer under the Indenture to be held by the Institutional Trustee,
for which a specimen certificate is included as Exhibit B.
"Debt Trustee" means Wilmington Trust Company, not in its individual
------------
capacity but solely as trustee under the Indenture until a successor is
appointed thereunder, and thereafter means such successor trustee.
"Definitive Preferred Security Certificates" has the meaning set forth
------------------------------------------
in Section 9.4.
"Delaware Trustee" has the meaning set forth in Section 5.2.
----------------
"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.
"Distribution" means a distribution payable to Holders of Securities
------------
in accordance with Section 6.1.
"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.
"Fiduciary Indemnified Person" has the meaning set forth in Section
----------------------------
10.4(b).
"Fiscal Year" has the meaning set forth in Section 11.1.
-----------
-3-
<PAGE>
"Global Certificate" has the meaning set forth in Section 9.4.
------------------
"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 ______________, 199__,
---------
between the Debenture Issuer and the Debt 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.
"Investment Company Act" means the Investment Company Act of 1940, as
----------------------
amended from time to time, or any successor legislation.
"Legal Action" has the meaning set forth in Section 3.6(g).
------------
"List of Holders" has the meaning set forth in Section 2.2.
---------------
"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.
"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 Declaration shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
-4-
<PAGE>
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Paying Agent" has the meaning specified in Section 3.8(i).
------------
"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 Securities Guarantee" means the guarantee agreement to be
------------------------------
dated as of ______________, 199__, of the Sponsor in respect of the Preferred
Securities.
"Preferred Securities" 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 in substantially the
-----------------
form attached as Exhibit A to the Underwriting Agreement among the Trust, Arvin
Industries, Inc., an Indiana corporation, and the underwriters designated by the
Administrative Trustees with respect to the offer and sale of the Preferred
Securities.
"Quorum" means a majority of the Administrative Trustees or, if there
------
are only two Administrative Trustees, both of them.
"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.
"Responsible Officer" means, with respect to the Institutional
-------------------
Trustee, the chairman of the board of directors, the president, any vice-
president, any assistant vice-president, the secretary, any assistant secretary,
the treasurer, any assistant treasurer, any trust officer or assistant trust
officer or other officer 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-7" means Rule 3a-7 under the Investment Company Act or any
---------
successor rule thereunder.
"Securities" means the Common Securities and the Preferred Securities.
----------
-5-
<PAGE>
"Securities Act" means the Securities Act of 1933, as amended from
--------------
time to time, or any successor legislation.
"Securities Guarantee" means each of the Common Securities Guarantee
--------------------
and the Preferred Securities Guarantee.
"Sponsor" means Arvin Industries, Inc., an Indiana corporation, or any
-------
successor entity in a merger, consolidation or amalgamation, in its capacity as
sponsor of the Trust.
"Successor Institutional Trustee" means a successor Trustee possessing
-------------------------------
the qualifications to act as Institutional Trustee under Section 5.3(a).
"Super Majority" has the meaning set forth in Section 2.6(a)(ii).
--------------
"Tax Event" has the meaning set forth in Annex I hereto.
---------
"10% in liquidation amount of the Securities" means, except as
-------------------------------------------
provided in the terms of the 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 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.
"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.
"Underwriting Agreement" means the Underwriting Agreement for the
----------------------
offering and sale of Preferred Securities in substantially the form of Exhibit
C.
SECTION 1.2 Interpretation.
--------------
References to the neuter gender include the masculine and feminine,
where appropriate. Terms which relate to accounting matters shall be interpreted
in accordance with generally accepted accounting principles in effect from time
to time. References to any statute mean such statute, as amended at the time,
and include any successor legislation. The word "or" is not exclusive, and the
words "herein," "hereof," and "hereunder" refer to this Declaration as a whole.
-6-
<PAGE>
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 (S)(S) 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 Trust's classification as a grantor trust for
United States Federal income tax purposes and 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 Administrative Trustees, on
behalf of the Trust, shall provide the Institutional Trustee (i) within fourteen
(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 Administrative 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 Administrative
Trustees, on behalf of the Trust, and (ii) at any other time, within thirty (30)
days of receipt by the Trust of a written request from the Institutional Trustee
for a List of Holders as of a date no more than fourteen (14) days before such
List of Holders is given to the Institutional Trustee. The Institutional Trustee
shall preserve, in as 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 (S)(S) 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Institutional Trustee.
------------------------------------
On or before July 15 of each year (commencing with the year of the
first anniversary of the issuance of the Preferred Securities), the
Institutional Trustee shall provide to the Holders of the Preferred Securities
such reports as are required by (S) 313 of the Trust Indenture Act, if any, in
the form and in the manner provided by (S) 313 of the Trust Indenture Act. The
Institutional Trustee shall also comply with the requirements of (S) 313(d) of
the Trust Indenture Act.
-7-
<PAGE>
SECTION 2.4 Periodic Reports to Institutional Trustee.
-----------------------------------------
Each of the Sponsor and the Administrative Trustees, on behalf of the
Trust, shall provide to the Institutional Trustee such documents, reports and
information as required by (S) 314 (if any) and the compliance certificate
required by (S) 314 of the Trust Indenture Act in the form, in the manner and at
the times required by (S) 314 of the Trust Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
------------------------------------------------
Each of the Sponsor and the Administrative 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 (S) 314(c) of the Trust Indenture Act.
Any certificate or opinion required to be given by an officer pursuant to (S)
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 the 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 the 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 (S)
316(a)(1)(B) of the Trust Indenture Act, and such (S) 316(a)(1)(B) of the Trust
Indenture Act is hereby expressly excluded from this Declaration and the
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:
-8-
<PAGE>
(i) is not waivable under the Indenture, except where the
Holders of the Common Securities are deemed to have waived such Event of
Default under the Declaration as provided below in this Section 2.6(b), the
Event of Default under the 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 the Declaration as provided below
in this Section 2.6(b), the Event of Default under the 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 (S)(S) 316(a)(1)(A) and 316(a)(1)(B) of the Trust
Indenture Act, and such (S)(S) 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 Secu rities
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 under this
Declaration. The foregoing provisions of this Section 2.6(c) shall be in lieu
of (S) 316(a)(1)(B) of the Trust Indenture Act, and such (S) 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act.
SECTION 2.7 Event of Default; Notice.
------------------------
(a) The Institutional Trustee shall, within ninety (90) days
after the occurrence of an Event of Default, transmit by mail, first class
postage prepaid, to the Holders of the Securities, notices of all defaults with
respect to the Securities known to the Institutional Trustee, 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 or in the payment of any sinking
fund installment established for the Debentures, the Institutional Trustee shall
be protected in withholding such notice if and so long as a the board of
directors, the executive committee, or a trust committee of directors and/or
Responsible Officer of the Institutional Trustee in good faith deter mines that
the withholding of such notice is in the interests of the Holders of the
Securities.
-9-
<PAGE>
(b) The Institutional Trustee shall not be deemed to have
knowledge of any default except:
(i) a default under Sections 6.01(a)(1) and 6.01(a)(2) 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 the Declaration
shall have actual knowledge.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
----
The Trust is named "Arvin Capital I," as such name may be modified
from time to time by the Administrative Trustees following written notice to the
Holders of Securities. The Trust's activities may be conducted under the name
of the Trust or any other name deemed advisable by the Administrative Trustees.
SECTION 3.2 Office.
------
The address of the principal office of the Trust is c/o Arvin
Industries, Inc., One Noblitt Plaza, Columbus, Indiana 47202. On ten (10)
Business Days' prior written notice to the Holders of Securities, the
Administrative Trustees may designate another principal office.
SECTION 3.3 Purpose.
-------
The exclusive purposes and functions of the Trust are (a) to issue and
sell Securities and use the proceeds from such sale to acquire the Debentures,
and (b) except as otherwise limited 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 undertake (or permit to be undertaken) any activity that
would cause the Trust not to be classified for United States federal income tax
purposes as a grantor trust.
The Trust will 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, deductions and credits of the Trust as if the Trust did not exist. By
the acceptance of this Trust, none of the Trustees, the Sponsor, the Holders of
the Preferred Securities or Common Securities or the Preferred Securities
Beneficial Owners 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 Administrative Trustees shall
have exclusive and complete authority to carry out the purposes of the Trust.
An action taken by the Administrative Trustees in accordance with their powers
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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 a
Trustee or the Trustees acting on behalf of the Trust, no Person shall be
required to inquire into the authority of such Trustee or Trustees to bind the
Trust. Persons dealing with the Trust are entitled to rely conclusively on the
power and authority of a Trustee or the Trustees as set forth in this
Declaration.
SECTION 3.5 Title to Property of the Trust.
------------------------------
Legal title to all assets of the Trust shall be vested in the
Institutional Trustee and shall be administered by the Institutional Trustee for
the benefit of the Holders in accordance with this Declaration. 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 Administrative Trustees.
------------------------------------------------
The Administrative 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 the
Securities shall be limited to a one-time, simultaneous issuance of both the
Preferred Securities and the Common Securities on the Closing Date;
(b) in connection with the issue and sale of the Preferred
Securities, 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, the Preferred Securities
Guarantee and the Debentures;
(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 Preferred Securities 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 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 and other related agreements providing for the sale of
the Preferred Securities;
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(c) to acquire the Debentures with the proceeds of the sale of
the Preferred Securities and the Common Securities; provided, however, that the
-------- -------
Administrative 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 Holders
of the Preferred Securities and the Holders of the Common Securities;
(d) to give the Sponsor and the Institutional Trustee prompt
written notice of the occurrence of a Tax Event; provided that the
-------- ----
Administrative Trustees shall consult with the Sponsor and the Institutional
Trustee before taking or refraining from taking any Ministerial Action in
relation to a Tax 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 (S)316(c) of the Trust Indenture Act,
Distributions, voting rights, redemptions 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 Administrative Trustees pursuant to the terms of the Securities;
(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(f), 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 (S) 314(a)(4) of the
Trust Indenture Act to the Institutional Trustee, which certificate may be
executed by any Administrative Trustee;
(k) to incur expenses that are necessary or incidental to carry
out any of the purposes of the Trust;
(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 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 on behalf of the Trust;
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(o) 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;
(p) to take any action, not inconsistent with this Declaration
or with applicable law, that the Administrative 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 materially adversely affect the interests of
- -------- ----
Holders; 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 Administrative 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 Administrative 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 Administrative 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 Administrative Trustees pursuant to this
Section 3.6 shall be reimbursed by the Debenture Issuer.
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;
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(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 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 Administrative Trustees or to the
Delaware Trustee (if the Institutional Trustee does not also act as Delaware
Trustee).
(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 Sec tion 6.1.
Funds in the Institutional Trustee Account shall be held uninvested until
disbursed in ac cordance with this Declaration. The Institutional Trustee
Account shall be an account that is main tained with a banking institution
the rating on whose long-term unsecured indebtedness, as assigned by a
"nationally recognized statistical rating organization", as that term is
defined for purposes of Rule 436(g)(2) under the Securities Act, is at
least _____________;
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(ii) engage in such ministerial activities as shall be necessary
or appropriate to effect the redemption of the Preferred Securities and the
Common Securities to the extent the Debentures are redeemed or mature; and
(iii) upon written notice of distribution issued by the
Administrative Trustees in accordance with the terms of the Securities,
engage in such ministerial activities as shall be neces sary 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.
(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 or the Trust Indenture
Act.
(f) The Institutional Trustee shall not resign as a Trustee
unless 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.
(h) The Institutional Trustee may authorize one or more Persons
(each, a "Paying Agent") to pay Distributions, redemption payments or
liquidation payments, on behalf of the Trust, with respect to all Securities,
and any such Paying Agent shall comply with (S) 317(b) of the Trust Indenture
Act. Any Paying Agent may be removed by the Institutional Trustee at any time
and a successor Paying Agent or additional Paying Agents may be appointed at any
time by the Institutional Trustee.
(i) Subject to this Section 3.8, the Institutional Trustee shall
have none of the duties, liabilities, powers or the authority of the
Administrative 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.
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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 in the terms of the Securities, and no implied
covenants shall be read into this Declaration against the Institutional Trustee.
In case an Event of Default has oc curred (that has not been cured or waived
pursuant to Section 2.6), 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 terms of the Securities, 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
in the terms of the Securities, and no implied covenants or
obligations shall be read into this Declaration against the
Institutional Trustee; and
(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
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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 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 Administrative 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
Administrative Trustees or the Sponsor.
SECTION 3.10 Certain Rights of the Institutional Trustee.
-------------------------------------------
(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 Administrative
Trustees contemplated by this Declaration shall be sufficiently evidenced
by a Direction or an Officers' 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 Officers' Certificate which, upon receipt of such
request, shall be promptly delivered by the Sponsor or the Administrative
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;
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(v) the Institutional Trustee may consult with counsel or other
experts and the written 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 which would
satisfy a reasonable person in the position of the Institutional Trustee,
against the costs, expenses (includ ing 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, re quest,
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;
(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 evi
denced 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
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(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 Administrative Trustees or the Institutional Trustee 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 (S)
3807 of the Business Trust Act.
SECTION 3.12 Execution of Documents.
----------------------
Except as otherwise required by the Business Trust Act, a majority of
or, if there are only two, any Administrative Trustee or, if there is only one,
such Administrative Trustee is authorized to execute, on behalf of the Trust,
any documents that the Administrative Trustees have the power and authority to
execute pursuant to Section 3.6; provided that, the registration statement
-------- ----
referred to in Section 3.6(b)(i), including any amendments thereto, shall be
signed by all of the Administrative 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 exist for fifty-five 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 Person, except as described in Section
3.15(b) and (c) and Annex I.
(b) The Trust may, with the consent of the Administrative
Trustees or, if there are more than two, a majority of the Administrative
Trustees, and without the consent of the Holders of the
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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 of the United States; 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 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, redemption 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) 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 any other
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 Securities (including any Successor Securities) in any material
respect (other than with respect to any dilution of such Holders' interests
in the new entity as a result of such merger, consolidation, amalgamation
or replacement);
(vi) such Successor Entity has a purpose substantially 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);
(B) following such merger, consolidation, amalgamation or
replacement, neither the Trust nor the Successor Entity will be
required to register as an Investment Company; 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
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(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 Succes sor 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.
---------------------------------------
On the Closing Date the Sponsor will purchase all of the Common
Securities issued by the Trust, in an amount equal to at least 3% 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 Preferred Securities 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) to prepare for filing by the Trust an application to the New
York Stock Exchange or any other national stock exchange or the Nasdaq Stock
Market's National Market for listing upon notice of issuance of any Preferred
Securities;
(d) to prepare for filing by the Trust with the Commission 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 Preferred Securities.
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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;
(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 or by written consent in lieu of a meeting;
provided however, that if the Institutional Trustee does not also act as
- -------- -------
Delaware Trustee, the number of Trustees shall be at least three (3); provided
--------
further that (1) one Trustee shall be the Delaware Trustee, as described in
- -------
Section 5.2 hereof; (2) there shall be at least one Trustee who is an employee
or officer of, or is affiliated with the Parent (a "Administrative 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:
(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.
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;
(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 other 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 or other
Person 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
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5.3(a)(ii), the combined capital and surplus of such corporation or other
Person shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published; and
(iii) if the Trust is excluded from the definition of an
Investment Company solely by means of Rule 3a-7 and to the extent Rule 3a-7
requires a trustee having certain qualifications to hold title to the
"eligible assets" (as defined in Rule 3a-7) of the Trust, the Institutional
Trustee shall possess those qualifications.
(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 (S) 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 (S) 310(b) of the Trust Indenture Act) shall in
all respects comply with the provisions of (S) 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.
SECTION 5.4 Qualifications of Administrative Trustees and Delaware
------------------------------------------------------
Trustee Generally.
- -----------------
Each Administrative 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 Initial Trustees.
----------------
The initial Administrative Trustees shall be:
Richard A. Smith
A. R. Sales
The initial Insititutional Trustee shall be:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
which shall also act as the initial Delaware Trustee.
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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.
(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 Administrative 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 deliv ered to the Administrative 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 pro ceeds 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.
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(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 sixty (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, 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.
------------------------
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 Administrative Trustees or, if
there are more than two, a majority of the Administrative 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, incompe tence or incapacity to perform the duties of a Trustee
shall not operate to annul the Trust. Whenever a vacancy in the number of
Administrative Trustees shall occur, until such vacancy is filled by the
appointment of a Administrative Trustee in accordance with Section 5.6, the
Administrative Trustees in office, regardless of their number, shall have all
the powers granted to the Administrative Trustees and shall discharge all the
duties imposed upon the Administrative Trustees by this Declaration.
SECTION 5.9 Meetings.
--------
If there is more than one Administrative Trustee, meetings of the
Administrative Trustees shall be held from time to time upon the call of any
Administrative Trustee. Regular meetings of the Administrative Trustees may be
held at a time and place fixed by resolution of the Administrative Trustees.
Notice of any in-person meetings of the Administrative 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 Administrative 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 Administrative Trustee at a meeting shall constitute a waiver of
notice of such meeting except where a Administrative 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 Administrative
Trustees may be taken at a meeting by vote of a majority of the Administrative
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 unani mous written consent of the Administrative Trustees. In the event
there is only one Administrative Trustee, any and all action of such
Administrative Trustee shall be evidenced by a written consent of such
Administrative Trustee.
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SECTION 5.10 Delegation of Power.
-------------------
(a) Any Administrative Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural person over the
age of 21 his or her power for the purpose of executing any documents
contemplated in Section 3.6, including any registration statement or amendment
thereto filed with the Commission, or making any other governmental filing; and
(b) the Administrative 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 Administrative Trustees or otherwise as the
Administrative Trustees may deem expedient, to the extent such delegation is not
prohibited by applicable law or contrary to the provisions of the Trust, as set
forth herein.
SECTION 5.11 Merger, Conversion, Consolidation or Succession to Business.
-----------------------------------------------------------
Any Person 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 Person 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 Person 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 Person
shall be otherwise qualified and eligible under this Article, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
-------------
Holders shall receive Distributions 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 InstitutionalTrustee 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.
SECTION 6.2 Payments under Indenture or Pursuant to Direct Actions.
------------------------------------------------------
Any amount payable hereunder to any Holder of Preferred Securities
shall be reduced by the amount of any corresponding payment such Holder (or a
Preferred Security Beneficial Owner with respect to the Holder's Preferred
Securities) has directly received pursuant to Section 6.4 of the Indenture or
Section 5(b) of the Securities.
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ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.
---------------------------------------
(a) The Administrative Trustees shall, on behalf of the Trust,
issue one class of pre ferred 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
undi vided 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
an Administrative Trustee. Any such signature shall be the manual or facsimile
signature of any present or any future Administrative Trustee. In case any
Administrative Trustee of the Trust who shall have signed any of the
Certificates shall cease to be such a Administrative 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 Administrative 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 Administrative Trustees of the Trust,
although at the date of the execution and delivery of the Declaration any such
person was not such an Administrative Trustee. Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is reasonably
acceptable to the Administrative 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 Administrative 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 the 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, subject to Section 10.1(b) with respect to the
Common Securities. The issuance of the Securities as provided in this
Declaration is not subject to preemptive or other similar rights.
(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, the Securities Guarantees and the
Indenture.
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"). 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 Agent not a party to this Declaration. If the Trust
fails to appoint or maintain another entity as Paying Agent, the Institutional
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Trustee shall act as such. The Trust or any of its Affiliates may act as Paying
Agent. The Trust shall act as Paying Agent for the Common Securities.
ARTICLE VIII
DISSOLUTION OF TRUST
SECTION 8.1 Dissolution of Trust.
(a) The Trust shall dissolve upon the earliest of:
(i) the bankruptcy of the Sponsor;
(ii) 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 at least a
majority in liquidation amount of the Securities, voting together as a
single class, to file such certificate of cancellation; the revocation of
the Sponsor's charter and the expiration of ninety (90) days after the date
of revocation without a reinstatement thereof;
(iii) the entry of a decree of judicial dissolution of the Holder
of the Common Securities, the Sponsor or the Trust;
(iv) the time when all of the Securities shall have been called
for redemption and the amounts necessary for redemption thereof shall have
been paid to the Holders in accordance with the terms of the Securities;
(v) at the election of the Sponsor, after satisfaction of the
liabilities of creditors of the Trust as required by applicable law,
provided that all of the Debentures shall have been distributed to the
Holders of the Preferred Securities in liquidation of the Trust;
(vi) the time when all of the Administrative Trustees and the
Sponsor shall have consented to termination of the Trust, provided such
action is taken before the issuance of any Securities; or
(vii) the expiration of the term of the Trust, as set forth in
Section 3.14.
(b) As soon as is practicable after the occurrence of an event
referred to in Section 8.1(a) and the completion of the winding up of the
affairs of the Trust, 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.
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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 Administrative 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 Administrative Trustees
may require) in respect of any tax or other governmental charges that may be
imposed in relation to it. Upon surrender for registration of transfer of any
Certificate, the Administrative 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
Administrative 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 Administrative 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
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.
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SECTION 9.4 Book Entry Interests.
--------------------
Unless otherwise specified in the terms of the Preferred Securities,
the Preferred Securities Certificates, on original issuance, will be issued in
the form of one or more, fully registered, global Preferred Security
Certificates (each, a "Global Certificate"), to be delivered to The Depository
Trust Company, 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 The Depository
Trust Company, 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. Unless and until definitive, fully registered Preferred
Security Certificates (the "Definitive Preferred Security Certificates") 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. The Depository Trust Company will make book entry transfers
among the Clearing Agency Participants and receive and transmit payments of
Distributions on the Global Certificate(s) to such Clearing Agency
Participants.
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
Preferred Security Certificates shall have been issued to the Preferred Security
Beneficial Owners pursuant to Section 9.7, the Administrative 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
Administrative Trustees may, in their sole discretion, appoint a successor
Clearing Agency with respect to such Preferred Securities.
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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 ninety (90) days after such
discontinuance pursuant to Section 9.6; or
(b) the Administrative Trustees elect, after consultation with the
Sponsor, to terminate the book entry system through the Clearing Agency with
respect to the Preferred Securities,
then:
(i) Definitive Preferred Security Certificates shall be prepared by
the Administrative Trustees, on behalf of the Trust, with respect to such
Preferred Securities; and
(ii) upon surrender of the Global Certificate(s) by the Clearing
Agency, accompanied by registration instructions, the Administrative
Trustees shall cause Definitive Preferred Security 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 Preferred Security
Certificates shall be printed, lithographed or engraved or may be produced
in any other manner as is reasonably acceptable to the Administrative
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 Administrative 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.
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates.
-------------------------------------------------
If:
(a) any mutilated Certificates should be surrendered to the
Administrative Trustees, or if the Administrative Trustees shall receive
evidence to their satisfaction of the destruction, loss or theft of any
Certificate; and
(b) there shall be delivered to the Administrative 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 Administrative 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 Administrative Trustees may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in con nection
therewith. Any duplicate Certificate issued pursuant to this Section shall
constitute conclusive
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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
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 termination 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 (S) 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 liable for any such loss, damage
or claim incurred by reason of such Indemnified Person's gross negligence (or in
the case of the Institutional Trustee, negligence, subject to the provisions of
Section 3.9) 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.
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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 or required by
applicable law:
(i) whenever a conflict of interest exists or arises between an
Indemnified Person and 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 provide 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) Unless required by applicable law, 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
(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 Debenture Issuer 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
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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 pleas 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 Debenture Issuer 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) To the extent that a Company Indemnified Person shall be
successful on the merits or otherwise (including dismissal of an action
without prejudice or the settlement of an action without admission of
liability) in defense of any action, suit or proceeding referred to in
paragraphs (i) and (ii) of this Section 10.4(a), or in defense of any
claim, issue or matter therein, he shall be indemnified, to the full extent
permitted by law, against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of this
Section 10.4(a) (unless ordered by a court) shall be made by the Debenture
Issuer only as authorized in the specific cause 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 Administrative Trustees by a majority vote of a quorum consisting of
such Administrative Trustees who were not parties to such action, suit or
proceedings, (2) if such a quorum is not obtainable, or, even if
obtainable, if a quorum of disinterested Administrative Trustees so
directs, by independent legal counsel in a written opinion, or (3) by the
Common Security Holder of the Trust.
(v) 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
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 Administrative Trustees by a majority vote of a quorum of
disinterested Administrative Trustees, (ii) if such a quorum is not
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obtainable, or, even if obtainable, if a quorum of disinterested
Administrative 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 Administrative 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
Administrative Trustees, independent legal counsel or the Common Security
Holder reasonably determine that such person deliberately breached his duty
to the Trust or its Common or Preferred Security Holders.
(vi) 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 stockholders 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.
(vii) the Debenture Issuer 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).
(viii) 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.
(ix) 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 heirs,
executors and administrators of such a person.
(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,
taxes or expense incurred without negligence or bad faith on its part, arising
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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 obligation to indemnify as set forth in this Section
10.4(b) shall survive the satisfaction and discharge of this Declaration.
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
Administrative 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 Administrative Trustees.
(b) The Administrative Trustees shall cause to be prepared and
delivered to each of the Holders of Securities, within ninety (90) days after
the end of each Fiscal Year of the Trust, annual financial statements of the
Trust, including a balance sheet of the Trust as of the end of such Fiscal Year,
and the related statements of income or loss.
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(c) The Administrative 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 Administrative Trustees shall
endeavor to deliver all such statements within thirty (30) days after the end of
each Fiscal Year of the Trust.
(d) The Administrative 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 re quired to be
filed by the Administrative 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 Administrative Trustees; provided,
however, that the Institutional Trustee shall designate the signatories for the
Institutional Trustee Account.
SECTION 11.4 Withholding.
The Trust and the Administrative 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 Administrative 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:
(i) the Administrative Trustees (or, if there are more than two
Administrative Trustees a majority of the Administrative Trustees);
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(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Institutional Trustee, the Institutional
Trustee; and
(iii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, the Delaware Trustee.
(b) No amendment of this Declaration shall be made, and any such
purported amend ment shall be void and ineffective:
(i) unless, in the case of any proposed amendment, the
Institutional Trustee shall have first received an Officers' 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
Secu rities);
(ii) unless, in the case of any proposed amendment which affects the
rights, powers, duties, obligations or immunities of the Institutional
Trustee or the Delaware Trustee, the Institutional Trustee or the Delaware
Trustee, as the case may be, shall have first received:
(A) an Officers' 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) an 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 materially 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 materially 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.
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(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.
(g) Notwithstanding 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-7 or written change in
interpretation or application of Rule 3a-7 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 of Securities; and
(v) to modify, eliminate and add to any provision of this
Declaration, provided that such modification, elimination, or addition
would not adversely affect the rights, privileges, or preferences of any
Holder of the Securities.
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 Administrative 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 Administrative
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 Administrative
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 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 at such meeting at least seven (7) days
and not more than sixty (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 Pre ferred 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
Hold ers of Securities may be taken without a meeting if a consent in
writing setting forth the action so
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taken is signed by the 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 Administrative 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
Administrative 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
eleven (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 Administrative Trustees or by such other Person that the
Administrative 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 Administrative 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 and
Delaware Trustee.
The Trustee which 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 Delaware banking association
with trust powers, duly organized, validly existing and in good standing under
the laws of the State of Delaware, 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);
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(c) the execution, delivery and performance by the Institutional
Trustee of the Declaration have 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 consti tutes 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; and
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 banking corporation with
trust powers, duly organized, validly existing and in good standing under the
laws of the State of Delaware, 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 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 the 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 has its principal place of business in the
State of Delaware.
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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 Administrative 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 Securi ties):
ARVIN CAPITAL I
c/o Arvin Industries, Inc.
One Noblitt Plaza
Columbus, Indiana 47202
Attention: _______________
(b) if given to the Institutional Trustee or the Delaware Trustee,
at the mailing address set forth below (or such other address as the
Institutional Trustee or the Delaware Trustee may give notice of to the Holders
of the Securities):
WILMINGTON TRUST COMPANY
Podney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust Administration
(c) 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):
ARVIN INDUSTRIES, INC.
One Noblitt Plaza
Columbus, Indiana 47202
Attention: __________
(d) 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 docu ment 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.
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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.
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 party hereto 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
Section 14.8 Incorporation by Reference of Annex I
-------------------------------------
The terms and provisions of Annex I, attached hereto, are hereby
incorporated by reference in their entirety into this Declaration.
THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN
BY OR ON BEHALF OF A HOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY SIGNATURE OR
FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL ACCEPTANCE
BY THE HOLDER AND ALL OTHERS
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HAVING A BENEFICIAL INTEREST IN SUCH TRUST SECURITY OF ALL THE TERMS AND
PROVISIONS OF THIS DECLARATION AND AGREEMENT TO THE SUBORDINATION PROVISIONS AND
OTHER TERMS OF THE SECURITIES GUARANTEES AND THE INDENTURE AND SHALL CONSTITUTE
THE AGREEMENT OF THE TRUST, THE DEPOSITARY OR ITS NOMINEE, THE TRUSTEES, SUCH
HOLDER AND SUCH OTHERS THAT THE TERMS AND PROVISIONS OF THIS DECLARATION SHALL
BE BINDING, OPERATIVE AND EFFECTIVE AS BETWEEN THE TRUST, THE DEPOSITARY OR ITS
NOMINEE, THE TRUSTEES, SUCH HOLDER AND SUCH OTHERS.
IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the day and year first above written.
ARVIN INDUSTRIES, INC.
as Sponsor
By:_____________________________________________________
Name:___________________________________________________
Title:__________________________________________________
WILMINGTON TRUST COMPANY
not in its individual capacity
but solely as Institutional Trustee and Delaware Trustee
By:_____________________________________________________
Name:___________________________________________________
Title:__________________________________________________
________________________________________________________
Richard A. Smith,
not in his individual capacity
but solely as Administrative Trustee
________________________________________________________
A.R. Sales
not in his individual capacity
but solely as Administrative Trustee
<PAGE>
ANNEX I
TERMS 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 ____________, 199__ (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 such
Declaration, as defined in the Prospectus referred to below):
1. Designation and Number.
----------------------
(a) Preferred Securities. Four million (4,000,000) Preferred
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Securities of the Trust with an aggregate liquidation amount with respect to the
assets of the Trust of one hundred million dollars ($100,000,000) and a
liquidation amount with respect to the assets of the Trust of $25 per preferred
securi ty, are hereby designated, for the purposes of identification, only as
"___% Trust Originated Preferred Securities/SM/ (TOPrS/SM/)" (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. One hundred twenty-four thousand (124,000)
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Common Securities of the Trust with an aggregate liquidation amount with respect
to the assets of the Trust of three million one hundred thousand dollars
($3,100,000) and a liquidation amount with respect to the assets of the Trust of
$25 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.
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(a) Distributions payable on each Security will be fixed at a rate
per annum of ___% (the "Coupon Rate") of the stated liquidation amount of $25
per Security, such rate being the rate of inter est payable on the Debentures to
be held by the Institutional Trustee. Distributions in arrears for more than one
quarter will bear interest thereon from and including the last day of such
quarter compounded quarterly at the Coupon Rate (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
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Distributions are computed, Distributions will be computed on the basis of the
actual number of days elapsed per 90-day quarter.
(b) Distributions on the Securities will be cumulative, will accrue
from ___________, 199_, and will be payable quarterly in arrears, on March 31,
June 30, September 30, and December 31 of each year, commencing _____________,
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 exceeding twenty
(20) consecutive quarters (each an "Extension Period"), during which Extension
Period no interest shall be due and payable on the Debentures, provided that no
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Extension Period shall last beyond the date of maturity of the Debentures. There
may be multiple Extension Periods of varying lengths during the term of the
Debentures. As a consequence of such deferral, Distributions will also be
deferred. Despite such deferral, quarterly Dis tributions will continue to
accrue with interest thereon (to the extent permitted by applicable law) at the
Coupon Rate compounded quarterly during any such Extension Period. Prior to the
termination of any such Extension Period, the Debenture Issuer may further
extend such Extension Period; provided that such Extension Period together with
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all such previous and further extensions thereof may not exceed twenty (20)
consecutive quarters or extend beyond the maturity date of the Debentures.
Payments of accrued Distribu tions 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, subject to the above requirements.
(c) Distributions on the Securities will be payable to the Holders
thereof as they appear on the books and records of the Trust on the relevant
record dates. While the Preferred Securities remain in book-entry only form,
the relevant record dates shall be one Business Day prior to the relevant
payment dates which payment dates correspond to the interest 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
Preferred Securities -- Book-Entry Only Issuance - The Depository Trust Company"
in the Prospectus dated ___________, 199__ (the "Prospectus"), included in the
Registration Statement on Form S-3 of the Sponsor and the Trust. The relevant
record dates for the Common Securities shall be the same record dates 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 Administrative Trustees, which
dates shall be at least one Business Day but fewer than sixty (60) Business Days
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 spe cial 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.
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(d) 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.
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In the event of any voluntary or involuntary liquidation, dissolution,
winding-up or termination of the Trust, the Holders of the Securities on the
date of the dissolution, winding-up or termina tion, as the case may be, will
be entitled to receive solely out of the assets of the Trust available for
distri bution to Holders of Securities, after paying or making reasonable
provision to pay all claims against and obligations of the Trust in accordance
with Section 3808(e) of the Business Trust Act, an amount equal to the aggregate
of the stated liquidation amount of $25 per Security plus accrued and unpaid
Distributions thereon to the date of payment (such amount being the "Liquidation
Distribution"), unless, in connection with such dissolution, winding-up or
termination, and after paying or making reasonable provision to pay all claims
against and obligations of the Trust in accordance with Section 3808(e) of the
Business Trust Act, Debentures in an aggregate stated principal amount equal to
the aggregate stated liquidation amount of such Securities, with an interest
rate equal to the Coupon Rate, and bearing accrued and unpaid interest in an
amount equal to the accrued and unpaid Distributions on such Securities, shall
be distributed on a Pro Rata basis to the Holders of the Securities in exchange
for such Securities in accordance with Section 4(e) hereof.
If, upon any such liquidation, dissolution, winding-up or termination,
the Liquidation Dis tribution can be paid only in part because the Trust has
insufficient assets available to pay in full the aggre gate Liquidation
Distribution, then the amounts payable directly by the Trust on the Securities
shall be paid on a Pro Rata basis.
4. Redemption and Distribution.
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(a) Upon the repayment of the Debentures in whole or in part,
whether at maturity or upon redemption (such redemption being either at the
option of the Debenture Issuer on or after ___________, 2002 or at the option of
the Debenture Issuer in connection with a Tax Event as described below), the
proceeds from such repayment or payment shall be simultaneously applied to
redeem Securities having an aggregate liquidation amount equal to the aggregate
principal amount of the Debentures so repaid or redeemed at a redemption price
of $25 per Security plus an amount equal to accrued and unpaid Distributions
thereon at the date of the redemption, payable in cash (the "Redemption Price").
Holders will be given not fewer than thirty (30) nor more than sixty (60) days'
notice of such redemption.
(b) If fewer than all the outstanding Securities are to be so
redeemed, the Common Securities and the Preferred Securities will be redeemed
Pro Rata and the Preferred Securities to be re deemed will be as described in
Section 4(f)(ii) below.
(c) If, at any time, a Tax Event (as defined below) shall occur and
be continuing, the Debenture Issuer shall have the right, upon not less than 30
nor more than 60 days' notice, to redeem the Debentures in whole (but not in
part) for cash within 90 days following the occurrence of such Tax Event, and,
following such redemption, all Securities shall be redeemed by the Trust at the
Redemption Price. The Common Securities will be redeemed Pro Rata with the
Preferred Securities, except that if an Event of Default has occurred and is
continuing, the Preferred Securities will have priority over the Common
Securities with respect to payment of the Redemption Price.
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"Tax Event" means that the Administrative Trustees shall have received
an opinion of independent tax counsel experienced in such matters to the effect
that, as a result of (a) 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, or
(b) any official administrative pronouncement or judicial decision interpreting
or applying such laws or regulations, which amendment or change is effective or
such pronouncement or decision is announced on or after the date of original
issuance of the Preferred Securities, there is more than an insubstantial risk
that (i) the Trust is, or will be within 90 days of the date thereof, subject to
United States federal income tax with respect to interest accrued or received on
the Debentures, (ii) the Trust is, or will be within 90 days of the date
thereof, subject to more than a de minimis amount of taxes, duties or other
governmental charges, or (iii) interest payable to the Trust on the Debentures
is not, or within 90 days of the date thereof will not be, de ductible, in
whole or in part, by the Debenture Issuer for United States federal income tax
purposes.
(d) The Trust may not redeem fewer than all the outstanding
Securities unless all accrued and unpaid Distributions have been paid on all
Securities for all quarterly Distribution periods terminating on or before the
date of redemption.
(e) If the Sponsor makes the election referred to in Section
8.1(a)(v) of the Declaration, the Administrative Trustees shall dissolve the
Trust and, after paying or making reasonable provision to pay all claims and
obligations of the Trust in accordance with Section 3808(e) of the Business
Trust Act, shall cause Debentures, held by the Institutional Trustee, having an
aggregate principal amount equal to the aggregate stated liquidation amount of,
with an interest rate identical to the Coupon Rate of, and accrued and unpaid
interest equal to accrued and unpaid Distributions on and having 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 and from
the date fixed by the Administrative Trustees for any distribution of Debentures
and dissolution of the Trust: (i) the Securities will no longer be deemed to be
outstanding, and (ii) the Depositary or its nominee (or any successor Depositary
or its nominee) will receive one or more global certificate or certificates
representing the Debentures to be delivered upon such distribution, and having
an aggregate principal amount equal to the aggregated stated liquidation amount
of, with an interest rate identical to the Coupon Rate of, and accrued and
unpaid interest equal to accrued and unpaid Distributions on such Securities.
Any certificates representing Securities, except for certificates representing
Preferred Securities held by the Depositary 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 identical to the
Coupon Rate of, 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. If the Debentures are
distributed to Holders of the Securities, pursuant to the terms of the
Indenture, the Debenture Issuer will use its best efforts to have the Debentures
listed on the New York Stock Exchange or on such other exchange as the Preferred
Securities were listed immediately prior to the distribution of the Debentures.
(f) "Redemption or Distribution Procedures."
(i) Notice of any redemption of, or notice of distribution of
Debentures in exchange for the Securities (a "Redemption/Distribution
Notice") will be given by the Trust by mail to each Holder of Securities to
be redeemed or exchanged not fewer than thirty (30) nor more than sixty
(60) days before the date fixed for redemption or exchange thereof which,
in the case of a redemp tion, will be the date fixed for redemption of the
Debentures. For purposes of the calculation of
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the date of redemption or exchange and the dates on which notices are given
pursuant to this Section 4(f)(i), a Redemption/ 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
Redemption/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 Redemption/ Distribution Notice or
in the mailing thereof of either with respect to any Holder shall affect
the validity of the redemption or exchange proceedings with respect to any
other Holder.
(ii) In the event that fewer than all the outstanding Securities are
to be redeemed, the Securities to be redeemed shall be redeemed Pro Rata
from each Holder of Preferred Securities, it being understood that, in
respect of Preferred Securities registered in the name of and held of
record by the Depositary or its nominee (or any successor Clearing Agency
or its nominee), the distribution of the proceeds of such redemption will
be made to each Clearing Agency Participant (or Person on whose behalf such
nominee holds such Securities) in accordance with the procedures applied by
such agency or nominee.
(iii) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice, which notice may only be issued if the
Debentures are redeemed 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 re demption date, provided that the Debenture
Issuer has paid the Institutional Trustee a sufficient amount of cash in
connection with the related redemption or maturity of the Debentures, the
Institutional Trustee will deposit irrevocably with the Depositary or its
nominee (or successor Clearing Agency or its nominee) funds sufficient to
pay the applicable Redemption Price with respect to the Preferred
Securities and will give the Depositary irrevocable instructions and
authori ty to pay the Redemption 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 redemption or maturity of the Debentures, the
Institutional Trustee will pay the relevant Redemp tion 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 redemption
date. If a Redemp tion/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 redemption date,
as applicable, distributions will cease to accrue on the Securities so
called for redemption and all rights of Holders of such Securities so
called for redemption will cease, except the right of the Holders of such
Securities to receive the Redemption Price, but without interest on such
Redemption Price. Neither the Administrative Trustees nor the Trust shall
be required to register or cause to be registered the transfer of any
Securities that have been so called for redemption. If any date fixed for
redemption of Securities is not a Business Day, then payment of the Redemp
tion 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 Busi ness 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 re demption. If payment of the Redemption 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 redemption date to the actual date of
payment, in which case the actual payment date will be considered the date
fixed for redemption for purposes of calculating the Redemption Price.
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(iv) Redemption/Distribution Notices shall be sent by the
Administrative Trustees on behalf of the Trust to (A) in respect of the
Preferred Securities, the Depositary or its nominee (or any successor
Clearing Agency or its nominee) if the Global Certificate(s) 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.
(v) Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws), 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. Voting Rights - Preferred Securities.
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(a) Except as provided under Sections 5(b) and 7 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, 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 default and its
conse quences 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, or consent to any amendment, modification or termination of
the Indenture or the Debentures, where such consent would be required; provided,
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however, that, where a consent or action under the Indenture would require the
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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. 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. Other
than with respect to directing the time, method and place of conducting any
remedy available to the Institutional Trustee or the Debt 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 with respect to the
Debentures held by the Trust, to the fullest extent permitted by law, any Holder
of Preferred Securities may institute legal proceedings directly against the
Debenture Issuer to enforce the Institutional Trustee's rights under the
Debentures without first instituting any legal proceedings against the
Institutional Trustee or any other person or entity. In addition, if an Event of
Default under the Declaration has occurred and is continuing and such event is
attributable to the failure of the Debenture Issuer to pay interest, principal
or other required payment on the Debentures issued to the Trust on the date such
interest, principal or other required payment is otherwise payable (or, in the
case of redemption, on the redemption date), then a Holder of Preferred
Securities may directly institute a proceeding against the Debenture Issuer for
enforcement of payment to the Holder of the Preferred Securities of the
principal, interest or other required
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payment on Debentures having a principal amount equal to the liquidation amount
of the Preferred Securities of such Holder on or after the respective due dates
specified in the Debentures. In connection with such Direct Action, Arvin will
be subrogated to the rights of such Holder of Preferred Securities to the extent
of any payment made by Arvin to such Holder of Preferred Securities in such
Direct Action.
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 Administrative 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 redeem and cancel Preferred Securities or to
distribute the Debentures in accordance with the Decla ration 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.
6. Voting Rights - Common Securities.
---------------------------------
(a) Except as provided under Sections 6(b), (c) and 7 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 num ber 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 set forth in
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 proceed ing for any remedy available to the Institutional
Trustee, or direct the exercise of any trust or power con ferred 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 default and its consequences that are 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 or consent to any amendment,
modification or termination of the Indenture or the Debentures, where such
consent would be required; provided that, where a consent or action under the
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Indenture would require the consent or act of a Super-Majority of the Holders of
the Debentures affected thereby, 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
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this Section 6(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 Debt 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 with
respect to the Debentures held as assets of the Trust, to the fullest extent
permitted by applicable law, any Holder of Common Securities may institute legal
proceedings directly against any Person 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 an Event of Default under the Declaration has occurred and is
continuing and such event is attributable to the failure of the Debenture Issuer
to pay interest, principal or other required payment on the Debentures on the
date such interest or principal is otherwise payable, a Holder of Common
Securities may directly institute a proceeding against the Debenture Issuer for
enforcement of payment to the Holder of the Common Securities of the principal,
interest or other required payment on the Debentures on or after the respective
due dates specified in the Debentures, and the amount of the payment will be
based on the Holder's pro rata share of the amount due and owing on all of the
Common Securities.
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 Administrative 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.
No vote or consent of the Holders of the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to distribute
the Debentures in accordance with the Declaration and the terms of the
Securities.
7. Amendments to Declaration and Indenture.
---------------------------------------
(a) In addition to any requirements under Section 12.1 of the
Declaration, if any proposed amendment to the Declaration provides for, or the
Administrative Trustees otherwise propose to effect, (i) any action that would
materially 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,
voting together as a single class, will be entitled to vote on such amend ment
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; provided, however, if
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any amendment or proposal referred to in clause (i) above would materially
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.
Notwithstanding the foregoing, no amendment or modification may be made to the
Declaration if such
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amendment or modification would (i) cause the Trust to be classified as other
than a grantor trust for United States federal income tax purposes, (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.
(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 Inden ture 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 re
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quire the consent of the holders of a Super-Majority of the Holders of the
Debentures, 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
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Institutional Trustee shall not take any action in accordance with the
directions of the Holders of the Securities under this Section 7(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.
8. 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.
9. Ranking.
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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 Securi ties
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.
10. Listing.
-------
The Administrative Trustees shall use their best efforts to cause the
Preferred Securities to be listed for quotation on the New York Stock Exchange.
I-9
<PAGE>
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>
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 "Depositary") 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 Depositary (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 Depositary 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
ARVIN CAPITAL I
____% Trust Originated Preferred Securities/SM/ ("TOPrS"/SM/)
(liquidation amount $25 per Preferred Security)
ARVIN CAPITAL I, a statutory business trust created under the laws of
the State of Dela ware (the "Trust"), hereby certifies that ______________ (the
"Holder") is the registered owner of pre ferred securities of the Trust
representing undivided beneficial interests in the assets of the Trust
designated the ___% Trust Originated Preferred Securities/SM/ (liquidation
amount $25 per Preferred Security) (the "Pre ferred 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 ___________, 199__, 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
A1-1
<PAGE>
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.
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 ___________, 199__.
ARVIN CAPITAL I
By:________________________________________
Name:_____________________________________,
not in his individual capacity
but solely as Administrative Trustee
By:________________________________________
Name:______________________________________
not in his individual capacity
but solely as Administrative Trustee
A1-2
<PAGE>
[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
$25 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
Coupon Rate (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 90-day quarter.
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 ____________, 199__ to the Holders
thereof as they appear on the books and records of the Trust on the relevant
record 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 20 consecutive quarters (each an
"Extension Period") provided that no Extension Period shall last beyond the date
of the maturity of the Debentures 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 Coupon Rate compounded quarterly during any
such Extension Period. Prior to the termination of any such Extension Period,
the Debenture Issuer may further extend such Extension Period; provided that
-------- ----
such Extension Period together with all such previous and further extensions
thereof may not exceed 20 consecutive quarters or extend beyond the date of
maturity of the Debentures. 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, subject to the above requirements.
The Preferred Securities shall be redeemable as provided in the
Declaration.
A1-3
<PAGE>
------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
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)
A1-4
<PAGE>
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
Certificate Number Number of Common Securities
Certificate Evidencing Common Securities
of
ARVIN CAPITAL I
______% Trust Originated Common Securities
(liquidation amount $25 per Common Security)
ARVIN CAPITAL I, a statutory business trust created under the laws of
the State of Dela ware (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 desig
nated the ______% Trust Originated Common Securities (liquidation amount $25
per Common Security) (the "Common Securities"). 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 _____________, 199__, 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. THE COMMON SECURITIES ARE NOT TRANSFERRABLE EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE DECLARATION.
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.
A2-1
<PAGE>
IN WITNESS WHEREOF, the Administrative Trustees of the Trust have
executed this certificate this ______ day of ____________, 199__.
ARVIN CAPITAL I
By:_____________________________________________
Name:__________________________________________,
not in his individual capacity
but solely as Administrative Trustee
By:_____________________________________________
Name:__________________________________________,
not in his individual capacity
but solely as Administrative Trustee
A2-2
<PAGE>
[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 $25
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
Coupon Rate (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 90-day quarter.
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 _________, 199__, to the Holders thereof
as they appear on the books and records of the Trust on the relevant record
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 20 consecutive quarters (each an
"Extension Period") provided that no Extension Period shall last beyond the date
of the maturity of the Debentures 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 Coupon Rate compounded quarterly during any
such Extension Period. Prior to the termination of any such Extension Period,
the Debenture Issuer may further extend such Extension Period; provided that
-------- ----
such Extension Period together with all such previous and further extensions
thereof may not exceed 20 consecutive quarters or extend beyond the date of
maturity of the Debentures. 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, subject to the above requirements.
The Common Securities shall be redeemable as provided in the
Declaration.
A2-3
<PAGE>
--------------------
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 Common 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 Common Security
Certificate)
A2-4
<PAGE>
EXHIBIT B
SPECIMEN OF DEBENTURE
B-1
<PAGE>
EXHIBIT C
UNDERWRITING AGREEMENT
C-1
<PAGE>
EXHIBIT 4.4
================================================================================
ARVIN INDUSTRIES, INC.
ISSUER
AND
WILMINGTON TRUST COMPANY
TRUSTEE
INDENTURE
DATED AS OF _______________, 199__
SUBORDINATED DEBT SECURITIES
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<S> <C> <C>
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions of Terms................................................. 1
ARTICLE II
ISSUE, DESCRIPTION, TERMS, EXECUTION,
REGISTRATION AND EXCHANGE OF DEBT SECURITIES
SECTION 2.1. Designation and Terms of Debt Securities............................. 6
SECTION 2.2. Form of Debt Securities and Trustee's Certificate.................... 8
SECTION 2.3. Denominations; Provisions for Payment................................ 8
SECTION 2.4. Execution and Authentication......................................... 9
SECTION 2.5. Registration of Transfer and Exchange................................ 10
SECTION 2.6. Temporary Securities................................................. 11
SECTION 2.7. Mutilated, Destroyed, Lost or Stolen Debt Securities................. 11
SECTION 2.8. Cancellation......................................................... 12
SECTION 2.9. Benefits of Indenture................................................ 12
SECTION 2.10. Authenticating Agent................................................. 13
SECTION 2.11. Global Securities.................................................... 13
ARTICLE III
REDEMPTION OF DEBT SECURITIES AND SINKING FUND PROVISIONS
SECTION 3.1. Redemption........................................................... 14
SECTION 3.2. Notice of Redemption................................................. 14
SECTION 3.3. Payment Upon Redemption.............................................. 15
SECTION 3.4. Sinking Fund......................................................... 16
SECTION 3.5. Satisfaction of Sinking Fund Payments with Debt Securities........... 16
SECTION 3.6. Redemption of Debt Securities for Sinking Fund....................... 16
ARTICLE IV
COVENANTS OF THE COMPANY
SECTION 4.1. Payment of Principal, Premium and Interest........................... 17
SECTION 4.2. Maintenance of Office or Agency...................................... 17
SECTION 4.3. Paying Agents........................................................ 17
SECTION 4.4. Appointment to Fill Vacancy in Office of Trustee..................... 18
SECTION 4.5. Compliance with Consolidation Provisions............................. 18
SECTION 4.6. Limitation on Dividends.............................................. 18
SECTION 4.7. Covenants as to Arvin Trusts......................................... 19
SECTION 4.8. Corporate Existence.................................................. 19
</TABLE>
i
<PAGE>
<TABLE>
<S> <C> <C>
ARTICLE V
SEURITYHOLDERS, LISTS AND REPORTS
BY THE COMPANY AND THE TRUSTEE
SECTION 5.1. Company to Furnish Trustee Names and Addresses of Securityholders.... 19
SECTION 5.2. Preservation Of Information; Communications With Securityholders..... 20
SECTION 5.3. Reports By the Company............................................... 20
SECTION 5.4. Reports by the Trustee............................................... 20
ARTICLE VI
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
SECTION 6.1. Events of Default.................................................... 21
SECTION 6.2. Collection of Indebtedness and Suits for Enforcement by Trustee...... 23
SECTION 6.3. Application of Moneys Collected...................................... 24
SECTION 6.4. Limitation on Suits.................................................. 24
SECTION 6.5. Rights and Remedies Cumulative; Delay or Omission Not Waiver......... 25
SECTION 6.6. Control by Securityholders........................................... 26
SECTION 6.7. Undertaking to Pay Costs............................................. 26
ARTICLE VII
CONCERNING THE TRUSTEE
SECTION 7.1. Certain Duties and Responsibilities of Trustee....................... 27
SECTION 7.2. Certain Rights of Trustee............................................ 28
SECTION 7.3. Trustee Not Responsible for Recitals or Issuance of Debt Securities.. 29
SECTION 7.4. May Hold Debt Securities............................................. 29
SECTION 7.5. Moneys Held in Trust................................................. 29
SECTION 7.6. Compensation and Reimbursement....................................... 29
SECTION 7.7. Reliance on Officers' Certificate.................................... 30
SECTION 7.8. Qualification; Conflicting Interests................................. 30
SECTION 7.9. Corporate Trustee Required; Eligibility.............................. 30
SECTION 7.10. Resignation and Removal; Appointment of Successor.................... 31
SECTION 7.11. Acceptance of Appointment By Successor............................... 32
SECTION 7.12. Merger, Conversion, Consolidation or Succession to Business.......... 33
SECTION 7.13. Preferential Collection of Claims Against the Company................ 33
ARTICLE VIII
CONCERNING THE SECURITYHOLDERS
SECTION 8.1. Evidence of Action by Securityholders................................ 33
SECTION 8.2. Proof of Execution by Securityholders................................ 34
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C> <C>
SECTION 8.3. Who May be Deemed Owners............................................. 34
SECTION 8.4. Certain Debt Securities Owned by Company Disregarded................. 34
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1. Supplemental Indentures Without the Consent of Securityholders....... 35
SECTION 9.2. Supplemental Indentures With Consent of Securityholders.............. 36
SECTION 9.3. Effect of Supplemental Indentures.................................... 36
SECTION 9.4. Debt Securities Affected by Supplemental Indentures.................. 37
SECTION 9.5. Execution of Supplemental Indentures................................. 37
ARTICLE X
SUCCESSOR CORPORATION
SECTION 10.1. Company May Consolidate, Etc......................................... 37
SECTION 10.2. Successor Corporation Substituted.................................... 38
SECTION 10.3. Evidence of Consolidation, Etc. to Trustee........................... 38
ARTICLE XI
SATISFACTION AND DISCHARGE
SECTION 11.1. Satisfaction and Discharge of Indenture.............................. 39
SECTION 11.2. Discharge of Obligations............................................. 39
SECTION 11.3. Deposited Moneys to be Held in Trust................................. 40
SECTION 11.4. Payment of Moneys Held by Paying Agents.............................. 40
SECTION 11.5. Repayment to Company................................................. 40
ARTICLE XII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
SECTION 12.1. No Recourse.......................................................... 41
ARTICLE XIII
SUBORDINATION OF DEBT SECURITIES
SECTION 13.1. Agreement to Subordinate............................................. 41
SECTION 13.2. Default on Senior Indebtedness....................................... 41
SECTION 13.3. Liquidation; Dissolution; Bankruptcy................................. 42
SECTION 13.4. Subrogation.......................................................... 43
SECTION 13.5. Trustee to Effectuate Subordination.................................. 44
SECTION 13.6. Notice by the Company................................................ 44
SECTION 13.7. Rights of the Trustee; Holders of Senior Indebtedness................ 45
SECTION 13.8. Subordination May Not Be Impaired.................................... 45
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C> <C>
ARTICLE XIV
MISCELLANEOUS PROVISIONS
SECTION 14.1. Effect on Successors and Assigns..................................... 46
SECTION 14.2. Actions by Successor................................................. 46
SECTION 14.3. Surrender of Company Powers.......................................... 46
SECTION 14.4. Notices.............................................................. 46
SECTION 14.5. Governing Law........................................................ 46
SECTION 14.6. Treatment of the Debt Securities as Debt............................. 46
SECTION 14.7. Compliance Certificates and Opinions................................. 47
SECTION 14.8. Payments on Business Days............................................ 47
SECTION 14.9. Conflict with Trust Indenture Act.................................... 47
SECTION 14.10. Counterparts......................................................... 47
SECTION 14.11. Separability......................................................... 47
SECTION 14.12. Assignment........................................................... 48
</TABLE>
iv
<PAGE>
<TABLE>
<CAPTION>
SECTION OF
TRUST INDENTURE ACT SECTION OF
OF 1939, AS AMENDED INDENTURE
- ------------------- ---------------
<S> <C>
310(a)..................................................................... 7.9
310(b)..................................................................... 7.8
................................................................... 7.10
310(c)..............................................................Inapplicable
311(a).................................................................. 7.13(a)
311(b).................................................................. 7.13(b)
311(c)..............................................................Inapplicable
312(a)..................................................................... 5.1
................................................................. 5.2(a)
312(b)................................................................... 5.2(b)
312(c)................................................................... 5.2(c)
313(a)................................................................... 5.4(a)
313(b)................................................................... 5.4(b)
313(c)................................................................... 5.4(a)
................................................................. 5.4(b)
313(d)................................................................... 5.4(c)
314(a)..................................................................... 5.3
314(b)..............................................................Inapplicable
314(c)..................................................................... 14.6
314(d)..............................................................Inapplicable
314(e)..................................................................... 14.6
314(f)..............................................................Inapplicable
315(a)................................................................... 7.1(a)
................................................................... 7.2
315(b)..................................................................... 6.7
315(c)..................................................................... 7.1
315(d)................................................................... 7.1(b)
................................................................. 7.1(c)
315(e)..................................................................... 6.7
316(a)..................................................................... 6.6
................................................................... 8.4
316(b)..................................................................... 6.4
316(c)..................................................................... 8.1
317(a)..................................................................... 6.2
317(b)..................................................................... 4.3
318(a)..................................................................... 14.8
</TABLE>
_________________
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of the Indenture and shall not have any bearing on the
interpretation of its terms or provisions.
v
<PAGE>
THIS INDENTURE, dated as of ________________, 199__, between ARVIN
INDUSTRIES, INC., an Indiana corporation (the "Company"), and WILMINGTON TRUST
COMPANY, a Delaware banking corporation, not in its individual capacity but
solely as trustee (the "Trustee"):
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance, from time to time, of its unsecured
debentures, notes or other evidences of indebtedness (the "Debt Securities"), to
be issued in one or more series as provided in this Indenture. This Indenture
is subject to the provisions of the Trust Indenture Act of 1939, as amended,
that are required to be part of this Indenture and shall, to the extent
applicable, be governed by such provisions. 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 Debt
Securities by the holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all holders of the Debt Securities or of any
series thereof, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions of Terms.
--------------------
The terms defined in this Section (except as otherwise expressly
provided in this Indenture or unless the context otherwise requires) for all
purposes of this Indenture and of any indenture supplemental hereto shall have
the respective meanings specified in this Section and shall include the plural
as well as the singular. All other terms used in this Indenture that are
defined in the Trust Indenture Act of 1939, as amended, or by reference therein
in the Securities Act of 1933, as amended (except as otherwise expressly
provided in this Indenture or unless the context otherwise requires), shall have
the meanings assigned to such terms in the Trust Indenture Act and in the
Securities Act as in force at the date of the execution of this instrument.
"Affiliate" means, with respect to a specified Person, (a) any Person
---------
directly or indirectly owning, controlling or holding with power to vote 10% or
more of the outstanding voting securities or other ownership interests of the
specified Person, (b) any Person 10% or more of whose outstanding voting
securities or other ownership interests are directly or indirectly owned,
controlled or held with power to vote by the specified Person, (c) any Person
directly or indirectly controlling, controlled by or under common control with
the specified Person, (d) a partnership in which the specified Person is a
general partner, (e) any officer or director of the specified Person and (f) if
the specified Person is an individual, any entity of which the specified Person
is an officer, director or general partner.
"Arvin Trust" means Arvin Capital I, a Delaware business trust, or any
-----------
similar trust created for the purpose of issuing preferred securities in
connection with the issuance of Debt Securities under this Indenture.
"Authenticating Agent" means an authenticating agent with respect to
--------------------
all or any of the series of Debt Securities appointed with respect to all or
such series of the Debt Securities by the Trustee pursuant to Section 2.10.
<PAGE>
"Bankruptcy Law" means Title 11, United States Code, or any similar
--------------
federal or state law for the relief of debtors.
"Board of Directors" means the board of directors of the Company, or
------------------
any duly authorized committee of such board.
"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.
"Business Day" means, with respect to any series of Debt Securities,
------------
any day other than a day on which federal or state banking institutions in New
York, New York or Wilmington, Delaware are authorized or required by law,
executive order or regulation to close.
"Certificate" means a certificate signed by the principal executive
-----------
officer, the principal financial officer, the treasurer or the principal
accounting officer of the Company. The Certificate need not comply with the
provisions of Section 14.7.
"Commission" means the United States Securities and Exchange
----------
Commission, or any successor agency thereto.
"Common Securities" means undivided beneficial interests in the assets
-----------------
of an Arvin Trust which rank pari passu with Preferred Securities issued by such
Arvin Trust; provided, however, that upon the occurrence of an Event of Default,
-------- -------
the rights of holders of Common Securities to payment in respect of
distributions and payments upon liquidation, redemption and maturity are
subordinated to the rights of holders of Preferred Securities.
"Common Securities Guarantee" means any guarantee that the Company may
---------------------------
enter into with an Arvin Trust or any other Person or Persons that operates
directly or indirectly for the benefit of holders of Common Securities of an
Arvin Trust.
"Company" means Arvin Industries, Inc., a corporation duly organized
-------
and existing under the laws of the State of Indiana, and, subject to the
provisions of Article X, shall also include its successors and assigns.
"Corporate Trust Office" means the office of the Trustee at which, at
----------------------
any particular time, its corporate trust business shall be principally
administered, which office at the date hereof is located at Rodney Square North,
1100 North Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate
Trust Department.
"Custodian" means any receiver, trustee, assignee, liquidator, or
---------
similar official under any Bankruptcy Law.
"Declaration" means, with respect to an Arvin Trust, the amended and
-----------
restated declaration of trust of such Arvin Trust or any other governing
instrument of such Arvin Trust.
2
<PAGE>
"Debt Securities" means the Debt Securities authenticated and delivered
---------------
under this Indenture.
"Default" means any event, act or condition that with notice or lapse
-------
of time, or both, would constitute an Event of Default.
"Defaulted Interest" has the meaning specified in Section 2.3.
------------------
"Depositary" means, with respect to Debt Securities of any series for
----------
which the Company shall determine that such Debt Securities will be issued as a
Global Security, The Depository Trust Company, New York, New York, another
clearing agency, or any successor registered as a clearing agency under the
Exchange Act or other applicable statute or regulation, which, in each case,
shall be designated by the Company pursuant to either Section 2.1 or 2.11.
"Event of Default" means, with respect to Debt Securities of a
----------------
particular series, any event specified in Section 6.1, continued for the period
of time, if any, therein designated.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"Global Security" means, with respect to any series of Debt Securities,
---------------
a Debt Security executed by the Company and delivered by the Trustee to the
Depositary or pursuant to the Depositary's instruction, all in accordance with
this Indenture, which shall be registered in the name of the Depositary or its
nominee.
"Governmental Obligations" means securities that are (i) direct
------------------------
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America, the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America that, in either case, are not
callable or redeemable at the option of the issuer thereof, and shall also
include a depositary receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act) as custodian with respect to any such Governmental
Obligation or a specific payment of principal of or interest on any such
Governmental Obligation held by such custodian for the account of the holder of
such depositary receipt; provided, however, that (except as required by law)
-------- -------
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depositary receipt from any amount received by the
custodian in respect of the Governmental Obligation or the specific payment of
principal of or interest on the Governmental Obligation evidenced by such
depositary receipt.
"Guarantees" mean the Preferred Securities Guarantee and the Common
----------
Securities Guarantee.
"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.
"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 in accordance with the terms hereof and shall
include the form and terms of particular series of Debt Securities established
as contemplated hereunder.
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"Institutional Trustee" has the meaning set forth in the Declaration of
---------------------
the applicable Arvin Trust.
"Interest Payment Date", when used with respect to any installment of
---------------------
interest on a Debt Security of a particular series, means the date specified in
such Debt Security or in a Board Resolution, an Officers' Certificate or an
indenture supplemental hereto with respect to such series as the fixed date on
which an installment of interest with respect to Debt Securities of that series
is due and payable.
"Officers' Certificate" means a certificate signed by the President or
---------------------
any Vice President and by the Treasurer or an Assistant Treasurer or the
Controller or an Assistant Controller or the Secretary or an Assistant Secretary
of the Company that is delivered to the Trustee in accordance with the terms
hereof. Each such certificate shall include the statements provided for in
Section 14.7, if and to the extent required by the provisions of such Section.
"Opinion of Counsel" means an opinion in writing of legal counsel, who
------------------
may be an employee of or counsel for the Company, that is delivered to the
Trustee in accordance with the terms hereof. Each such opinion shall include the
statements provided for in Section 14.7, if and to the extent required by the
provisions of such Section.
"Outstanding", when used with reference to Debt Securities of any
-----------
series, means, subject to the provisions of Section 8.4, as of any particular
time, all Debt Securities of that series theretofore authenticated and delivered
by the Trustee under this Indenture, except (a) Debt Securities theretofore
canceled by the Trustee or any paying agent, or delivered to the Trustee or any
paying agent for cancellation or that have previously been canceled; (b) Debt
Securities or portions thereof for the payment or redemption of which moneys or
Governmental Obligations in the necessary amount shall have been deposited in
trust with the Trustee or with any paying agent (other than the Company) or
shall have been set aside and segregated in trust by the Company (if the Company
shall act as its own paying agent); provided, however, that if such Debt
-------- -------
Securities or portions of such Debt Securities are to be redeemed prior to the
maturity thereof, notice of such redemption shall have been given as provided in
Section 3.2, or provision satisfactory to the Trustee shall have been made for
giving such notice; (c) Debt Securities in lieu of or in substitution for which
other Debt Securities shall have been authenticated and delivered pursuant to
the terms of Section 2.7; and (d) Debt Securities, except to the extent provided
in Sections 11.1 and 11.2, with respect to which the Company has effected
defeasance and/or covenant defeasance as provided in Article XI.
"Person" means any individual, corporation, partnership, limited
------
liability company, joint venture, joint-stock company, unincorporated
organization or government or any agency or political subdivision thereof.
"Predecessor Security" of any particular Debt Security means every
--------------------
previous Debt Security evidencing all or a portion of the same debt and
guarantee as that evidenced by such particular Debt Security; and, for the
purposes of this definition, any Debt Security authenticated and delivered under
Section 2.7 in lieu of a lost, destroyed or stolen Debt Security shall be deemed
to evidence the same debt as the lost, destroyed or stolen Debt Security.
"Preferred Securities" means undivided beneficial interests in the
--------------------
assets of an Arvin Trust which rank pari passu with Common Securities issued by
such Arvin Trust; provided, however, that upon the occurrence of an Event of
-------- -------
Default, the rights of holders of Common Securities to payment in respect of
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distributions and payments upon liquidation, redemption and otherwise are
subordinated to the rights of holders of Preferred Securities.
"Preferred Securities Guarantee" means any guarantee that the Company
------------------------------
may enter into with Wilmington Trust Company or any other Person or Persons that
operates directly or indirectly for the benefit of holders of Preferred
Securities of an Arvin Trust.
"Responsible Officer," when used with respect to the Trustee, means the
-------------------
chairman or any vice-chairman of the board of directors, the president, any
vice-president, any assistant vice-president, the secretary, any assistant
secretary, the Treasurer, any assistant treasurer, any trust officer or
assistant trust officer or other officer of the Trustee customarily performing
functions similar to those performed by the Persons who at the time shall be
such officers, respectively, or to whom any corporate trust matter is referred
because of his or her knowledge of and familiarity with the particular subject.
"Securities Act" means the Securities Act of 1933, as amended from time
--------------
to time, or any successor legislation.
"Securityholder", "Holder of Debt Securities", "Registered Holder", or
-------------- ------------------------- -----------------
other similar term, means the Person or Persons in whose name or names a
particular Debt Security shall be registered on the books of the Company kept
for that purpose in accordance with the terms of this Indenture.
"Security Register" and "Security Registrar" have the respective
----------------- ------------------
meanings set forth in Section 2.5.
"Senior Indebtedness" means, with respect to the Company, (i) the
-------------------
principal, premium, if any, and interest in respect of (A) indebtedness of the
Company for money borrowed and (B) indebtedness evidenced by securities,
debentures, bonds or other similar instruments issued by the Company, (ii) all
capital lease obligations of the Company, (iii) all obligations of the Company
issued or assumed as the deferred purchase price of property, all conditional
sale obligations of the Company and all obligations of the Company under any
title retention agreement (but excluding trade accounts payable arising in the
ordinary course of business); (iv) all obligations of the Company for the
reimbursement on any letter of credit, banker's acceptance, security purchase
facility or similar credit transaction; (v) all obligations of the type referred
to in clauses (i) through (iv) of other Persons for the payment of which the
Company is responsible or liable as obligor, guarantor or otherwise, (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 the Company (whether or not such
obligation is assumed by the Company), and (vii) all obligations of the Company
under guarantees in respect of operating lease payments of its Subsidiaries or
under guarantees in respect of the obligations of any trust, partnership or
other entity that has been or is established as a lease financing entity of the
Company ("a Lease Financing Entity") which guarantees were, in either case,
incurred in connection with the issuance by such Lease Financing Entity of
indebtedness or other securities, including without limitation all obligations
of the Company under that certain Guarantee Agreement dated as of July 27, 1995,
as amended from time to time, by the Company in favor of State Street Bank and
Trust Company of Connecticut, National Association, and under that certain
Guarantee Agreement dated as of November 28, 1995, as amended from time to time,
by the Company in favor of State Street Bank and Trust Company of Connecticut,
National Association; except in each case for (1) any such indebtedness that is
by its terms subordinated to or pari passu with the Debt Securities, and (2) any
indebtedness between or among the Company and its affiliates, including all
other debt securities and guarantees in respect of those debt
5
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securities (other than guarantees referred to in clause (vii) herein) issued to
any trust, or a trustee of such trust, partnership, or other entity affiliated
with the Company that is a financing entity of the Company (a "financing
entity") in connection with the issuance by such financing entity of securities
that are similar to the Preferred Securities.
"Subsidiary" means, with respect to any Person, (i) any corporation at
----------
least a majority of whose outstanding Voting Stock shall at the time be owned,
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, (ii) any general
partnership, joint venture or similar entity, at least a majority of whose
outstanding partnership or similar interests shall at the time be owned by such
Person, or by one or more of its Subsidiaries, or by such Person and one or more
of its Subsidiaries and (iii) any limited partnership of which such Person or
any of its Subsidiaries is a general partner.
"Trustee" means Wilmington Trust Company and, subject to the provisions
-------
of Article VII, shall also include its successors and assigns, and, if at any
time there is more than one Person acting in such capacity hereunder, "Trustee"
shall mean each such Person. The term "Trustee," as used with respect to a
particular series of Debt Securities, shall mean the trustee with respect to
that series.
"Trust Indenture Act" means the Trust Indenture Act of 1939, subject to
-------------------
the provisions of Sections 9.1, 9.2 and 10.1, as in effect at the date of
execution of this instrument.
"Trust Securities" means Common Securities and Preferred Securities.
----------------
"Voting Stock", as applied to stock of any Person, means shares,
------------
interests, participations or other equivalents in the equity interest (however
designated) in such Person having ordinary voting power for the election of a
majority of the directors (or the equivalent) of such Person, other than shares,
interests, participations or other equivalents having such power only by reason
of the occurrence of a contingency.
ARTICLE II
ISSUE, DESCRIPTION, TERMS, EXECUTION,
REGISTRATION AND EXCHANGE OF DEBT SECURITIES
SECTION 2.1. Designation and Terms of Debt Securities.
----------------------------------------
The aggregate principal amount of Debt Securities that may be
authenticated and delivered under this Indenture is unlimited. The Debt
Securities may be issued in one or more series up to the aggregate principal
amount of Debt Securities of that series from time to time authorized by or
pursuant to a Board Resolution of the Company, or pursuant to one or more
indentures supplemental hereto. Prior to the initial issuance of Debt
Securities of any series, there shall be established in or pursuant to a Board
Resolution of the Company, and set forth in an Officers' Certificates, or
established in one or more indentures supplemental hereto:
(a) the title of the series of Debt Security (which shall distinguish
the Debt Securities of that series from all other series of Debt Securities);
(b) any limit upon the aggregate principal amount of the Debt
Securities of that series that may be authenticated and delivered under this
Indenture (except for Debt Securities authenticated and
6
<PAGE>
delivered upon registration of transfer of, or in exchange for, or in lieu of,
other Debt Securities of that series);
(c) the date or dates on which the principal of the Debt Securities of
that series is payable;
(d) the rate or rates at which the Debt Securities of that series shall
bear interest or the manner of calculation of such rate or rates, if any;
(e) the date or dates from which such interest shall accrue, the
Interest Payment Dates on which such interest will be payable or the manner of
determination of such Interest Payment Dates and the record date for the
determination of holders to whom interest is payable on any such Interest
Payment Dates;
(f) the right, if any, to defer the interest payment periods and the
duration of such extension;
(g) the period or periods within which, the price or prices at which,
and the terms and conditions upon which, Debt Securities of that series may be
redeemed, in whole or in part, at the option of the Company;
(h) the obligation, if any, of the Company to redeem or purchase Debt
Securities of that series pursuant to any sinking fund or analogous provisions
(including payments made in cash in participation of future sinking fund
obligations) 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, Debt Securities of that series shall be redeemed or purchased, in whole
or in part, pursuant to such obligation;
(i) the form of the Debt Securities of that series, including the form
of the Certificate of Authentication for such series;
(j) if other than denominations of twenty-five U.S. dollars ($25) or
any integral multiple thereof, the denominations in which the Debt Securities of
that series shall be issuable;
(k) whether the Debt Securities are issuable as a Global Security and,
in such case, the identity of the Depositary for such series; and
(l) any and all other terms with respect to such series (which terms
shall not be inconsistent with the terms of this Indenture), including any terms
which may be required by or advisable under United States laws or regulations or
advisable in connection with the marketing of Debt Securities of that series.
All Debt Securities of any one series shall be substantially identical
except as to denomination and except as may otherwise be provided in or pursuant
to any such Board Resolution or in any indentures supplemental hereto.
If any of the terms of a 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
7
<PAGE>
of the Company and delivered to the Trustee at or prior to the delivery of the
Officers' Certificate setting forth the terms of such series.
SECTION 2.2. Form of Debt Securities and Trustee's Certificate.
-------------------------------------------------
The Debt Securities of any series and the Trustee's certificate of
authentication to be borne by such Debt Securities shall be substantially of the
tenor and purport as set forth in one or more indentures supplemental hereto or
as provided in a Board Resolution and as set forth in an Officers' Certificate,
and may have such letters, numbers or other marks of identification or
designation and such legends or endorsements printed, lithographed or engraved
thereon as the Company may deem appropriate and as are not inconsistent with the
provisions of this Indenture, 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 Debt Securities of that series may be listed, or
to conform to usage.
SECTION 2.3. Denominations; Provisions for Payment.
-------------------------------------
The Debt Securities shall be issuable as registered Debt Securities and
in the denominations of twenty-five U.S. dollars ($25) or any integral multiple
thereof, subject to Section 2.1(j). The Debt Securities of a particular series
shall bear interest payable on the Interest Payment Dates and at the rate
specified with respect to that series. The principal of and the interest on the
Debt Securities of any series, as well as any premium thereon in case of
redemption thereof prior to maturity, shall be payable in the coin or currency
of the United States of America that at the time of such payment is legal tender
for public and private debt, at the office or agency of the Company maintained
for that purpose in the Borough of Manhattan, the City and State of New York.
Each Debt Security shall be dated the date of its authentication. Interest on
the Debt Securities shall be computed on the basis of a 360-day year composed of
twelve 30-day months.
The interest installment on any Debt Security that is payable, and is
punctually paid or duly provided for, on any Interest Payment Date for Debt
Securities of that series shall be paid to the Person in whose name said Debt
Security (or one or more Predecessor Debt Securities) is registered at the close
of business on the regular record date for such interest installment. In the
event that any Debt Security of a particular series or portion thereof is called
for redemption and the redemption date is subsequent to a regular record date
with respect to any Interest Payment Date and prior to such Interest Payment
Date, interest on such Debt Security will be paid upon presentation and
surrender of such Debt Security as provided in Section 3.3.
Any interest on any Debt Security that is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date for Debt
Securities of that series (herein called "Defaulted Interest") shall forthwith
cease to be payable to the registered holder on the relevant regular record date
by virtue of having been such holder; and such Defaulted Interest shall be paid
by the Company, at its election, as provided in clause (1) or clause (2) below:
(1) The Company may make payment of any Defaulted Interest on Debt
Securities to the Persons in whose names such Debt Securities (or their
respective Predecessor Debt 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 such Debt Security and the
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<PAGE>
date of the proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date
of the proposed payment, such money when deposited to be held in trust for
the benefit of the Persons entitled to such Defaulted Interest as in this
clause provided. Thereupon the Trustee shall fix a special record date for
the payment of such Defaulted Interest which shall not be more than 15 nor
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
Securityholder at his or her 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 mailed as aforesaid, such Defaulted Interest shall be
paid to the Persons in whose names such Debt Securities (or their
respective Predecessor Debt Securities) are registered on such special
record date and shall be no longer payable pursuant to the following clause
(2).
(2) The Company may make payment of any Defaulted Interest on any Debt
Securities in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Debt Securities may
be listed, and upon such notice as may be required by such exchange, if,
after notice given by the Company to the Trustees of the proposed payment
pursuant to this clause, such manner of payment shall be deemed practicable
by the Trustee.
Unless otherwise provided in a Board Resolution, in an Officers'
Certificate or in one or more indentures supplemental hereto establishing the
terms of any series of Debt Securities pursuant to Section 2.1 hereof, the term
"regular record date" as used in this Section with respect to a series of Debt
Securities with respect to any Interest Payment Date for such series shall mean
either the fifteenth day of the month immediately preceding the month in which
an Interest Payment Date established for such series pursuant to Section 2.1
shall occur, if such Interest Payment Date is the first day of a month, or the
last day of the month immediately preceding the month in which an Interest
Payment Date established for such series pursuant to Section 2.1 hereof shall
occur, if such Interest Payment Date is the fifteenth day of a month, whether or
not such date is a Business Day.
Subject to the foregoing provisions of this Section, each Debt Security
of a series delivered under this Indenture upon transfer of or in exchange for
or in lieu of any other Debt Security of such series shall carry the rights to
interest accrued and unpaid, and to accrue, that were carried by such other Debt
Security.
SECTION 2.4. Execution and Authentication.
----------------------------
The Debt Securities shall be signed on behalf of the Company by its
President or one of its Vice Presidents, under its corporate seal attested by
its Secretary or one of its Assistant Secretaries. Signatures may be in the form
of a manual or facsimile signature. The Company may use the facsimile signature
of any Person who shall have been President or Vice President thereof, or of any
Person who shall have been a Secretary or Assistant Secretary thereof,
notwithstanding the fact that at the time the Debt Securities shall be
authenticated and delivered or disposed of such Person shall have ceased to be
the President or a Vice President, or the Secretary or an Assistant Secretary,
of the Company. The seal of the
9
<PAGE>
Company may be in the form of a facsimile of such seal and may be impressed,
affixed, imprinted or otherwise reproduced on the Debt Securities. The Debt
Securities may contain such notations, legends or endorsements required by law,
stock exchange rule or usage. Each Debt Security shall be dated the date of its
authentication by the Trustee.
A Debt Security shall not be valid until authenticated manually by an
authorized signatory of the Trustee, or by an Authenticating Agent. Such
signature shall be conclusive evidence that the Debt Security so authenticated
has been duly authenticated and delivered hereunder and that the holder is
entitled to the benefits of this Indenture.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Debt Securities of any series executed
by the Company to the Trustee for authentication, together with a written order
of the Company for the authentication and delivery of such Debt Securities,
signed by its President or any Vice President and its Treasurer or any Assistant
Treasurer, and the Trustee in accordance with such written order shall
authenticate and deliver such Debt Securities.
In authenticating such Debt Securities and accepting the additional
responsibilities under this Indenture in relation to such Debt Securities, the
Trustee 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 form and
terms thereof have been established in conformity with the provisions of this
Indenture.
The Trustee shall not be required to authenticate such Debt Securities
if the issue of such Debt Securities pursuant to this Indenture will affect the
Trustee's own rights, duties or immunities under the Debt Securities and this
Indenture or otherwise in a manner that is not reasonably acceptable to the
Trustee.
SECTION 2.5. Registration of Transfer and Exchange.
-------------------------------------
(a) Debt Securities of any series may be exchanged upon presentation
thereof at the Corporate Trust Office or such other location designated by the
Company pursuant to Section 4.2 for other Debt Securities of such series of
authorized denominations, and for a like aggregate principal amount, upon
payment of a sum sufficient to cover any tax or other governmental charge in
relation thereto, all as provided in this Section. In respect of any Debt
Securities so surrendered for exchange, the Company shall execute, the Trustee
shall authenticate and such office or agency shall deliver in exchange therefor
the Debt Security or Debt Securities of the same series that the Securityholder
making the exchange shall be entitled to receive, bearing numbers not
contemporaneously outstanding.
(b) The Company shall keep, or cause to be kept, at the Corporate Trust
Office or such other location designated by the Company pursuant to Section 4.2
a register or registers (herein referred to as the "Security Register") in
which, subject to such reasonable regulations as it may prescribe, the Company
shall register the Debt Securities and the transfers of Debt Securities as in
this Article provided and which at all reasonable times shall be open for
inspection by the Trustee. The registrar for the purpose of registering Debt
Securities and the transfer of Debt Securities as herein provided shall be
appointed as authorized by a Board Resolution (the "Security Registrar").
Upon surrender for transfer of any Debt Security at the Corporate Trust
Office or such other location designated by the Company pursuant to Section 4.2,
the Company shall execute, the Trustee shall
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<PAGE>
authenticate, and such office or agency shall deliver in the name of the
transferee or transferees a new Debt Security or Debt Securities of the same
series as the Debt Security presented for a like aggregate principal amount.
All Debt Securities presented or surrendered for exchange or
registration of transfer, as provided in this Section, shall be accompanied (if
so required by the Company or the Security Registrar) by a written instrument or
instruments of transfer, in form satisfactory to the Company or the Security
Registrar, duly executed by the registered holder or by such holder's duly
authorized attorney in writing.
(c) No service charge shall be made for any exchange or registration of
transfer of Debt Securities, or issue of new Debt Securities in case of partial
redemption of any series, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge in relation thereto,
other than exchanges pursuant to Section 2.6, Section 3.3(b) and Section 9.4 not
involving any transfer.
(d) The Company shall not be required (i) to issue, exchange or
register the transfer of any Debt Securities during a period beginning at the
opening of business 15 days before the day of the mailing of a notice of
redemption of less than all the Outstanding Debt Securities of the same series
and ending at the close of business on the day of such mailing, nor (ii) to
register the transfer of or exchange any Debt Securities of any series or
portions thereof called for redemption. The provisions of this Section 2.5 are,
with respect to any Global Security, subject to Section 2.11 hereof.
SECTION 2.6. Temporary Securities.
--------------------
Pending the preparation of definitive Debt Securities of any series,
the Company may execute, and the Trustee shall authenticate and deliver,
temporary Debt Securities (printed, lithographed or typewritten) of any
authorized denomination. Such temporary Debt Securities shall be substantially
in the form of the definitive Debt Securities in lieu of which they are issued,
but with such omissions, insertions and variations as may be appropriate for
temporary Debt Securities, all as may be determined by the Company. Every
temporary Debt Security of any series shall be executed by the Company and be
authenticated by the Trustee upon the same conditions and in substantially the
same manner, and with like effect, as the definitive Debt Securities of such
series. Without unnecessary delay the Company will execute and furnish
definitive Debt Securities of such series and thereupon any or all temporary
Debt Securities of such series may be surrendered in exchange therefor (without
charge to the holders), at the Corporate Trust Office or such location
designated by the Company pursuant to Section 4.2, and the Trustee shall
authenticate, and such Corporate Trust Office or location shall deliver, in
exchange for such temporary Debt Securities an equal aggregate principal amount
of definitive Debt Securities of such series, unless the Company advises the
Trustee to the effect that definitive Debt Securities need not be executed and
furnished until further notice from the Company. Until so exchanged, the
temporary Debt Securities of such series shall be entitled to the same benefits
under this Indenture as definitive Debt Securities of such series authenticated
and delivered hereunder.
SECTION 2.7. Mutilated, Destroyed, Lost or Stolen Debt Securities.
----------------------------------------------------
In case any temporary or definitive Debt Security shall become
mutilated or be destroyed, lost or stolen, the Company (subject to the next
succeeding sentence) shall execute, and upon the Company's request, the Trustee
(subject as aforesaid) shall authenticate and deliver, a new Debt Security of
the same series, bearing a number not contemporaneously outstanding, in exchange
and substitution for the mutilated
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Debt Security, or in lieu of and in substitution for the Debt Security so
destroyed, lost or stolen. In every case the applicant for a substituted Debt
Security shall furnish to the Company and the Trustee such security or indemnity
as may be required by them to save each of them harmless, and, in every case of
destruction, loss or theft, the applicant shall also furnish to the Company and
the Trustee evidence to their satisfaction of the destruction, loss or theft of
the applicant's Debt Security and of the ownership thereof. The Trustee may
authenticate any such substituted Debt Security and deliver the same upon the
written request or authorization of any officer of the Company. Upon the
issuance of any substituted Debt Security, 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. In case any Debt Security that
has matured or is about to mature shall become mutilated or be destroyed, lost
or stolen, the Company may, instead of issuing a substitute Debt Security, pay
or authorize the payment of the same (without surrender thereof except in the
case of a mutilated Debt Security) if the applicant for such payment shall
furnish to the Company and the Trustee such security or indemnity as they may
require to save them harmless, and, in case of destruction, loss or theft,
evidence to the satisfaction of the Company and the Trustee of the destruction,
loss or theft of such Debt Security and of the ownership thereof.
Every replacement Debt Security issued pursuant to the provisions of
this Section shall constitute an additional contractual obligation of the
Company, whether or not the mutilated, destroyed, lost or stolen Debt Security
shall be found at any time, or be enforceable by anyone, and shall be entitled
to all the benefits of this Indenture equally and proportionately with any and
all other Debt Securities of the same series duly issued hereunder. All Debt
Securities shall be held and owned upon the express condition that the foregoing
provisions are exclusive with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Debt Securities, and shall preclude (to the
extent lawful) any and all other rights or remedies, notwithstanding any law or
statute existing or hereafter enacted to the contrary with respect to the
replacement or payment of negotiable instruments or other securities without
their surrender.
SECTION 2.8. Cancellation.
------------
All Debt Securities surrendered for the purpose of payment, redemption,
exchange or registration of transfer shall, if surrendered to the Company or any
paying agent, be delivered to the Trustee for cancellation, or, if surrendered
to the Trustee, shall be canceled by it, and no Debt Securities shall be issued
in lieu thereof except as expressly required or permitted by any of the
provisions of this Indenture. On request of the Company at the time of such
surrender, the Trustee shall deliver to the Company canceled Debt Securities
held by the Trustee. In the absence of such request the Trustee may dispose of
canceled Debt Securities in accordance with its standard procedures and deliver
a certificate of disposition to the Company. If the Company shall otherwise
acquire any of the Debt Securities, however, such acquisition shall not operate
as a redemption or satisfaction of the indebtedness represented by such Debt
Securities unless and until the same are delivered to the Trustee for
cancellation.
SECTION 2.9. Benefits of Indenture.
---------------------
Nothing in this Indenture or in the Debt Securities, express or
implied, shall give or be construed to give to any Person, other than the
parties hereto and the holders of the Debt Securities (and, with respect to the
provisions of Article XIII, the holders of Senior Indebtedness) any legal or
equitable right, remedy or claim under or in respect of this Indenture, or under
any covenant, condition or provision herein contained; all such covenants,
conditions and provisions being for the sole benefit of the parties hereto and
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of the holders of the Debt Securities (and, with respect to the provisions of
Article XIII, the holders of Senior Indebtedness).
SECTION 2.10. Authenticating Agent.
--------------------
So long as any of the Debt Securities of any series remain Outstanding,
there may be an Authenticating Agent for any or all such series of Debt
Securities which the Trustee shall have the right to appoint. Said
Authenticating Agent shall be authorized to act on behalf of the Trustee to
authenticate Debt Securities of such series issued upon exchange, transfer or
partial redemption thereof, and Debt 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. All references in
this Indenture to the authentication of Debt Securities by the Trustee shall be
deemed to include authentication by an Authenticating Agent for such series.
Each Authenticating Agent shall be acceptable to the Company and shall be a
corporation that has a combined capital and surplus, as most recently reported
or determined by it, sufficient under the laws of any jurisdiction under which
it is organized or in which it is doing business to conduct a trust business,
and that is otherwise authorized under such laws to conduct such business and is
subject to supervision or examination by federal or state authorities. If at
any time any Authenticating Agent shall cease to be eligible in accordance with
these provisions, it shall resign immediately.
Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Trustee and to the Company. The Trustee may at any
time (and upon request by the Company shall) terminate the agency of any
Authenticating Agent by giving written notice of termination to such
Authenticating Agent and to the Company. Upon resignation, termination or
cessation of eligibility of any Authenticating Agent, the Trustee may appoint an
eligible successor Authenticating Agent acceptable to the Company. Any
successor Authenticating Agent, upon acceptance of its appointment hereunder,
shall become vested with all the rights, powers and duties of its predecessor
hereunder as if originally named as an Authenticating Agent pursuant hereto.
SECTION 2.11. Global Securities.
-----------------
(a) If the Company shall establish pursuant to Section 2.1 that the
Debt Securities of a particular series are to be issued as a Global Security or
Global Securities, then the Company shall execute and the Trustee shall, in
accordance with Section 2.4, authenticate and deliver, a Global Security or
Global Securities that (i) shall represent, and shall be denominated in an
amount equal to the aggregate principal amount of, all of the Outstanding Debt
Securities of such series, (ii) shall be registered in the name of the
Depositary or its nominee, (iii) shall be delivered by the Trustee to the
Depositary or pursuant to the Depositary's instruction, and (iv) shall bear a
legend substantially to the following effect: "Except as otherwise provided in
Section 2.11 of the Indenture, this Debt Security may be transferred, in whole
but not in part, only to another nominee of the Depositary or to a successor
Depositary or to a nominee of such successor Depositary."
(b) Except as provided in clause (c), notwithstanding the provisions of
Section 2.5, the Global Security or Global Securities of a series may be
transferred, in whole but not in part and in the manner provided in Section 2.5,
only to another nominee of the Depositary for such series, or to a successor
Depositary for such series selected or approved by the Company or to a nominee
of such successor Depositary.
13
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(c) If at any time the Depositary for a series of the Debt Securities
notifies the Company that it is unwilling or unable to continue as Depositary
for such series or if at any time the Depositary for such series shall no longer
be registered or in good standing under the Exchange Act, or other applicable
statute or regulation, at a time when the Depositary is required to be so
registered to act as such Depositary and a successor Depositary 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, this Section 2.11
shall no longer be applicable to the Debt Securities of such series and the
Company will execute, and subject to Section 2.5, the Trustee will authenticate
and deliver the Debt Securities of such series in definitive registered form
without coupons, in authorized denominations, and in an aggregate principal
amount equal to the principal amount of the Global Security or Global Securities
of such series in exchange for such Global Security or Global Securities. In
addition, the Company may at any time determine that the Debt Securities of any
series shall no longer be represented by a Global Security or Global Securities
and that the provisions of this Section 2.11 shall no longer apply to the Debt
Securities of such series. In such event, the Company will execute and, subject
to Section 2.5, the Trustee, upon receipt of an Officers' Certificate evidencing
such determination by the Company, will authenticate and deliver the Debt
Securities of such series in definitive registered form without coupons, in
authorized denominations, and in an aggregate principal amount equal to the
principal amount of the Global Security or Global Securities of such series in
exchange for such Global Security or Global Securities. Upon the exchange of
the Global Security or Global Securities for such Debt Securities in definitive
registered form without coupons, in authorized denominations, the Global
Security or Global Securities shall be canceled by the Trustee. Such Debt
Securities in definitive registered form issued in exchange for the Global
Security or Global Securities pursuant to this Section 2.11(c) shall be
registered in such names and in such authorized denominations as the Depositary,
pursuant to instructions from its direct or indirect participants or otherwise,
shall instruct the Trustee. The Trustee shall deliver such Debt Securities to
the Depositary for delivery to the Persons in whose names such Debt Securities
are so registered.
ARTICLE III
REDEMPTION OF DEBT SECURITIES AND SINKING FUND PROVISIONS
SECTION 3.1. Redemption.
----------
The Company may redeem the Debt Securities of any series issued
hereunder on and after the dates and in accordance with the terms established
for such series pursuant to Section 2.1.
SECTION 3.2. Notice of Redemption.
--------------------
(a) In case the Company shall desire to exercise such right to redeem
all or, as the case may be, a portion of the Debt Securities of any series in
accordance with the right reserved so to do, the Company shall, or shall cause
the Trustee to, give notice of such redemption to holders of the Debt Securities
of such series to be redeemed by mailing, first class postage prepaid, a notice
of such redemption not less than 30 days and not more than 60 days before the
date fixed for redemption of that series to such holders at their last addresses
as they shall appear upon the Security Register unless a shorter period is
specified in the Debt Securities to be redeemed. Any notice that is mailed in
the manner herein provided shall be conclusively presumed to have been duly
given, whether or not the registered holder receives the notice. In any case,
failure duly to give such notice to the holder of any Debt Security of any
series designated for redemption in whole or in part, or any defect in the
notice, shall not affect the validity of the proceedings for the redemption of
any other Debt Securities of such series or any other series. In the case of
any redemption
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<PAGE>
of Debt Securities prior to the expiration of any restriction on such redemption
provided in the terms of such Debt Securities or elsewhere in this Indenture,
the Company shall furnish the Trustee with an Officers' Certificate evidencing
compliance with any such restriction.
Each such notice of redemption shall specify the date fixed for
redemption and the redemption price at which Debt Securities of that series are
to be redeemed, and shall state that payment of the redemption price of such
Debt Securities to be redeemed will be made at the Corporate Trust Office, upon
presentation and surrender of such Debt Securities, that interest accrued to the
date fixed for redemption will be paid as specified in said notice, that from
and after said date interest will cease to accrue and that the redemption is for
a sinking fund, if such is the case. If less than all the Debt Securities of a
series are to be redeemed in whole or in part, the notice to the holders of Debt
Securities of that series to be redeemed shall specify the particular Debt
Securities to be so redeemed. In case any Debt Security is to be redeemed in
part only, the notice that relates to such Debt Security shall state the portion
of the principal amount thereof to be redeemed and shall state that on and after
the redemption date, upon surrender of such Debt Security, a new Debt Security
or Debt Securities of such series in principal amount equal to the unredeemed
portion thereof will be issued.
(b) If less than all the Debt Securities of a series are to be
redeemed, the Company shall give the Trustee at least 45 days' notice in advance
of the date fixed for redemption as to the aggregate principal amount of Debt
Securities of the series to be redeemed, and thereupon the Trustee shall select,
by lot or in such other manner as it shall deem appropriate and fair in its
discretion and that may provide for the selection of a portion or portions
(equal to twenty-five U.S. dollars ($25) or any integral multiple thereof) of
the principal amount of such Debt Securities of a denomination larger than $25,
the Debt Securities to be redeemed and shall thereafter promptly notify the
Company in writing of the numbers of the Debt Securities to be redeemed, in
whole or in part.
The Company may, if and whenever it shall so elect, by delivery of
instructions signed on its behalf by its President or any Vice President,
instruct the Trustee or any paying agent to call all or any part of the Debt
Securities of a particular series for redemption and to give notice of
redemption in the manner set forth in this Section, such notice to be in the
name of the Company or its own name as the Trustee or such paying agent may deem
advisable. In any case in which notice of redemption is to be given by the
Trustee or any such paying agent, the Company shall deliver or cause to be
delivered to, or permit to remain with, the Trustee or such paying agent, as the
case may be, such Security Register, transfer books or other records, or
suitable copies or extracts therefrom, sufficient to enable the Trustee or such
paying agent to give any notice by mail that may be required under the
provisions of this Section.
SECTION 3.3. Payment Upon Redemption.
-----------------------
(a) If the giving of notice of redemption shall have been completed as
above provided, the Debt Securities or portions of Debt Securities of the series
to be redeemed specified in such notice shall become due and payable on the date
and at the place stated in such notice at the applicable redemption price,
together with interest accrued to the date fixed for redemption, and interest on
such Debt Securities or portions of Debt Securities shall cease to accrue on and
after the date fixed for redemption, unless the Company shall default in the
payment of such redemption price and accrued interest with respect to any such
Debt Security or portion thereof. On presentation and surrender of such Debt
Securities on or after the date fixed for redemption at the place of payment
specified in the notice, said Debt Securities shall be paid and redeemed at the
applicable redemption price for such series, together with interest accrued
thereon to the date
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<PAGE>
fixed for redemption (but if the date fixed for redemption is an Interest
Payment Date, the interest installment payable on such date shall be payable to
the registered holder at the close of business on the applicable record date
pursuant to Section 2.3).
(b) Upon presentation of any Debt Security of such series that is to be
redeemed in part only, the Company shall execute and the Trustee shall
authenticate and the office or agency where the Debt Security is presented shall
deliver to the holder thereof, at the expense of the Company, a new Debt
Security or Debt Securities of the same series, of authorized denominations in
principal amount equal to the unredeemed portion of the Debt Security so
presented.
SECTION 3.4. Sinking Fund.
-------------
The provisions of Sections 3.4, 3.5 and 3.6 shall be applicable to any
sinking fund for the retirement of Debt Securities of a series, except as
otherwise specified as contemplated by Section 2.1 for Debt Securities of such
series.
The minimum amount of any sinking fund payment provided for by the
terms of Debt 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 Debt Securities of any series is herein referred to as an
"optional sinking fund payment." If provided for by the terms of Debt
Securities of any series, the cash amount of any sinking fund payment may be
subject to reduction as provided in Section 3.5. Each sinking fund payment
shall be applied to the redemption of Debt Securities of any series as provided
for by the terms of Debt Securities of such series.
SECTION 3.5. Satisfaction of Sinking Fund Payments with Debt Securities.
----------------------------------------------------------
The Company (i) may deliver Outstanding Debt Securities of a series
(other than any Debt Securities previously called for redemption) and (ii) may
apply as a credit Debt Securities of a series that have been redeemed either at
the election of the Company pursuant to the terms of such Debt Securities or
through the application of permitted optional sinking fund payments pursuant to
the terms of such Debt Securities, in each case in satisfaction of all or any
part of any sinking fund payment with respect to the Debt Securities of such
series required to be made pursuant to the terms of such Debt Securities as
provided for by the terms of such series, provided that such Debt Securities
have not been previously so credited. Such Debt Securities shall be received
and credited for such purpose by the Trustee at the redemption price specified
in such Debt Securities for redemption through operation of the sinking fund and
the amount of such sinking fund payment shall be reduced accordingly.
SECTION 3.6. Redemption of Debt Securities for Sinking Fund.
----------------------------------------------
Not less than 45 days prior to each sinking fund payment date for any
series of Debt Securities, the Company will deliver to the Trustee (i) an
Officers' Certificate specifying the amount of the next ensuing sinking fund
payment for that series pursuant to the terms of the series, the portion
thereof, if any, that is to be satisfied by delivering and crediting Debt
Securities of that series pursuant to Section 3.5, and the basis for such credit
and (ii) any Debt Securities to be so delivered. Not less than 30 days before
each such sinking fund payment date, the Trustee shall select the Debt
Securities to be redeemed upon such sinking fund payment date in the manner
specified in Section 3.2 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 3.2. Such
16
<PAGE>
notice having been duly given, the redemption of such Debt Securities shall be
made upon the terms and in the manner stated in Section 3.3.
ARTICLE IV
COVENANTS OF THE COMPANY
SECTION 4.1. Payment of Principal, Premium and Interest.
------------------------------------------
The Company will duly and punctually pay or cause to be paid the
principal of (and premium, if any) and interest on the Debt Securities of each
series at the time and place and in the manner provided herein and established
with respect to such Debt Securities.
SECTION 4.2. Maintenance of Office or Agency.
-------------------------------
So long as any series of the Debt Securities remain Outstanding, the
Company agrees to maintain an office or agency with respect to each such series
at such location or locations as may be designated as provided in this Section
4.2, where (i) Debt Securities of that series may be presented for payment, (ii)
Debt Securities of that series may be presented as hereinabove authorized for
registration of transfer and exchange, and (iii) notices and demands to or upon
the Company in respect of the Debt Securities of that series and this Indenture
may be given or served, such designation to continue with respect to such office
or agency until the Company shall, by written notice signed by its President or
a Vice President and delivered to the trustee, designate some other office or
agency for such purposes or any of them. 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, notices and demands may be
made or served at the Corporate Trust Office of the Trustee, and the Company
hereby appoints the Trustee as its agent to receive all such presentations,
notices and demands.
SECTION 4.3. Paying Agents.
-------------
(a) If the Company shall appoint one or more paying agents for all or
any series of the Debt Securities, other than the Trustee, the Company will
cause each such paying agent to execute and deliver to the Trustee an instrument
in which such agent shall agree with the Trustee, subject to the provisions of
this Section:
(1) that it will hold all sums held by it as such agent for the payment
of the principal of (and premium, if any) or interest on the Debt
Securities of that series (whether such sums have been paid to it by the
Company or by any other obligor of such Debt Securities) in trust for the
benefit of the Persons entitled thereto;
(2) that it will give the Trustee notice of any failure by the Company
(or by any other obligor of such Debt Securities) to make any payment of
the principal of (and premium, if any) or interest on the Debt Securities
of that series when the same shall be due and payable;
(3) that it will, at any time during the continuance of any failure
referred to in the preceding paragraph (a)(2) above, upon the written
request of the Trustee, forthwith pay to the Trustee all sums so held in
trust by such paying agent; and
17
<PAGE>
(4) that it will perform all other duties of paying agent as set forth
in this Indenture.
(b) If the Company shall act as its own paying agent with respect to
any series of the Debt Securities, it will on or before each due date of the
principal of (and premium, if any) or interest on Debt Securities of that
series, set aside, segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay such principal (and premium, if any) or
interest so becoming due on Debt Securities of that series until such sums shall
be paid to such Persons or otherwise disposed of as herein provided and will
promptly notify the Trustee of such action, or any failure (by it or any other
obligor on such Debt Securities) to take such action. Whenever the Company
shall have one or more paying agents for any series of Debt Securities, it will,
prior to each due date of the principal of (and premium, if any) or interest on
any Debt Securities of that series, deposit with the 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 this action or failure
so to act.
(c) Notwithstanding anything in this Section to the contrary, (i) the
agreement to hold sums in trust as provided in this Section is subject to the
provisions of Section 11.5, and (ii) 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 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 terms and conditions 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.
SECTION 4.4. Appointment to Fill Vacancy in Office of Trustee.
------------------------------------------------
The Company, whenever necessary to avoid or fill a vacancy in the
office of Trustee, will appoint, in the manner provided in Section 7.10, a
Trustee, so that there shall at all times be a Trustee hereunder.
SECTION 4.5. Compliance with Consolidation Provisions.
----------------------------------------
The Company will not, while any of the Debt Securities remain
Outstanding, consolidate with, or merge into, any other company or merge any
other company into itself, or sell or convey all or substantially all of its
property to any other company unless the provisions of Article X are complied
with.
SECTION 4.6. Limitation on Dividends.
-----------------------
If Debt Securities are issued to an Arvin Trust or a trustee of such
trust in connection with the issuance of Trust Securities by such Arvin Trust
and (a) there shall have occurred any event that would constitute an Event of
Default, or (b) the Company shall be in default with respect to its payment of
any obligations under the Preferred Securities Guarantee or Common Securities
Guarantee relating to such Trust Securities, or (c) the Company shall have given
notice of its election to defer payments of interest on Debt Securities by
extending the interest payment period as provided in the Board Resolution and
Officers' Certificate or indenture supplemental hereto establishing such series
of Debt Securities, and such period, or any extension thereof, shall be
continuing, then (x) the Company shall not declare or pay any dividend on, make
any distribution with respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to, any of its capital stock (other than (i)
repurchases or acquisitions of the Company's common
18
<PAGE>
shares as contemplated by any employment arrangement, benefit plan or other
similar contract with or for the benefit of employees, officers or directors
entered into in the ordinary course of business, (ii) as a result of an exchange
or conversion of any class or series of the Company's capital stock for the
Company's common shares, provided that such class or series of the Company's
capital stock was outstanding prior to the occurrence of such Event of Default,
(iii) the purchase of fractional interests in shares of the Company's capital
stock pursuant to the conversion or exchange provisions of such Company capital
stock or the security being converted or exchanged, provided that such Company
capital stock or security was outstanding prior to the occurrence of such Event
of Default, or (iv) the payment of any stock dividend where the dividend is paid
in the form of the same stock as that on which the dividend is paid), (y) the
Company shall not directly or indirectly, and shall not allow any of its
Subsidiaries to, 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 Debt Securities, and (z) the Company shall
not make guarantee payments with respect to the foregoing (other than pursuant
to the Guarantees).
SECTION 4.7. Covenants as to Arvin Trusts.
----------------------------
In the event Debt Securities are issued to an Arvin Trust in connection
with the issuance of Trust Securities by such Arvin Trust, for so long as such
Trust Securities remain outstanding, the Company will (i) maintain 100% direct
or indirect ownership of the Common Securities of such Arvin Trust; provided,
--------
however, that any permitted successor of the Company under this Indenture may
- -------
succeed to the Company's ownership of the Common Securities, (ii) not cause, as
sponsor of such Arvin Trust, or permit, as holder of Common Securities of such
Arvin Trust, the dissolution, winding-up or termination of such Arvin Trust,
except in connection with a distribution of Debt Securities as provided in the
Declaration and in connection with certain mergers, consolidations or
amalgamations permitted by the Declaration, and (iii) use its reasonable efforts
to cause such Arvin Trust (a) to remain a statutory business trust, except in
connection with a distribution of Debt Securities, the redemption of all of the
Trust Securities of such Arvin Trust or certain mergers, consolidations or
amalgamations, each as permitted by the Declaration of such Arvin Trust, and (b)
to otherwise continue to be classified for United States federal income tax
purposes as a grantor trust.
SECTION 4.8. Corporate Existence.
-------------------
The Company will, subject to the provisions of Article X, at all times
maintain its corporate existence and right to carry on business and will duly
procure all renewals and extensions thereof, and, to the extent necessary or
desirable in the operation of its business, will use its best efforts to
maintain, preserve and renew all of its rights, powers, privileges and
franchises.
ARTICLE V
SECURITYHOLDERS, LISTS AND REPORTS
BY THE COMPANY AND THE TRUSTEE
SECTION 5.1. Company to Furnish Trustee Names and Addresses of
-------------------------------------------------
Securityholders.
- ---------------
The Company will furnish or cause to be furnished to the Trustee (a) on
each regular record date (as defined in Section 2.3) a list, in such form as the
Trustee may reasonably require, of the names and addresses of the holders of
each series of Debt Securities as of such regular record date, provided,
--------
however, the Company shall not be obligated to furnish or cause such list to be
- -------
furnished at any time that the list shall not differ in any respect from the
most recent list furnished to the Trustee by the Company and (b) at such
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<PAGE>
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 in either case, no such list need be furnished for any
- -------- -------
series for which the Trustee shall be the Security Registrar.
SECTION 5.2. Preservation Of Information; Communications With
------------------------------------------------
Securityholders.
- ---------------
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of the holders of
Debt Securities contained in the most recent list furnished to it as provided in
Section 5.1 and as to the names and addresses of holders of Debt Securities
received by the Trustee in its capacity as Security Registrar (if acting in such
capacity).
(b) The Trustee may destroy any list furnished to it as provided in
Section 5.1 upon receipt of a new list so furnished.
(c) Securityholders may communicate as provided in Section 312(b) of
the Trust Indenture Act with other Securityholders with respect to their rights
under this Indenture or under the Debt Securities.
SECTION 5.3. Reports By the Company.
----------------------
(a) The Company covenants and agrees to file with the Trustee, within
15 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) that 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 such sections, then to file with the
Trustee and the Commission, in accordance with the rules and regulations
prescribed from time to time by the Commission, such of the supplementary and
periodic information, documents and reports that 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.
(b) The Company covenants and agrees to file with the Trustee and the
Commission, in accordance with the rules and regulations prescribed from to time
by the Commission, such additional information, documents and reports with
respect to compliance by the Company with the conditions and covenants provided
for in this Indenture as may be required from time to time by such rules and
regulations.
(c) The Company covenants and agrees to transmit by mail, first class
postage prepaid, or reputable overnight delivery service that provides for
evidence of receipt, to the Securityholders, as their names and addresses appear
upon the Security Register, within 30 days after the filing thereof with the
Trustee, such summaries of any information, documents and reports required to be
filed by the Company pursuant to subsections (a) and (b) of this Section as may
be required by rules and regulations prescribed from time to time by the
Commission.
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SECTION 5.4. Reports by the Trustee.
----------------------
(a) On or before July 15 in each year in which any of the Debt
Securities are Outstanding, the Trustee shall transmit by mail, first class
postage prepaid, to the Securityholders, as their names and addresses appear
upon the Security Register, a brief report dated as of the preceding May 15, if
and to the extent required under Section 313(a) of the Trust Indenture Act.
(b) The Trustee shall comply with Sections 313(b) and 313(c) of the
Trust Indenture Act.
(c) A copy of each such report shall, at the time of such transmission
to Securityholders, be filed by the Trustee with the Company, with each stock
exchange upon which any Debt Securities are listed (if so listed) and also with
the Commission. The Company agrees to notify the Trustee when any Debt
Securities become listed on any stock exchange.
ARTICLE VI
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
SECTION 6.1. Events of Default.
-----------------
(a) Whenever used herein with respect to Debt Securities of a
particular series, "Event of Default" means any one or more of the following
events that has occurred and is continuing:
(1) the Company defaults in the payment of any installment of interest
upon any of the Debt Securities of that series, as and when the same shall
become due and payable, and continuance of such default for a period of 30
days; provided, however, that a valid extension of an interest payment
-------- -------
period by the Company in accordance with the terms of the Debt Securities
of that series shall not constitute a default in the payment of interest
for this purpose;
(2) the Company defaults in the payment of the principal of (or
premium, if any, on) any of the Debt Securities of that series as and when
the same shall become due and payable whether at maturity, upon redemption,
by declaration or otherwise, or in any payment required by any sinking or
analogous fund established with respect to that series;
(3) the Company fails to observe or perform any other of its covenants
or agreements with respect to that series contained in this Indenture or
otherwise established with respect to that series of Debt Securities
pursuant to Section 2.1 for a period of 90 days after the date on which
written notice of such failure, requiring the same to be remedied and
stating that such notice is a "Notice of Default" hereunder, shall have
been given to the Company by the Trustee, by registered or certified mail,
or to the Company and the Trustee by the holders of at least 25% in
principal amount of the Debt Securities of that series at the time
Outstanding;
(4) the Company, pursuant to or within the meaning of any Bankruptcy
Law, (i) commences a voluntary case, (ii) consents to the entry of an order
for relief against it in an
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involuntary case, (iii) consents to the appointment of a Custodian of it or
for all or substantially all of its property or (iv) makes a general
assignment for the benefit of its creditors;
(5) a court of competent jurisdiction enters an order under any
Bankruptcy Law that (i) is for relief against the Company in an involuntary
case, (ii) appoints a Custodian of the Company for all or substantially all
of its property, or (iii) orders the liquidation of the Company, and the
order or decree remains unstayed and in effect for 90 days; or
(6) in the event Debt Securities are issued to an Arvin Trust or a
trustee of such trust in connection with the issuance of Trust Securities
by such Arvin Trust, such Arvin Trust shall have voluntarily or
involuntarily dissolved, wound-up its business or otherwise terminated its
existence, except in connection with (i) the distribution of Debt
Securities to holders of Trust Securities in liquidation of their interests
in such Arvin Trust, (ii) the redemption of all outstanding Trust
Securities of such Arvin Trust, and (iii) mergers, consolidations or
amalgamations, each as permitted by the Declaration of such Arvin Trust.
(b) If an Event of Default described in clauses 1, 2, 3 or 6 of this
Section 6.1 with respect to Debt Securities of any series at the time
outstanding occurs and is continuing, unless the principal of all the Debt
Securities of that series shall have already become due and payable, either the
Trustee or the holders of not less than 25% in aggregate principal amount of the
Debt Securities of that series then Outstanding hereunder, by notice in writing
to the Company (and to the Trustee, if given by such Securityholders), may
declare the principal of all the Debt Securities of that series to be due and
payable immediately, and upon any such declaration the same shall become and be
immediately due and payable, notwithstanding anything contained in this
Indenture or in the Debt Securities of that series or established with respect
to that series pursuant to Section 2.1 to the contrary. If an Event of Default
specified in clause (4) or (5) of Section 6.1(a) occurs or is continuing, then
the principal amount of all the Debt Securities shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Securityholder.
(c) At any time after the principal of the Debt Securities of that
series shall have been so declared due and payable, and before any judgment or
decree for the payment of the moneys due shall have been obtained or entered as
hereinafter provided, the holders of a majority in aggregate principal amount of
the Debt Securities of that series then Outstanding hereunder, by written notice
to the Company and the Trustee, may rescind and annul such declaration and its
consequences if: (i) the Company has paid or deposited with the Trustee a sum
sufficient to pay all matured installments of interest upon all the Debt
Securities of that series and the principal of (and premium, if any, on) any and
all Debt Securities of that series that shall have become due otherwise than by
acceleration (with interest upon such principal and premium, if any, and, to the
extent that such payment is enforceable under applicable law, upon overdue
installments of interest, at the rate per annum expressed in the Debt Securities
of that series to the date of such payment or deposit) and the amount payable to
the Trustee under Section 7.6, and (ii) any and all Events of Default with
respect to such series, other than the nonpayment of principal on Debt
Securities of that series that shall not have become due by their terms, shall
have been remedied or waived as provided in Section 6.6. No such rescission and
annulment shall extend to or shall affect any subsequent default or impair any
right consequent thereon.
(d) In case the Trustee shall have proceeded to enforce any right with
respect to Debt Securities of that series under this Indenture and such
proceedings shall have been discontinued or
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abandoned because of such rescission or annulment or for any other reason or
shall have been determined adversely to the Trustee, then and in every such case
the Company and the Trustee shall be restored respectively to their former
positions and rights hereunder, and all rights, remedies and powers of the
Company and the Trustee shall continue as though no such proceedings had been
taken.
SECTION 6.2. Collection of Indebtedness and Suits for Enforcement by
-------------------------------------------------------
Trustee.
- -------
(a) The Company covenants that (1) in case it shall default in the
payment of any installment of interest on any of the Debt Securities of a
series, or any payment required by any sinking or analogous fund established
with respect to that series as and when the same shall have become due and
payable, and such default shall have continued for a period of 90 days, or (2)
in case it shall default in the payment of the principal of (or premium, if any,
on) any of the Debt Securities of a series when the same shall have become due
and payable, whether upon maturity of the Debt Securities of a series or upon
redemption or upon declaration or otherwise, then, upon demand of the Trustee,
the Company will pay to the Trustee, for the benefit of the holders of the Debt
Securities of that series, the whole amount that then shall have become due and
payable on all such Debt Securities for principal (and premium, if any) or
interest, or both, as the case may be, with interest upon the overdue principal
(and premium, if any) and (to the extent that payment of such interest is
enforceable under applicable law and, if the Debt Securities are held by an
Arvin Trust, without duplication of any other amounts paid by such Arvin Trust
in respect thereof) upon overdue installments of interest at the rate per annum
expressed in the Debt Securities of that series; and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection and the amount payable to the Trustee under Section 7.6.
(b) If the Company shall fail to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any action or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceeding to judgment or final decree, and may enforce any such
judgment or final decree against the Company or other obligor upon the Debt
Securities of that series and collect the moneys adjudged or decreed to be
payable in the manner provided by law out of the property of the Company or
other obligor upon the Debt Securities of that series, wherever situated.
(c) In case of any receivership, insolvency, liquidation, bankruptcy,
reorganization, readjustment, arrangement, composition or judicial proceedings
affecting the Company or its creditors or property, the Trustee shall have power
to intervene in such proceedings and take any action therein that may be
permitted by the court and shall (except as may be otherwise provided by law) be
entitled to file such proofs of claim and other papers and documents as may be
necessary or advisable in order to have the claims of the Trustee and of the
holders of Debt Securities of such series allowed for the entire amount due and
payable by the Company under this Indenture at the date of institution of such
proceedings and for any additional amount that may become due and payable by the
Company after such date, and to collect and receive any moneys or other property
payable or deliverable on any such claim, and to distribute the same after the
deduction of the amount payable to the Trustee under Section 7.6; and any
receiver, assignee or trustee in bankruptcy or reorganization is hereby
authorized by each of the holders of Debt Securities of such series to make such
payments to the Trustee, and, in the event that the Trustee shall consent to the
making of such payments directly to such Securityholders, to pay to the Trustee
any amount due it under Section 7.6.
(d) All rights of action and of asserting claims under this Indenture,
or under any of the terms established with respect to Debt Securities of that
series, may be enforced by the Trustee without the
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possession of any of such Debt Securities, or the production thereof at any
trial or other proceeding relative thereto, and any such suit or 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 payment
to the Trustee of any amounts due under Section 7.6, be for the ratable benefit
of the holders of the Debt Securities of such series.
In case of an Event of Default, the Trustee may in its discretion
proceed to protect and enforce the rights vested in it by this Indenture by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any of such rights, either at law or in equity or in
bankruptcy or otherwise, whether for the specific enforcement of any covenant or
agreement contained in this Indenture or in aid of the exercise of any power
granted in this Indenture, or to enforce any other legal or equitable right
vested in the Trustee by this Indenture or by law.
Nothing contained herein shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Securityholder any
plan of reorganization, arrangement, adjustment or composition affecting the
Debt Securities of that series or the rights of any holder thereof or to
authorize the Trustee to vote in respect of the claim of any Securityholder in
any such proceeding.
SECTION 6.3. Application of Moneys Collected.
-------------------------------
Any moneys collected by the Trustee pursuant to this Article with
respect to a particular series of Debt Securities shall be applied in the
following order, at the date or dates fixed by the Trustee and, in case of the
distribution of such moneys on account of principal (or premium, if any) or
interest, upon presentation of the Debt Securities of that series, and notation
thereon of the payment, if only partially paid, and upon surrender thereof if
fully paid:
FIRST: To the payment of costs and expenses of collection and of all
amounts payable to the Trustee under Section 7.6;
SECOND: To the payment of all Senior Indebtedness of the Company if
and to the extent required by Article XIII; and
THIRD: To the payment of the amounts then due and unpaid upon Debt
Securities of such series for principal (and premium, if any) and interest,
in respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind, according
to the amounts due and payable on such Debt Securities for principal (and
premium, if any) and interest, respectively.
SECTION 6.4. Limitation on Suits.
-------------------
(a) No holder of any Debt Security of any series shall have any right
by virtue or by availing of any provision of this Indenture to institute any
suit, action or proceeding in equity or at law upon or under or with respect to
this Indenture or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless (i) such holder previously shall have given to the
Trustee written notice of an Event of Default and of the continuance thereof
with respect to the Debt Securities of such series specifying such Event of
Default, as hereinbefore provided; (ii) the holders of not less than 25% in
aggregate principal amount of the Debt Securities of such series then
Outstanding shall have made written request upon the Trustee to institute such
action, suit or proceeding in its own name as trustee hereunder; (iii) such
holder or
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holders shall have offered to the Trustee such reasonable indemnity as it may
require against the costs, expenses and liabilities to be incurred therein or
thereby; (iv) the Trustee, for 60 days after its receipt of such notice, request
and offer of indemnity, shall have failed to institute any such action, suit or
proceeding; and (v) during such 60 day period, the holders of not less than a
majority in principal amount of the Debt Securities of that series do not give
the Trustee a direction inconsistent with the request.
(b) Notwithstanding anything contained herein to the contrary or any
other provisions of this Indenture, the right of any holder of any Debt Security
to receive payment of the principal of (and premium, if any) and interest on
such Debt Security, as therein provided, on or after the respective due dates
expressed in such Debt Security (or in the case of redemption, on the redemption
date), or to institute suit for the enforcement of any such payment on or after
such respective dates or redemption date, shall not be impaired or affected
without the consent of such holder, and by accepting a Debt Security hereunder
it is expressly understood, intended and covenanted by the taker and holder of
every Debt Security of such series with every other such taker and holder and
the Trustee, that no one or more holders of Debt Securities of such series shall
have any right in any manner whatsoever by virtue or by availing of any
provision of this Indenture to affect, disturb or prejudice the rights of the
holders of any other of such Debt Securities, or to obtain or seek to obtain
priority over or preference to any other such holder, or to enforce any right
under this Indenture, except in the manner herein provided and for the equal,
ratable and common benefit of all holders of Debt Securities of such series. For
the protection and enforcement of the provisions of this Section, each and every
Securityholder and the Trustee shall be entitled to such relief as can be given
either at law or in equity.
(c) Notwithstanding any provision of this Indenture to the contrary, in
the event that the Institutional Trustee, as the holder of record of Debt
Securities of any series held by an Arvin Trust, fails to enforce its rights
with respect to such Debt Securities under the Indenture to the fullest extent
permitted by law, any holder of Preferred Securities may institute legal
proceedings directly against the Company to enforce the Institutional Trustee's
rights under the Indenture without first instituting proceedings against the
Institutional Trustee or any other person or entity. In addition, if an Event of
Default under the Declaration has occurred and is continuing and such event is
attributable to the failure of the Company to pay interest, principal, or other
required payments on Debt Securities issued to an Arvin Trust on the date such
interest, principal or other required payment is otherwise payable (or, in the
case of redemption, on the redemption date), then a holder of record of the
Preferred Securities may directly institute a proceeding against the Company for
enforcement of payment to such holder of the principal, interest or other
required payment on Debt Securities having a principal amount equal to the
liquidation amount of the Preferred Securities held by such holder on or after
the respective due dates specified in the Debt Securities. In connection with
such proceeding, the Company will be subrogated to the rights of such record
holder of Preferred Securities to the extent of any payment made by the Company
to such holder of Preferred Securities in such proceeding.
SECTION 6.5. Rights and Remedies Cumulative; Delay or Omission Not Waiver.
------------------------------------------------------------
(a) Except as otherwise provided in Section 2.7, all powers and
remedies given by this Article to the Trustee or to the Securityholders shall,
to the extent permitted by law, be deemed cumulative and not exclusive of any
other powers and remedies available to the Trustee or the holders of the Debt
Securities, by judicial proceedings or otherwise, to enforce the performance or
observance of the covenants and agreements contained in this Indenture or
otherwise established with respect to such Debt Securities.
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<PAGE>
(b) No delay or omission of the Trustee or of any holder of any of the
Debt Securities to exercise any right or power accruing upon any Event of
Default occurring and continuing as aforesaid shall impair any such right or
power, or shall be construed to be a waiver of any such default or an
acquiescence therein; and, subject to the provisions of Section 6.4, every power
and remedy given by this Article or by law to the Trustee or the Securityholders
may be exercised from time to time, and as often as shall be deemed expedient,
by the Trustee or by the Securityholders.
SECTION 6.6. Control by Securityholders.
--------------------------
The holders of a majority in aggregate principal amount of the Debt
Securities of any or all series affected (voting as a class) at the time
Outstanding, determined in accordance with Section 8.4, 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 such series; provided, however, that such direction
-------- -------
shall not be in conflict with any rule of law or with this Indenture or be
unduly prejudicial to the rights of holders of Debt Securities of any other
series at the time Outstanding determined in accordance with Section 8.4.
Subject to the provisions of Section 7.1, the Trustee shall have the right to
decline to follow any such direction if the Trustee in good faith shall, by a
Responsible Officer or Responsible Officers of the Trustee, determine that the
proceeding so directed would involve the Trustee in personal liability. The
holders of a majority in aggregate principal amount of the Debt Securities of
any series at the time Outstanding affected thereby, determined in accordance
with Section 8.4, may on behalf of the holders of all of the Debt Securities of
such series waive any past default in the performance of any of the covenants
contained herein or established pursuant to Section 2.1 with respect to such
series and its consequences, except (i) a default in the payment of the
principal of, or premium, if any, or interest on, any of the Debt Securities of
that series as and when the same shall become due by the terms of such Debt
Securities otherwise than by acceleration (unless such default has been cured
and a sum sufficient to pay all matured installments of interest and principal
and any premium has been deposited with the Trustee (in accordance with Section
6.1(c)), or (ii) a default in the covenants contained in Section 4.6. Upon any
such waiver, the default covered thereby shall be deemed to be cured for all
purposes of this Indenture and the Company, the Trustee and the holders of the
Debt Securities of such series shall be restored to their former positions and
rights hereunder, respectively; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
SECTION 6.7. Undertaking to Pay Costs.
------------------------
All parties to this Indenture agree, and each holder of any Debt
Securities by such holder's acceptance thereof shall be deemed to have agreed,
that any court may in its discretion require, in any suit for the enforcement of
any right or remedy under this Indenture, or in any suit against the Trustee for
any action taken or omitted by it as Trustee, the filing by any party litigant
in such suit of an undertaking to pay the costs of such suit, and that such
court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Securityholder, or group of
Securityholders, holding more than 10% in aggregate principal amount of the
Outstanding Debt Securities of any series, or to any suit instituted by any
Securityholder for the enforcement of the payment of the principal of (or
premium, if any) or interest on any Debt Security of such series, on or after
the respective due dates expressed in such Debt Security or established pursuant
to this Indenture.
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ARTICLE VII
CONCERNING THE TRUSTEE
SECTION 7.1. Certain Duties and Responsibilities of Trustee.
----------------------------------------------
(a) The Trustee, prior to the occurrence of an Event of Default with
respect to the Debt Securities of a series and after the curing of all Events of
Default with respect to the Debt Securities of that series that may have
occurred, shall undertake to perform with respect to the Debt Securities of such
series such duties and only such duties as are specifically set forth in this
Indenture, and no implied covenants shall be read into this Indenture against
the Trustee. In case an Event of Default with respect to the Debt Securities of
a series has occurred (that has not been cured or waived), the Trustee shall
exercise with respect to Debt Securities of that series such of the rights and
powers vested in it by this Indenture, and use the same degree of care and skill
in their exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
(b) no provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that:
(1) prior to the occurrence of an Event of Default with respect to
the Debt Securities of a series and after the curing or waiving of all such
Events of Default with respect to that series that may have occurred:
(A) the duties and obligations of the Trustee shall, with respect
to the Debt Securities of such series, be determined solely by the
express provisions of this Indenture, and the Trustee shall not be
liable with respect to the Debt Securities of such series except for
the performance of such duties and obligations as are specifically set
forth in this Indenture, and no implied covenants or obligations shall
be read into this Indenture against the Trustee; and
(B) in the absence of bad faith on the part of the Trustee, the
Trustee may with respect to the Debt Securities of such series
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 Trustee and conforming to the requirements of
this Indenture; but in the case of any such certificates or opinions
that by any provision hereof are specifically required to be furnished
to the Trustee, the Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirement of this
Indenture;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer or Responsible Officers of the Trustee,
unless it shall be proved that the Trustee was negligent in ascertaining
the pertinent facts;
(3) the Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the direction of
the holders of not less than a majority in principal amount of the Debt
Securities of any series at the time Outstanding relating to the time,
method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred upon the Trustee
under this Indenture with respect to the Debt Securities of that series;
and
27
<PAGE>
(4) None of the provisions contained in this Indenture shall require
the 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 there is reasonable ground for
believing that the repayment of such funds or liability is not reasonably
assured to it under the terms of this Indenture or adequate indemnity
against such risk is not reasonably assured to it.
SECTION 7.2. Certain Rights of Trustee.
-------------------------
Except as otherwise provided in Section 7.1:
(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, consent, order, approval, bond, security 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, direction, order or demand of the Company mentioned
herein shall be sufficiently evidenced by a Board Resolution or an Officers'
Certificate (unless other evidence in respect thereof is specifically prescribed
herein);
(c) 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 or suffered or omitted hereunder in
good faith and in reliance thereon;
(d) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Securityholders, pursuant to the provisions of this
Indenture, unless such Securityholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that may be incurred therein or thereby; nothing contained herein shall,
however, relieve the Trustee of the obligation, upon the occurrence of an Event
of Default with respect to a series of the Debt Securities (that has not been
cured or waived) to exercise with respect to Debt Securities of that series such
of the rights and powers vested in it by this Indenture, and to 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;
(e) the Trustee shall not be liable for any action taken or omitted to
be taken by it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Indenture;
(f) 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, consent, order, approval, bond, security, or
other papers or documents, unless requested in writing so to do by the holders
of not less than a majority in principal amount of the Outstanding Debt
Securities of the particular series affected thereby (determined as provided in
Section 8.4); 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, in the opinion of the Trustee, not
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,
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<PAGE>
expenses or liabilities as a condition to so proceeding. The reasonable expense
of every such examination shall be paid by the Company or, if paid by the
Trustee, shall be repaid by the Company upon demand; and
(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.
SECTION 7.3. Trustee Not Responsible for Recitals or Issuance of Debt
--------------------------------------------------------
Securities.
- ----------
(a) The recitals contained herein and in the Debt Securities shall be
taken as the statements of the Company, and the Trustee assumes no
responsibility for the correctness of the same.
(b) The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Debt Securities.
(c) The Trustee shall not be accountable for the use or application by
the Company of any of the Debt Securities or of the proceeds of such Debt
Securities, or for the use or application of any moneys paid over by the Trustee
in accordance with any provision of this Indenture or established pursuant to
Section 2.1, or for the use or application of any moneys received by any paying
agent other than the Trustee.
SECTION 7.4. May Hold Debt Securities.
------------------------
The Trustee or any paying agent or Security Registrar, in its
individual or any other capacity, may become the owner or pledgee of Debt
Securities with the same rights it would have if it were not Trustee, paying
agent or Security Registrar.
SECTION 7.5. Moneys Held in Trust.
--------------------
Subject to the provisions of Section 11.5, all moneys received by the
Trustee shall, until used or applied as herein provided, be held in trust for
the purposes for which they were received, but 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 moneys received by it hereunder except such as it
may agree with the Company to pay thereon. So long as no Event of Default shall
have occurred and be continuing, all interest allowed on any such moneys shall
be paid from time to time upon the written order of the Company, signed by the
President or a Vice President or the Treasurer or an Assistant Treasurer of the
Company.
SECTION 7.6. Compensation and Reimbursement.
------------------------------
(a) The Company covenants and agrees to pay to the Trustee, and the
Trustee shall be entitled to, such reasonable compensation (which shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust), as the Company and the Trustee may from time to time agree in
writing, for all services rendered by it in the execution of the trusts hereby
created and in the exercise and performance of any of the powers and duties
hereunder of the Trustee, and, except as otherwise expressly provided herein,
the Company will pay or reimburse the Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by the Trustee
in accordance with any of the provisions of this Indenture (including the
reasonable compensation and the expenses and disbursements of
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<PAGE>
its counsel and of all Persons not regularly in its employ) except any such
expense, disbursement or advance as may arise from its negligence or bad faith.
The Company also covenants to indemnify the Trustee (and its officers, agents,
directors and employees) for, and to hold it harmless against, any loss,
liability or expense incurred without negligence or bad faith on the part of the
Trustee and arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of defending
itself against any claim of liability in the premises.
(b) The obligations of the Company under this Section to compensate and
indemnify the Trustee and to pay or reimburse the Trustee for expenses,
disbursements and advances shall constitute additional indebtedness hereunder
and shall survive the satisfaction and discharge of this Indenture. Such
additional indebtedness shall be secured by a lien prior to that of the Debt
Securities upon all property and funds held or collected by the Trustee as such,
except funds held in trust for the benefit of the holders of particular Debt
Securities.
SECTION 7.7. Reliance on Officers' Certificate.
---------------------------------
Except as otherwise provided in Section 7.1, whenever in the
administration of the provisions of this Indenture the Trustee shall deem it
necessary or desirable that a matter be proved or established prior to taking or
suffering or omitting to take any action hereunder, such matter (unless other
evidence in respect thereof be herein specifically prescribed) may, in the
absence of negligence or bad faith on the part of the Trustee, be deemed to be
conclusively proved and established by an Officers' Certificate delivered to the
Trustee, and such certificate, in the absence of negligence or bad faith on the
part of the Trustee, shall be full warrant to the Trustee for any action taken,
suffered or omitted to be taken by it under the provisions of this Indenture
upon the faith thereof.
SECTION 7.8. Qualification; Conflicting Interests.
------------------------------------
If the Trustee has or shall acquire any "conflicting interest" within
the meaning of Section 310(b) of the Trust Indenture Act, the Trustee and the
Company shall in all respects comply with the provisions of Section 310(b) of
the Trust Indenture Act.
SECTION 7.9. Corporate Trustee Required; Eligibility.
---------------------------------------
There shall at all times be a Trustee with respect to the Debt
Securities issued hereunder which shall at all times 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 other
Person permitted to act as trustee by the Commission, authorized under such laws
to exercise corporate trust powers, having a combined capital and surplus of at
least fifty 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 aforesaid 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. The
Company may not, nor may any Person directly or indirectly controlling,
controlled by, or under common control with the Company, serve as Trustee. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, the Trustee shall resign immediately in the manner
and with the effect specified in Section 7.10.
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SECTION 7.10. Resignation and Removal; Appointment of Successor.
-------------------------------------------------
(a) The Trustee or any successor hereafter appointed, may at any time
resign with respect to the Debt Securities of one or more series by giving
written notice thereof to the Company and by transmitting notice of resignation
by mail, first class postage prepaid, to the Securityholders of such series, as
their names and addresses appear upon the Security Register. Upon receiving such
notice of resignation, the Company shall promptly appoint a successor trustee
with respect to Debt Securities of such series by written instrument, in
duplicate, executed by order of the Board of Directors, one copy of which
instrument shall be delivered to the resigning Trustee and one copy to the
successor trustee. If no successor trustee shall have been so appointed and
have accepted appointment within 30 days after the mailing 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 Debt
Securities of such series, or any Securityholder of that series who has been a
bona fide holder of a Debt Security or Debt Securities for at least six months
may, subject to the provisions of Section 6.8, on behalf of himself and all
others similarly situated, petition any such court for the appointment of a
successor trustee. Such court may thereupon after such notice, if any, as it
may deem proper and prescribe, appoint a successor trustee.
(b) In case at any time any one of the following shall occur:
(1) the Trustee shall fail to comply with the provisions of subsection
(a) of Section 7.8 after written request therefor by the Company or by any
Securityholder who has been a bona fide holder of a Debt Security or Debt
Securities for at least six months; or
(2) the Trustee shall cease to be eligible in accordance with the
provisions of Section 7.9 and shall fail to resign after written request
therefor by the Company or by any such Securityholder; or
(3) the Trustee shall become incapable of acting, or shall be adjudged
a bankrupt or insolvent, or commence a voluntary bankruptcy proceeding, or
a receiver of the Trustee or of its property shall be appointed or
consented to, 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, the Company may remove
the Trustee with respect to all Debt Securities and appoint a successor
trustee by written instrument, in duplicate, executed by order of the Board
of Directors, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee, or, subject to
the provisions of Section 6.8, unless the Trustee's duty to resign is
stayed as provided herein, any Securityholder who has been a bona fide
holder of a Debt Security or Debt Securities for at least six months may,
on behalf of that holder and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor trustee. Such court may thereupon after such
notice, if any, as it may deem proper and prescribe, remove the Trustee and
appoint a successor trustee.
(c) The holders of a majority in aggregate principal amount of the Debt
Securities of any series at the time Outstanding may at any time remove the
Trustee with respect to such series by so notifying the Trustee and the Company
and may appoint a successor Trustee for such series with the consent of the
Company.
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(d) Any resignation or removal of the Trustee and appointment of a
successor trustee with respect to the Debt Securities of a series pursuant to
any of the provisions of this Section shall become effective upon acceptance of
appointment by the successor trustee as provided in Section 7.11.
(e) Any successor trustee appointed pursuant to this Section may be
appointed with respect to the Debt Securities of one or more series or all of
such series, and at any time there shall be only one Trustee with respect to the
Debt Securities of any particular series.
SECTION 7.11. Acceptance of Appointment By Successor.
--------------------------------------
(a) In case of the appointment hereunder of a successor trustee with
respect to all Debt 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.
(b) In case of the appointment hereunder of a successor trustee with
respect to the Debt Securities of one or more (but not all) series, the Company,
the retiring Trustee and each successor trustee with respect to the Debt
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
Debt Securities of that or those series to which the appointment of such
successor trustee relates, (2) 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 Debt 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, 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 that no
Trustee shall be responsible for any act or failure to act on the part of any
other Trustee hereunder; 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, such retiring Trustee shall
with respect to the Debt Securities of that or those series to which the
appointment of such successor trustee relates have no further responsibility for
the exercise of rights and powers or for the performance of the duties and
obligations vested in the Trustee under this Indenture, 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 Debt 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, to the extent contemplated by such supplemental indenture,
the property and money held by such retiring Trustee hereunder with respect to
the Debt Securities of that or those series to which the appointment of such
successor trustee relates.
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(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 this Article.
(e) Upon acceptance of appointment by a successor trustee as provided
in this Section, the Company shall transmit notice of the succession of such
trustee hereunder by mail, first class postage prepaid, to the Securityholders,
as their names and addresses appear upon the Security Register. If the Company
fails to transmit such notice within ten days after acceptance of appointment by
the successor trustee, the successor trustee shall cause such notice to be
transmitted at the expense of the Company.
SECTION 7.12. Merger, Conversion, Consolidation or Succession to Business.
-----------------------------------------------------------
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to the corporate trust business of the Trustee, shall be
the successor of the Trustee hereunder, provided that such corporation shall be
-------- ----
qualified under the provisions of Section 7.8 and eligible under the provisions
of Section 7.9, without the execution or filing of any paper or any further act
on the part of any of the parties hereto, anything herein to the contrary
notwithstanding. In case any Debt 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 Debt Securities so authenticated with the same
effect as if such successor trustee had itself authenticated such Debt
Securities.
SECTION 7.13. Preferential Collection of Claims Against the Company.
-----------------------------------------------------
The Trustee shall comply with Section 311(a) of the Trust Indenture
Act, excluding any creditor relationship described 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 included
therein.
ARTICLE VIII
CONCERNING THE SECURITYHOLDERS
SECTION 8.1. Evidence of Action by Securityholders.
-------------------------------------
Whenever in this Indenture it is provided that the holders of a
majority or specified percentage in aggregate principal amount of the Debt
Securities of a particular series may take any action (including the making of
any demand or request, the giving of any notice, consent or waiver or the taking
of any other action), the fact that at the time of taking any such action the
holders of such majority or specified percentage of that series have joined
therein may be evidenced by any instrument or any number of instruments of
similar tenor executed by such holders of Debt Securities of that series in
Person or by agent or proxy appointed in writing.
If the Company shall solicit from the Securityholders of any series any
request, demand, authorization, direction, notice, consent, waiver or other
action, the Company may, at its option, as evidenced
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by an Officers' Certificate, fix in advance a record date for such series for
the determination of Securityholders entitled to give such request, demand,
authorization, direction, notice, consent, waiver or other action, 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
action may be given before or after the record date, but only the
Securityholders of record at the close of business on the record date shall be
deemed to be Securityholders for the purposes of determining whether
Securityholders of the requisite proportion of Outstanding Debt Securities of
that series have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other action, and for that
purpose the Outstanding Debt Securities of that series shall be computed as of
the record date; provided, however, that no such authorization, agreement or
-------- -------
consent by such Securityholders on the 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 8.2. Proof of Execution by Securityholders.
-------------------------------------
Subject to the provisions of Section 7.1, proof of the execution of any
instrument by a Securityholder (such proof will not require notarization) or his
agent or proxy and proof of the holding by any Person of any of the Debt
Securities shall be sufficient if made in the following manner:
(a) The fact and date of the execution by any such Person of any
instrument may be proved in any reasonable manner acceptable to the Trustee.
(b) The ownership of Debt Securities shall be proved by the Security
Register of such Debt Securities or by a certificate of the Security Registrar
thereof.
(c) The Trustee may require such additional proof of any matter
referred to in this Section as it shall deem necessary.
SECTION 8.3. Who May be Deemed Owners.
------------------------
Prior to the due presentment for registration of transfer of any Debt
Security, the Company, the Trustee, any paying agent and any Security Registrar
may deem and treat the Person in whose name such Debt Security shall be
registered upon the books of the Company as the absolute owner of such Debt
Security (whether or not such Debt Security shall be overdue and notwithstanding
any notice of ownership or writing thereon made by anyone other than the
Security Registrar) for the purpose of receiving payment of or on account of the
principal of, premium, if any, and (subject to Section 2.3) interest on such
Debt Security 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.
SECTION 8.4. Certain Debt Securities Owned by Company Disregarded.
----------------------------------------------------
In determining whether the holders of the requisite aggregate principal
amount of Debt Securities of a particular series have concurred in any
direction, consent waiver under this Indenture, the Debt Securities of that
series that are owned by the Company or any other obligor on the Debt Securities
of that series or by any Person directly or indirectly controlling or controlled
by or under common control with the Company or any other obligor on the Debt
Securities of that series (other than an Arvin Trust) shall be disregarded and
deemed not to be Outstanding for the purpose of any such determination, except
that for the
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purpose of determining whether the Trustee shall be protected in relying on any
such direction, consent or waiver, only Debt Securities of such series that the
Trustee actually knows are so owned shall be so disregarded. The Debt
Securities so owned that have been pledged in good faith may be regarded as
Outstanding for the purposes of this Section, if the pledgee shall establish to
the satisfaction of the Trustee the pledgee's right so to act with respect to
such Debt Securities and that the pledgee is not a Person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company or any such other obligor. In case of a dispute as to such right, any
decision by the Trustee taken upon the advice of counsel shall be full
protection to the Trustee.
SECTION 8.5. Actions Binding on Future Securityholders.
-----------------------------------------
At any time prior to (but not after) the evidencing to the Trustee, as
provided in Section 8.1, of the taking of any action by the holders of a
majority or specified percentage in aggregate principal amount of the Debt
Securities of a particular series in connection with such action, any holder of
a Debt Security of that series that is shown by the evidence to be included in
the Debt Securities the holders of which have consented to such action may, by
filing written notice with the Trustee, and upon proof of holding as provided in
Section 8.2, revoke such action so far as concerns such Debt Security. Except as
aforesaid, any such action taken by the holder of any Debt Security shall be
conclusive and binding upon such holder and upon all future holders and owners
of such Debt Security, and of any Debt Security issued in exchange therefor, on
registration of transfer thereof or in place thereof, irrespective of whether or
not any notation in regard thereto is made upon such Debt Security. Any action
taken by the holders of a majority or specified percentage in aggregate
principal amount of the Debt Securities of a particular series in connection
with such action shall be conclusively binding upon the Company, the Trustee and
the holders of all the Debt Securities of that series.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1. Supplemental Indentures Without the Consent of Securityholders.
--------------------------------------------------------------
In addition to any supplemental indenture otherwise authorized by this
Indenture, the Company and the Trustee may from time to time and at any time
enter into an indenture or indentures supplemental hereto (which shall conform
to the provisions of the Trust Indenture Act as then in effect), without the
consent of the Securityholders, for one or more of the following purposes:
(a) to cure any ambiguity, defect or inconsistency herein or in the
Debt Securities of any series;
(b) to comply with Article X;
(c) to provide for uncertificated Debt Securities in addition to or in
place of certificated Debt Securities;
(d) to add to the covenants of the Company for the benefit of the
holders of all or any series of Debt Securities (and if such covenants are to be
for the benefit of less than all series of Debt Securities, stating that such
covenants are expressly being included solely for the benefit of such series) or
to surrender any right or power herein conferred upon the Company;
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(e) to add to, delete from, or revise the conditions, limitations and
restrictions on the authorized amount, terms or purposes of issue,
authentication and delivery of Debt Securities, as herein set forth;
(f) to make any change that does not adversely affect the rights of any
Securityholder in any material respect; or
(g) to provide for the issuance of and establish the form and terms and
conditions of the Debt Securities of any series as provided in Section 2.1, to
establish the form of any certifications required to be furnished pursuant to
the terms of this Indenture or any series of Debt Securities, or to add to the
rights of the holders of any series of Debt Securities.
The Trustee is hereby authorized to join with the Company in the
execution of any such supplemental indenture, and to make any further
appropriate agreements and stipulations that may be therein contained, but the
Trustee shall not be obligated to enter into any such supplemental indenture
that affects the Trustee's own rights, duties or immunities under this Indenture
or otherwise.
Any supplemental indenture authorized by the provisions of this Section
may be executed by the Company and the Trustee without the consent of the
holders of any of the Debt Securities at the time Outstanding notwithstanding
any of the provisions of Section 9.2.
SECTION 9.2. Supplemental Indentures With Consent of Securityholders.
-------------------------------------------------------
With the consent (evidenced as provided in Section 8.1) of the holders
of not less than a majority in aggregate principal amount of the Debt Securities
of each series affected by such supplemental indenture or indentures at the time
Outstanding, the Company, when authorized by a Board Resolution, and the Trustee
may from time to time and at any time enter into an indenture or indentures
supplemental hereto (which shall conform to the provisions of the Trust
Indenture Act as then in effect) for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or
of any supplemental indenture or of modifying in any manner not covered by
Section 9.1 the rights of the holders of the Debt Securities of such series
under this Indenture; provided, however, that no such supplemental indenture
-------- -------
shall, without the consent of the holders of each Debt Security then Outstanding
and affected thereby, (i) extend the fixed maturity of any Debt Securities of
any series, or 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 Debt Security so
affected or (ii) reduce the aforesaid percentage of Debt Securities, the holders
of which are required to consent to any such supplemental indenture.
It shall not be necessary for the consent of the Securityholders of any
series affected thereby under this Section to approve the particular form of any
proposed supplemental indenture, but it shall be sufficient if such consent
shall approve the substance thereof.
SECTION 9.3. Effect of Supplemental Indentures.
---------------------------------
Upon the execution of any supplemental indenture pursuant to the
provisions of this Article or of Section 10.1, this Indenture shall, with
respect to such series, be and be deemed to be modified and
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amended in accordance therewith and the respective rights, limitations of
rights, obligations, duties and immunities under this Indenture of the Trustee,
the Company and the holders of Debt Securities of the series affected thereby
shall thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.
SECTION 9.4. Debt Securities Affected by Supplemental Indentures.
---------------------------------------------------
Debt Securities of any series, affected by a supplemental indenture,
authenticated and delivered after the execution of such supplemental indenture
pursuant to the provisions of this Article or of Section 10.1, may bear a
notation in form approved by the Company, provided such form meets the
requirements of any securities exchange upon which such series may be listed, as
to any matter provided for in such supplemental indenture. If the Company shall
so determine, new Debt Securities of that series so modified as to conform, in
the opinion of the Board of Directors of the Company, to any modification of
this Indenture contained in any such supplemental indenture may be prepared by
the Company, authenticated by the Trustee and delivered in exchange for the Debt
Securities of that series then Outstanding.
SECTION 9.5. Execution of Supplemental Indentures.
------------------------------------
Upon the request of the Company, accompanied by a Board Resolution
authorizing the execution of any such supplemental indenture, and upon the
filing with the Trustee of evidence of the consent of Securityholders required
to consent thereto as aforesaid, the Trustee shall join with the Company in the
execution of such supplemental indenture unless such supplemental indenture
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion but shall not be
obligated to enter into such supplemental indenture. The Trustee, subject to
the provisions of Section 7.1, may receive an Opinion of Counsel as conclusive
evidence that any supplemental indenture executed pursuant to this Article is
authorized or permitted by, and conforms to, the terms of this Article and that
it is proper for the Trustee under the provisions of this Article to join in the
execution thereof.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of this Section, the Trustee
shall transmit by mail, first class postage prepaid, a notice, setting forth in
general terms the substance of such supplemental indenture, to the
Securityholders of all series affected thereby as their names and addresses
appear upon the Security Register. Any failure of the Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
ARTICLE X
SUCCESSOR CORPORATION
SECTION 10.1. Company May Consolidate, Etc.
----------------------------
Nothing contained in this Indenture or in any of the Debt Securities
shall prevent any consolidation or merger of the Company with or into any other
corporation or corporations (whether or not affiliated with the Company), or
successive consolidations or mergers in which the Company or its successor or
successors shall be a party or parties, or shall prevent any sale, conveyance,
transfer or other disposition of the property of the Company or its successor or
successors as an entirety, or substantially as an entirety, to any other
corporation (whether or not affiliated with the Company or its successor or
successors)
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authorized to acquire and operate the same; provided, however, that (i) the
-------- -------
entity formed by such consolidation, or into which the Company shall have been
merged, or which shall have acquired such property (the "successor corporation")
shall be a corporation organized under a state of the United States or the
District of Columbia, (ii) upon such consolidation, merger, sale, conveyance,
transfer or other disposition, the successor corporation shall expressly assume,
by supplemental indenture (which shall conform to the provisions of the Trust
Indenture Act, as then in effect), satisfactory in form to the Trustee and
executed and delivered to the Trustee, the due and punctual payment of the
principal of (premium, if any) and interest on all of the Debt Securities of all
series in accordance with the terms of each series, according to their tenor and
the due and punctual performance and observance of all the covenants and
conditions of this Indenture with respect to each series or established with
respect to such series pursuant to Section 2.1 to be kept or performed by the
Company, and (iii) immediately following such consolidation, merger, sale,
conveyance, transfer or other disposition, no Event of Default and no event
which, after notice or lapse of time, or both, would become an Event of Default
shall have occurred and be continuing.
SECTION 10.2. Successor Corporation Substituted.
---------------------------------
(a) In case of any such consolidation, merger, sale, conveyance,
transfer or other disposition and upon the assumption by the successor
corporation, by supplemental indenture, executed and delivered to the Trustee
and satisfactory in form to the Trustee, of the due and punctual payment of the
principal of, premium, if any, and interest on all of the Debt Securities of all
series Outstanding and the due and punctual performance of all of the covenants
and conditions of this Indenture or established with respect to each series of
the Debt Securities pursuant to Section 2.1 to be performed by the Company, with
respect to each series, such successor corporation shall succeed to and be
substituted for the Company, with the same effect as if it had been named as the
Company herein and thereupon the Company shall be relieved of all obligations
and covenants under this Indenture and the Debt Securities.
(b) In case of any such consolidation, merger, sale, conveyance,
transfer or other disposition, such changes in phraseology and form (but not in
substance) may be made in the Debt Securities thereafter to be issued as may be
appropriate.
(c) Nothing contained in this Indenture or in any of the Debt
Securities shall prevent the Company from merging any other Person (whether or
not affiliated with the Company) into itself or acquiring by purchase or
otherwise all or any part of the property of any other Person (whether or not
affiliated with the Company).
SECTION 10.3. Evidence of Consolidation, Etc. to Trustee.
------------------------------------------
The Trustee, subject to the provisions of Section 7.1, may receive an
Opinion of Counsel as conclusive evidence that any such consolidation, merger,
sale, conveyance, transfer or other disposition, and any such assumption, comply
with the provisions of this Article.
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ARTICLE XI
SATISFACTION AND DISCHARGE
SECTION 11.1. Satisfaction and Discharge of Indenture.
---------------------------------------
If at any time: (a) the Company shall have delivered to the Trustee for
cancellation all Debt Securities of a series theretofore authenticated (other
than any Debt Securities that shall have been destroyed, lost or stolen and that
shall have been replaced or paid as provided in Section 2.7 and Debt Securities
for whose payment money or Governmental Obligations have theretofore been
deposited in trust or segregated and held in trust by the Company (and thereupon
repaid to the Company or discharged from such trust, as provided in Section
11.5)); or (b) all such Debt Securities of a particular series not theretofore
delivered to the Trustee for cancellation shall have become due and payable, or
are by their terms to become due and payable within one year or are to be called
for redemption within one year under arrangements satisfactory to the Trustee
for the giving of notice of redemption, and the Company shall deposit or cause
to be deposited with the Trustee as trust funds the entire amount in moneys or
Governmental Obligations or a combination thereof, sufficient in the opinion of
a nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, to pay at maturity or
upon redemption all Debt Securities of that series not theretofore delivered to
the Trustee for cancellation, including principal (and premium, if any) and
interest due or to become due to such date of maturity or date fixed for
redemption, as the case may be, and if the Company shall also pay or cause to be
paid all other sums payable hereunder with respect to such series by the
Company; and if the Company has delivered to the Trustee an Opinion of Counsel
based on the fact that (x) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (y) since the date
hereof, there has been a change in the applicable United States federal income
tax law, in either case to the effect that, and such opinion shall confirm that,
the holders of the Debt Securities of such series will not recognize income,
gain or loss for United States federal income tax purposes as a result of such
deposit, defeasance and discharge and will be subject to United States federal
income tax on the same amount and in the same manner and at the same times, as
would have been the case if such deposit, defeasance and discharge had not
occurred, then this Indenture shall thereupon cease to be of further effect with
respect to such series except for the provisions of Sections 2.3, 2.5, 2.7, 4.1,
4.2, 4.3 and 7.10, that shall survive until the date of maturity or redemption
date, as the case may be, and Sections 7.6 and 11.5, that shall survive to such
date and thereafter, and the Trustee, on demand of the Company and at the cost
and expense of the Company, shall execute proper instruments acknowledging
satisfaction of and discharging this Indenture with respect to such series.
SECTION 11.2. Discharge of Obligations.
------------------------
If at any time all Debt Securities of a particular series not
heretofore delivered to the Trustee for cancellation or that have not become due
and payable as described in Section 11.1 shall have been paid by the Company by
depositing irrevocably with the Trustee as trust funds the entire amount in
moneys or Governmental Obligations, or a combination thereof, sufficient, in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof, delivered to the Trustee to pay at
maturity or upon redemption under arrangements satisfactory to the Trustee for
the giving of notice of redemption all such Debt Securities of that series not
theretofore delivered to the Trustee for cancellation, including principal (and
premium, if any) and interest due or to become due to such date of maturity or
date fixed for redemption, as the case may be, and if the Company shall also pay
or cause to be paid all other sums payable hereunder by the Company with respect
to such series, then after the date such moneys or
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Governmental Obligations, as the case may be, are deposited with the Trustee
then, and if the Company has delivered to the Trustee an Opinion of Counsel
based on the fact that (x) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (y) since the date
hereof, there has been a change in the applicable United States federal income
tax law, in either case to the effect that, and such opinion shall confirm that,
the holders of the Debt Securities of such series will not recognize income,
gain or loss for United States federal income tax purposes as a result of such
deposit, defeasance and discharge and will be subject to United States federal
income tax on the same amount and in the same manner and at the same times, as
would have been the case if such deposit, defeasance and discharge had not
occurred, the obligations of the Company, under this Indenture with respect to
such series shall cease to be of further effect except for the provisions of
Sections 2.3, 2.5, 2.7, 4.1, 4.2, 4.3, and 7.10 hereof that shall survive until
such Debt Securities shall mature and be paid, and Sections 7.6 and 11.5 that
shall survive to such date and thereafter.
SECTION 11.3. Deposited Moneys to be Held in Trust.
------------------------------------
All moneys or Governmental Obligations deposited with the Trustee
pursuant to Sections 11.1 or 11.2 shall be held in trust and shall be available
for payment as due, either directly or through any paying agent (including the
Company acting as its own paying agent), to the holders of the particular series
of Debt Securities for the payment or redemption of which such moneys or
Governmental Obligations have been deposited with the Trustee.
SECTION 11.4. Payment of Moneys Held by Paying Agents.
---------------------------------------
In connection with the satisfaction and discharge of this Indenture, or
the Company's obligation with respect to the Debt Securities of a series, all
moneys or Governmental Obligations then held by any paying agent under the
provisions of this Indenture shall, upon demand of the Company, be paid to the
Trustee and thereupon such paying agent shall be released from all further
liability with respect to such moneys or Governmental Obligations.
SECTION 11.5. Repayment to Company.
--------------------
Any moneys or Governmental Obligations deposited with any paying agent
or the Trustee, or then held by the Company, in trust for payment of principal
of or premium or interest on the Debt Securities of a particular series that are
not applied but remain unclaimed by the holders of such Debt Securities for at
least two years after the date upon which the principal of (and premium, if any)
or interest on such Debt Securities shall have respectively become due and
payable, shall be repaid to the Company on May 31 of each year or (if then held
by the Company) shall be discharged from such trust; and thereupon the paying
agent and the Trustee shall be released from all further liability with respect
to such moneys or Governmental Obligations, and the holder of any of the Debt
Securities entitled to receive such payment shall thereafter, as an unsecured
general creditor, look only to the Company for the payment thereof.
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ARTICLE XII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
SECTION 12.1. No Recourse.
-----------
No recourse under or upon any obligation, covenant or agreement of this
Indenture, or of any Debt Security, or for any claim based thereon or otherwise
in respect thereof, shall be had against any incorporator, stockholder, officer
or director, past, present or future as such, of the Company or of any
predecessor or successor corporation, either directly or through the Company or
any such 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; it being expressly understood that this Indenture and the
obligations issued hereunder are solely corporate obligations, and that no such
personal liability whatever shall attach to, or is or shall be incurred by, the
incorporators, stockholders, officers or directors as such, of the Company or of
any predecessor or successor corporation, or any of them, because of the
creation of the indebtedness hereby authorized, or under or by reason of the
obligations, covenants or agreements contained in this Indenture or in any of
the Debt Securities or implied herefrom; and that any and all such personal
liability of every name and nature, either at common law or in equity or by
constitution or statute, of, and any and all such rights and claims against,
every such incorporator, stockholder, officer or director as such, because of
the creation of the indebtedness hereby authorized, or under or by reason of the
obligations, covenants or agreements contained in this Indenture or in any of
the Debt Securities or implied therefrom, are hereby expressly waived and
released as a condition of, and as a consideration for, the execution of this
Indenture and the issuance of such Debt Securities.
ARTICLE XIII
SUBORDINATION OF DEBT SECURITIES
SECTION 13.1. Agreement to Subordinate.
------------------------
The Company covenants and agrees, and each holder of Debt Securities
issued hereunder, by such Securityholder's acceptance thereof, likewise
covenants and agrees, that all Debt Securities shall be issued subject to the
provisions of this Article XIII, and each Holder of a Debt Security, whether
upon original issue or upon transfer or assignment thereof, accepts and agrees
to be bound by such provisions.
The payment by the Company of the principal of, premium, if any, and
interest on all Securities issued hereunder shall, to the extent and in the
manner hereinafter set forth, be subordinated and junior in right of payment to
the prior payment in full of all Senior Indebtedness of the Company, whether
outstanding at the date of this Indenture or thereafter incurred.
No provision of this Article XIII shall prevent the occurrence of any
default or Event of Default hereunder.
SECTION 13.2. Default on Senior Indebtedness.
------------------------------
In the event that any default by the Company in the payment of
principal, premium, interest or any other payment due on any Senior Indebtedness
of the Company has occurred and is continuing and any applicable grace period
with respect to such default has expired and such default has not been cured or
41
<PAGE>
waived or ceased to exist, or in the event that the maturity of any Senior
Indebtedness of the Company has been accelerated because of a default, then, in
either case, no payment shall be made by the Company with respect to the
principal (including redemption and sinking fund payments) of, or premium, if
any, or interest on the Debt Securities.
In the event that, notwithstanding the foregoing, any payment shall be
received by the Trustee when such payment is prohibited by the preceding
paragraph of this Section 13.2, such payment shall be held in trust for the
benefit of, and shall be paid over or delivered to, the holders of Senior
Indebtedness or their respective representatives, or to the trustee or trustees
under any indenture pursuant to which any of such Senior Indebtedness may have
been issued, as their respective interests may appear, but only to the extent
that the holders of the Senior Indebtedness (or their representative or
representatives or a trustee) notify the Trustee in writing within 90 days of
such payment of the amounts then due and owing on the Senior Indebtedness and
only the amounts specified in such notice to the Trustee shall be paid to the
holders of Senior Indebtedness.
SECTION 13.3. Liquidation; Dissolution; Bankruptcy.
------------------------------------
Upon any payment by the Company or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
creditors upon any dissolution or winding-up or liquidation or reorganization of
the Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due upon all Senior Indebtedness
of the Company shall first be paid in full, or payment thereof provided for in
money in accordance with its terms, before any payment is made by the Company on
account of the principal (and premium, if any) or interest on the Debt
Securities; and upon any such dissolution or winding-up or liquidation or
reorganization, any payment by the Company, or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
which the Securityholders or the Trustee would be entitled to receive from the
Company, except for the provisions of this Article XIII, shall be paid by the
Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or
other Person making such payment or distribution, or by the Securityholders or
by the Trustee under the Indenture if received by them or it, directly to the
holders of Senior Indebtedness of the Company (pro rata to such holders on the
basis of the respective amounts of Senior Indebtedness held by such holders, as
calculated by the Company) or their representative or representatives, or to the
trustee or trustees under any indenture pursuant to which any instruments
evidencing such Senior Indebtedness may have been issued, as their respective
interests may appear, to the extent necessary to pay such Senior Indebtedness in
full, in money or money's worth, after giving effect to any concurrent payment
or distribution to or for the holders of such Senior Indebtedness, before any
payment or distribution is made to the Securityholders or to the Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, prohibited by the foregoing, shall be received by the
Trustee before all Senior Indebtedness of the Company is paid in full, or
provision is made for such payment in money in accordance with its terms, such
payment or distribution shall be held in trust for the benefit of and shall be
paid over or delivered to the holders of such Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing such Senior Indebtedness
may have been issued, and their respective interests may appear, as calculated
by the Company, for application to the payment of all Senior Indebtedness of the
Company, as the case may be, remaining unpaid to the extent necessary to pay
such Senior Indebtedness in
42
<PAGE>
full in money in accordance with its terms, after giving effect to any
concurrent payment or distribution to or for the benefit of the holders of such
Senior Indebtedness.
For purposes of this Article XIII, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in this Article XIII with
respect to the Debt Securities to the payment of all Senior Indebtedness of the
Company, as the case may be, that may at the time be outstanding, provided that
(i) such Senior Indebtedness is assumed by the new corporation, if any,
resulting from any such reorganization or readjustment, and (ii) the rights of
the holders of such Senior Indebtedness are not, without the consent of such
holders, altered by such reorganization or readjustment. The consolidation of
the Company with, or the merger of the Company into, another corporation or the
liquidation or dissolution of the Company following the conveyance or transfer
of its property as an entirety, or substantially as an entirety, to another
corporation upon the terms and conditions provided for in Article X of this
Indenture shall not be deemed a dissolution, winding-up, liquidation or
reorganization for the purposes of this Section 13.3 if such other corporation
shall, as a part of such consolidation, merger, conveyance or transfer, comply
with the conditions stated in Article X of this Indenture. Nothing in Section
13.2 or in this Section 13.3 shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 7.6 of this Indenture.
SECTION 13.4. Subrogation.
-----------
Subject to the payment in full of all Senior Indebtedness of the
Company, the rights of the Securityholders shall be subrogated to the rights of
the holders of such Senior Indebtedness to receive payments or distributions of
cash, property or securities of the Company, as the case may be, applicable to
such Senior Indebtedness until the principal of (and premium, if any) and
interest on the Debt Securities shall be paid in full; and, for the purposes of
such subrogation, no payments or distributions to the holders of such Senior
Indebtedness of any cash, property or securities to which the Securityholders or
the Trustee would be entitled except for the provisions of this Article XIII,
and no payment over pursuant to the provisions of this Article XIII to or for
the benefit of the holders of such Senior Indebtedness by Securityholders or the
Trustee, shall, as between the Company, its creditors other than holders of
Senior Indebtedness of the Company, and the holders of the Debt Securities, be
deemed to be a payment by the Company to or on account of such Senior
Indebtedness. It is understood that the provisions of this Article XIII are and
are intended solely for the purposes of defining the relative rights of the
holders of the Debt Securities, on the one hand, and the holders of such Senior
Indebtedness on the other hand.
Nothing contained in this Article XIII or elsewhere in this Indenture
or in the Debt Securities is intended to or shall impair, as between the
Company, its creditors other than the holders of Senior Indebtedness of the
Company, and the holders of the Debt Securities, the obligation of the Company,
which is absolute and unconditional, to pay to the holders of the Debt
Securities the principal of (and premium, if any) and interest on the Debt
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 Debt Securities and creditors of the Company, as the case may be,
other than the holders of Senior Indebtedness of the Company, as the case may
be, nor shall anything herein or therein prevent the Trustee or the holder of
any Debt Security from exercising all remedies otherwise permitted by applicable
law upon default under the Indenture, subject to the rights, if any, under this
Article XIII of the holders of such Senior Indebtedness in respect of cash,
property or securities of the Company, as the case may be, received upon the
exercise of any such remedy.
43
<PAGE>
Upon any payment or distribution of assets of the Company referred to
in this Article XIII, the Trustee, subject to the provisions of Section 7.1 of
this Indenture, and the Securityholders shall be entitled to conclusively 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 receiver, trustee in bankruptcy, liquidation
trustee, agent or other Person making such payment or distribution, delivered to
the Trustee or to the Securityholders, for the purposes of ascertaining the
Persons entitled to participate in such distribution, the holders of Senior
Indebtedness and other indebtedness of the Company, as the case may be, the
amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article XIII.
SECTION 13.5. Trustee to Effectuate Subordination.
-----------------------------------
Each Securityholder by such Securityholder's acceptance thereof
authorizes and directs the Trustee on such Securityholder's behalf to take such
action as may be necessary or appropriate to effectuate the subordination
provided in this Article XIII and appoints the Trustee such Securityholder's
attorney-in-fact for any and all such purposes.
SECTION 13.6. 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 Debt Securities
pursuant to the provisions of this Article XIII. Notwithstanding the provisions
of this Article XIII or any other provision of this 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 Debt
Securities pursuant to the provisions of this Article XIII, 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 7.1 of this 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 for in this
Section 13.6 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 Debt Security), 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 7.1 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 XIII, 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 XIII, and, if such evidence is not furnished, the
44
<PAGE>
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment.
SECTION 13.7. Rights of the Trustee; Holders of Senior Indebtedness.
-----------------------------------------------------
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article XIII in respect of any Senior Indebtedness at
any time held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.
With respect to the holders of Senior Indebtedness of the Company, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article XIII, and no implied
covenants or obligations with respect to the holders of such Senior Indebtedness
shall be read into this Indenture or against the Trustee. The Trustee shall
not be deemed to owe any fiduciary duty to the holders of such Senior
Indebtedness and, subject to the provisions of Section 7.1 of this Indenture,
the Trustee shall not be liable to any holder of such Senior Indebtedness if it
shall pay over or deliver to Securityholders, the Company or any other Person
money or assets to which any holder of such Senior Indebtedness shall be
entitled by virtue of this Article XIII or otherwise.
SECTION 13.8. Subordination May Not Be Impaired.
---------------------------------
No right of any present or future holder of any Senior Indebtedness of
the Company to enforce subordination as herein provided shall be at any time in
any way prejudiced or impaired by any act or failure to act on the part of the
Company, as the case may be, or by any act or failure to act, in good faith, by
any such holder, or by any noncompliance by the Company, as the case may be,
with the terms, provisions and covenants of this Indenture, regardless of any
knowledge thereof that any such holder may have or otherwise be charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness of the Company may, at any time and from time
to time, without the consent of or notice to the Trustee or the Securityholders,
without incurring responsibility to the Securityholders and without impairing or
releasing the subordination provided in this Article XIII or the obligations
hereunder of the holders of the Securities to the holders of such Senior
Indebtedness, do any one or more of the following: (i) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, such
Senior Indebtedness, or otherwise amend or supplement in any manner such Senior
Indebtedness or any instrument evidencing the same or any agreement under which
such Senior Indebtedness is outstanding; (ii) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing such
Senior Indebtedness; (iii) release any Person liable in any manner for the
collection of such Senior Indebtedness; and (iv) exercise or refrain from
exercising any rights against the Company, as the case may be, and any other
Person.
45
<PAGE>
ARTICLE XIV
MISCELLANEOUS PROVISIONS
SECTION 14.1. Effect on Successors and Assigns.
--------------------------------
All the covenants, stipulations, promises and agreements in this
Indenture contained by or on behalf of the Company shall bind successors and
assigns of the Company, whether so expressed or not.
SECTION 14.2. Actions by Successor.
--------------------
Any act or proceeding by any provision of this Indenture authorized or
required to be done or performed by any board, committee or officer of the
Company shall and may be done and performed with like force and effect by the
corresponding board, committee or officer of any corporation that shall at the
time be the lawful successor of the Company.
SECTION 14.3. Surrender of Company Powers.
---------------------------
The Company by instrument in writing executed by authority of 2/3 (two-
thirds) of the Board of Directors and delivered to the Trustee may surrender any
of the powers reserved to the Company, and thereupon such power so surrendered
shall terminate both as to the Company and as to any successor corporation.
SECTION 14.4. Notices.
-------
Except as otherwise expressly provided herein, any notice or demand
that by any provision of this Indenture is required or permitted to be given or
served by the Trustee or by the holders of Debt Securities to or on the Company
may be given or served by being deposited first class postage prepaid in a post-
office letterbox addressed (until another address is filed in writing by the
Company with the Trustee), as follows: Arvin Industries, Inc., One Noblitt
Plaza, Columbus, Indiana 47202, Attention: _______________. Any notice,
election, request or demand by the Company or any Securityholder to or upon the
Trustee shall be deemed to have been sufficiently given or made, for all
purposes, if given or made in writing at the Corporate Trust Office of the
Trustee.
SECTION 14.5. Governing Law.
-------------
This Indenture and each Debt Security 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 14.6. Treatment of the Debt Securities as Debt.
----------------------------------------
It is intended that the Debt Securities will be treated as indebtedness
and not as equity for federal income tax purposes. The provisions of this
Indenture shall be interpreted to further this intention.
46
<PAGE>
SECTION 14.7. Compliance Certificates and Opinions.
------------------------------------
(a) Upon any application or demand by the Company to the Trustee to
take any action under any of the provisions of this Indenture, the Company shall
furnish to the Trustee an Officers' Certificate stating that all conditions
precedent 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 have been complied with, except that in
the case of any such application or demand as to which the furnishing of such
documents is specifically required by any provision of this Indenture relating
to such particular application or demand, no additional certificate or opinion
need be furnished.
(b) Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or covenant
in this Indenture shall include (1) a statement that the Person making such
certificate or opinion has read such covenant or condition; (2) a brief
statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are
based; (3) a statement that, in the opinion of such Person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and (4) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been complied with.
SECTION 14.8. Payments on Business Days.
-------------------------
Except as provided pursuant to Section 2.1 pursuant to a Board
Resolution, and as set forth in an Officers' Certificate, or established in one
or more indentures supplemental to this Indenture, in any case where the date of
maturity of interest or principal of any Debt Security or the date of redemption
of any Debt Security shall not be a Business Day, then payment of interest or
principal (and premium, if any) may be made on the next succeeding Business Day
with the same force and effect as if made on the nominal date of maturity or
redemption, and no interest shall accrue for the period after such nominal date;
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, as if made
on the nominal date of maturity or redemption.
SECTION 14.9. Conflict with Trust Indenture Act.
---------------------------------
If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
SECTION 14.10. Counterparts.
------------
This 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.
SECTION 14.11. Separability.
------------
In case any one or more of the provisions contained in this Indenture
or in the Debt Securities of any series 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 Indenture or of
such Debt Securities, but this Indenture and such Debt Securities shall be
construed as if such invalid or illegal or unenforceable provision had never
been contained herein or therein.
47
<PAGE>
SECTION 14.12. Assignment.
----------
The Company will have the right at all times to assign any of its
respective rights or obligations under this Indenture to a direct or indirect
wholly-owned Subsidiary of the Company, provided that, in the event of any such
-------- ----
assignment, the Company will remain liable for all such obligations. Subject to
the foregoing, the Indenture is binding upon and inures to the benefit of the
parties thereto and their respective successors and assigns. This Indenture may
not otherwise be assigned by the parties thereto.
48
<PAGE>
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.
ARVIN INDUSTRIES, INC.
By:_________________________________________
Name:
Title:
Attest:
By:_________________________
Name:
Title:
[Seal]
WILMINGTON TRUST COMPANY
not in its individual capacity
but solely as Trustee
By:_________________________________________
Name:
Title:
Attest:
By:_________________________
Name:
Title:
[Seal]
49
<PAGE>
STATE OF INDIANA )
) SS:
COUNTY OF __________ )
On the ____ day of ___________, 199__, before me personally came
__________ and __________ to be known, who, being by me duly sworn, did depose
and say that they are the __________ and __________, respectively, of ARVIN
INDUSTRIES, INC., one of the corporations described in and which executed the
above instrument; that they know the corporate seal of said corporation; that
the seal affixed to the said instrument is such corporate seal; that it was so
affixed by authority of the Board of Directors of said corporation, and that
they signed their respective names thereto by like authority.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal of
office this ____ day of _____________, 199__.
________________________________________
Notary Public
STATE OF DELAWARE )
)
COUNTY OF _______ )
On the ____ day of ____________, 199__, before me personally came
__________ and __________ to be known, who, being by me duly sworn, did depose
and say that they are __________ and __________, respectively, of
__________________________________, one of the corporations described in and
which executed the above instrument; that they know the corporate seal of said
corporation; that the seal affixed to the said instrument is such corporate
seal; that it was so affixed by authority of the Board of Directors of said
corporation, and that they signed their respective names thereto by like
authority.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal of
office this ____ day of ___________, 199__.
_______________________________________
Notary Public
50
<PAGE>
EXHIBIT 4.5
FIRST SUPPLEMENTAL INDENTURE
BETWEEN
ARVIN INDUSTRIES, INC.
AND
WILMINGTON TRUST COMPANY
DATED AS OF ____________, 199___
=========================
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
Page
----
<S> <C> <C>
ARTICLE I
DEFINITIONS
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...................................................... 3
SECTION 2.3 Form and Payment.............................................. 3
SECTION 2.4 Global Debenture.............................................. 3
SECTION 2.5 Interest...................................................... 4
ARTICLE III
REDEMPTION OF THE DEBENTURES
SECTION 3.1 Redemption; Conditions to Redemption.......................... 5
SECTION 3.2 No Sinking Fund............................................... 6
ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 4.1 Extension of Interest Payment Period.......................... 6
SECTION 4.2 Notice of Extension........................................... 6
ARTICLE V
EXPENSES
SECTION 5.1 Payment of Expenses........................................... 7
SECTION 5.2 Payment Upon Resignation or Removal........................... 7
ARTICLE VI
COVENANT TO LIST ON EXCHANGE
SECTION 6.1 Listing on an Exchange........................................ 8
ARTICLE VII
FORM OF DEBENTURE
SECTION 7.1 Form of Debenture............................................. 8
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE VIII
ORIGINAL ISSUE OF DEBENTURES
SECTION 8.1 Original Issue of Debentures.................................. 14
ARTICLE IX
MISCELLANEOUS
SECTION 10.1 Ratification of Indenture..................................... 14
SECTION 10.2 Trustee Not Responsible for Recitals.......................... 14
SECTION 10.3 Governing Law................................................. 15
SECTION 10.4 Separability.................................................. 15
SECTION 10.5 Counterparts.................................................. 15
</TABLE>
ii
<PAGE>
FIRST SUPPLEMENTAL INDENTURE, dated as of ____________, 199___ (the
"First Supplemental Indenture"), between Arvin Industries, Inc., an Indiana
corporation (the "Company"), and Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity but solely as trustee (the
"Trustee") under the Indenture dated as of _____________, 199___ between the
Company and the Trustee (the "Indenture").
W I T N E S S E T H:
WHEREAS, the Company executed and delivered the Indenture to the
Trustee to provide for the future issuance of the Company's unsecured junior
subordinated debt securities to be issued from time to time in one or more
series as might be determined by the Company under the Indenture, in an
unlimited aggregate principal amount which may be authenticated and delivered as
provided in the Indenture;
WHEREAS, pursuant to the terms of the Indenture, the Company desires
to provide for the establishment of a new series of its Debt Securities to be
known as its ___% Junior Subordinated Deferrable Interest Debentures due 2037
(the "Debentures"), the form and substance of such Debentures and the terms,
provisions and conditions thereof to be set forth as provided in the Indenture
and this First Supplemental Indenture;
WHEREAS, Arvin Capital I, a Delaware statutory business trust (the
"Trust"), has offered to the public $100,000,000 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 $3,100,000 aggregate
liquidation amount of its ___% Trust Originated Common Securities, in
$103,100,000 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;
<PAGE>
(c) the singular includes the plural and vice versa;
(d) a reference to a Section or Article is to a Section or
Article of this First Supplemental Indenture;
(e) headings are for convenience of reference only and do not
affect interpretation;
(f) the following terms have the meanings given to them in the
Declaration: (i) Administrative Trustee; (ii) Clearing Agency; (iii) Delaware
Trustee; (iv) Distributions; (v) Preferred Security Certificate; (vi) Pricing
Agreement; (vii) Institutional Trustee; (viii) Tax Event; and (ix) Underwriting
Agreement;
(g) the following terms have the meanings given to them in this
Section 1.1(g):
"Additional Interest" shall have the meaning set forth in
Section 2.5.
"Compounded Interest" shall have the meaning set forth in
Section 4.1.
"Coupon Rate" shall have the meaning set forth in Section 2.5.
"Declaration" means the Amended and Restated Declaration of Trust
of Arvin Capital I, a Delaware statutory business trust, dated as of
____________, 199___, including the Terms of Securities attached thereto as
Annex I.
"Deferred Interest" shall have the meaning set forth in
Section 4.1.
"Extended Interest Payment Period" shall have the meaning set
forth in Section 4.1.
"Global Debenture" 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.
"Redemption Price" shall have the meaning set forth in
Section 3.2.
ARTICLE II
GENERAL TERMS AND CONDITIONS OF THE DEBENTURES
SECTION 2.1 Designation and Principal Amount.
--------------------------------
There is hereby authorized a series of Debt Securities designated
the "___% Junior Subordinated Deferrable Interest Debentures due 2037", limited
in aggregate principal amount to $103,100,000, which amount shall be as set
forth in any written order of the Company for the authentication and delivery of
Debentures pursuant to Section 2.4 of the Indenture.
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SECTION 2.2 Maturity.
--------
The Maturity Date is _______________, 2037.
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 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 the event that the Debentures are distributed to holders of
Preferred Securities in liquidation of such holders' interests in the Trust:
(i) the Debentures may be presented to the Trustee by the
Institutional Trustee in exchange for a global Debenture in an aggregate
principal amount equal to the aggregate principal amount of all
outstanding Debentures (a "Global Debenture"), to be registered in the
name of the Depositary, or its nominee, and delivered by the Trustee to
the Depositary 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 Depositary; and
(ii) if any Preferred Securities are held in non book-entry
certificated form, the Debentures 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.
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(b) A Global Debenture may be transferred, in whole but not in
part, only to another nominee of the Depositary, or to a successor Depositary
selected or approved by the Company or to a nominee of such successor
Depositary.
(c) If at any time the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary or if at any time the Depositary
for such series shall no longer be registered or in good standing under the
Exchange Act, or other applicable statute or regulation, and a successor
Depositary 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 II of the Indenture,
the Trustee, upon written notice from the Company, will authenticate and deliver
the Debentures in definitive registered form, 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, in its sole discretion, that the Debentures shall no longer
be represented by a Global Debenture. In such event the Company will execute,
and subject to Section 2.11(c) 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 Depositary,
pursuant to instructions from its direct or indirect participants or otherwise,
shall instruct the Trustee. The Trustee shall deliver such Debentures to the
Depositary for delivery to the Persons in whose names such Debentures are so
registered.
SECTION 2.5 Interest.
--------
(a) Each Debenture will bear interest at the rate of ___% per
annum (the "Coupon Rate") from the original date of issuance 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 Coupon Rate, 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 __________, 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
any Debentures of which the Institutional Trustee is the holder of a Global
Debenture, shall be the close of business on the Business Day next preceding
that Interest Payment Date. Notwithstanding the foregoing sentence, if the
Preferred Securities are no longer in book-entry only form or, except if the
Debentures are held by the Institutional Trustee, 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 one Business Day
before an Interest Payment Date.
(b) The amount of interest payable for any period will be computed
on the basis of a 360-day year 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
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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.
(c) 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 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 governmental charges been imposed.
ARTICLE III
REDEMPTION OF THE DEBENTURES
SECTION 3.1 Redemption; Conditions to Redemption.
(a) Subject to the provisions of Article III of the Indenture, the
Company shall have the right to redeem the Debentures, in whole or in part, from
time to time, on or after __________, 2002, upon not less than 30 nor more than
60 days' prior written notice, at a redemption price equal to 100% of the
principal amount to be redeemed plus any accrued and unpaid interest thereon to
the date of such redemption (the "Redemption Price"); provided, however, that
the Company shall not redeem the Debentures in part unless all accrued but
unpaid interest has been paid in full on all of the Debentures Outstanding for
all quarterly interest periods terminating on or prior to the Redemption Date;
and provided, further, that if a partial redemption would result in the
delisting of the Preferred Securities from any national securities exchange or
other organization on which the Preferred Securities are then listed, the
Company shall not be permitted to effect such partial redemption and may only
redeem the Debentures in whole. If the Debentures are only partially redeemed
pursuant to this Section 3.1(a), the Debentures will be redeemed pro rata or by
lot or by any other method utilized by the Trustee; provided, that if at the
time of redemption the Debentures are registered as a Global Debenture, the
Depositary shall determine, in accordance with its procedures, the principal
amount of such Debentures held by each holder of Debentures to be redeemed.
(b) Notwithstanding the provisions of Section 3.1(a), if a Tax
Event has occurred and is continuing, the Company shall have the right, upon not
less than 30 nor more than 60 days' prior written notice, to redeem the
Debentures, in whole but not in part, at the Redemption Price, within 90 days
following the occurrence of such Tax Event.
(c) For so long as the Trust is the Holder of all Outstanding
Debentures, the proceeds of any redemption provided for in this Section 3.1
shall be used by the Trust to redeem Preferred Securities in accordance with
their terms.
SECTION 3.2 No Sinking Fund.
The Subordinated Debentures are not entitled to the benefit of any
sinking fund.
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ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 4.1 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
exceeding 20 consecutive quarters (the "Extended Interest Payment Period"),
during which Extended Interest Payment Period no interest shall be due and
payable; provided that no Extended Interest Payment Period may extend beyond the
Maturity Date. 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 4.1, will bear interest thereon at the Coupon
Rate 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. Before the termination of
any Extended Interest Payment Period, the Company may further extend such
period, provided that such period together with all such further extensions
thereof shall not exceed 20 consecutive quarters or 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.
SECTION 4.2 Notice of Extension.
-------------------
(a) If the Institutional Trustee is the only registered holder of
the Debentures at the time the Company elects an Extended Interest Payment
Period, the Company shall give written notice to the Trustee, the Administrative
Trustees, and the Institutional Trustee of its election of such Extended
Interest Payment Period at least 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, 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 elects an Extended Interest Payment Period,
the Company shall give the holders of the Debentures and the Trustee written
notice of its election 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 4.2 shall be counted as one of the 20
quarters permitted in the maximum Extended Interest Payment Period permitted
under Section 4.1.
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ARTICLE V
EXPENSES
SECTION 5.1 Payment of Expenses.
-------------------
(a) 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:
(1) 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 compensation of the
Trustee under the Indenture in accordance with the provisions of Section
7.6 of the Indenture;
(2) 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);
(3) 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.
(b) The obligations of the Company under paragraphs (a)(2) and
(a)(3) of this Section 5.1 are for the benefit of, and shall be enforceable by,
any person to whom any such liabilities, costs, expenses, and taxes are owed (a
"Creditor"), whether or not such Creditor has received notice thereof. Any such
Creditor may enforce such obligations of the Company directly against the
Company, and the Company 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 Company. The Company shall execute such additional
agreements as may be necessary or desirable to give full effect to the
provisions of this Section 5.1(b).
SECTION 5.2 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 Section 7.10
of the Indenture, 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 5.7 of the
Declaration, the Company shall pay to the Institutional Trustee all amounts
accrued to the date of such termination, removal or resignation.
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ARTICLE VI
COVENANT TO LIST ON EXCHANGE
SECTION 6.1 Listing on an Exchange.
----------------------
If the Debentures are to be issued as a Global Debenture in
connection with the distribution of the Debentures to the holders of the
Preferred Securities, the Company will use its best efforts to list such
Subordinated Debentures on the New York Stock Exchange or on such other exchange
as the Preferred Secu rities are then listed.
ARTICLE VII
FORM OF DEBENTURE
SECTION 7.1 Form of Debenture.
-----------------
The Debentures and the Trustee's Certificate of Authentication to
be endorsed thereon are to be substantially in the following forms:
(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 Depositary or a nominee of a
Depositary. This Debenture is exchangeable for Debentures registered in the name
of a person other than the Depositary or its nominee only in the limited
circumstances described in the Indenture, and no transfer of this Debenture
(other than a transfer of this Debenture 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 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.]
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No.
----------------------
ARVIN INDUSTRIES, INC.
___% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE
DUE 2037
Arvin Industries, Inc., an Indiana 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 $103,100,000 on __________, 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 _____________, at the rate of ___% per annum 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 same rate per annum compounded quarterly. The amount of interest
payable on any Interest Payment Date shall be computed on the basis of a 360-day
year 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 actual number of days elapsed in such 90-day quarter.
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 15th day of the month in which such Interest Payment Date shall
occur.] 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 of which shall be given to the registered holders of this
series of 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
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at the option of the Company by check mailed to the registered holder at suchh
address as shall appear in the Security Register. Notwithstanding the foregoing,
so long as the holder of this Debenture is the Institutional Trustee, 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 by the
Institutional Trustee.
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
-------------------
ARVIN INDUSTRIES, INC.
By:
-----------------------
Name:
Title
Attest:
By:
----------------------
Name:
Title:
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(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is one of the Subordinated Debentures of the series of
Subordinated Debentures described in the within-mentioned Indenture.
WILMINGTON TRUST COMPANY or
--------------------------------------
as Trustee as Authenticating Agent
By By
--------------------------- --------------------------------------
Authorized Signatory Authorized Signatory
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(FORM OF REVERSE OF DEBENTURE)
This Debenture is one of a duly authorized series of Debentures of
the Company (herein sometimes referred to as the "Debentures"), specified in the
Indenture, all issued or to be issued in one or more series under and pursuant
to an Indenture dated as of ______________, 199__, duly executed and delivered
between the Company and Wilmington Trust Company, as Trustee (the "Trustee"), as
supplemented by the First Supplemented Indenture dated as of __________, 199__,
between the Company and the Trustee (the 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 Debentures. By the terms of the Indenture, the Debentures 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
Debentures is limited in aggregate principal amount as specified in said First
Supplemental Indenture.
At any time on or after __________, 2002, the Company shall have
the right, subject to the terms and conditions of Article III of the Indenture,
to redeem this Debenture, without premium or penalty, in whole or in part, at a
Redemption Price equal to 100% of the principal amount to be redeemed plus
accrued but unpaid interest to the Redemption Date. If a Tax Event (as defined
in the First Supplemental Indenture) shall occur and be continuing, the Company
shall have the right, subject to the terms and conditions of Article III of the
Indenture, to redeem this Debenture, without premium or penalty, in whole but
not in part, at a Redemption Price equal to 100% of the principal amount thereof
plus accrued but unpaid interest to the Redemption Date within 90 days following
the occurrence of such Tax Event. Any redemption pursuant to this paragraph will
be made upon not less than 30 days nor more than 60 days' notice, at the
Redemption Price. If the Debentures are only partially redeemed by the Company,
the Debentures will be redeemed pro rata or by lot or by any other method
utilized by the Trustee; provided that if, at the time of redemption, the
Debentures are registered as a Global Debenture, the Depositary shall determine
the principal amount of such Debentures held by each holder to be redeemed in
accordance with its procedures.
In the event of redemption of this Debenture in part only, a new
Debenture or Debentures of this series for the unredeemed portion hereof will be
issued in the name of the holder hereof upon the cancellation hereof.
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 amount 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) extend the fixed maturity
of any Debentures of any series, or 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
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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 Debentures of any series at the time outstanding
affected thereby, on behalf of all of the holders of the Debentures of such
series, to waive any past default in the performance of any of the covenants
contained in the Indenture, or established pursuant to the Indenture with
respect to such series, and its consequences, except a default in the payment of
the principal of or premium, if any, or interest on any of the Debentures 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 herefor 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.
The Company shall have the right at any time during the term of the
Debentures and from time to time to extend the interest payment period of such
Debentures for up to 20 consecutive quarters (an "Extended Interest Payment
Period"), at the end of which period the Company shall pay all interest then
accrued and unpaid (together with interest thereon at the rate specified for the
Debentures to the extent that payment of such interest is enforceable under
applicable law); provided that no Extended Interest Payment Date may extend
beyond the maturity date of the Debentures. Before the termination of any such
Extended Interest Payment Period, the Company may further extend such Extended
Interest Payment Period, provided that such Extended Interest Payment Period
together with all such further extensions thereof shall not exceed 20
consecutive quarters. At the termination of any such Extended Interest Payment
Period and upon the payment of all accrued and unpaid interest and any
additional amounts then due, the Company may commence a new Extended Interest
Payment Period.
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 Corporate Trust Office of the Trustee or
such other location designated by the Company pursuant to the Indenture
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 desig nated 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 this
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.
13
<PAGE>
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, stockholder, officer 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 Debentures of this series are issuable only in registered form
without coupons in denominations of $25 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 $25 and any integral multiple thereof.] As provided in the
Indenture and subject to certain limitations herein and 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.
All terms used in this Debenture that are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
ARTICLE VIII
ORIGINAL ISSUE OF DEBENTURES
SECTION 8.1 Original Issue of Debentures.
----------------------------
Debentures in the aggregate principal amount of $103,100,000 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 President, or any Vice President and its Treasurer or an
Assistant Treasurer, without any further action by the Company.
ARTICLE IX
MISCELLANEOUS
SECTION 10.1 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 10.2 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.
14
<PAGE>
SECTION 10.3 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 10.4 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 10.5 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>
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, and their respective corporate seals
to be hereunto affixed and attested, on the date or dates indicated in the
acknowledgments and as of the day and year first above written.
ARVIN INDUSTRIES, INC.
By:
-----------------------------------
Name:
Title:
Attest:
By:
-------------------------
Name:
Title:
[Seal]
WILMINGTON TRUST COMPANY
not in its individual capacity
but solely as Trustee
By:
------------------------------------
Name:
Title:
Attest:
By:
-------------------------
Name:
Title:
[Seal]
<PAGE>
STATE OF INDIANA )
) SS
COUNTY OF _______ )
On the _____ day of __________, 199___, before me personally came _________
and _________ to be known, who, being by me duly sworn, did depose and say that
they are the __________ and _________, respectively, of ARVIN INDUSTRIES, INC.,
one of the corporations described in and which executed the above instrument;
that they know the corporate seal of said corporation; that the seal affixed to
the said instrument is such corporate seal; that it was so affixed by authority
of the Board of Directors of said corporation, and that they signed their
respective names thereto by like authority.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal of
office this _____ day of _________, 199___.
--------------------------------------
Notary Public
STATE OF DELAWARE )
) SS
COUNTY OF _______ )
On the _____ day of__________, 199___, before me personally came __________
and __________ to be known, who, being by me duly sworn, did depose and say that
they are __________ and __________, respectively, of WILMINGTON TRUST COMPANY,
one of the corporations described in and which executed the above instrument;
that they know the corporate seal of said corporation; that the seal affixed to
the said instrument is such corporate seal; that it was so affixed by authority
of the Board of Directors of said corporation, and that they signed their
respective names thereto by like authority.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal of
office this _____ day of __________, 199___.
--------------------------------------
Notary Public
<PAGE>
EXHIBIT 4.7
=========================
PREFERRED SECURITIES GUARANTEE AGREEMENT
ARVIN INDUSTRIES, INC.
DATED AS OF _______________, 199__
=========================
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation............................. 1
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application........................... 4
SECTION 2.2 Lists of Holders of Securities............................. 4
SECTION 2.3 Reports by the Preferred Guarantee Trustee................. 5
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...................................... 6
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................................................... 10
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee.................................................. 10
SECTION 5.2 Waiver of Notice and Demand................................ 11
SECTION 5.3 Obligations Not Affected................................... 11
SECTION 5.4 Rights of Holders.......................................... 12
SECTION 5.5 Guarantee of Payment....................................... 12
SECTION 5.6 Subrogation................................................ 12
SECTION 5.7 Independent Obligations.................................... 12
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions................................ 13
SECTION 6.2 Ranking................................................... 13
ARTICLE VII
TERMINATION
SECTION 7.1 Termination............................................... 13
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation............................................... 14
SECTION 8.2 Indemnification........................................... 14
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns.................................... 14
SECTION 9.2 Amendments................................................ 14
SECTION 9.3 Notices................................................... 15
SECTION 9.4 Benefit................................................... 15
SECTION 9.5 Governing Law............................................. 15
</TABLE>
ii
<PAGE>
Page
----
CROSS-REFERENCE TABLE
FOR THE PREFERRED SECURITIES GUARANTEE AGREEMENT
<TABLE>
<CAPTION>
SECTION OF SECTION OF
TRUST INDENTURE GUARANTEE
OF 1939, AS AMENDED AGREEMENT
- --------------------- -----------------
<S> <C>
310(a)...................................4.1(a)
310(b)................................1(c), 2.8
310(c)...........................Not Applicable
311(a)...................................2.2(a)
311(b)...................................2.2(b)
311(c)...........................Not Applicable
312(a)...................................2.2(a)
312(b)...................................2.2(b)
313.........................................2.3
314(a)......................................2.4
314(b)...........................Not Applicable
314(c)......................................2.5
314(d)...........................Not Applicable
314(e).................................2.5, 3.2
314(f).................................2.1, 3.2
315(a)...................................3.1(d)
315(b)......................................2.7
315(c)......................................3.1
315(d)...................................3.1(d)
316(a)..............................5.4(a), 2.6
316(b)......................................5.3
316(c)......................................2.2
317(a)...........................Not Applicable
317(b)...........................Not Applicable
318(a)...................................2.1(b)
318(b)......................................2.1
319(c)...................................2.1(a)
</TABLE>
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Guarantee Agreement and shall not have any bearing on the
interpretation of its terms or provisions.
iii
<PAGE>
PREFERRED SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Preferred Securities Guarantee"), dated
as of ____________, 199__, is executed and delivered by Arvin Industries, Inc.,
an Indiana corporation (the "Guarantor"), and Wilmington Trust Company, not in
its individual capacity but solely 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 Arvin Capital I, a Delaware
statutory business trust (the "Issuer").
W I T N E S S E T H:
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of _____________, 199__, 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 4,000,000 preferred securities, having an
aggregate liquidation amount of $100,000,000, 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 INTERPRETATION
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;
<PAGE>
(c) all references 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;
(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.
"Business Day" means any day other than a day on which state or
federal banking institutions in New York, New York or Wilmington, Delaware are
authorized or required by 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 Rodney Square North, 1100
North Market Street, Wilmington, Delaware 19890-0001.
"Covered Person" means any Holder or beneficial owner of Preferred
Securities.
"Debentures" means the series of junior subordinated debt securities
of the Guarantor designated the ___% Junior Subordinated Deferrable Interest
Debentures due 2037 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
payment 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 redemption price, including all accrued and unpaid Distributions to the date
of redemption (the "Redemption Price") to the extent the Issuer has funds
available therefor, with respect to any Preferred Securities called for
redemption by the Issuer, and (iii) upon a voluntary or involuntary dissolution,
liquidation, winding-up or termination of the
2
<PAGE>
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 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 ______________, 199__
between 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 in the terms of the Preferred Securities or 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.
3
<PAGE>
"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.
"Responsible Officer" means, with respect to the Preferred Guarantee
Trustee, the chairman of the board of directors, president, any vice-president,
any assistant vice-president, the secretary, any assistant secretary, the
treasurer, any assistant treasurer, any trust officer or other officer 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
Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
SECTION 2.2 Lists 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 fourteen (14) days after January
1 and June 30 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 fourteen (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.
4
<PAGE>
(b) The Preferred Guarantee Trustee shall comply with its
obligations under Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Preferred Guarantee Trustee
On or before July 15 of each year [(commencing with the first
anniversary of the issuance of the Preferred Securities], 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 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 of the Trust
Indenture Act (if any) and the compliance certif icate 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 such 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) of the Trust
Indenture Act 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 a
Responsible Officer has knowledge of 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 a
5
<PAGE>
Responsible Officer of the Preferred Guarantee Trustee charged with the
administration of the Declaration shall have obtained actual knowledge, of such
Event of Default.
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.
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 all 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
6
<PAGE>
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 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 Prefer red 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.
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<PAGE>
(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 registration thereof).
(v) The Preferred Guarantee Trustee may consult with 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 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 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
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<PAGE>
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, 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.
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(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 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
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<PAGE>
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:
(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, Redemption Price, Liquidation Distribution or any
other sums payable under the terms of the Preferred Securities or the extension
of time for the performance of any other obligation under, arising out of, or in
connection with, the Preferred Securities (other than an extension of time for
payment of Distributions, Redemption 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.
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<PAGE>
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, then any Holder of Preferred Securities may
institute a legal proceeding directly against the Guarantor to enforce the
Preferred Guarantee Trustee's rights under this Preferred Securities Guarantee
without first instituting a legal proceeding against the Issuer, the Preferred
Guarantee Trustee or any other person or entity. In addition, 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 Securities Guarantee for such payment to the Holder of the Preferred
Securities of the principal of, or interest on, the Debentures on or after the
respective due dates specified in the Debentures, and the amount of the payment
will be based on the Holder's pro rata share of the amount due and owing on all
of the Preferred Securities. The Guarantor hereby 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.
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 (if any) rights 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.
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<PAGE>
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 Guarantor shall not declare or pay any dividend on, make any
distribution with respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to, any of its capital stock (other than (i)
repurchases or acquisitions of the Guarantor's common shares as contemplated by
any employment arrangement, benefit plan or other similar contract with or for
the benefit of employees, officers or directors entered into in the ordinary
course of business, (ii) as a result of an exchange or conversion of any class
or series of the Guarantor's capital stock for the Guarantor's common shares,
provided that such class or series of the Guarantor's capital stock was
outstanding prior to the occurrence of such Event of Default, (iii) the purchase
of fractional interests in shares of the Guarantor's capital stock pursuant to
the conversion or exchange provisions of such Guarantor capital stock or the
security being converted or exchanged, provided that such Guarantor capital
stock or security was outstanding prior to the occurrence of such Event of
Default, or (iv) the payment of any stock dividend where the dividend is paid in
the form of the same stock as that on which the dividend is paid), (b) the
Guarantor shall not directly or indirectly, and shall not allow any of its
Subsidiaries to, make any payment of interest, principal or premium, if any, on
or repay, repurchase or redeem any debt securities issued by the Guarantor that
rank pari passu with or junior to the Debentures, and (c) the Guarantor shall
not make guarantee payments with respect to the foregoing (other than pursuant
to this Preferred Securities Guarantee Agreement).
SECTION 6.2 Ranking
This Preferred Securities Guarantee will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right of
payment to all other liabilities of the Guarantor, including the Debentures,
except those liabilities of the Guarantor made pari passu or subordinate by
their terms, (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 Redemption Price of all Preferred Securities, (ii) the
distribution of the Debentures to the Holders of all of the Preferred Securities
or (iii) full payment of the amounts payable in accordance with the Declaration
upon dissolution 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.
13
<PAGE>
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
The Guarantor agrees to indemnify each Indemnified Person for, and to
hold each Indemnified Person 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 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 obligation to indemnify as set forth in this Section 8.2 shall
survive the termination of this 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
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<PAGE>
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):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Department
(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):
Arvin Industries, Inc.
One Noblitt Plaza
Columbus, Indiana 47202
Attention: ________________
(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.
15
<PAGE>
THIS PREFERRED SECURITIES GUARANTEE is executed as of the day and year
first above written.
ARVIN INDUSTRIES, INC.,
as Guarantor
By:__________________________
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Preferred Guarantee Trustee
By:__________________________
Name:
Title:
<PAGE>
EXHIBIT 12.1
------------
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED
DIVIDENDS (UNAUDITED)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
nine nine
months months
ended ended
(Dollars in millions) 9/29/96 10/1/95 1995 1994 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Profit Before Tax $43.4 $18.1 $29.4 $38.8 $ 56.8 $ 50.2 $ 29.4
Income (Loss) of 50% owned
subsidiaries (.1) .0 (.8) 0.3 2.0 3.1 1.9
Dividends received from
less than 50% owned 2.7 2.5 2.6 1.6 1.3 2.4 0.4
subsidiaries
Interest Expense 32.5 33.6 44.9 44.9 37.4 38.6 39.8
25% of Rent Expense 2.9 2.3 3.9 3.2 3.2 2.7 2.6
----- ----- ----- ----- ------ ------ ------
TOTAL FIXED CHARGES 35.4 35.9 48.8 48.1 40.6 41.3 42.4
Pre-tax earnings required
to cover Preferred Dividends 0.0 0.0 0.0 0.0 0.0 10.2 15.2
----- ----- ----- ----- ------ ------ ------
TOTAL FIXED CHARGES AND
PREFERRED DIVIDENDS 35.4 35.9 48.8 48.1 40.6 51.5 57.6
===== ===== ===== ===== ====== ====== ======
EARNINGS BEFORE INCOME
TAXES AND FIXED CHARGES $81.4 $56.5 $79.5 $88.8 $100.7 $ 97.0 $ 74.1
===== ===== ===== ===== ====== ====== ======
RATIO OF EARNINGS TO 2.3 to 1 1.6 to 1 1.6 to 1 1.8 to 1 2.5 to 1 2.3 to 1 1.7 to 1
FIXED CHARGES
RATIO OF EARNINGS TO
COMBINED FIXED
CHARGES AND PREFERRED
DIVIDENDS 2.3 to 1 1.6 to 1 1.6 to 1 1.8 to 1 2.5 to 1 1.9 to 1 1.3 to 1
</TABLE>
Note 1: For purposes of calculating the ratio of earnings to fixed charges,
"earnings" consist of earnings from continuing operations before income
taxes, adjusted for the portion of fixed charges deducted from such
earnings. "Fixed charges" consist of interest on all indebtedness
(including capital lease obligations and capitalized interest),
amortization of debt expense and the percentage of rental expense on
operating leases deemed representative of the interest factor.
Note 2: The ratio of earnings to fixed charges, before special charges, for the
nine months ended September 29, 1996 and October 1, 1995 were 2.5 to 1
and 1.9 to 1, respectively. The ratios of earnings to fixed charges,
before the restructuring and special charges, for 1995 and 1994 were
1.9 to 1 and 2.4 to 1, respectively.
Note 3: The above computations do not include any fixed charges related to the
Company's guarantee of debt for Calspan SRL Corporation. The debt
guarantee was $18.0 million at September 29, 1996 and $21.7 million at
December 31, 1995.
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
January 30, 1996 appearing on page 41 of Arvin Industries, Inc.'s Annual Report
on Form 10-K for the year ended December 31, 1995. We also consent to the
reference to us under the heading "Experts" in such Prospectus.
Price Waterhouse LLP
Indianapolis, Indiana
December 16, 1996
<PAGE>
EXHIBIT 23.2
------------
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
Calspan SRL Corporation
We consent to the use of our report dated January 25, 1995 with respect to the
consolidated balance sheet of Space Industries International, Inc. and
subsidiaries (formerly Calspan Holding Corporation and predecessor to Calspan
SRL Corporation) as of January 1, 1995, and the related consolidated statements
of operations, shareholders' equity, and cash flows for the years ended January
1, 1995 and January 2, 1994, which report is incorporated herein by reference to
the December 31, 1995 annual report on Form 10-K of Arvin Industries, Inc. and
to the reference to our Firm under the heading "Experts" in the prospectus.
KPMG Peat Marwick LLP
Buffalo, New York
December 16, 1996
