<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 22, 1996.
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
ROBBINS & MYERS, INC.
OHIO
(State of Incorporation)
31-424220
(I.R.S. Employer Identification Number)
1400 KETTERING TOWER, DAYTON, OHIO 45423
(513) 222-2610
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
------------------------
JOSEPH M. RIGOT
THOMPSON HINE & FLORY P.L.L.
2000 COURTHOUSE PLAZA, N.E.
DAYTON, OHIO 45402
(513) 443-6586
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------
Copy to:
JOHN E. RILEY
SIMPSON THACHER & BARTLETT
425 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017-3954
(212) 455-2000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable 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
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
Proposed Maximum Proposed Maximum
Offering Price Aggregate
Title of Each Class of Amount to be Per Offering Amount of
Securities to be Registered Registered(1) Note(2)(3) Price(2)(3) Registration Fee
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Convertible Subordinated
Notes Due 2003............ $55,000,000 100% $55,000,000 $18,966
- ----------------------------------------------------------------------------------------------------------------
Common Shares, without par
value..................... (4) -- -- --
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
<FN>
(1) Includes up to $5,000,000 principal amount of Convertible Subordinated Notes
Due 2003 which may be issued solely to cover over-allotments.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(a).
(3) Exclusive of accrued interest.
(4) Such indeterminate number of Common Shares, without par value, as may be
issued upon conversion of Convertible Subordinated Notes Due 2003 registered
hereunder, including such Common Shares as may be issuable pursuant to
anti-dilution adjustments.
</TABLE>
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS 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, DATED AUGUST 22, 1996
$50,000,000
[LOGO] ROBBINS & MYERS, INC.
% Convertible Subordinated Notes Due 2003
Interest Payable on and
The Notes offered hereby are convertible into Common Shares, without par
value (the "Common Shares"), of Robbins & Myers, Inc. (the "Company") at any
time prior to maturity, unless previously redeemed, at a conversion price of
$ per share, subject to adjustment in certain events. The Common Shares are
traded on The Nasdaq Stock Market's National Market (the "Nasdaq National
Market") under the symbol "ROBN." On August 20, 1996, the last reported sale
price of the Common Shares on the Nasdaq National Market was $22.75 per share.
See "Price Range of Common Shares and Dividends."
The Notes will mature on , 2003. The Notes are redeemable, in
whole or in part, at the option of the Company at any time on or after
, 1999, at the redemption prices set forth herein, plus accrued and
unpaid interest. Upon a Change in Control (as defined), each holder of Notes
will have the right, subject to certain conditions and restrictions, to require
the Company to repurchase any or all outstanding Notes owned by such holder at
100% of the principal amount thereof, plus accrued and unpaid interest.
The Notes will be unsecured and subordinated to all present and future
Senior Indebtedness (as defined) of the Company. At August 21, 1996, after
giving effect to this offering and the application of the net proceeds therefrom
(based on the assumptions set forth under "Use of Proceeds"), Senior
Indebtedness would have been approximately $31,257,000. At July 31, 1996,
liabilities (including trade payables but excluding inter-company liabilities)
of the Company's subsidiaries, to which the Notes are effectively subordinated,
were approximately $91,288,000. See "Description of the Notes."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
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- -----------------------------------------------------------------------------------------------
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(3)
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<S> <C> <C> <C>
Per Note......................... % % %
- -----------------------------------------------------------------------------------------------
Total(4)......................... $ $ $
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
<FN>
(1) Plus accrued interest, if any, from , 1996.
(2) See "Underwriting" for indemnification arrangements.
(3) Before deducting estimated expenses of $250,000 payable by the Company.
(4) The Company has granted to the Underwriters a 30-day option to purchase up
to an additional $5,000,000 principal amount of Notes solely to cover
over-allotments. If this option is exercised in full, total Price to Public,
Underwriting Discounts and Commissions and Proceeds to Company will be
$ , $ and $ , respectively. See "Underwriting."
</TABLE>
The Notes offered hereby are being offered by the Underwriters, subject to
prior sale and acceptance by the Underwriters and subject to their right to
reject any order in whole or part. It is expected that the Notes, in temporary
or definitive registered form, will be available for delivery on or about
, 1996 at the offices of Schroder Wertheim & Co. Incorporated, New
York, New York. If temporary Notes are delivered, definitive Notes will be
available for exchange as soon as practicable after that date.
SCHRODER WERTHEIM & CO. ROBERT W. BAIRD & CO.
INCORPORATED
FIRST ANALYSIS SECURITIES
CORPORATION
September , 1996
<PAGE> 3
GLOBAL PRESENCE
[MAP OF INDICATED GEOGRAPHIC AREAS]
<TABLE>
<CAPTION>
NORTH & SOUTH AMERICA EUROPE ASIA
<S> <C> <C> <C> <C> <C>
- - U.S.A. - Mexico - England - Belgium - India - China
- Brazil - Scotland - Germany - Singapore - Taiwan
</TABLE>
SALES BY REGION
NORTH AMERICA (70%)
EUROPE (25%) [PIE CHART]
ASIA (2%)
SOUTH AMERICA (3%)
SALES BY MARKET
PHARMACEUTICALS (25%)
OIL & GAS RECOVERY (13%)
OTHER (5%) [PIE CHART]
PULP & PAPER (5%)
FOOD & BEVERAGE (4%)
WASTEWATER TREATMENT (8%)
SPECIALTY CHEMICALS (40%)
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE NOTES AND THE
COMMON SHARES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS (IF ANY) MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON
SHARES OF THE COMPANY ON THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH RULE
10b-6A UNDER THE SECURITIES EXCHANGE ACT OF 1934. SEE "UNDERWRITING."
2
<PAGE> 4
ROBBINS & MYERS PRODUCTS AND APPLICATIONS
Moyno(R)
Power
Section [PRODUCT PICTURE]
for
Directional
Drilling
Moyno(R) Sanitary Pump for Food Products
Pfaudler(R)
Glass-Lined
Reactor Vessel [PRODUCT PICTURE]
for the Specialty
Chemicals
Industry
Pfaudler(R) Glass-Lined
Stainless Steel
Reactor Vessel for [PRODUCT PICTURE]
the Pharmaceuticals
Industry
Pfaudler(R) Multipurpose Resin Pilot Plant [PRODUCT PICTURE]
<PAGE> 5
ROBBINS & MYERS PRODUCTS AND APPLICATIONS
Moyno(R) Diesel Driven
Progressing Cavity Pump [PRODUCT PICTURE]
for Transfer of Petroleum
Products
Chemineer(R)
Turbine
Agitator
in Section [PRODUCT PICTURE]
View
(Shown Below
in Water
Treatment
Plant)
Prochem(R) Side-Entry Mixer for the
Pulp and Paper Industry [PRODUCT PICTURE]
Chemineer(R) Turbine Agitator [PRODUCT PICTURE]
in Water Treatment Plant
Chemineer(R) Customer Test Center [PRODUCT PICTURE]
<PAGE> 6
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the more
detailed information and financial statements, including the notes thereto,
appearing elsewhere, or incorporated by reference, in this Prospectus. Fiscal
year references refer to years ending August 31. Unless otherwise indicated, or
the context otherwise requires, all information in this Prospectus (i) is based
on the assumption that the Underwriters' over-allotment option is not exercised,
and (ii) gives effect to the 2-for-1 Common Share stock split effective July 31,
1996 (the "Stock Split").
THE COMPANY
The Company designs, manufactures and markets on a global basis high
performance, specialized fluids management products for the process industries.
The Company's four product lines consist of glass-lined storage and reactor
vessels (38% of fiscal 1995 sales), progressing cavity products (30%), mixing
and turbine agitation equipment (22%), and related products such as engineered
systems, fluoropolymer products and valves (10%). The Company's customers
include the specialty chemicals, pharmaceuticals, oil and gas recovery,
wastewater treatment, pulp and paper, and food and beverage industries.
The Company has achieved leading market shares in each of its main product
lines: the Company believes that it is first worldwide in glass-lined storage
and reactor vessels, first in North America in progressing cavity products and
second worldwide in mixing and turbine agitation equipment. The Company also
believes that its principal brand names--Pfaudler(R), Moyno(R), and
Chemineer(R)--are well-recognized in the marketplace and are associated with
high performance, innovation and quality as well as with extensive customer
support, including product application engineering, state-of-the-art customer
test facilities and strong aftermarket capabilities.
Since February 1992, the Company has completed eight acquisitions as part
of a strategy to leverage its fluids management expertise, its leadership in
progressing cavity technology, and its operating capabilities into a portfolio
of highly-engineered, fluids management products and services. The most
significant of these acquisitions occurred in June 1994 when the Company
acquired its Pfaudler(R), Chemineer(R) and Edlon(R) business units. These
acquisitions more than tripled the sales of the Company and provided leading
worldwide positions in two core product lines.
The Company seeks to balance its mix of products and services and maintain
overall stability in its operating results principally through increased levels
of higher margin aftermarket sales, increased international presence with
manufacturing facilities in ten countries and end market diversification. In
fiscal 1995, aftermarket sales to the Company's customers as well as customers
of its competitors accounted for approximately 38% of total sales, international
sales accounted for approximately 45% of total sales and at least 5% of total
sales were derived from each of its five primary end markets.
The Company has used its competitive strengths to achieve substantial
growth over the past several years. From fiscal 1991 through fiscal 1995, the
Company's sales and income before interest and taxes increased at a compound
annual rate of 40.1% and 31.6%, respectively, and for the nine months ended May
31, 1996 the Company's sales and income before interest and taxes, increased
16.3% and 33.2%, respectively, as compared to the nine months ended May 31, 1995
(comparative figures are before the write-off of the Company's investment in
Hazleton Environmental in the third quarter of fiscal 1995).
The Company seeks to continue to grow by (i) capitalizing on the inherent
growth of its end markets, particularly high-growth markets such as oil and gas
recovery, pharmaceuticals and food additives and supplements, which collectively
account for over 40% of the Company's sales; (ii) exploiting opportunities for
industry consolidation within existing markets, specifically the highly
fragmented positive displacement pump and industrial mixer industries; (iii)
expanding geographically, both internally and through acquisitions, into
high-growth emerging markets such as Asia/Pacific Rim and South America; and
(iv) establishing new product lines through acquisitions of related fluids
management businesses such as valves, filters and grinders.
3
<PAGE> 7
THE OFFERING
<TABLE>
<S> <C>
Securities Offered........................... $50,000,000 aggregate principal amount
of % Convertible Subordinated Notes Due
2003 (the "Notes").
Interest Payment Dates....................... and , commencing , 1997.
Maturity Date................................ , 2003.
Conversion................................... The Notes are convertible at the option of the
holder, in whole or in part, at any time prior
to maturity, unless previously redeemed, into
Common Shares at $ per share, subject to
adjustment under certain conditions.
Optional Redemption.......................... The Notes are redeemable, in whole or in part,
at the option of the Company, at any time on
or after , 1999, at the redemption prices
set forth herein, plus accrued and unpaid
interest.
Subordination................................ The Notes will be subordinated to all present
and future Senior Indebtedness (as defined) of
the Company.
Change in Control............................ Upon a Change in Control (as defined), each
holder of the Notes will have the right,
subject to certain conditions and
restrictions, to require the Company to
repurchase any or all outstanding Notes
submitted by such holder at 100% of the
principal amount, plus accrued and unpaid
interest.
Use of Proceeds.............................. To repay certain bank indebtedness, including
indebtedness incurred to repurchase certain
senior subordinated indebtedness and stock
appreciation rights.
</TABLE>
4
<PAGE> 8
SUMMARY FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED AUGUST 31, MAY 31,
------------------------------------------------------------- ----------------------
1991 1992 1993 1994(1) 1995(1) 1995 1996
------- ------- ------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales..................... $78,662 $75,588 $85,057 $121,647 $302,952 $219,475 $255,272
Gross profit.................. 29,247 30,080 32,761 44,981 101,304 73,368 84,936
Income before interest and
income taxes(2)............. 9,309 8,512 8,400 12,102 26,320 19,246 27,783
Income before income taxes.... 9,711 9,832 9,746 10,645 19,033 13,694 22,479
Net income (loss)(3).......... 5,012 7,873 (1,840) 6,355 13,157 9,591 14,162
Net income (loss) per share,
fully diluted(3)............ $ .48 $ .75 $ (.17) $ .61 $ 1.21 $ .90 $ 1.28
Dividends declared per
share....................... .07 .09 .12 .14 .15 .11 .13
OTHER DATA:
EBITDA(4)..................... $11,281 $10,953 $11,198 $ 16,482 $ 37,576 $ 27,745 $ 38,042
Ratio of earnings to fixed
charges(5).................. 30.6x 28.9x 25.6x 7.1x 3.4x 3.2x 4.8x
Capital expenditures.......... $ 4,240 $ 4,749 $ 2,579 $ 6,798 $ 10,133 $ 6,350 $ 9,277
Backlog at period-end......... 17,762 12,210 20,248 73,944 107,423 98,747 113,724
Return on average common
equity(6)................... 18.5% 14.9% 11.4% 11.6% 18.6% 17.7% 24.5%
</TABLE>
<TABLE>
<CAPTION>
MAY 31, 1996
----------------------------
ACTUAL AS ADJUSTED(8)
-------- --------------
(UNAUDITED)
<S> <C> <C>
BALANCE SHEET DATA:
Total assets...................................................................... $295,417 $297,167
Long-term debt.................................................................... 79,285 82,809
Total debt........................................................................ 81,233 84,757
Shareholders' equity.............................................................. 83,988 83,988
Long-term debt to capitalization(7)............................................... 48.6% 49.6%
<FN>
- ---------------
(1) Results for Pfaudler(R), Chemineer(R), and Edlon(R), which were acquired on
June 30, 1994, are included for two months in fiscal 1994 and 12 months in
fiscal 1995.
(2) Includes restructuring charges of $950 in 1993 and $2,551 in 1994 and the
write-off of the Company's investment in Hazleton Environmental of $1,612 in
1995 and in the nine months ended May 31, 1995. See "Selected Consolidated
Financial Data."
(3) Includes after-tax (charges) of $(3,658), $(.36) per share, in 1991 for
discontinued operations and $(8,018), $(.76) per share, in 1993 for
cumulative effect of accounting changes and an after-tax gain of $1,332,
$.12 per share, in 1995 and of $1,332, $.13 per share, in the nine months
ended May 31, 1995 for early extinguishment of debt.
(4) EBITDA represents earnings before interest income and interest expense,
income taxes, depreciation and amortization (including amortization of debt
discount). EBITDA is presented because it may be used as one indicator of a
company's ability to service debt. The Company believes that EBITDA, while
providing useful information, should not be considered in isolation or as a
substitute for net income as an indicator of operating performance or as an
alternative to cash flow as a measure of liquidity, in each case determined
in accordance with generally accepted accounting principles.
(5) The ratio of earnings to fixed charges has been computed by dividing income
from continuing operations before income taxes plus fixed charges (excluding
capitalized interest expense) by fixed charges. Fixed charges consist of
interest and debt expense and an appropriate portion of rentals.
(6) Calculated by dividing income before special items by average shareholders'
equity and annualized for the nine month periods.
(7) Capitalization consists of long-term debt and shareholders' equity.
(8) Gives effect to the repurchase of the Repurchased Obligations, the issuance
and sale of the Notes by the Company (based on the assumptions set forth
under "Use of Proceeds") and the anticipated use of the estimated net
proceeds therefrom as described in "Use of Proceeds."
</TABLE>
5
<PAGE> 9
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Notes are estimated to
be approximately $48.25 million, assuming an initial public offering price of
100% of the principal amount of the Notes and after deducting estimated
underwriting discounts and commissions and expenses of the offering ($53.10
million if the Underwriters' over-allotment option is exercised in full). The
Company intends to use such net proceeds to repay certain outstanding bank
indebtedness, including indebtedness which the Company drew under its revolving
credit facility in August 1996 in order to repurchase for approximately $24.1
million and $.8 million, respectively, the remaining $25 million in principal
amount of senior subordinated notes and remaining stock appreciation rights
(collectively, the "Repurchased Obligations") which were issued by the Company
in 1994 in connection with the acquisition by the Company of its Pfaudler(R),
Chemineer(R) and Edlon(R) business units.
At August 21, 1996, the outstanding indebtedness under the Company's bank
credit agreement was comprised of a $34.3 million term loan and $40.0 million
under its revolving credit facility. The principal of the term loan is payable
in quarterly installments through 2001. Interest rates on both the term loan and
revolving credit facility are, at the Company's option, based upon either prime
rates or a formula tied to LIBOR rates. The effective annual interest rate on
the loans was 7.46% at August 21, 1996.
CAPITALIZATION
The following table sets forth the capitalization of the Company at May 31,
1996 and as adjusted to reflect the repurchase of the Repurchased Obligations,
the issuance and sale of the Notes by the Company at an assumed public offering
price of 100% of the principal amount of the Notes and the application of the
estimated net proceeds therefrom (assuming that the Underwriters' over-allotment
option is not exercised).
<TABLE>
<CAPTION>
MAY 31, 1996
-------------------------
ACTUAL AS ADJUSTED
-------- -----------
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
Short-term debt:
Current portion of long-term debt........................ $ 1,948 $ 1,948
========= ==========
Long-term debt (less current portion):
Senior debt.............................................. $ 52,250 $ 28,900
Senior subordinated debt................................. 27,035 3,909(1)
% Convertible Subordinated Notes Due 2003............. -- 50,000
-------- -----------
Total long-term debt.................................. 79,285 82,809
Shareholders' equity:
Common Shares(2)
Authorized shares -- 25,000,000
Outstanding shares -- 10,467,284...................... 22,213 22,213
Retained earnings........................................ 62,099 62,099
Equity adjustment for foreign currency translation....... 450 450
Equity adjustment to recognize minimum pension
liability............................................. (774) (774)
-------- -----------
Total shareholders' equity............................ 83,988 83,988
-------- -----------
Capitalization(3)................................... $163,273 $ 166,797
========= ==========
<FN>
- ---------------
(1) Reflects the repurchase in August 1996 of $25 million in principal amount
(with a book value of $23.1 million) of senior subordinated notes for
approximately $24.1 million.
(2) Does not include 130,108 Common Shares (net of 34,118 repurchased treasury
shares)issued after May 31, 1996 (other than in the Stock Split) and 702,054
Common Shares issuable upon exercise of options granted under employee
benefit plans, with an average exercise price of $9.03 per share.
(3) Capitalization consists of long-term debt and shareholders' equity.
</TABLE>
6
<PAGE> 10
PRICE RANGE OF COMMON SHARES AND DIVIDENDS
The Common Shares of the Company are traded on the Nasdaq National Market
under the symbol "ROBN." The following table sets forth, for the periods
presented, the high and low sale prices of the Common Shares, as reported on the
Nasdaq National Market, and dividends paid per share (giving effect to the Stock
Split).
<TABLE>
<CAPTION>
DIVIDENDS
HIGH LOW PER SHARE
------- ------- ---------
<S> <C> <C> <C>
Fiscal 1994
First Quarter................................... $10.375 $7.750 $.03125
Second Quarter.................................. 9.500 7.750 .03750
Third Quarter................................... 10.250 8.500 .03750
Fourth Quarter.................................. 10.125 9.000 .03750
Fiscal 1995
First Quarter................................... 10.250 8.375 .03750
Second Quarter.................................. 11.375 8.250 .03750
Third Quarter................................... 14.250 10.375 .03750
Fourth Quarter.................................. 14.375 12.500 .03750
Fiscal 1996
First Quarter................................... 17.500 13.625 .03750
Second Quarter.................................. 16.500 13.625 .04375
Third Quarter................................... 23.500 22.750 .04375
Fourth Quarter (Through August 20, 1996)........ 26.500 21.000 .04375
</TABLE>
The last reported sale price of the Common Shares on the Nasdaq National
Market as of August 20, 1996 was $22.75.
The Company has paid cash dividends in every quarter since May 31, 1989.
Payment of dividends in the future will be made at the discretion of the Board
of Directors out of funds legally available for that purpose taking into
account, among other things, the Company's earnings, capital requirements,
financial condition, commitments for the use by the Company of available funds
and other factors considered relevant by the Board of Directors. The ability of
the Company to pay dividends is subject to certain contractual restrictions set
forth in the Company's bank credit facility, under which approximately $4
million of retained earnings was available for the payment of dividends as of
May 31, 1996.
7
<PAGE> 11
SELECTED CONSOLIDATED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
The following table presents selected consolidated financial data of the
Company for each of the fiscal years in the five-year period ended August 31,
1995, and for the nine-month periods ended May 31, 1995 and 1996. The selected
consolidated financial data for the full year periods has been derived from
audited consolidated financial statements of the Company. Such selected
financial data should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the consolidated
financial statements of the Company and the notes thereto included herein. The
information with respect to the nine months ended May 31, 1995 and 1996 is
unaudited but, in the opinion of management, includes all adjustments,
consisting only of normal recurring adjustments necessary for a fair
presentation of such information.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED AUGUST 31, MAY 31,
--------------------------------------------------------- ---------------------
1991 1992 1993 1994(1) 1995(1) 1995 1996
------- ------- ------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales............................ $78,662 $75,588 $85,057 $121,647 $302,952 $219,475 $255,272
Cost of sales........................ 49,415 45,508 52,296 76,666 201,648 146,107 170,336
------- ------- ------- -------- -------- -------- --------
Gross profit......................... 29,247 30,080 32,761 44,981 101,304 73,368 84,936
Engineering and development, selling
and administrative expenses........ 18,332 19,365 22,171 28,733 74,234 53,375 58,180
Other expense (income)(2)............ 1,606 2,203 2,190 4,146 750 747 (1,027)
------- ------- ------- -------- -------- -------- --------
Income before interest and income
taxes.............................. 9,309 8,512 8,400 12,102 26,320 19,246 27,783
Interest (income).................... (490) (1,380) (1,462) 0 0 0 0
Interest expense..................... 88 60 116 1,457 7,287 5,552 5,304
------- ------- ------- -------- -------- -------- --------
Income before income taxes........... 9,711 9,832 9,746 10,645 19,033 13,694 22,479
Income taxes......................... 1,041 1,959 3,568 4,290 7,208 5,435 8,317
------- ------- ------- -------- -------- -------- --------
Income before special items.......... 8,670 7,873 6,178 6,355 11,825 8,259 14,162
Special items, net of tax(3)......... (3,658) -- (8,018) -- 1,332 1,332 --
------- ------- ------- -------- -------- -------- --------
Net income (loss).................... $ 5,012 $ 7,873 $(1,840) $ 6,355 $ 13,157 $ 9,591 $ 14,162
======== ======== ======== ========= ========= ========= =========
Income per share, fully diluted,
before special items............... $ .83 $ .75 $ .59 $ .61 $ 1.09 $ .77 $ 1.28
Special items, net of tax, per share,
fully diluted(3)................... (.35) -- (.76) -- .12 .13 --
------- ------- ------- -------- -------- -------- --------
Net income (loss) per share, fully
diluted............................ $ .48 $ .75 $ (.17) $ .61 $ 1.21 $ .90 $ 1.28
======== ======== ======== ========= ========= ========= =========
Dividends declared per share......... $ .07 $ .09 $ .12 $ .14 $ .15 $ .11 $ .13
Weighted average number of common
shares outstanding, fully diluted
(in thousands)..................... 10,442 10,498 10,514 10,504 10,874 10,716 11,084
OTHER DATA:
EBITDA(4)............................ $11,281 $10,953 $11,198 $ 16,482 $ 37,576 $ 27,745 $ 38,042
Ratio of earnings to fixed
charges(5)......................... 30.6x 28.9x 25.6x 7.1x 3.4x 3.2x 4.8x
Capital expenditures................. $ 4,240 $ 4,749 $ 2,579 $ 6,798 $ 10,133 $ 6,350 $ 9,277
Backlog at period-end................ 17,762 12,210 20,248 73,944 107,423 98,747 113,724
Return on average common equity(6)... 18.5% 14.9% 11.4% 11.6% 18.6% 17.7% 24.5%
</TABLE>
<TABLE>
<CAPTION>
AUGUST 31, MAY 31,
--------------------------------------------------------- ---------------------
1991 1992 1993 1994 1995 1995 1996
------- ------- ------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets......................... $69,258 $74,318 $84,636 $258,130 $270,407 $275,428 $295,417
Long-term debt....................... 879 906 0 80,290 61,834 72,553 79,285
Total debt........................... 1,094 939 971 83,790 67,901 77,520 81,233
Shareholders' equity................. 49,232 56,310 52,342 57,039 69,939 67,200 83,988
Long-term debt to
capitalization(7).................. 1.8% 1.6% 0.0% 58.5% 46.9% 51.9% 48.6%
<FN>
- ---------------
(1) Results of Pfaudler(R), Chemineer(R), and Edlon(R), which were acquired on
June 30, 1994, are included for two months in 1994 and 12 months in 1995.
(2) Includes restructuring charges of $950 in 1993 and $2,551 in 1994 and the
write-off of the Company's investment in Hazleton Environmental of $1,612 in
1995 and in the nine months ended May 31, 1995.
(3) Special items are: 1991 -- discontinued operations, 1993 -- cumulative
effect of accounting changes, and 1995 and the nine months ended May 31,
1995 -- extraordinary gain on debt extinguishment.
(4) EBITDA represents earnings before interest income and interest expense,
income taxes, depreciation and amortization (including amortization of debt
discount). EBITDA is presented because it may be used as one indicator of a
company's ability to service debt. The Company believes that EBITDA, while
providing useful information, should not be considered in isolation or as a
substitute for net income as an indicator of operating performance or as an
alternative to cash flow as a measure of liquidity, in each case determined
in accordance with generally accepted accounting principles.
(5) The ratio of earnings to fixed charges has been computed by dividing income
from continuing operations before income taxes plus fixed charges (excluding
capitalized interest expense) by fixed charges. Fixed charges consist of
interest and debt expense and an appropriate portion of rentals.
(6) Calculated by dividing income before special items by average shareholders'
equity and annualized for the nine month periods.
(7) Capitalization consists of long-term debt and shareholders' equity.
</TABLE>
8
<PAGE> 12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Since May 31, 1994, the Company has completed six acquisitions that have
significantly changed its business and financial profile. As a result of the
acquisitions, critical elements of the Company's strategy to expand its
capabilities to serve the fluids management needs of its customers on a global
basis were accomplished. The results of the most significant of the acquired
companies -- Pfaudler(R), Chemineer(R) and Edlon(R)-- are included in the
Company's results for twelve months in 1995 and for two months in 1994, which
significantly impact year to year comparisons. The nine month periods ended May
31, 1995 and 1996 include comparable operations.
The acquisitions of Pfaudler(R), Chemineer(R) and Edlon(R) more than
tripled the Company's total sales and increased its international sales to
approximately 45% of consolidated sales. Profitability of the non-U.S. business
units of the Company was less than domestic business units both before and after
the acquisitions. Operating margins for the international businesses increased
to 9.7% for the nine months ended May 31, 1996 from 7.4% for the nine months
ended May 31, 1995. The improvements were the result of improved market
conditions and implementation by the Company of ongoing cost reduction programs
in its international operations.
The Company seeks to balance its mix of products and services and maintain
overall stability in its operating results principally through increased levels
of aftermarket sales, increased international sales and end market
diversification. In fiscal 1995, aftermarket sales accounted for approximately
38% of total sales, international sales accounted for approximately 45% of total
sales and at least 5% of total sales were derived from each of the specialty
chemicals, pharmaceuticals, oil and gas recovery, wastewater treatment and pulp
and paper industries.
RESULTS OF OPERATIONS
The following table presents, for the periods indicated, the components of
the Company's statement of operations as a percentage of net sales:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MAY 31,
YEAR ENDED ------------------
AUGUST 31, 1995 1995 1996
--------------- ----- -----
<S> <C> <C> <C>
Net sales........................................... 100.0% 100.0% 100.0%
Cost of sales....................................... 66.6 66.6 66.7
----- ----- -----
Gross profit........................................ 33.4 33.4 33.3
Engineering and development, selling and
administrative expenses........................... 24.5 24.3 22.8
Other expense (income).............................. 0.2 0.3 (0.4)
----- ----- -----
Income before interest and income taxes............. 8.7 8.8 10.9
Interest expense.................................... 2.4 2.5 2.1
----- ----- -----
Income before income taxes.......................... 6.3 6.3 8.8
Income taxes........................................ 2.4 2.5 3.3
----- ----- -----
Income before special items......................... 3.9 3.8 5.5
Special items, net of tax........................... 0.4 0.6 --
----- ----- -----
Net income.......................................... 4.3% 4.4% 5.5%
===== ===== =====
</TABLE>
9
<PAGE> 13
NINE MONTHS ENDED MAY 31, 1996. Net income of $14.2 million was 47.7%
higher than in the first nine months of 1995. Earnings per share of $1.28, fully
diluted, increased 42.2% from the first nine months of 1995. These increases
were primarily the result of higher volume and profit improvement programs.
Net sales for the first nine months of 1996 were $255.3 million, an
increase of 16.3% over the same period of the prior year. This increase was
primarily the result of strong market demand for the Company's mixing and
turbine agitation equipment, glass-lined storage and reactor vessels and
oilfield products. These products are primarily sold to the pharmaceuticals, oil
and gas recovery and specialty chemicals markets. In addition, the Company
expanded its aftermarket business from the prior year, resulting in increased
sales. Company backlog was $114 million at May 31, 1996, $6 million higher than
at August 31, 1995 and $15 million higher than at May 31, 1995.
Despite higher sales levels in 1996, the gross profit percentage of 33.3%
for the first nine months of 1996 was relatively consistent with 33.4% for the
first nine months of 1995, because the gross margins for the products with the
greatest sales increases, industrial mixers and reactor vessels, are
traditionally lower than the Company's other products. Margins for industrial
mixers and reactor vessels, however, have improved over the prior year as a
result of higher volume and profitability improvement measures, including
restructuring, implemented by the Company.
Engineering and development, selling and administrative expenses decreased
as a percentage of sales from 24.3% in the first nine months of 1995 to 22.8% in
the first nine months of 1996. This decrease resulted from the higher sales
volume and the fixed nature of certain of these expenses.
Other (income) expense for the first nine months of 1995 includes a
one-time write-off of $1.6 million of the Company's investment in Hazleton
Environmental. The Company has no ongoing exposure to further losses related to
this investment.
Interest expense decreased to $5.3 million in the first nine months of 1996
from $5.6 million in the same period of the prior year as a result of slightly
lower interest rates in 1996.
The estimated annual effective tax rate was 37.0% in the first nine months
of 1996 compared to 39.7% in the first nine months of 1995. The tax rate for the
first nine months of 1995 reflects the effect of the nondeductibility of a
portion of the write-off of the investment in Hazleton Environmental. The
Company believes that the 1996 tax rate is more reflective of the Company's
ongoing operations.
During the first nine months of 1995, the Company realized an extraordinary
gain of $1.3 million, net of tax, related to the early extinguishment of certain
debt.
FISCAL 1995. Net sales reached $303.0 million and net income rose to $13.2
million or $1.21 per share, fully-diluted. This compares to net sales of $121.6
million and net income of $6.4 million or $.61 per share for 1994. The increase
in both sales and net income is due primarily to the acquired companies.
However, it should be noted that the Company's existing businesses also
experienced growth with net sales of such operations reaching $102.5 million, an
11% increase over 1994. Operating income of these businesses, which excludes
corporate, interest and amortization expense, reached $19.4 million, a 10%
increase over 1994.
The rate of profitability, as measured by the ratio of operating income to
sales, declined for domestic operations in both 1994 and 1995 because the rate
of profitability for the acquired businesses was lower than that of the
Company's historic businesses.
Profitability in 1995 was further impacted by the fact that the Company's
foreign businesses were less profitable than its domestic businesses. In 1995,
the European businesses were affected primarily by the German operation which
accounted for 52% of European sales but was only nominally profitable. A program
for changing the way the Company conducted business in Germany and the related
cost structure was commenced in fiscal 1995. The lower rate of profitability for
the other foreign businesses was due in part to their being start-up operations.
10
<PAGE> 14
Operating income also includes a pre-tax write-off of $1.6 million
representing the value of the Company's investment in Hazleton Environmental.
The Company in May 1995 repurchased $25 million of subordinated debt issued
as a part of the consideration for the acquired companies. The transaction
generated an after-tax extraordinary gain of $1.3 million.
FISCAL 1994. The acquisitions and related restructure transactions had a
significant impact on 1994 operating results. Aided by the inclusion of the
acquired businesses for July and August, net sales increased to $121.6 million,
or 43% greater than net sales for 1993 and net income increased to $6.4 million,
or 3% greater than income before cumulative effect of accounting changes earned
for 1993. For the period owned, the acquired businesses accounted for $29.3
million of net sales and provided sufficient income before tax to cover the
additional interest and amortization expense incurred as a result of the
transaction.
The Company's existing businesses also grew in 1994. Net sales increased
8.5% and net income, before considering the restructure provision for the year,
increased 28% over 1993 levels. Improved sales were seen in products for the
oilfield and industrial mixer markets. In addition, improved operating results
were seen in Europe related to the restructuring process that took place there
during the year. Orders improved for all existing products, with year-end
backlog having increased 5% over that of the prior year.
The Pfaudler(R) business unit had been in the process of restructuring its
operations prior to being acquired by the Company. The provisions were primarily
for employee termination costs and related to the operations in Rochester, N.Y.,
Mexico and Germany. The actions in Rochester, N.Y. and the curtailment of new
product manufacturing operations in Mexico were completed as planned in 1995.
LIQUIDITY AND CAPITAL RESOURCES
During the first nine months of 1996, 1.85 million outstanding stock
appreciation rights were retired for $18 million. Also during this period, $9
million was used for capital expenditures and $8 million for working capital.
These cash requirements, aggregating $35 million, were funded from operations
and net borrowings of $11 million under the Company's bank credit facility.
The Company is investing $16 million in capital expenditures in 1996 and
anticipates capital expenditures of $21 million in 1997, including approximately
$5 million for a new Houston, Texas facility and equipment for the Moyno(R)
oilfield equipment business.
In the first nine months of 1995, the significant uses of cash were capital
expenditures and acquisitions of $17 million and net debt payments of $5
million. These requirements were funded by cash generated from operations of $19
million. The net result was a decrease of $4.3 million in cash balances for the
first nine months of 1995.
The Company expects operating cash flow to be adequate for operating needs,
including scheduled debt service, capital expenditure plans and shareholder
dividend requirements, during the remainder of fiscal year 1996 and fiscal year
1997. As discussed in "Use of Proceeds," the Company will repay certain bank
indebtedness with the proceeds from the offering of the Notes, including
indebtedness incurred in August 1996, to repurchase the Repurchased Obligations
for approximately $25 million plus accrued interest.
At May 31, 1996, the Company had approximately $30 million available under
its current bank credit facility. Primarily as a result of borrowings to
repurchase the Repurchased Obligations at August 20, 1996, the amount available
to the Company under its current bank credit facility was reduced to $10
million.
The Company has entered into negotiations with respect to a replacement
bank facility which would provide certain more favorable terms than the existing
facility and would add up to $50 million of additional availability for purposes
of financing future acquisitions.
11
<PAGE> 15
BUSINESS
The Company designs, manufactures and markets high-performance, specialized
fluids management products for the process industries on a global basis. The
Company's four product lines are glass-lined reactor and storage vessels (38% of
fiscal 1995 sales), progressing cavity products (30%), mixing and turbine
agitation equipment (22%), and related products, such as engineered systems,
fluoropolymer products, and valves (10%).
The Company has achieved leading market shares in each of its main product
lines: the Company believes that it is first worldwide in glass-lined storage
and reactor vessels, first in North America in progressing cavity products, and
second worldwide in mixing and turbine agitation equipment. The Company also
believes that its principal brand names -- Pfaudler(R), Moyno(R), and
Chemineer(R) -- are well-known in the marketplace and are associated with
quality products and extensive customer support, including product application
engineering, state-of-the-art customer test facilities, and strong aftermarket
service and support.
The Company markets its products to the process industries -- industries in
which the pumping, mixing, treatment, chemical processing, measurement, and
containment of fluids and particulates are important elements in their
production processes. The principal sectors of the process industries served by
the Company are specialty chemicals, pharmaceuticals, oil and gas recovery,
wastewater treatment, food and beverage, and pulp and paper.
An important element of the Company's strategy has been to develop a
balanced group of businesses serving diverse markets. In fiscal 1995,
international sales represented approximately 45% of total Company sales,
aftermarket sales represented approximately 38% of total Company sales and at
least 5% of total Company sales were derived from each of its five primary end
markets.
COMPETITIVE STRENGTHS
In 1992, the Company identified specific areas of the fluids management
industry in which it believed significant growth opportunities were available
and embarked on a strategy with the primary objective of becoming a global
fluids management company and a leader in its chosen markets. Through a series
of acquisitions and internal actions, the Company believes that it has developed
significant competitive strengths which enable it to realize more effectively
its goal of providing customers with comprehensive and innovative solutions to
their fluids management needs while sustaining significant levels of profitable
growth.
The Company believes that its success is attributable to:
A Record of Successful Acquisitions. Since 1992, the Company has completed
and integrated eight acquisitions in the fluids management industry. These
acquisitions have more than tripled the sales of the Company and have helped the
Company to better serve the requirements of many of its customers by offering a
more diverse product line. Several of the businesses acquired by the Company
were unprofitable or marginally profitable at the time at which they were
acquired. The Company has demonstrated an ability to improve the operating
performance of all of its acquisitions, including that of Pfaudler(R),
Chemineer(R) and Edlon(R), which, on a combined basis, improved from an
operating margin of 8.7% for the nine month period ended May 31, 1995 to 11.0%
for the nine month period ended May 31, 1996.
Global Presence. The Company has responded to the globalization of the
process industries by establishing manufacturing, sales and service capabilities
in numerous international markets. The Company maintains facilities in emerging
markets such as Mexico, Brazil, India, Singapore and China, as well as in
established markets such as England, Germany, Scotland and Belgium. By
implementing a network of local manufacturing and service facilities, the
Company believes that it can better respond to the global sourcing requirements
of its multinational customer base while realizing substantial market
penetration and cost savings associated with operating within local markets.
12
<PAGE> 16
Fluids Management Applications Expertise. The Company brings to its
customers a broad knowledge of the component products of fluids management
systems and a commitment to understanding the application engineering
requirements of its customers. As a result, the Company is able to meet its
customers' expectations of innovative and cost-effective solutions to their
requirements. In addition, in each of its businesses, the Company maintains
state-of-the-art test facilities which the Company and customer engineers use
jointly to test and develop particular equipment and system configurations.
Aftermarket Support. The Company believes that the ability to serve
customers globally requires strong aftermarket service and support. In 1995, the
Company augmented its aftermarket business with the acquisition of Pharaoh and
Cannon, which it integrated with its existing aftermarket operations to form
dedicated aftermarket subsidiaries in the United States and the United Kingdom.
Through these subsidiaries, the Company provides aftermarket service and support
to its own customers, as well as to customers of the Company's competitors
which, along with the substantial growth of the Company's installed base of
products, provides a stable source of higher margin aftermarket business. The
Company believes that its dedication to aftermarket support reinforces its image
of dependability with its customers, leading to increased business
opportunities.
Recognized Technologies and Brand Names. The Company believes that it is
recognized within its markets as a leader in certain core technologies which are
fundamental to its success and that its Moyno(R), Pfaudler(R) and Chemineer(R)
brand names are associated throughout the process industries with high
performance, innovation and quality. The Company's core technologies are
pressure vessel construction and glass coating of metal substrates
(Pfaudler(R)), fluid dynamics engineering (Chemineer(R)), progressing cavity
technology (Moyno(R)) and fluoropolymer coating (Edlon(R)). The Company
believes that its established brand names and core technologies offer its
existing customers assurances of dependability and product support while
affording the Company competitive advantages in gaining new business.
GROWTH STRATEGY
The Company has used its competitive strengths to achieve substantial
growth over the past several years. From fiscal 1991 through fiscal 1995, the
Company's sales and income before interest and taxes increased at a compound
annual rate of 40.1% and 31.6%, respectively, and for the nine months ended May
31, 1996 the Company's sales and income before interest and taxes increased
16.3% and 33.2%, respectively, as compared to the nine months ended May 31, 1995
(comparative figures are before the write-off of the Company's investment in
Hazleton Environmental in the third quarter of fiscal 1995). The sales growth
from 1991 through 1995 primarily was driven
13
<PAGE> 17
by eight acquisitions completed since February 1992 at an aggregate purchase
price of approximately $160 million:
<TABLE>
<CAPTION>
FISCAL YEAR PURCHASE PRICE
ACQUIRED BUSINESS PRINCIPAL PRODUCTS (MILLIONS)
- ------------- -------------------------------------- ----------------------------- --------------
<S> <C> <C> <C>
1992 Prochem Mixing Equipment, Inc. Large industrial mixers $ 8.0
1993 JWI Mixer Line Portable industrial mixers 2.2
1994 Chemineer, Inc. Large industrial mixers 78.4
1994 Pfaudler, Inc. Glass-lined reactor and 50.3
storage vessels and
engineered systems
1994 Edlon, Inc. Fluoropolymer parts and 5.5
coatings for process
equipment
1995 Pharaoh Corporation Glass-lined vessel parts and 2.1
aftermarket services
1995 Cannon Process Equipment Co., Ltd. Glass-lined reactor and 5.4
storage vessels
1995 Universal Glasteel Equipment Reconditioned glass-lined 7.0
reactor and storage vessels
</TABLE>
The Company seeks to continue its growth by (i) capitalizing on the
inherent growth of its end markets; (ii) exploiting opportunities for industry
consolidation within existing markets; (iii) expanding geographically, both
internally and through acquisitions; and (iv) establishing new product lines
through acquisitions.
Capitalize on Market Growth Opportunities. Over 40% of the Company's sales
are derived from high-growth markets such as oil and gas recovery,
pharmaceuticals and food additives and supplements, with the remainder derived
from other process industries such as specialty chemicals, wastewater treatment
and pulp and paper. The Company maintains leading positions in each of its
primary product lines and believes that it will benefit substantially from any
inherent growth in its end markets. Additionally, the Company seeks to expand
upon the inherent growth of its end markets by identifying and responding to new
technology trends with value-added products and by applying its existing
products to new market niches.
Exploit Industry Consolidation. The Company believes that it will benefit
from the trends among its customers to limit their supplier base, to favor
global suppliers and to require a higher level of application engineering
expertise from their suppliers, which is leading to consolidation among the
manufacturers of fluids management equipment. Both positive displacement pumps
and industrial mixers, which account for over 50% of the Company's sales, are
highly fragmented industries and should offer the Company significant
acquisition opportunities. The Company believes that the greatest opportunities
for consolidation are in the positive displacement pump industry, which the
Company estimates has combined domestic annual sales of $700 million. In
addition, the Company believes that there are consolidation opportunities in the
domestic industrial mixer industry, which includes a number of smaller
manufacturers with combined domestic sales of approximately $100 million.
Expand Geographically. The Company believes that it successfully can
increase the rate of penetration of its products in high-growth, emerging
markets--Asia/Pacific Rim and South America--by leveraging the Company's strong
brand name recognition and its relationships with multinational customers. In
addition, the Company believes that there are opportunities for it to utilize
its existing presence in certain emerging markets to introduce other product
lines currently
14
<PAGE> 18
offered by the Company. The Company seeks other opportunities to expand
geographically, including acquisitions of existing businesses and the formation
of joint ventures/alliances, each of which the Company believes are low risk and
effective methods of entering new geographic markets. By taking advantage of
opportunities to expand geographically, the Company seeks to grow at a rate
which exceeds that of its end markets, while meeting its customers' global
sourcing needs.
Acquire New Product Lines. The process industries utilize a number of
fluids management products which the Company does not manufacture or which
currently represent an insignificant portion of the Company's sales. The Company
considers and evaluates on an ongoing basis acquisition opportunities in several
of these product areas, including valves, filters and grinders, and may, in the
future, acquire one or more such businesses. It is unlikely, however, that the
Company would acquire a related product line unless it were able by such
acquisitions to establish a major market position.
MARKETS SERVED
The Company markets its fluids management products and services to the
process industries -- industries in which the pumping, mixing, treatment,
chemical processing, measurement and containment of fluids and particulates are
important elements in their manufacturing or production processes. The principal
sectors of the process industries served by the Company are oil and gas
recovery, pharmaceuticals, specialty chemicals, food and beverage, pulp and
paper and wastewater treatment.
COMPANY SALES BY MARKET -- FISCAL 1995
<TABLE>
<S> <C>
Specialty Chemicals 40%
Food & Beverage 4%
Other 5%
Pharmaceuticals 25%
Pulp & Paper 5%
Wastewater Treatement 8%
Oil & Gas Recovery 13%
</TABLE>
The companies included in these sectors of the process industries tend to
be large, often with global operations. Capital expenditures for equipment in
each sector are driven by a variety of factors, such as market growth rates, new
product introduction, globalization and cost control. Economic cycles tend to
differ among sectors, and the Company believes that general economic
15
<PAGE> 19
downturns have less of an impact on capital expenditures in the pharmaceuticals,
oil and gas recovery and food and beverage industries.
Oil and Gas Recovery. The Company's sales to the oil and gas recovery
market include (i) progressing cavity down-hole pumps used in lifting oil to the
surface and dewatering of gas wells; (ii) progressing cavity power sections used
to drive the drilling element in directional drilling operations; and (iii)
aftermarket products and services such as replacement power sections, relining
of down-hole pump stators and replacement of rotors. For the last five fiscal
years, the Company's sales of oil and gas recovery products have grown at an
annual rate of 19%. The Company believes its growth prospects primarily are
driven by the trend in the industry to adopt the latest oil and gas
technologies, including 3-D seismic analysis which, in conjunction with
directional drilling methods and versatile down-hole pumps, facilitates recovery
of oil and gas from difficult to reach formations. In addition, changing
geopolitics have resulted in more countries opening their borders to
privatization in the exploration and development of their oil and gas
properties. In response to increased demand within the oil and gas recovery
market and to maintain its technological advantages, the Company currently is
developing a facility in Houston, Texas dedicated to the production of down-hole
pumps and power drilling sections which is scheduled to begin operation in
fiscal 1997.
Pharmaceuticals. The Company's products perform critical functions in the
production of pharmaceuticals by providing temperature, agitation and
pressure-controlled environments for complex chemical reactions which require
exact formulations, repeatability and high levels of purity. In addition, the
Company's products are reconditioned on a regular basis because of the severe
operating conditions to which the Company's products are exposed and the need to
maintain a pure processing environment. The Company believes that it will
benefit from the long-term trend of high levels of capital expenditures within
the pharmaceuticals industry. This trend is driven by the significant industry
growth rates resulting from globalization of manufacturing facilities to serve
emerging markets and development of innovative drugs which often require new
process facilities or retrofit of existing facilities.
Specialty Chemicals. Substantially all of the Company's products sold to
the chemical industry consist of specialized equipment and aftermarket products
and services for use in the batch processing of specialty chemicals rather than
for use in the continuous processing of commodity chemicals. Unlike commodity
chemicals, such as basic petrochemicals and inorganic commodities, specialty
chemicals are downstream products, such as intermediate products directed to the
pharmaceuticals industry, which are more highly processed and refined. The
Company believes that, because producers of specialty chemicals are value-added,
strategic suppliers to their customers, pricing pressure and volatility are less
severe than in other segments of the chemical industry.
Other Markets. The Company's industrial mixer and pump products also serve
the food and beverage, pulp and paper and wastewater treatment industries.
Long-term growth in these markets should approximate the growth in general
economic activity, with certain segments such as food additives and supplements
and international markets growing faster than the overall domestic market.
PRODUCTS
Glass-Lined Storage and Reactor Vessels. The Company's Pfaudler(R) unit
manufactures and sells glass-lined reactor and storage vessels and related
equipment for use in the pharmaceuticals and specialty chemicals industries.
Reactor vessels perform critical functions in the production process by
providing a temperature, agitation and pressure controlled environment for often
complex chemical reactions.
16
<PAGE> 20
The Pfaudler(R) unit fabricates steel vessels and bonds glass to the
interior of vessels to form a fused composite, referred to as Glasteel(R), which
provides a vessel in which materials can be processed or stored in an inert,
nonsticking, corrosion-resistant, pressure-controlled environment. Reactor
vessels range in capacities from one to 15,000 gallons, are generally
custom-ordered and designed and can be equipped with various accessories, such
as agitators, instrumentation and baffles. Storage vessels have capacities of up
to 25,000 gallons.
Aftermarket products and services consist of reconditioning and reglassing
reactor vessels, replacement of vessel parts and accessories and field service.
<TABLE>
<CAPTION>
PRODUCTS PRIMARY MARKETS SERVED
- ------------------------------------------------- ---------------------------------
<S> <C>
Glasteel(R) Reactor and Storage Vessels Pharmaceuticals
Glasteel(R) pH Measurement Systems Specialty Chemicals
Cryo-Lock(R) Mixing Systems
Pfaudler(R) Mixer Drives
Pfaudler(R) Conical Dryers and Blenders
</TABLE>
Progressing Cavity Products. Progressing cavity technology is used in
down-hole pumps and power sections for the oil and gas recovery industry, as
well as in other process industries such as specialty chemicals, food and
beverage, pulp and paper and wastewater treatment. A progressing cavity pump
consists of a high-strength, single helix steel rod (called the rotor) which
rotates in a double helix elastomer-lined steel tube (called the stator). The
rotor generates positive displacement in the stator to deliver uniform fluid
flow, at rates proportional to the rotational speed of the rotor.
For the oil and gas recovery industry, the Company manufactures and sells
down-hole pumps and power sections used to drive the drilling element in the
drilling of wells. The ability of progressing cavity technology to be used in
severe pumping applications and also as a hydraulic motor has enabled the
Company to become a leader in the development of pumping and directional
drilling products. Moyno(R) down-hole pumps are used primarily to pump heavy
crude oil to the surface and for dewatering gas wells. Moyno(R) down-hole power
sections utilize progressing cavity technology to drive the drilling element in
oil and gas well drilling.
For other process industries, the Company markets a wide range of
progressing cavity pumps under the brand names Moyno(R) and R&M(R). Progressing
cavity pumps are versatile as they can be positioned at any angle and can
deliver flow in either direction, without modification or accessories. These
pumps are able to handle fluids ranging from high pressure water and
shear-sensitive materials to heavy, viscous, abrasive, solid-laden slurries and
sludges.
Aftermarket products and services consist of replacement power sections,
relining of the elastomer component of down-hole pump stators and replacement of
rotors.
<TABLE>
<CAPTION>
PRODUCTS PRIMARY MARKETS SERVED
- ------------------------------------------------- ---------------------------------
<S> <C>
Moyno(R) Down-Hole Pumps Oil and Gas Recovery
Moyno(R) Power Sections for Down-Hole Motors Oil and Gas Recovery
R&M(R) Positive Displacement Pumps Food and Beverage
Moyno(R) Progressing Cavity Pumps Pulp and Paper
Specialty Chemicals
Wastewater Treatment
</TABLE>
Mixing and Turbine Agitation Equipment. The Company's industrial mixers
and turbine agitation equipment are used in a variety of applications, ranging
from simple storage tank agitation to critical applications in polymerization
and fermentation processes. Industrial mixers are sold under the Chemineer(R),
Prochem(R), and Kenics(R) brand names.
Chemineer(R) products include a line of high-quality turbine agitators.
These gear-driven agitators are available in various sizes, a wide selection of
mounting methods, and drive ranges from one
17
<PAGE> 21
to 1,000 horsepower. The Chemineer(R) line also includes top-entry turbine
agitators with drive ranges from one-half to five horsepower, designed for less
demanding applications, and a line of portable gear-driven and direct drive
mixers which can be clamp-mounted to tanks to handle batch mixing needs. The
principal markets for Chemineer(R) products are the specialty chemicals,
pharmaceuticals, food and beverage and wastewater treatment industries.
Prochem(R) industrial mixers are principally belt-driven, side-entry mixers
used primarily in the pulp and paper, mining, and mineral processing industries.
Kenics(R) mixers are continuous mixing and processing devices, with no moving
parts, which are used in specialized static mixing and heat transfer
applications.
Aftermarket products and services consist of replacement parts, such as
impellers and gear boxes, as well as field service.
<TABLE>
<CAPTION>
PRODUCTS PRIMARY MARKETS SERVED
- ----------------------------------------- -----------------------
<S> <C>
Chemineer(R) Top-and-Side Entry Mixers Specialty Chemicals
Chemineer(R) Portable Mixers Wastewater Treatment
Valchem(R) Portable Mixers Food and Beverage
Kenics(R) Static Mixers & Heat Exchangers Pharmaceuticals
Prochem(R) Top- and Side-Entry Mixers Pulp and Paper
Prochem(R) Specialty Mixers
</TABLE>
Related Products. The Company also manufactures and markets to the process
industries several products which complement its principal products. These
related products include engineered systems, fluoropolymer products, and valves.
The Company's engineered systems group designs and sells fluid
heating/cooling systems used with reactor vessels to control fluid temperature
in the manufacture and processing of pharmaceuticals and specialty chemicals.
The engineered systems group also designs and sells fluid separators, known as
wiped film evaporators. The Company maintains a computer controlled pilot plant
test facility for use by engineers from the Company and its customers to
determine and evaluate operating parameters in the production and processing of
pharmaceuticals, specialty chemicals, and other products.
The Company's Edlon(R) unit manufactures and markets fluoropolymer roll
covers and liners for process equipment, isostatically molded liners for pipe
and flowmeters, and vessel and piping accessories. Edlon's(R) products
principally are used in the speciality chemicals industry to provide
corrosion-resistant environments and in the paper industry for release
applications.
<TABLE>
<CAPTION>
PRODUCTS PRIMARY MARKETS SERVED
- ----------------------------------- -----------------------
<S> <C>
Pfaudler(R) Engineered Systems Pharmaceuticals
Pfaudler(R) Wiped Film Evaporators Specialty Chemicals
Edlon(R) Custom Linings & Coatings Pulp and Paper
Edlon(R) Roll Covering Products Wastewater Treatment
Edlon(R) Fluoropolymer Products
RKL(R) Pinch Valves
RKL(R) Pressure Sensors
</TABLE>
SALES AND MARKETING
The marketing and sales function in each of the Company's businesses
generally involves outside sales efforts supported by numerous internal sales
personnel, application engineers and, in many cases, the joint utilization of
the Company's test and development facilities by Company and customer engineers.
Distributors and manufacturers' representatives are supported by Company-
maintained regional offices and educational and training programs. The
specialized nature of the Company's products requires multiple methods of
distribution, depending upon product line and end-use application.
18
<PAGE> 22
Pfaudler(R) glass-lined reactor and storage vessels and accessories are
sold directly to end-users by a Company-employed direct sales force of
approximately 30 persons, approximately 20 of whom are based outside the United
States. Pfaudler(R) is particularly focused on continuing to develop preferred
supplier relationships with major pharmaceuticals companies as they continue to
expand their production operations in emerging markets.
Chemineer(R) industrial mixers and agitation equipment are sold directly
through regional sales offices and through a network of approximately 125
domestic and 30 international manufacturers' representatives. The Company
maintains regional sales offices for such equipment in Dayton, Ohio, Houston,
Texas, Toronto, Canada, Singapore, Taiwan, and China.
Moyno(R) progressing cavity pumps (other than for oil and gas recovery
applications) are sold worldwide through approximately 55 domestic and 30
international distributors and 40 domestic and 15 international manufacturers'
representatives. The Company maintains 11 regional sales offices for this
equipment.
Sales efforts for Moyno(R) down-hole pumps are directed by Company product
managers who work closely with the Company's principal domestic distributor,
which maintains approximately 90 outlets capable of handling pump sales. Outside
the U.S., down-hole pumps are directly sold by the Company, except in Canada
where the Company employs a national distributor. Additional distributor
relationships are currently being established for these products in South
America, the former Soviet Union, and the Pacific Rim. Moyno(R) power sections
for use in down-hole drilling are sold directly to motor manufacturers and
oilfield service companies.
19
<PAGE> 23
FACILITIES
The Company's executive offices are located in Dayton, Ohio. Set forth
below is certain information relating to the Company's principal facilities.
<TABLE>
<CAPTION>
SQUARE PRODUCTS MANUFACTURED
LOCATION FOOTAGE OR OTHER USE OF FACILITY
- ----------------------------- ------- ------------------------------------------------
<S> <C> <C>
NORTH AND SOUTH AMERICA:
Rochester, New York 500,000 Glass-lined vessels
Springfield, Ohio 272,800 Progressing cavity pumps and pinch valves
Dayton, Ohio 160,000(1) Turbine agitators and mixers
Houston, Texas 110,000 Down-hole pumps and power sections
Mexico City, Mexico 110,000 Glass-lined vessels
Taubate, Brazil 100,000 Glass-lined vessels
Fairfield, California 60,000 Progressing cavity pumps and power sections
Avondale, Pennsylvania 50,000 Fluoropolymer products
North Andover, Massachusetts 30,000(1) Static mixers and heat exchangers
Sao Jose Dos Campos, Brazil 30,000 Air handlers
Rochester, New York 10,000(1) Parts and field service for glass-lined vessels
EUROPE:
Schwetzingen, Germany 400,000 Glass-lined vessels
Leven, Scotland 240,000 Glass-lined vessels, roll covers and liners
Bilston, England 50,000 Parts and reglassing for glass-lined vessels
Derby, England 20,000(1) Turbine agitators and mixers
Petit-Rechain, Belgium 15,000 Progressing cavity products
Kearsley, England 14,000 Parts and field service for glass-lined vessels
Bolton, England 10,000 Gaskets for glass-lined vessels
Southampton, England 10,000(1) Assembly operation for progressing cavity pumps
ASIA:
Gujurat, India 350,000(2) Glass-lined vessels
Suzhou, China 150,000(3) Glass-lined vessels
Singapore 5,000(1) Assembly operation for progressing cavity pumps
<FN>
- ---------------
(1) Leased facility.
(2) Facility of a 40%-owned affiliate.
(3) Facility of a 60%-owned subsidiary.
</TABLE>
20
<PAGE> 24
MANAGEMENT, DIRECTORS AND PRINCIPAL SHAREHOLDER
The executive officers and directors of the Company and their ages as of
August 15, 1996 are:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------ --- ------------------------------------------------
<S> <C> <C>
Maynard H. Murch IV 52 Chairman of the Board
Daniel W. Duval 60 President, Chief Executive Officer and Director
Gerald L. Connelly 55 Executive Vice President and Chief Operating
Officer
George M. Walker 59 Vice President and Chief Financial Officer
Howard O. Royer 57 Treasurer
Kevin J. Brown 38 Corporate Controller
Joseph M. Rigot 52 Secretary and General Counsel
Robert J. Kegerreis 75 Director
Thomas P. Loftis 52 Director
William D. Manning, Jr. 62 Director
John N. Taylor, Jr. 61 Director
Jerome F. Tatar 49 Director
</TABLE>
MAYNARD H. MURCH IV has been Chairman of the Board of the Company since
July, 1979 and a director of the Company since 1977. Mr. Murch also is President
and Chief Executive Officer of Maynard H. Murch Co., Inc. (investments), which
is managing general partner of M.H.M. & Co., Ltd. (investments). Mr. Murch also
is Vice President (since June, 1976) of Parker/Hunter Incorporated (dealer in
securities), a successor firm to Murch and Co., Inc., a securities firm which
Mr. Murch had been associated with since 1968.
DANIEL W. DUVAL is President and Chief Executive Officer of the Company
and a director of the Company. He was elected to this position on December 3,
1986. Prior to joining the Company, he was President and Chief Operating Officer
of Midland-Ross Corporation (a manufacturer of electrical, electronic and
aerospace products and thermal systems) having held various positions with that
company since 1960.
GERALD L. CONNELLY is Executive Vice President and Chief Operating Officer
of the Company, having been elected to that position on May 1, 1996. He also is
President of Pfaudler, Inc. From June 1994 until May 1, 1996, he was Vice
President of the Company. He was President of the Process Industries Group of
Eagle Industries, Inc. from 1993 until joining the Company in June, 1994.
Previously, he served as President of Pulsafeeder, Inc. (metering pumps) for ten
years.
GEORGE M. WALKER is Vice President and Chief Financial Officer of the
Company, having been elected to that position in 1972. From 1968 to 1972, he
held various positions with the Company in the areas of finance and accounting,
including the position of Controller. Prior to 1968, he was employed by the
accounting firm of Ernst & Young LLP for eight years.
HOWARD O. ROYER is Treasurer of the Company, having been elected to that
position on June 28, 1995. He had previously been employed by the Company from
1975 to 1985, serving as Treasurer at the time of his departure. Prior to
rejoining the Company, he was employed by Nissan Motor Corp., USA, most recently
holding the position of Vice President, Finance and Information Systems.
KEVIN J. BROWN is Corporate Controller of the Company, having been elected
to that position on December 12, 1995 after joining the Company on October 10,
1995. Prior to joining the Company he was employed by the accounting firm of
Ernst & Young LLP for fifteen years.
21
<PAGE> 25
JOSEPH M. RIGOT is Secretary and General Counsel of the Company, having
been elected to that position in 1990. He has been a partner with the law firm
of Thompson Hine & Flory P.L.L., Dayton, Ohio, for more than five years.
ROBERT J. KEGERREIS served as President of Wright State University from
July 1973 to June 1985. He is currently a management consultant and has served
as Executive Director of the Arts Center Foundation, Dayton, Ohio, since 1989.
Dr. Kegerreis is a director of The Elder-Beerman Stores Corporation and Energy
Innovations Inc.
THOMAS P. LOFTIS has been engaged in commercial real estate development,
brokerage and consulting with Midland Properties, Inc. since 1980. Mr. Loftis
has been a general partner of M.H.M. & Co., Ltd. (investments) since 1986.
WILLIAM D. MANNING, JR. was Senior Vice President of The Lubrizol
Corporation (industrial chemicals) from 1985 to his retirement in April 1994. He
currently is a management consultant.
JOHN N. TAYLOR, JR. has been Chairman and Chief Executive Officer since
August 1986 and was President from October 1974 until August 1986 of Kurz-Kasch,
Inc. (a manufacturer of custom thermoset plastics). He was also Chairman and
Chief Executive Officer of Component Technology Corp. (a manufacturer of
plastic-based assemblies) from 1982 to June 1989. Mr. Taylor is a director of
LSI Industries, Inc.
JEROME F. TATAR has been President and Chief Operating Officer and a
director of The Mead Corporation (forest products) since April 1996. From July
1994 to April 1996 he was Vice President-Operating Officer of The Mead
Corporation, and from November 1986 to July 1994, he was President of the Mead
Fine Paper Division of The Mead Corporation.
PRINCIPAL SHAREHOLDER
At August 15, 1996, M.H.M. & Co. Ltd. owned 2,994,254 Common Shares
representing 28.3% of the outstanding Common Shares as of that date. M.H.M. &
Co., Ltd. is an Ohio limited partnership of which Maynard H. Murch Co., Inc. is
the managing general partner and Thomas P. Loftis, a director of the Company, is
the other general partner. Partnership decisions with respect to the voting and
disposition of Common Shares are determined by Maynard H. Murch Co., Inc., the
board of directors of which is comprised of Maynard H. Murch IV, Chairman of the
Board of the Company, and Robert B. Murch, who are brothers, and Creighton B.
Murch, who is their first cousin. M.H.M. & Co. Ltd. is the only person known to
the Company to be the beneficial owner of more than 10% of its outstanding
Common Shares.
DESCRIPTION OF NOTES
The Notes are to be issued under an Indenture, dated as of September ,
1996 (the "Indenture"), between the Company and Star Bank, N.A., as Trustee (the
"Trustee"). A draft of the Indenture has been filed as an exhibit to the
Registration Statement referred to below under "Available Information". The
following summarizes the material provisions of the Indenture and is subject to,
and qualified in its entirety by reference to, all the provisions of the
Indenture, including the definition therein of certain terms. Wherever
particular articles, sections or defined terms of the Indenture are referred to,
it is intended that such articles, sections or defined terms shall be
incorporated herein by reference.
GENERAL
The Notes will be limited to $50,000,000 aggregate principal amount (or
$55,000,000 aggregate principal amount assuming exercise in full of the
Underwriters' over-allotment option), will be unsecured subordinated obligations
of the Company, and will mature on , 2003. The
22
<PAGE> 26
Notes will bear interest from , 1996 at the rate per annum shown on
the cover page of this Prospectus. Interest will be payable semiannually on
and of each year ("Interest Payment Dates"),
subject to certain exceptions, commencing , 1997, to the persons in
whose names the Notes are registered at the close of business on the day of
or , as the case may be ("Regular Record Date"),
next preceding such Interest Payment Date. Principal of, premium, if any, and
interest on the Notes will be payable, and the Notes will be convertible and
exchangeable and transfers thereof will be registrable, at the office of the
Trustee or the office or agency of the Company maintained for such purpose in
The City of New York and at any other office or agency maintained by the Company
for such purpose, provided that at the option of the Company, payment of
interest may be made by check mailed to the address of the person entitled
thereto as it appears in the Note Register. All payments of interest and
principal will be made in United States Dollars. (Sections 3.1, 3.5, 3.7, 10.2,
12.2 and 13.1)
The Notes will be issued only in registered form without coupons in
denominations of $1,000 or any integral multiple thereof. (Section 3.2) No
service charge will be made for any registration of transfer or exchange of
Notes, but the Company may require payment of a sum sufficient to cover any tax
or other governmental charge payable in connection therewith. (Section 3.5)
CONVERSION RIGHTS
The Notes will be convertible into Common Shares at any time prior to
redemption (except as set forth in the following sentence) or maturity,
initially at the conversion price stated on the cover page hereof. The right to
convert Notes called for redemption will terminate at the close of business on
the Business Day immediately preceding a Redemption Date and will be lost if not
exercised prior to that time. (Section 12.1) See "Optional Redemption."
Notes surrendered for conversion during the period from the close of
business on any Regular Record Date next preceding any Interest Payment Date to
the opening of business on such Interest Payment Date (except Notes called for
redemption on a Redemption Date within such period) must be accompanied by
payment of an amount equal to the interest thereon which the registered Holder
is to receive on such Interest Payment Date. No other adjustment for interest or
dividends is to be made upon conversion. (Sections 3.7 and 12.2) Fractional
Common Shares will not be issued upon conversion, but in lieu thereof, the
Company will pay a cash adjustment based upon market price. (Section 12.3)
The Conversion Price is subject to adjustment (under the formula set forth
in the Indenture) under certain circumstances, including: (i) the issuance of
Common Shares as a dividend or distribution on Common Shares; (ii) the issuance
to all holders of Common Shares of rights or warrants entitling them to
subscribe for or purchase Common Shares at a price per share less than the
Current Market Price; (iii) certain subdivisions and combinations of Common
Shares; (iv) the issuance as a dividend or distribution to all holders of Common
Shares of capital shares of the Company (other than Common Shares) or evidences
of its indebtedness, cash or other assets (including securities, but excluding
those rights, warrants, dividends and distributions referred to above and
dividends and distributions paid exclusively in cash and excluding any capital
shares, evidences of indebtedness, cash or assets distributed upon a
consolidation or merger to which the provision described in the last sentence of
this paragraph applies); (v) dividends or other distributions consisting
exclusively of cash (excluding any cash that is distributed upon a merger or
consolidation to which the provision described in the last sentence of this
paragraph applies and any cash portion of distributions referred to in clause
(iv)) to all holders of Common Shares to the extent such distributions, combined
with (A) all such cash distributions made within the preceding 12 months in
respect of which no adjustment has been made, plus (B) any cash and the fair
market value of other consideration payable in respect of any tender offer by
the Company or any of its subsidiaries for Common Shares concluded within the
preceding 12 months in respect of which no adjustment has been made, exceeds 10%
of the Company's market capitalization (being the product of the then current
market price of the Common Shares times the number of Common
23
<PAGE> 27
Shares then outstanding) on the record date for such distribution; and (vi) the
purchase of Common Shares pursuant to a tender offer made by the Company or any
of its subsidiaries to the extent that the aggregate consideration, together
with (X) any cash and the fair market value of any other consideration payable
in any other such tender offers expiring within the 12 months preceding such
tender offer in respect of which no adjustment has been made, plus (Y) the
aggregate amount of any such all-cash distributions referred to in clause (v)
above to all holders of Common Shares within the 12 months preceding the
expiration of such tender offer in respect of which no adjustments have been
made, exceeds 10% of the Company's market capitalization on the expiration of
such tender offer. The foregoing provisions for adjustment are subject to
certain exceptions, as set forth in the Indenture. (Section 12.4) In the case of
certain consolidations or mergers to which the Company is a party or the
conveyance or transfer of the properties and assets of the Company substantially
as an entirety, each Note then outstanding shall, without the consent of any
Holders of Notes, become convertible only into the kind and amount of
securities, cash and other property receivable upon such consolidation, merger,
conveyance or transfer by a holder of the number of Common Shares into which the
Note might have been converted immediately prior to such consolidation, merger,
conveyance or transfer, assuming such holder of Common Shares failed to exercise
his rights of election, if any, as to the kind or amount of securities, cash and
other property receivable upon such consolidation, merger, conveyance or
transfer (provided that if the kind or amount of securities, cash and other
property so receivable is not the same for each non-electing share, then the
kind and amount of securities, cash and other property so receivable by each
non-electing share shall be deemed to be the kind and amount so receivable per
share by a plurality of the non-electing shares). (Section 12.10)
SUBORDINATION OF NOTES
The Notes will be subordinated and subject, to the extent and in the manner
set forth in the Indenture, to the prior payment in full of all Senior
Indebtedness. (Section 13.1) Senior Indebtedness is defined to include the
principal of, and premium, if any, and interest on and other amounts due on any
indebtedness, whether now outstanding or hereafter created, incurred, assumed or
guaranteed by the Company, for money borrowed from others (including obligations
under capitalized leases or purchase money indebtedness) or in connection with
the acquisition by the Company or a Subsidiary of any other business or entity,
or in respect of letters of credit or bid, performance or surety bonds issued
for the account or on the credit of the Company or a Subsidiary, and, in each
case, all renewals, extensions and refundings thereof, other than (i) any such
indebtedness as to which, in the instrument creating or evidencing the same, it
is provided that such indebtedness is not superior in right of payment to the
Notes, (ii) indebtedness of the Company to any Affiliate and (iii) the Notes.
(Section 1.1) At August 21, 1996, the Company had approximately $79,507,000 of
outstanding indebtedness that would have constituted Senior Indebtedness under
the Indenture. The Indenture does not limit the amount of Senior Indebtedness or
other indebtedness that the Company or its Subsidiaries may incur.
No payments of principal of, premium, if any, or interest on the Notes may
be made and no Notes may be redeemed, retired or purchased if the Company is
then in default in the payment of any Senior Indebtedness or if at the time any
other Event of Default under the terms of any Senior Indebtedness exists
permitting acceleration thereof. Upon any payment or distribution of assets of
the Company in the event of any insolvency, reorganization, liquidation or
similar proceeding, all Senior Indebtedness must be repaid in full (including
any interest thereon accruing after the commencement of any such proceeding)
before the Holders of the Notes will be entitled to receive or retain any
payment. If the Notes are declared due and payable before their Stated Maturity
because of the occurrence of an Event of Default, no payment may be made in
respect of the Notes unless and until all Senior Indebtedness shall have been
paid in full or such declaration and its consequences shall have been rescinded
and all such defaults shall have been remedied or waived. (Section 13.2)
24
<PAGE> 28
By reason of such subordination, in the event of insolvency, creditors of
the Company who are holders of Senior Indebtedness may recover more, ratably,
than Holders, and creditors of the Company who are neither holders of Senior
Indebtedness nor Holders may recover less, ratably, than holders of Senior
Indebtedness and may recover more, ratably, than Holders.
The Notes are structurally subordinated in right of payment to all
liabilities (including trade payables) of the Company's Subsidiaries. The
Company's Subsidiaries had approximately $91,288,000 of liabilities (including
trade payables but excluding inter-company liabilities) outstanding at July 31,
1996.
OPTIONAL REDEMPTION
The Notes will be redeemable upon not less than 30 nor more than 60 days'
notice by mail at any time on or after , 1999, as a whole or in part, at
the election of the Company, at a Redemption Price equal to the percentage of
the principal amount set forth below if redeemed in the 12-month period
beginning of the years indicated:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
- ----- ----------
<S> <C>
1999 %
2000 %
2001 %
</TABLE>
and thereafter at a Redemption Price equal to 100% of the principal amount,
together in each case with accrued and unpaid interest to the Redemption Date
(subject to the right of Holders of record on Regular Record Dates to receive
interest due on an Interest Payment Date), provided that the Company may not
redeem any Notes prior to , 1999. (Sections 2.3, 11.1, 11.4, 11.5 and
11.6)
CERTAIN RIGHTS TO REQUIRE REPURCHASE OF NOTES BY THE COMPANY
In the event of any Change in Control (as defined below) of the Company
occurring after the date of issuance of the Notes and on or prior to Maturity,
each Holder of Notes will have the right, at such Holder's option, to require
the Company to repurchase all or any part of such Holder's Notes on the date
(the "Repurchase Date") that is 75 days after the date the Company gives notice
of the Change in Control (as described below) at a price (the "Repurchase
Price") equal to 100% of the principal amount thereof, together with accrued and
unpaid interest to the Repurchase Date. (Section 14.1) On or prior to the
Repurchase Date, the Company is required to deposit with the Trustee or a Paying
Agent an amount of money sufficient to pay the Repurchase Price of the Notes
which are to be repaid on the Repurchase Date. (Section 14.3) Neither the Board
of Directors of the Company nor the Trustee, acting alone or together, can
modify or waive this required repurchase of the Notes.
Failure by the Company to repurchase the Notes when required under the
preceding paragraph will result in an Event of Default under the Indenture
whether or not such repurchase is permitted by the subordination provisions of
the Indenture. (Section 5.1)
On or before the 15th day after the occurrence of a Change in Control, the
Company is obligated to mail to all Holders a notice of the event constituting
and the date of such Change in Control, the Repurchase Date, the date by which
the repurchase right must be exercised, the Repurchase Price for Notes, and the
procedures which a Holder must follow to exercise a repurchase right. To
exercise the repurchase right, a Holder of a Note must deliver, on or before the
10th day prior to the Repurchase Date, written notice to the Company (or an
agent designated by the Company for such purpose) and to the Trustee of the
Holder's exercise of such right, together with the certificates evidencing the
Notes with respect to which the right is being duly exercised, duly endorsed for
transfer. (Section 14.2)
25
<PAGE> 29
A "Change in Control" will occur when: (i) all or substantially all of the
Company's assets are sold as an entirety to any person or related group of
persons; (ii) there shall be consummated any consolidation or merger of the
Company (A) in which the Company is not the continuing or surviving corporation
(other than a consolidation or merger with a wholly-owned subsidiary of the
Company in which all Common Shares outstanding immediately prior to the
effectiveness thereof are changed into or exchanged for the same consideration)
or (B) pursuant to which the Common Shares are converted into cash, securities
or other property, in each case other than a consolidation or merger of the
Company in which the holders of the Common Shares immediately prior to the
consolidation or merger have, directly or indirectly, at least a majority of the
common shares of the continuing or surviving corporation immediately after such
consolidation or merger, or (iii) any person, or any persons acting together
which would constitute a "group" for purposes of Section 13(d) of the Exchange
Act, together with any Affiliates thereof, acquires beneficial ownership (as
defined in Rule 13d-3 under the Exchange Act) of at least 50% of the total
voting power of all classes of capital shares of the Company entitled to vote
generally in the election of directors of the Company. Notwithstanding clause
(iii) of the foregoing definition, a Change in Control will not be deemed to
have occurred solely by virtue of the Company, any Subsidiary, any employee
share purchase plan, share option plan or other share incentive plan or program,
retirement plan or automatic dividend reinvestment plan or any substantially
similar plan of the Company or any Subsidiary or any person holding securities
of the Company for or pursuant to the terms of any such employee benefit plan,
filing or becoming obligated to file a report under or in response to Schedule
13D or Schedule 14D-1 (or any successor schedule, form or report) under the
Exchange Act disclosing beneficial ownership by it of shares or securities of
the Company, whether at least 50% of the total voting power referred to in
clause (iii) of the foregoing definition or otherwise. (Section 14.5) A
recapitalization or a leveraged buyout or similar transaction involving members
of management or their Affiliates will constitute a Change in Control if it
meets the foregoing definition.
Notwithstanding the foregoing, a Change in Control as described above will
not be deemed to have occurred if (i) the Current Market Price of the Common
Shares on the date of a Change in Control is at least equal to 105% of the
conversion price of the Notes in effect immediately preceding the time of such
Change in Control, or (ii) all of the consideration (excluding cash payments for
fractional shares) in the transaction giving rise to such Change in Control to
the holders of Common Shares consists of common shares that are, or immediately
upon issuance will be, listed on a national securities exchange or quoted on the
Nasdaq National Market, and as a result of such transaction the Notes will
become convertible solely into such common shares, or (iii) the consideration in
the transaction giving rise to such Change in Control to the holders of Common
Shares consists of cash or securities that are, or immediately upon issuance
will be, listed on a national securities exchange or quoted on the Nasdaq
National Market, or a combination of cash and such securities, and the aggregate
fair market value of such consideration (which, in the case of such securities,
will be equal to the average of the daily Closing Prices of such securities
during the 10 consecutive trading days commencing with the sixth trading day
following consummation of such transaction) is at least 105% of the conversion
price of the Notes in effect on the date immediately preceding the closing date
of such transaction. (Section 14.5)
There is no definition of the phrase "all or substantially all" as applied
to the Company's assets and used in the definition of Change in Control in the
Indenture, and there is no clear definition of the phrase under applicable law.
As a result of the uncertainty of the meaning of this phrase, in the event the
Company were to sell a significant amount of its assets, the Holders and the
Company may disagree over whether the sale gave rise to the right of Holders to
require the Company to repurchase the Notes. In such event, the Holders would
likely not be able to require the Company to repurchase unless and until the
disagreement were resolved in favor of the Holders.
The right to require the Company to repurchase Notes as a result of a
Change in Control could create an Event of Default under Senior Indebtedness, as
a result of which any repurchase could,
26
<PAGE> 30
absent a waiver, be blocked by the subordination provisions of the Notes. See
"Subordination of Notes." The Company's ability to pay cash to the Holders upon
a repurchase may also be limited by certain financial covenants contained in the
Company's Senior Indebtedness.
In the event a Change in Control occurs and the Holders exercise their
rights to require the Company to repurchase Notes, the Company intends to comply
with applicable tender offer rules under the Exchange Act, including Rules 13e-4
and 14e-1, as then in effect, with respect to any such purchase. The Change of
Control purchase feature of the Notes may in certain circumstances make more
difficult or discourage a takeover of the Company and, thus, the removal of
incumbent management. The Change in Control purchase feature, however, is not
the result of management's knowledge of any specific effort to accumulate Common
Shares or to obtain control of the Company by means of a merger, tender offer,
solicitation or otherwise, or part of a plan by management to adopt a series of
anti-takeover provisions. Instead, the Change in Control purchase feature is a
standard term contained in other similar debt offerings and the specific terms
of this feature resulted from negotiations between the Company and the
Underwriters. Management has no present intention to engage in a transaction
involving a Change in Control.
The foregoing provisions would not necessarily afford Holders protection in
the event of highly leveraged or other transactions involving the Company that
may adversely effect Holders.
SINKING FUND
There will be no sinking fund established for the retirement of the Notes.
MODIFICATION OF THE INDENTURE
Modifications and amendments of the Indenture may be made by the Company
and the Trustee with the consent of the Holders of two-thirds in principal
amount of the Outstanding Notes; provided that no such modification or amendment
may, without the consent of the Holder of each Outstanding Note affected
thereby, (i) change the stated maturity date of the principal of, or any
installment of interest on, any Note, (ii) reduce the principal amount of, the
rate of interest thereon, or any premium payable on, any Notes, (iii) change the
place of payment where, or the coin or currency in which, any Note or any
payment or the interest thereon is payable, (iv) impair the right to institute
suit for the enforcement of any such payment when due, (v) adversely affect the
conversion rights of the Holders, (vi) modify the provisions of the Indenture
with respect to the subordination of the Notes in a manner adverse to the
Holders, (vii) adversely affect the right to require the Company to repurchase
Notes, or (viii) reduce the percentage in principal amount of Notes the consent
of whose Holders is required for modification or amendment of the Indenture or
for waiver of compliance with certain provisions of the Indenture or for waiver
of certain defaults. (Section 9.2)
EVENTS OF DEFAULT, NOTICE AND WAIVER
The following are Events of Default: (i) default in the payment of any
interest on the Notes which continues for 30 days; (ii) default in the payment
of principal or premium, if any, when due; (iii) default in the payment of the
Repurchase Price in respect of any Note on the Repurchase Date; (iv) default in
the performance of any other covenant continued for 60 days after written notice
to the Company as provided in the Indenture; (v) default in respect of
indebtedness of the Company for money borrowed which results in acceleration of
the maturity of $10.0 million or more of indebtedness, if such acceleration is
not rescinded or indebtedness discharged within 30 days after written notice to
the Company as provided in the Indenture; and (vi) certain events in bankruptcy,
insolvency or reorganization. (Section 5.1) If any Event of Default shall happen
and be continuing, the Trustee or the Holders of not less than 25% in principal
amount of the Outstanding Notes may declare the principal of all the Notes due
and payable immediately. (Section 5.2) At any time after a declaration of
acceleration with respect to the Notes has been made, but before a judgment or
decree based on acceleration has been obtained, the Holders of a majority in
principal amount of the
27
<PAGE> 31
Outstanding Notes may, under certain circumstances, rescind and annul such
acceleration. (Section 5.2)
No Holder will have any right to institute any proceeding with respect to
the Indenture or for any remedy under the Indenture unless (i) the Holder
previously has given to the Trustee written notice of a continuing Event of
Default, (ii) the Holders of not less than 25% in principal amount of the
Outstanding Notes have made written request, and offered reasonable indemnity,
to the Trustee to institute proceedings as Trustee, and (iii) within 60 days
after such request, the Trustee has neither instituted such proceedings nor
received from the Holders of a majority in aggregate principal amount of the
Outstanding Notes a direction inconsistent with the request. (Section 5.7)
The Indenture provides that the Trustee will be under no obligation,
subject to the duty of the Trustee during default to act with the required
standard of care, to exercise any of its rights or powers under the Indenture at
the request or direction of any of the Holders, unless such Holders shall have
offered to the Trustee reasonable indemnification. (Section 6.3) Subject to the
requirement that the Trustee be indemnified, the Holders of a majority in
principal amount of the Outstanding Notes will 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. (Section
5.12)
The Holders of a majority in principal amount of the Outstanding Notes may
on behalf of the Holders of all Notes waive compliance by the Company with
certain covenants in the Indenture. (Section 10.7) The Holders of a majority in
principal amount of the Outstanding Notes may on behalf of the Holders of all
Notes waive certain past defaults except a default in payment of the principal
of, or premium, if any, or interest on any Note or in respect of a covenant or
provision which under the Indenture cannot be modified or amended without the
consent of the Holder of each Outstanding Note affected. (Section 5.13)
The Company is required to furnish to the Trustee annually a certificate as
to the Company's compliance with the Indenture and specifying each default and
the nature thereof. (Section 7.4(d))
CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER
The Indenture provides that the Company shall not consolidate with or merge
into any other corporation or convey or transfer its properties and assets
substantially as an entirety to any person, unless (i) any such successor
assumes the Company's obligations under the Notes and the Indenture, (ii) after
giving effect thereto, no Event of Default or event which with notice and/or
lapse of time would become an Event of Default shall have occurred and be
continuing and (iii) certain other conditions under the Indenture are met.
(Section 8.1) Upon any such consolidation or merger, or any such conveyance or
transfer of the properties and assets of the Company substantially as an
entirety, the successor corporation formed by such consolidation, or into which
the Company is merged, or to which such conveyance or transfer is made, will
succeed to, and be substituted for, and may exercise every right and power of,
the Company under the Indenture with the same effect as if such successor
corporation had been named as the Company, and thereupon the Company as the
predecessor corporation will be relieved of all obligations and covenants under
the Indenture and the Notes. (Section 8.2)
GOVERNING LAW
The Notes will be governed by, and construed in accordance with, the laws
of the State of Ohio, without giving effect to applicable principles of
conflicts of law.
THE TRUSTEE
Star Bank, N.A. will be the Trustee under the Indenture.
28
<PAGE> 32
DESCRIPTION OF CAPITAL SHARES
The Common Shares are the only class of capital shares of the Company. The
Company is authorized to issue 25,000,000 Common Shares, and at August 15, 1996,
there were 10,595,528 Common Shares outstanding. All of the outstanding Common
Shares are, and any Common Shares issued by the Company upon conversion of the
Notes will be upon issuance, fully paid and non-assessable. Shareholders do not
have pre-emptive rights to purchase any securities of the Company.
Holders of Common Shares are entitled to receive such dividends as may be
declared from time to time by the Board of Directors out of funds legally
available therefor. The ability of the Company to pay dividends is subject to
certain contractual limitations in its credit agreements. Upon liquidation,
holders of Common Shares are entitled to receive a pro rata share of all assets
available to shareholders.
KeyCorp Shareholder Services, Inc. is transfer agent and registrar of the
Common Shares.
Holders of Common Shares are entitled to one vote per share upon all
matters presented to shareholders. Shareholders do, however, have cumulative
voting rights in the election of directors.
Article II of the Company's Code of Regulations divides the Board of
Directors of the Company into two classes, one class comprised of four directors
and one class of three directors. One class of directors is elected each year to
serve for a two-year term. Directors may not be removed from office without the
affirmative vote of the holders of at least two-thirds of the outstanding voting
power of the Company. Article II of the Code of Regulations provides that only
persons who are nominated in accordance with a specified procedure are eligible
for election as directors. The procedure requires that notice of the nomination,
together with the specified information concerning the nominee, must be given to
the Company not less than 50 nor more than 75 days prior to the meeting at which
directors are to be elected. Article II may not be amended or repealed without
the affirmative vote of the holders of at least two-thirds of the voting power
of the Company.
CERTAIN OHIO LEGISLATION
Ohio's "Control Share Acquisition Act" generally requires shareholder
approval of any acquisition of shares of an Ohio corporation which would result
in the acquiring person first reaching or exceeding ownership of one-fifth,
one-third or a majority of the total voting power of the corporation. Any such
control share acquisition cannot be consummated unless authorized by the holders
of: (i) a majority of the voting power of the corporation present at a meeting
of shareholders, and (ii) a majority of such voting power other than shares held
by the acquiring person or an officer or employee who is a director of the
corporation, and other than shares acquired by a person or group after
announcement of the proposed control share acquisition if the amount so acquired
exceeds 1/2% of the outstanding voting shares or was acquired for a
consideration exceeding $250,000.
Ohio's "Merger Moratorium Act" prohibits an Ohio corporation from engaging
in specified transactions such as mergers, certain asset sales, certain
issuances of shares, a liquidation or the like with a beneficial owner of 10% or
more of the outstanding voting power of the corporation during the three-year
period following the date the person became the owner of the 10% interest,
unless prior to such date the transaction or the acquisition of shares was
approved by the directors of the corporation. After the three-year period, such
transactions may be entered into if approved by the holders of at least
two-thirds of the voting power of the corporation (including by the holders of
at least a majority of the shares held by persons other than an interested
person, as defined in the statute) or if the consideration to be paid in the
transaction is at least equal to certain specified amounts.
29
<PAGE> 33
UNDERWRITING
The Underwriters named below have severally agreed, subject to certain
conditions, to purchase from the Company the principal amounts of Notes set
forth opposite their respective names:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
UNDERWRITERS NOTES
---------------------------------------------------------------------- -----------
<S> <C>
Schroder Wertheim & Co. Incorporated.................................. $
Robert W. Baird & Co. Incorporated....................................
First Analysis Securities Corporation.................................
-----------
Total....................................................... $50,000,000
===========
</TABLE>
The Underwriting Agreement provides that the several Underwriters are
obligated to purchase all of the Notes offered hereby, if any are purchased.
Schroder Wertheim & Co. Incorporated, Robert W. Baird & Co. Incorporated and
First Analysis Securities Corporation, as representatives (the
"Representatives") of the several Underwriters, have advised the Company that
the Underwriters propose to offer the Notes to the public initially at the
offering price set forth on the cover page of this Prospectus; that the
Underwriters propose initially to allow a concession of not in excess of %
of the principal amount of the Notes to certain dealers, including the
Underwriters; that the Underwriters and such dealers may initially allow a
discount of not in excess of % of the principal amount of the Notes to other
dealers; and that the public offering price and concession and discount to
dealers may be changed by the Representatives after the initial public offering.
The Company has granted to the Underwriters an option, expiring at the
close of business on the 30th day after the date of the Underwriting Agreement,
to purchase up to an additional $5,000,000 aggregate principal amount of Notes
at the public offering price less underwriting discounts and commissions, all as
set forth on the cover page of this Prospectus. The Underwriters may exercise
the option only to cover over-allotments, if any, in the sale of Notes in this
offering. To the extent that the Underwriters exercise the option, each
Underwriter will be committed, subject to certain conditions, to purchase Notes
in an aggregate principal amount proportionate to such Underwriter's initial
commitment.
The Notes are a new issue of securities with no established trading market.
The Company has been advised by the Underwriters that they intend to make a
market in the Notes, but they are not obligated to do so and may discontinue any
market making at any time without notice. No assurance can be given as to the
liquidity of the trading market for the Notes.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended
(the "Securities Act").
Certain of the Underwriters and selling group members (if any) that
currently act as market makers for the Common Shares may engage in "passive
market making" in the Common Shares on the Nasdaq National Market in accordance
with Rule 10b-6A under the Exchange Act. Rule 10b-6A permits, upon the
satisfaction of certain conditions, underwriters and selling group members
participating in a distribution that are also Nasdaq market makers in the
security being distributed, or in securities that are issuable upon conversion
of the security being distributed, to engage in limited market making
transactions during the period when Rule 10b-6 under the Exchange Act would
otherwise prohibit such activity. Rule 10b-6A prohibits underwriters and selling
group members engaged in passive market making generally from entering a bid or
effecting a purchase at
30
<PAGE> 34
a price that exceeds the highest bid for those securities displayed on the
Nasdaq National Market by a market marker that is not participating in the
distribution. Under Rule 10b-6A, each underwriter or selling group member
engaged in passive market making is subject to a daily net purchase limitation
equal to 30% of such entity's average daily trading volume during the two full
consecutive calendar months immediately preceding the date of the filing of the
registration statement under the Securities Act pertaining to the security to be
distributed.
From time to time, certain of the Underwriters or their affiliates have
provided, and may continue to provide, investment banking or other financial
services to the Company.
LEGAL MATTERS
The validity of the issuance of the Notes being offered hereby will be
passed upon for the Company by Thompson Hine & Flory P.L.L., Dayton, Ohio,
counsel for the Company. Certain legal matters in connection with the issuance
of the Notes will be passed upon for the Underwriters by Simpson Thacher &
Bartlett (a partnership which includes professional corporations), New York, New
York. Joseph M. Rigot, a member of the firm of Thompson Hine & Flory P.L.L.,
also serves as the Secretary and General Counsel of the Company. At August 21,
1996, members of the firm of Thompson Hine & Flory P.L.L. owned beneficially
2,500 Common Shares.
EXPERTS
The consolidated financial statements of the Company as of August 31, 1995
and 1994 and for each of the three fiscal years in the period ended August 31,
1995 in the Prospectus have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report with respect thereto and are included
herein in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy and information statements and other information
with the Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information filed by the Company with the Commission
pursuant to the Exchange Act may be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's regional offices located at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661,
and Seven World Trade Center, 13th Floor, New York, New York 10048. Copies of
such materials also can be obtained from the Public Reference Branch of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
The Registration Statement has been, and amendments thereto will be, filed with
the Commission through the Electronic Data Gathering, Analysis and Retrieval
("EDGAR") system. Registration statements and other documents filed through the
EDGAR system are publicly available through the Commission's WEB site
(http:/www.sec.gov).
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act. This Prospectus does not
contain all the information set forth in the Registration Statement, certain
parts of which have been omitted in accordance with the rules and regulations of
the Commission. For further information, reference is hereby made to the
Registration Statement.
31
<PAGE> 35
INFORMATION INCORPORATED BY REFERENCE
The following documents filed by the Company with the Commission (File No.
0-288) pursuant to the Exchange Act are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
August 31, 1995 filed pursuant to Section 13 of the Exchange Act.
2. The Company's Quarterly Reports on Form 10-Q for the quarter ended
November 30, 1995, as amended by Form 10-Q/A-1, the quarter ended February
28, 1996 and the quarter ended May 31, 1996, filed pursuant to Section 13
of the Exchange Act.
3. The description of the Company's Common Shares contained in its
Registration Statement on Form 10 filed with the Commission on April 19,
1965, as amended by Form 10/A-2, filed on December 13, 1995.
4. All reports and other documents filed by the Company 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 this offering.
Any statement incorporated herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein, in a supplement to this Prospectus 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 statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of the Registration Statement or this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon the written or oral
request of such person, a copy of any and all of the documents which are
incorporated herein by reference (other than exhibits to such documents, unless
such exhibits are specifically incorporated by reference into such document).
Requests for such documents should be directed to the principal executive
offices of Robbins & Myers, Inc., 1400 Kettering Tower, Dayton, Ohio 45423,
(513) 222-2610.
32
<PAGE> 36
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Auditors........................................................ F-2
Consolidated Balance Sheets as of August 31, 1994 and 1995 and May 31, 1996........... F-3
Statement of Consolidated Operations and Retained Earnings for the fiscal years ended
August 31, 1993, 1994 and 1995 and for the nine months ended May 31, 1995 and 1996.. F-4
Statement of Consolidated Cash Flows for the fiscal years ended August 31, 1993, 1994
and 1995 and the nine months ended May 31, 1995 and 1996............................ F-5
Notes to Consolidated Financial Statements............................................ F-6
</TABLE>
F-1
<PAGE> 37
REPORT OF INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
ROBBINS & MYERS, INC. AND SUBSIDIARIES
We have audited the accompanying consolidated balance sheet of Robbins &
Myers, Inc. and Subsidiaries as of August 31, 1995 and 1994, and the related
statements of consolidated operations and retained earnings and cash flows for
each of the three years in the period ended August 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Robbins &
Myers, Inc. and Subsidiaries at August 31, 1995 and 1994, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended August 31, 1995, in conformity with generally accepted
accounting principles.
As discussed in the Summary of Accounting Policies note to the Consolidated
Financial Statements, in 1993 the Company changed its method of accounting for
postretirement benefits other than pensions and accounting for income taxes.
/S/ ERNST & YOUNG LLP
Dayton, Ohio
October 3, 1995,
except for SAR Redemption and Stock Split notes, as to which the dates are
October 24, 1995, and July 31, 1996, respectively
F-2
<PAGE> 38
ROBBINS & MYERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
AUGUST 31, AUGUST 31, MAY 31,
1994 1995 1996
---------- ---------- -----------
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents........................ $ 16,079 $ 10,210 $ 8,836
Accounts receivable, less allowances............. 41,388 49,415 51,811
Inventories...................................... 39,926 43,176 46,824
Other current assets............................. 2,828 2,492 1,884
Deferred taxes................................... 3,632 4,539 5,644
---------- ---------- -----------
Total current assets........................ 103,853 109,832 114,999
Goodwill............................................ 68,210 73,497 92,098
Other intangible assets............................. 9,267 13,573 12,691
Deferred taxes...................................... 7,802 4,522 3,421
Other assets........................................ 6,836 4,378 5,948
Property, plant and equipment, net.................. 62,162 64,605 66,260
---------- ---------- -----------
Total Assets.......................................... $ 258,130 $ 270,407 $ 295,417
========= ========= ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable................................. $ 16,164 $ 22,442 $ 21,174
Accrued expenses................................. 38,842 49,190 48,223
Current portion long-term debt................... 3,500 6,067 1,948
---------- ---------- -----------
Total current liabilities................... 58,506 77,699 71,345
Long-term debt-less current portion................. 80,290 61,834 79,285
Other long-term liabilities......................... 62,295 60,935 60,799
Shareholders' equity
Common stock-without par value:
Authorized shares -- 25,000,000
Outstanding shares -- 10,405,088 in 1995 and
10,285,634 in 1994 after deducting shares in
treasury of 271,610 in 1995 and 294,010 in
1994, at stated amount......................... 19,573 20,682 22,213
Retained earnings................................ 37,656 49,254 62,099
Equity adjustment for foreign currency
translation.................................... 211 777 450
Equity adjustment to recognize minimum pension
liability...................................... (401) (774) (774)
---------- ---------- -----------
Total shareholders' equity............................ 57,039 69,939 83,988
---------- ---------- -----------
Total liabilities and shareholders' equity............ $ 258,130 $ 270,407 $ 295,417
========= ========= ==========
</TABLE>
See Notes to Consolidated Financial Statements
F-3
<PAGE> 39
ROBBINS & MYERS, INC. AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED OPERATIONS AND RETAINED EARNINGS
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED AUGUST 31, ENDED MAY 31,
------------------------------ -------------------
1993 1994 1995 1995 1996
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales.......................................... $ 85,057 $121,647 $302,952 $219,475 $255,272
Less:
Cost of sales.................................. 52,296 76,666 201,648 146,107 170,336
Engineering and development, selling and
administrative expenses...................... 22,171 28,733 74,234 53,375 58,180
Interest expense............................... 116 1,457 7,287 5,552 5,304
Other deductions (income):
Provision for business restructure........... 950 2,551 -- -- --
Other items -- net........................... 1,240 1,595 750 747 (1,027)
-------- -------- -------- -------- --------
8,284 10,645 19,033 13,694 22,479
Investment income.................................. 1,462 -- -- -- --
-------- -------- -------- -------- --------
Income before income taxes......................... 9,746 10,645 19,033 13,694 22,479
Income taxes....................................... 3,568 4,290 7,208 5,435 8,317
-------- -------- -------- -------- --------
Income before extraordinary gain and
cumulative effect of accounting changes.......... 6,178 6,355 11,825 8,259 14,162
Extraordinary gain from early extinguishment of
debt, net of income taxes........................ -- -- 1,332 1,332 --
Cumulative effect of accounting changes,
net of income taxes.............................. (8,018) -- -- -- --
-------- -------- -------- -------- --------
Net income (loss).................................. (1,840) 6,355 13,157 9,591 14,162
Retained earnings at beginning of year............. 35,826 32,776 37,656 37,656 49,254
Deduct dividends declared on common stock.......... (1,210) (1,475) (1,559) (1,168) (1,317)
-------- -------- -------- -------- --------
Retained earnings at end of year................... $ 32,776 $ 37,656 $ 49,254 $ 46,079 $ 62,099
======== ======== ======== ======== ========
Income (loss) per share
Primary:
Income before extraordinary gain and
cumulative effect of accounting changes...... $ .59 $ .61 $1.09 $ .78 $1.29
Extraordinary gain from early extinguishment of
debt, net of income taxes.................... -- -- .13 .13 --
Cumulative effect of accounting changes,
net of income taxes.......................... (.76) -- -- -- --
-------- -------- -------- -------- --------
$(.17) $ .61 $1.22 $ .91 $1.29
======== ======== ======== ======== ========
Assuming full dilution:
Income before extraordinary gain and
cumulative effect of accounting changes...... $ .59 $ .61 $1.09 $ .77 $1.28
Extraordinary gain from early extinguishment of
debt, net of income taxes.................... -- -- .12 .13 --
Cumulative effect of accounting changes,
net of income taxes.......................... (.76) -- -- -- --
-------- -------- -------- -------- --------
$(.17) $ .61 $1.21 $ .90 $1.28
======== ======== ======== ======== ========
</TABLE>
See Notes to Consolidated Financial Statements
F-4
<PAGE> 40
ROBBINS & MYERS, INC. AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED AUGUST 31, ENDED MAY 31,
--------------------------- -----------------
1993 1994 1995 1995 1996
------- ------- ------- ------- -------
(IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)..................................... ($1,840) $ 6,355 $13,157 $ 9,591 $14,162
Equity adjustment for foreign currency translation.... (1,069) (81) 566 1,370 (327)
Adjustments required to reconcile net income (loss) to
net cash and cash equivalents provided by operating
activities:
Depreciation...................................... 2,637 3,761 8,549 6,543 7,622
Amortization...................................... 161 833 3,852 2,815 3,288
Deferred taxes.................................... 742 (523) (800) 644 (4)
Equity income from unconsolidated investments..... -- (80) (944) (560) (1,500)
Gain on extinguishment of debt.................... -- -- (2,183) (2,183) --
Other............................................. -- -- 575 -- 869
Cumulative effect of accounting changes........... 8,018 -- -- -- --
Changes in operating assets and
liabilities -- excluding the effects of the purchase
of Pharaoh Corp. and Cannon Process Equipment, Ltd.,
Pfaudler, Chemineer, Edlon and the JWI Mixer Line:
Accounts receivable, less allowances.............. (2,020) 129 (7,487) (9,243) (2,396)
Inventories....................................... 2,029 2,476 (1,854) (2,852) (3,648)
Other current assets.............................. 233 (1,436) 2,236 2,484 608
Other assets...................................... (1,843) 1,729 659 1,267 (70)
Accounts payable.................................. 863 (128) 5,273 1,898 (1,268)
Accrued expenses.................................. (942) 549 9,605 3,692 (967)
Other long-term liabilities....................... 564 1,017 1,813 3,437 (136)
------- ------- ------- ------- -------
Net cash and cash equivalents provided by operating
activities............................................ 7,533 14,601 33,017 18,903 16,233
INVESTING ACTIVITIES
Capital expenditures, net of nominal disposals........ (2,579) (6,798) (10,133) (6,350) (9,277)
Purchase of marketable securities..................... (32,533) (29,796) -- -- --
Proceeds from sale of marketable securities........... 31,566 52,860 -- -- --
Purchase of JWI Mixer Line............................ (2,188) -- -- -- --
Purchase of Pfaudler, Chemineer and Edlon Business
Units............................................... -- (96,725) -- -- --
Purchase of Pharaoh Corp. and Cannon Process
Equipment, Ltd...................................... -- -- (12,898) (11,088) --
Investment in Hazelton Environmental.................. (1,081) (700) -- -- --
------- ------- ------- ------- -------
Net cash and cash equivalents used by investing
activities............................................ (6,815) (81,159) (23,031) (17,438) (9,277)
FINANCING ACTIVITIES
Proceeds from debt borrowings......................... 17,800 113,805 67,375 55,449 50,870
Payments of long-term debt............................ (17,769) (31,200) (82,205) (60,455) (39,812)
Proceeds from sale of common stock.................... 338 580 534 368 662
Retirement of stock appreciation rights and
acquisition Costs Incurred.......................... -- -- -- -- (18,733)
Purchase of common stock.............................. (452) (495) -- -- --
Dividends paid........................................ (1,210) (1,475) (1,559) (1,168) (1,317)
------- ------- ------- ------- -------
Net cash and cash equivalents (used) provided by
financing activities.................................. (1,293) 81,215 (15,855) (5,806) (8,330)
------- ------- ------- ------- -------
(Decrease) Increase in cash and cash equivalents........ (575) 14,657 (5,869) (4,341) (1,374)
Cash and cash equivalents at beginning of year.......... 1,997 1,422 16,079 16,079 10,210
------- ------- ------- ------- -------
Cash and cash equivalents at end of year................ $ 1,422 $16,079 $10,210 $11,738 $ 8,836
======= ======= ======= ======= =======
</TABLE>
See Notes to Consolidated Financial Statements
F-5
<PAGE> 41
ROBBINS & MYERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION PERTAINING TO MAY 31, 1996 AND FOR THE NINE MONTHS ENDED
MAY 31, 1996 IS UNAUDITED)
SUMMARY OF ACCOUNTING POLICIES
CONSOLIDATION
The consolidated financial statements include accounts of the Company and
its wholly-owned subsidiaries. All significant inter-company accounts and
transactions have been eliminated upon consolidation. All of the Company's
operations are conducted in the fluids management industry.
INCOME TAXES
Income taxes are provided for all items included in the Statement of
Consolidated Operations and Retained Earnings regardless of the period when such
items are reported for income tax purposes. Deferred income taxes reflect the
net effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income tax
purposes.
PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment are stated at cost. Depreciation expense is
recorded over the estimated useful life of the asset on the straight-line method
using the following lives:
<TABLE>
<S> <C>
Land improvements............................................ 20 years
Buildings.................................................... 40 years
Machinery & equipment........................................ 3 to 15 years
</TABLE>
The Company's normal policy is to charge repairs and improvements made to
capital assets to expense as incurred. In limited circumstances, major building
repairs are capitalized and amortized over the estimated life of the new asset
and any remaining value of the old asset is written off. Repairs to machinery
and equipment must result in an addition to the useful life of the asset before
the costs are capitalized.
"Property, Plant and Equipment, Net" consisted of the following:
<TABLE>
<CAPTION>
AUGUST 31,
-------------------- MAY 31,
1994 1995 1996
------- ------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Land and improvements................... $ 9,366 $ 9,732 $ 9,851
Buildings............................... 21,658 20,182 20,892
Machinery & equipment................... 58,876 69,255 74,880
------- ------- -----------
89,900 99,169 105,623
Less accumulated depreciation........... 27,738 34,564 39,363
------- ------- -----------
$62,162 $64,605 $66,260
======== ======== ==========
</TABLE>
INVENTORIES
Domestic inventories are stated at the lower of cost or market determined
by the last-in, first-out (LIFO) method. At August 31, 1995 and 1994, the
difference between estimated current replacement cost and the stated LIFO value
was approximately $7,436,000 and $7,312,000, respectively.
F-6
<PAGE> 42
ROBBINS & MYERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION PERTAINING TO MAY 31, 1996 AND FOR THE NINE MONTHS ENDED
MAY 31, 1996 IS UNAUDITED)
Foreign inventories are reported on the first-in, first-out (FIFO) method
and amounted to $23,226,000 and $21,995,000 at August 31, 1995 and 1994,
respectively.
"Inventories" consisted of the following:
<TABLE>
<CAPTION>
AUGUST 31,
-------------------- MAY 31,
1994 1995 1996
------- ------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Finished products..................... $12,491 $13,743 $12,566
Work in process....................... 13,913 15,149 20,412
Raw materials......................... 13,522 14,284 13,846
------- ------- -----------
$39,926 $43,176 $46,824
======== ======== ==========
</TABLE>
GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill is the excess of the purchase price paid over the value of net assets
of businesses acquired. Amortization of goodwill is calculated on a
straight-line basis over 40 years. The carrying value of goodwill is reviewed
quarterly if the facts and circumstances suggest that it may be permanently
impaired. If the review indicates that goodwill will not be recoverable, as
determined by the undiscounted cash flow method, the asset will be reduced to
its estimated recoverable value. Accumulated amortization of goodwill and other
intangible assets totaled $3,904,000 and $1,176,000 at August 31, 1994 and 1995,
respectively.
At August 31, "Other Intangible Assets" consisted of the following:
<TABLE>
<CAPTION>
1994 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Patents............................................. $ 1,098 $ 1,019
Non-compete agreements.............................. 1,028 5,401
Financing costs..................................... 393 396
Acquisition costs................................... 3,040 3,515
Pension intangible.................................. 3,708 3,242
------- -------
$ 9,267 $13,573
======== ========
</TABLE>
Amortization is calculated on the straight-line basis using the following
lives:
<TABLE>
<S> <C>
Patents..................................................... 14 to 17 years
Non-compete agreements...................................... 3 to 5 years
Financing costs............................................. 5 years
Goodwill.................................................... 40 years
</TABLE>
INCOME PER SHARE
All income per share amounts are based on the weighted average number of
shares outstanding during the year plus the dilutive effect of common stock
equivalents. The stock appreciation rights granted in connection with the prior
year acquisitions of Pfaudler, Chemineer and Edlon have been excluded from the
calculation of income per share. See the Common Stock note for additional
information.
F-7
<PAGE> 43
ROBBINS & MYERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION PERTAINING TO MAY 31, 1996 AND FOR THE NINE MONTHS ENDED
MAY 31, 1996 IS UNAUDITED)
RESEARCH AND DEVELOPMENT
Research and development expenditures are expensed as incurred and amounted
to approximately $2,403,000, $1,363,000 and $1,260,000 for the years ended
August 31, 1995, 1994 and 1993, respectively.
ACCOUNTS RECEIVABLE
Accounts receivable are stated net of allowances for doubtful accounts
totaling $1,260,000 and $952,000 at August 31, 1995 and 1994, respectively.
Accounts receivable relate primarily to customers located in North America and
Western Europe and are concentrated in the specialty chemicals, pharmaceuticals
and oil and gas recovery industries. To reduce credit risk, the Company performs
credit investigations prior to accepting an order and when necessary, requires
advance payments and letters of credit to insure payment.
STATEMENT OF CONSOLIDATED CASH FLOWS
Cash and cash equivalents consist of working cash balances and temporary
investments having an original maturity of 90 days or less.
CHANGES IN ACCOUNTING POLICIES
In 1993, the Company adopted Statement of Financial Accounting Standards
No. 106, "Employers Accounting for Postretirement Benefits Other Than Pensions"
and No. 109, "Accounting for Income Taxes."
Statement No. 106 generally requires the accrual of the expected costs of
postretirement benefits by the date the employees become eligible for benefits.
Previously, the expense for these benefits was recognized as claims were paid. A
charge of $8,812,000, net of income taxes of $5,239,000, was recognized as the
cumulative effect for the adoption of Statement No. 106.
Statement No. 109 replaces Statement No. 96 and the Company will continue
using the liability method of computing deferred income taxes. A credit of
$794,000 was recognized as the cumulative effect for the adoption of Statement
No. 109.
EQUITY INVESTMENTS
The Company owns 40% of Gujarat Machinery Manufacturers, Ltd. (GMM). GMM is
located in India and manufactures and markets glass-lined reactor and storage
vessels, parts and services, primarily for the Indian market. In addition, the
Company owns 50% of Universal Glasteel Equipment (UGE) located in Robbinsville,
New Jersey. UGE is a supplier of used and reconditioned glass-lined storage and
reactor vessels. The Company uses the equity method of accounting for the
investments, totaling approximately $2,980,000, which are included in "Other
Assets" in the Consolidated Balance Sheet.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in
estimating the fair value of financial instruments:
F-8
<PAGE> 44
ROBBINS & MYERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION PERTAINING TO MAY 31, 1996 AND FOR THE NINE MONTHS ENDED
MAY 31, 1996 IS UNAUDITED)
Current portion long-term debt and equity investments. -- The amounts
reported approximate the market value of similar instruments.
Long-term debt. -- The amounts reported are consistent with the terms,
interest rates and maturities currently available to the Company for
similar debt instruments.
Interest swap agreements. -- The amounts reported are consistent with
values at which they could be settled, based upon dealer estimates.
Foreign exchange contracts. -- The amounts reported are estimated
using quoted market prices for similar instruments.
FOREIGN CURRENCY ACCOUNTING
Gains and losses resulting from the settlement of a transaction in a
currency different from that used to record the transaction are charged or
credited to operations when incurred. Adjustments resulting from the translation
of foreign financial statements into U.S. dollars are recognized as a separate
component of shareholders' equity for all foreign units except those located in
Brazil. The U.S. dollar is the functional currency for the Brazilian units. As a
result, translation gains and losses for these operations are reflected in net
income.
RECOGNITION OF REVENUE
Revenue is primarily recognized as products are shipped to customers except
for infrequent long-term contracts for which revenue is recognized under the
percentage of completion method. At August 31, 1995, 1994 and 1993 there were no
such contracts in process.
PRODUCT WARRANTY
Provision for product warranty is recognized as a liability at the time of
sale based on the historical relationship of warranty expense to sales. Actual
payments of warranty claims are charged against the liability as incurred. The
liability is reviewed quarterly and adjusted as necessary.
COMMON STOCK
The Company's stock option plans provide for the granting of options to
directors, officers and other key employees. Under the plans, the option price
per share may not be less than the fair market value as of the date of grant and
the options become exercisable on a vesting schedule determined by the
Compensation Committee of the Board of Directors. Most currently outstanding
grants become exercisable over a three or four year period. Proceeds from the
sale of stock issued under option arrangements are credited to common stock. The
Company makes no charges or credits against earnings with respect to options.
At August 31, 1995 and 1994, 882,500 and 2,800,000 shares, respectively,
were reserved for future grants.
F-9
<PAGE> 45
ROBBINS & MYERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION PERTAINING TO MAY 31, 1996 AND FOR THE NINE MONTHS ENDED
MAY 31, 1996 IS UNAUDITED)
<TABLE>
<CAPTION>
1994 1995
------- -------
<S> <C> <C>
Options granted..................................... 166,000 153,500
Options expired..................................... 4,800 86,600
Options exercised: option price $2.07-$8.50......... 110,400 92,200
Options outstanding: option price $1.94-$13.50...... 832,400 807,100
Options which became exercisable:
option price $8.13-$10.13......................... 85,900 103,160
Options exercisable: option price $1.94-$13.50...... 494,240 501,200
</TABLE>
The Company also sponsors a long-term incentive stock plan for senior
executives. Under the program, participants earn performance shares based on a
three year measurement of how favorably the total return on Company shares
compares to the total shareholder return of the Russell 2000 Company Group. No
performance shares are earned unless the total return on Company shares is at
least equal to the median return for companies included in the Russell 2000.
Performance shares earned under the program are issued to the participants at
the end of the three year measurement period and are subject to forfeit if the
participant leaves the employment of the Company within the next two years.
At August 31, 1995, 73,000 units had been awarded under the program. The
Company has estimated the total value of shares that could be earned under the
program and has chosen to recognize the cost ratably over a five year period.
The amount charged to expense for this program is $562,000 as of August 31,
1995.
During 1994, in connection with the acquisition of Pfaudler, Chemineer and
Edlon, the Company issued to the seller stock appreciation rights on 4,000,000
shares of its common stock. The stock appreciation rights entitle the holder to
receive a payment equal to the increase in market value of the Company's common
stock above $11.50 per share to a maximum market value of $20 per share. The
stock appreciation rights are exercisable by the holder during the period
January 1, 1995 through June 30, 2000. At the Company's option, payment may be
made in cash or common stock of the Company. It is the Company's intention to
make any payment for stock appreciation rights in cash and therefore the payment
will result in additional goodwill at the time of the transaction. See SAR
Redemption note for additional information.
The net changes in common shares outstanding during 1995, 1994 and 1993
were increases of 119,454, 89,140 and 9,994 shares, respectively. Activity for
all years was limited to employee transactions.
RETIREMENT PLANS
The Company sponsors three defined contribution plans covering most
salaried employees and certain domestic hourly employees. Company contributions
are made to the plans based on a percentage of eligible amounts contributed by
participating employees.
The Company also has several defined benefit plans covering all domestic
employees and certain foreign employees. Plans covering salaried employees
provide benefits based on years of service and employees' compensation. Plans
covering hourly employees generally provide benefits of stated amounts for each
year of service. The Company's funding policy is consistent with the funding
requirements of applicable federal regulations. At August 31, 1995 and 1994
pension assets were invested in short and long-term interest bearing obligations
and equity securities, including 238,000 shares of the Company's common stock.
F-10
<PAGE> 46
ROBBINS & MYERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION PERTAINING TO MAY 31, 1996 AND FOR THE NINE MONTHS ENDED
MAY 31, 1996 IS UNAUDITED)
During 1995, the Company adjusted its minimum pension liability to
$4,016,000 from $4,109,000 in the prior year. This liability is required for
defined benefit plans whose accumulated benefits exceed assets. The transaction,
which had no effect on income, was recorded by adjusting an intangible asset to
the amount of $3,242,000 from $3,708,000 in 1994 and adjusting equity by
$373,000 for a total equity adjustment of $774,000 at August 31, 1995.
Retirement plan costs for the above plans include the following components:
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
------------------------------
1993 1994 1995
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Defined benefit plans:
Service cost -- benefits earned during the
period................................. $ 854 $1,128 $2,134
Interest cost on projected benefit
obligation............................. 2,594 2,875 3,460
Actual return on assets................... (5,617) (1,167) (5,242)
Net amortization and deferral............. 3,098 (1,865) 2,167
------ ------ ------
Total..................................... 929 971 2,519
Defined contribution plans.................. 222 327 477
------ ------ ------
$1,151 $1,298 $2,996
====== ====== ======
</TABLE>
The increase in 1995 costs over the previous year is due primarily to the
inclusion in 1995 of a full year's expense for Pfaudler, Chemineer and Edlon
compared with two months in 1994.
The funded status of domestic defined benefit plans at August 31, 1995 and
1994 was as follows:
<TABLE>
<CAPTION>
ASSETS EXCEED ACCUMULATED
ACCUMULATED BENEFITS
BENEFITS EXCEED ASSETS
1995 1995
------------- -------------
(IN THOUSANDS)
<S> <C> <C>
Actuarial present value of:
Vested benefit obligation................................. $15,207 $31,109
Accumulated benefit obligation............................ 15,849 33,824
Projected benefit obligation.............................. 19,177 33,830
Plan assets at fair market value............................ 16,456 25,589
------------- -------------
Plan assets less than projected benefit obligation.......... (2,721) (8,241)
Unrecognized net loss....................................... 2,273 65
Unrecognized prior service cost............................. 1,169 2,826
Unrecognized net (asset) obligation at August 31............ (432) 416
Adjustment to recognize minimum liability................... -- (4,016)
------------- -------------
Net pension asset (liability) recognized in the Consolidated
Balance Sheet............................................. $ 289 $(8,950)
============ ============
</TABLE>
F-11
<PAGE> 47
ROBBINS & MYERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION PERTAINING TO MAY 31, 1996 AND FOR THE NINE MONTHS ENDED
MAY 31, 1996 IS UNAUDITED)
<TABLE>
<CAPTION>
ASSETS EXCEED ACCUMULATED
ACCUMULATED BENEFITS
BENEFITS EXCEED ASSETS
1994 1994
------------- -------------
(IN THOUSANDS)
<S> <C> <C>
Actuarial present value of:
Vested benefit obligation................................. $13,819 $ 30,687
Accumulated benefit obligation............................ 14,353 30,862
Projected benefit obligation.............................. 17,504 31,915
Plan assets at fair market value............................ 15,942 24,133
------------- -------------
Plan assets less than projected
benefit obligation........................................ (1,562) (7,782)
Unrecognized net loss....................................... 1,091 401
Unrecognized prior service cost............................. 1,528 3,208
Unrecognized net (asset) obligation at August 31............ (492) 500
Adjustment to recognize minimum liability................... -- (4,109)
------------- -------------
Net pension asset (liability) recognized in the Consolidated
Balance Sheet............................................. $ 565 $ (7,782)
============ ============
</TABLE>
The projected benefit obligation was determined using a discount rate of 7%
in 1995 (7 1/2% in 1994) and weighted average pay increases of 6 3/4%. The
assumed long-term rate of return on plan assets is 9 1/2% in 1995, 10% in 1994
and 10 1/2% in 1993. The effect of the change in the discount rate on the above
plans is an increase in the projected benefit obligation of approximately
$3,011,000.
The following tables describe the amount recognized in the Consolidated
Financial Statements relating to Pfaudler's unfunded German pension plan as of
the actuarial valuation dates at August 31, 1995 and June 30, 1994.
Net pension cost for this plan includes the following components at August
31,:
<TABLE>
<CAPTION>
1994 1995
----- -------
(IN THOUSANDS)
<S> <C> <C>
Service cost.............................................. $ 79 $ 550
Interest cost............................................. 315 2,231
---- ------
Net pension cost.......................................... $ 394 $ 2,781
==== ======
</TABLE>
The increase in pension cost during 1995 is primarily the result of the
inclusion of twelve months of expense in 1995 and two months of expense in 1994
of the Pfaudler, Chemineer and Edlon
F-12
<PAGE> 48
ROBBINS & MYERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION PERTAINING TO MAY 31, 1996 AND FOR THE NINE MONTHS ENDED
MAY 31, 1996 IS UNAUDITED)
acquired businesses. The status of this plan at the actuarial valuation dates of
August 31, 1995 and June 30, 1994 was as follows:
<TABLE>
<CAPTION>
1994 1995
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Actuarial present value of:
Accumulated benefit obligation.................... $ 26,052 $ 28,636
Vested benefit obligation......................... 25,699 28,231
Projected benefit obligation...................... 29,014 31,746
Plan assets at fair market value*................... -- --
------- -------
Plan assets less than projected benefit
obligation........................................ (29,014) (31,746)
Unrecognized net actuarial gain..................... -- (966)
------- -------
Pension liability recognized in the Consolidated
Balance Sheet..................................... $ (29,014) $ (32,712)
======= =======
<FN>
- ---------------
*Funding of pension obligations is not permitted in Germany.
</TABLE>
The projected benefit obligation for this plan was determined using a
discount rate of 7 1/4% and weighted average pay increases of 4%. Pension
payments are paid from funds generated by operations as Germany does not permit
funding of pension obligations.
OTHER POSTRETIREMENT BENEFITS
In addition to pension benefits, the Company provides health care and life
insurance benefits for certain of its retired domestic employees. The Company's
policy is to fund the cost of these benefits as claims are paid. The Company's
accumulated postretirement benefit obligation includes the following components
at August 31:
<TABLE>
<CAPTION>
1994 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Retirees.............................................. $ 13,255 $ 13,988
Active employees...................................... 4,313 3,680
------- -------
$ 17,568 $ 17,668
======= =======
</TABLE>
Net periodic postretirement benefit cost includes the following components:
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
-------------------------------
1993 1994 1995
----- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Interest cost................................... $ 957 $ 1,100 $ 1,237
Service cost.................................... 29 87 93
---- ------ ------
$ 986 $ 1,187 $ 1,330
==== ====== ======
</TABLE>
The rate of increase in per capita health care costs is assumed to be 8% in
1996, decreasing 1% per year to 6% in 1998. The rate of increase in health care
costs has a significant effect on the amounts reported. Each one percentage
point change in the rate of increase would change the accumulated postretirement
benefit obligation at August 31, 1995, by approximately $541,000 and change net
periodic postretirement benefit cost by approximately $39,000. The discount rate
used in
F-13
<PAGE> 49
ROBBINS & MYERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION PERTAINING TO MAY 31, 1996 AND FOR THE NINE MONTHS ENDED
MAY 31, 1996 IS UNAUDITED)
determining the accumulated postretirement benefit obligation was 7% in 1995 and
7 1/2% in 1994. The change resulted in an increase in the accumulated
postretirement benefit obligation of approximately $638,000.
INVESTMENT INCOME
The following items are included in "Investment Income":
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
-----------------------------
1993 1994 1995
------- ------ ----
(IN THOUSANDS)
<S> <C> <C> <C>
Interest income................................. $ 477 $ 474 $--
Dividend income................................. 733 403 --
(Losses) realized gains-net..................... 340 (778) --
Unrealized gains-net............................ 67 -- --
Investment expenses............................. (155) (99) --
------ ------ ---
$ 1,462 $ -- $--
====== ====== ===
</TABLE>
FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
At August 31, 1994, the Company had a foreign currency forward contract
which matured on March 1, 1995. The objective of the contract was to reduce the
exposure to foreign currency exchange risk associated with an intercompany loan
from the Company's German subsidiary which came due on the same date. The
contract, which called for the purchase of Deutsche marks, had a value of
approximately $16,500,000 at August 31, 1994.
OTHER DEDUCTIONS
The following items are included in "Other items -- net":
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
---------------------------------
1993 1994 1995
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Costs associated with the business units sold
in previous periods......................... $ 1,034 $ 1,036 $ 982
Write-off of investment in Hazleton
Environmental............................... -- -- 1,612
Income from equity investments................ -- (80) (944)
Royalty income................................ -- (46) (712)
All other items............................... 206 685 (188)
------ ------ ------
$ 1,240 $ 1,595 $ 750
====== ====== ======
</TABLE>
INCOME TAXES
Deferred income taxes reflect the net effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income
F-14
<PAGE> 50
ROBBINS & MYERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION PERTAINING TO MAY 31, 1996 AND FOR THE NINE MONTHS ENDED
MAY 31, 1996 IS UNAUDITED)
tax purposes. Significant components of the Company's deferred tax position at
August 31 are as follows:
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
----------------------
1994 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax benefits:
Other postretirement benefits obligation............ $ 7,035 $ 6,863
Capital loss carryforward........................... 1,231 1,231
Foreign tax loss carryforward and restructuring
charges.......................................... 3,489 2,822
Pension benefits.................................... 1,738 1,627
Other items--net.................................... 4,445 4,748
------- -------
17,938 17,291
Less valuation allowance............................ 4,020 2,853
------- -------
13,918 14,438
Deferred tax liabilities:
Tax depreciation in excess of book depreciation..... 1,768 2,725
Discount on subordinated debt....................... 2,484 971
Other items--net.................................... 1,405 1,681
------- -------
5,657 5,377
------- -------
Net deferred tax benefit............................ $ 8,261 $ 9,061
======= =======
</TABLE>
Included in the valuation allowance for deferred tax benefits is $1,622,000
relating to foreign tax loss carryforwards.
The provision for federal, foreign and state income taxes charged to
operations is as follows:
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
----------------------------------
1993 1994 1995
-------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Current:
Federal.................................... $ 1,812 $ 4,100 $ 5,021
Foreign.................................... (113) 337 2,007
State...................................... 459 598 980
------ ------ ------
2,158 5,035 8,008
Deferred:
Federal.................................... 1,328 (40) 366
Foreign.................................... -- (700) (1,218)
State...................................... 82 (5) 52
------ ------ ------
1,410 (745) (800)
------ ------ ------
$ 3,568 $ 4,290 $ 7,208
====== ====== ======
</TABLE>
F-15
<PAGE> 51
ROBBINS & MYERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION PERTAINING TO MAY 31, 1996 AND FOR THE NINE MONTHS ENDED
MAY 31, 1996 IS UNAUDITED)
A summary of the differences between the effective income tax rate
attributable to operations and the statutory rate is as follows:
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
--------------------------
1993 1994 1995
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Statutory rate.................................... 34.0% 35.0% 35.0%
State income taxes net of federal tax benefit..... 3.1 3.7 3.5
Other items--net.................................. (.5) 1.6 (.6)
---- ---- ----
36.6% 40.3% 37.9%
==== ==== ====
</TABLE>
Income taxes paid in 1995, 1994 and 1993 were $3,007,000, $3,299,000 and
$2,808,000, respectively. The Company also has a Canadian tax loss carryforward
of approximately $900,000 and a German tax loss carryforward of $2,600,000 for
corporation tax purposes and $6,700,000 for trade tax purposes. For financial
reporting purposes, a valuation allowance was deducted for a portion of the
deferred tax benefit related to the German tax loss carryforwards. The Canadian
carryforward, if unused, will expire in future years beginning in 1998. The
German carryforward has no expiration period.
At August 31, 1995, the Company has a capital loss carryforward of
$3,077,000 for income tax purposes that expires in the years ending August 31,
1997 through August 31, 1999.
The carryforward was primarily generated from the disposal of the Motion
Control Group in 1991. For financial reporting purposes, a valuation allowance
was deducted for the full amount of the deferred tax benefit related to this
carryforward.
It is the Company's policy to provide income taxes on undistributed foreign
earnings which the Company intends to remit to the United States. The provision
for income tax on those earnings was $220,000 in 1995. No income taxes were
recorded for this purpose in 1994 or 1993. The amount of undistributed retained
earnings is $3,339,000 and $977,000 at August 31, 1995 and 1994.
LEASES
Future minimum payments, by year and in the aggregate, under noncancellable
operating leases with initial or remaining terms of one year or more consisted
of the following at August 31, 1995:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
1996.................................. $2,042
1997.................................. 1,610
1998.................................. 1,219
1999.................................. 1,034
2000.................................. 531
Thereafter............................ 209
------
$6,645
======
</TABLE>
F-16
<PAGE> 52
ROBBINS & MYERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION PERTAINING TO MAY 31, 1996 AND FOR THE NINE MONTHS ENDED
MAY 31, 1996 IS UNAUDITED)
Rental expense for all operating leases in 1995 was approximately
$2,352,000 ($904,000 in 1994 and $841,000 in 1993).
ACCRUED EXPENSES
At August 31, "Accrued Expenses" consisted of the following:
<TABLE>
<CAPTION>
1994 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Customer advances..................................... $ 6,222 $ 9,531
Salaries, wages, payroll taxes and withholdings....... 6,031 9,158
Federal income taxes.................................. 3,017 4,197
Business restructure costs............................ 5,541 3,712
Warranty costs........................................ 2,139 3,040
Pension benefits...................................... 1,392 2,373
Medical benefits...................................... 2,260 2,257
Workers' compensation benefits........................ 1,333 1,094
All other items....................................... 10,907 13,828
------- -------
$ 38,842 $ 49,190
======= =======
</TABLE>
LONG-TERM DEBT
Long-term debt is as follows:
<TABLE>
<CAPTION>
AUGUST 31,
---------------------- MAY 31,
1994 1995 1996
-------- -------- --------------
(IN THOUSANDS)
<S> <C> <C> <C>
Senior debt
Term loan......................... $ 40,000 $ 36,500 $ 34,250
Revolving credit loan............. -- 3,800 18,600
Subordinated debt
Face amount....................... 50,000 30,495 30,439
Discount.......................... (6,210) (2,894) (2,056)
------- ------- -------
Total debt.......................... 83,790 67,901 81,233
Less current portion.............. 3,500 6,067 1,948
------- ------- -------
$ 80,290 $ 61,834 $ 79,285
======= ======= =======
</TABLE>
At August 31, 1995, the Company had senior debt outstanding under an
agreement with two Ohio banks. The agreement consists of a term loan and a
revolving credit arrangement. The term loan portion of the agreement is payable
in quarterly installments through 2001. During 1995, the Company amended the
revolving credit portion of the agreement and increased the amount the Company
can borrow by $15 million to $50 million. The revolving credit agreement does
not require compensating balances; however, a nominal commitment fee is paid on
the unused portion.
The interest rate on both the term loan and any outstanding balance under
the revolving credit portion of the agreement is variable based upon Prime or a
formula tied to LIBOR rates. At
F-17
<PAGE> 53
ROBBINS & MYERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION PERTAINING TO MAY 31, 1996 AND FOR THE NINE MONTHS ENDED
MAY 31, 1996 IS UNAUDITED)
August 31, 1995, the interest rate for all amounts outstanding ranged from
7 1/2% to 8 1/3% (6 1/3% to 8 1/3% at August 31, 1994). During 1994, the Company
entered into interest rate swap agreements to manage its exposure to
fluctuations in short-term interest rates. These arrangements total $25 million,
expire in 1997 and allow the Company to pay an effective interest rate of
approximately 8 1/3%. The counter party to the transaction is one of the loan
originating banks and the Company continually monitors its financial position
and credit rating to guard against credit risk.
The senior debt agreement is secured by all domestic assets except land and
buildings and includes certain restrictive covenants which include, among other
things, minimum requirements for tangible net worth, working capital, additional
debt, debt service coverage and payment of cash dividends. At August 31, 1995,
$5,789,000 of retained earnings is available for future dividends. See SAR
redemption note.
On March 1, 1996, the Company incurred subordinated debt and recorded
additional goodwill of $1.6 million to record contingent purchase price
provisions related to the Pharaoh acquisition.
At August 31, 1994, subordinated debt consisted of $50 million principal
amount. During the third quarter of 1995, the Company recorded an extraordinary
gain of $2,183,000 ($1,332,000 after taxes or $.12 per share) in connection with
the early retirement of $25 million of the subordinated debt. The remaining
principal amount of $25 million bears interest at 5 1/2% but has been discounted
to reflect a rate of 9 1/4% which approximated the market interest rate on debt
instruments with similar features at the time the debt was incurred. The debt
becomes due on June 30, 1998, and the agreement includes certain restrictive
covenants which are generally consistent with, but less restrictive than, those
of the senior debt. Subject to covenant compliance, the Company may extend the
maturity of the notes until June 30, 2001, by paying an interest rate consistent
with the market rate paid on similar instruments as of the date of the maturity
extension. The debt is unsecured. It is the Company's current intention to avail
itself of the renewal option as of June 30, 1998. During 1995, the Company
incurred additional subordinated debt in the amount of $5,495,000. This debt
bears interest at 8% but has been discounted to reflect a rate of 11% which
approximated the market interest rate on debt instruments with similar features
at the time the debt was incurred. The debt is payable in annual installments on
February 28 of each year through 1999. The debt is secured by all domestic
assets of the Company.
Aggregate principal payments for the debt for the five years subsequent to
August 31, 1995 are as follows:
<TABLE>
<CAPTION>
SENIOR SUBORDINATED
DEBT DEBT
-------- ------------
(IN THOUSANDS)
<S> <C> <C>
1996............................................. $ 4,500 $ 1,567
1997............................................. 6,000 1,461
1998............................................. 6,500 1,642
1999............................................. 6,500 825
2000............................................. 6,500 0
2001 and thereafter.............................. 10,300 25,000
------- -------
$ 40,300 $ 30,495
======= =======
</TABLE>
F-18
<PAGE> 54
ROBBINS & MYERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION PERTAINING TO MAY 31, 1996 AND FOR THE NINE MONTHS ENDED
MAY 31, 1996 IS UNAUDITED)
Interest paid on all outstanding debt amounted to $6,753,000 in 1995,
$1,457,000 in 1994 and $124,000 in 1993.
OTHER LONG-TERM LIABILITIES
The following items are included in "Other Long-Term Liabilities" at August 31:
<TABLE>
<CAPTION>
1994 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
German pension liability.............................. $ 29,014 $ 31,478
Other postretirement benefits......................... 15,237 15,276
U.S. pension liability................................ 8,321 7,347
Casualty insurance reserves........................... 3,900 5,612
All other items....................................... 5,823 1,222
------- -------
$ 62,295 $ 60,935
======= =======
</TABLE>
BUSINESS ACQUISITIONS
On March 1, 1995, the Company acquired Cannon Process Equipment Limited and
Pharaoh Corporation for cash and subordinated notes totaling $12,898,000.
Cannon, located in Bilston, England, sells new and reconditioned glass-lined
reactor vessels. Pharaoh, located in Rochester, New York, is a supplier of
replacement parts and services for glass-lined process equipment. At the same
time, the Company entered into a partnership with a major supplier of used
process equipment to supply used and reconditioned glass-lined vessels
worldwide. The new business units will be combined with similar activities of
Pfaudler.
On June 30, 1994, the Company completed the acquisition of the Pfaudler,
Chemineer and Edlon business units for approximately $117,045,000. Pfaudler is
the foremost worldwide manufacturer of glass-lined steel chemical reactor and
storage vessels. Chemineer is a leading producer of industrial mixing and
agitation equipment and Edlon designs and fabricates engineered Teflon(R)
products and coatings. The funds used for the acquisition were provided by a
combination of cash on hand, bank debt of $52,000,000 and subordinated notes of
$43,576,000, net of discount, issued to the seller. In addition to cash and
subordinated notes, the seller also received certain stock appreciation rights
as further described in the Common Stock note.
The acquisitions were accounted for under the purchase method and,
accordingly, the purchase price was allocated to the assets acquired and
liabilities assumed based on their fair values on the dates of the respective
transactions. These transactions resulted in goodwill of $71,225,000.
The operating results of the acquired businesses have been included in
consolidated operating results since the dates of each acquisition. The
following unaudited pro forma summary presents the results of operations of the
Company combined with the results of Pfaudler, Chemineer and Edlon as if the
acquisition of the business units had occurred at the beginning of 1993. In
preparing the pro forma data, certain adjustments have been made to historic
operating results, including increased interest expense resulting from the new
debt structure, amortization of intangible assets and the related income tax
effects. The pro forma data exclude business restructure provisions recorded at
Pfaudler of $8,100,000 and $1,318,000 in 1994 and 1993, respectively. This
summary
F-19
<PAGE> 55
ROBBINS & MYERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION PERTAINING TO MAY 31, 1996 AND FOR THE NINE MONTHS ENDED
MAY 31, 1996 IS UNAUDITED)
does not necessarily reflect the results of operations as they would have been
had the acquisitions occurred at the beginning of 1993, nor is it necessarily
indicative of future operating results.
<TABLE>
<CAPTION>
YEAR ENDED
AUGUST 31,
------------------------
1993 1994
--------- ---------
(IN THOUSANDS,
EXCEPT PER SHARE DATA)
<S> <C> <C>
Net sales........................................... $ 255,307 $ 261,090
Income before extraordinary gain and cumulative
effect of accounting changes...................... 4,911 4,388
Income per share before extraordinary gain and
cumulative effect of accounting changes
Primary........................................ $ .47 $ .42
Fully Diluted.................................. .47 .42
</TABLE>
BUSINESS RESTRUCTURE
The following is a summary of the Company's restructuring activities for
the current and prior year.
<TABLE>
<CAPTION>
EMPLOYEE FACILITY
SEVERANCE RELATED OTHER
COSTS COSTS COSTS TOTAL
-------- -------- ------ --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Balance August 31, 1993.......................... $ 746 $ 105 $ 99 $ 950
Additional provision charged against
operations..................................... 1,266 1,245 40 2,551
Additional provision recorded by adjusting
purchase entry................................. 1,750 250 700 2,700
Balances assumed from former owner............... 2,786 -- (311) 2,475
Payments......................................... (1,681) (105) (99) (1,885)
Non-cash asset reductions........................ -- (1,250) -- (1,250)
------- ------- ----- ------
Balance August 31, 1994.......................... 4,867 245 429 5,541
Additional provision recorded by adjusting
purchase entry................................. 300 -- -- 300
Payments......................................... (1,659) (121) (1) (1,781)
Other activity*.................................. (215) (44) (89) (348)
------- ------- ----- ------
Balance August 31, 1995.......................... $ 3,293 $ 80 $ 339 $ 3,712
======= ======= ===== ======
<FN>
- ---------------
*Primarily the result of foreign currency translation
</TABLE>
During 1995 the Company continued the implementation of an extensive
restructuring program at Pfaudler which was in process at the time of the
acquisition in fiscal 1994. Included in the program is a major reorganization of
the German facility, which includes employee termination costs. In addition,
Pfaudler has completed the curtailment of new product manufacturing in Mexico.
F-20
<PAGE> 56
ROBBINS & MYERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION PERTAINING TO MAY 31, 1996 AND FOR THE NINE MONTHS ENDED
MAY 31, 1996 IS UNAUDITED)
The consolidation of the Company's industrial mixer production, announced
last year, is in process and will be completed during the first half of fiscal
1996. The program involves closing the existing Prochem manufacturing facility
in Brampton, Ontario and relocating all business activities to the Chemineer
facility in Dayton, Ohio. The move has been delayed approximately six months
from the original timetable due to an ongoing systems implementation project at
Chemineer and the need to complete a building addition to accommodate additional
production.
Finally, the move of the RKL valve production from a facility in Lumberton,
New Jersey to the Company's pump manufacturing plant in Springfield, Ohio was
completed during fiscal 1995 as originally planned.
At August 31, 1995, the Company believes the above reserve is adequate to
complete the various programs currently in process. The Company continually
monitors charges against the reserve and has made adjustments as required.
SAR REDEMPTION
On October 10, 1995, 3,700,000 of the stock appreciation rights which were
issued in connection with the acquisition of Pfaudler, Chemineer and Edlon (see
Common Stock note) were retired for $4.875 per right. This resulted in a total
payment of $18,037,500. The payment was made October 24, 1995. The payment was
financed through the Company's long-term revolving credit agreement. The
Company's covenants with its lenders have been amended as a result of this
transaction and the Company is in compliance with the modified covenants.
STOCK SPLIT
At the June 26, 1996, Board of Directors' meeting the Board approved a
2-for-1 stock split for shareholders of record on July 12, 1996, effected in the
form of a share distribution on July 31, 1996. Per share information has been
adjusted to reflect the effect of this stock split for all periods presented.
ACCOUNTING FOR STOCK BASED COMPENSATION
In October 1995, the Financial Accounting Standards Board issued Statement
No. 123, "Accounting for Stock-Based Compensation." The Statement establishes
financial accounting and reporting standards for stock-based employee
compensation plans. Companies may elect to account for such plans under the fair
value method or continue the previous accounting and disclose pro forma net
income and earnings per share as if the fair value method was applied. The
statement is to be applied on a prospective basis beginning in the Company's
fiscal year 1997.
The Company has not as yet determined the potential financial statement
impact of the Standard, nor has it decided how or when it will initially adopt
the Standard.
F-21
<PAGE> 57
ROBBINS & MYERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION PERTAINING TO MAY 31, 1996 AND FOR THE NINE MONTHS ENDED
MAY 31, 1996 IS UNAUDITED)
INFORMATION BY GEOGRAPHIC AREA
<TABLE>
<CAPTION>
YEARS ENDED AUGUST 31,
------------------------------------------
1993 1994 1995
-------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Net Sales
U.S. domestic................................. $ 56,376 $ 73,380 $ 165,135
U.S. export................................... 17,100 18,926 31,218
-------- -------- -------
Total U.S..................................... 73,476 92,306 196,353
Europe........................................ 3,603 16,824 80,844
Other foreign................................. 7,978 12,517 25,755
-------- -------- -------
Total Net Sales............................... $ 85,057 $ 121,647 $ 302,952
======== ======== =======
Operating Income
U.S........................................... $ 15,554 $ 17,718 $ 29,519
Europe........................................ (1,156)(3) 877 4,818
Other foreign................................. (2,024) (1,696)(2) 3,377
-------- -------- -------
Total operating income........................ 12,374 16,899 37,714
Investment income............................. 1,462 0 0
Interest expense.............................. (116) (1,457) (7,287)
Amortization of intangible assets............. 0 (121) (2,707)
Corporate expenses............................ (3,974) (4,676) (8,687)(1)
-------- -------- -------
Income Before Income Taxes.................... $ 9,746 $ 10,645 $ 19,033
======== ======== =======
Income Before Income Taxes
U.S........................................... $ 12,926 $ 11,464 $ 10,838
Europe........................................ (1,156) 877 4,818
Other foreign................................. (2,024) (1,696) 3,377
-------- -------- -------
Total......................................... $ 9,746 $ 10,645 $ 19,033
======== ======== =======
Assets
U.S........................................... $ 71,105 $ 185,706 $ 193,852
Europe........................................ 4,579 50,694 56,063
Other foreign................................. 8,952 21,730 20,492
-------- -------- -------
Total Assets.................................. $ 84,636 $ 258,130 $ 270,407
======== ======== =======
<FN>
- ---------------
(1) Includes $1,612 write-off of investment in Hazleton Environmental.
(2) Includes provision for business restructure of $1,929.
(3) Includes provision for business restructure of $950.
</TABLE>
F-22
<PAGE> 58
ROBBINS & MYERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
QUARTERLY DATA
(Unaudited)
<TABLE>
<CAPTION>
1994 1995
-------- --------
(IN THOUSANDS, EXCEPT
PER SHARE DATA)
<S> <C> <C>
Net Sales
Quarter Ended
November 30............................... $ 21,895 $ 68,628
February 28............................... 22,567 70,873
May 31.................................... 25,018 79,973
August 31................................. 52,167 83,478
-------- --------
Total..................................... $121,647 $302,952
========= =========
Gross Profit
Quarter Ended
November 30............................... $ 8,120 $ 23,042
February 28............................... 8,888 24,145
May 31.................................... 10,350 26,180
August 31................................. 17,623 27,937
-------- --------
Total..................................... $ 44,981 $101,304
========= =========
Income Before Income Taxes
Quarter Ended
November 30............................... $ 3,096 $ 4,332
February 28............................... 3,392 5,044
May 31.................................... 3,838 4,317(1)
August 31................................. 319(3) 5,340
-------- --------
Total..................................... $ 10,645 $ 19,033
========= =========
</TABLE>
<TABLE>
<CAPTION>
1995
BEFORE
EXTRAORDINARY
GAIN
-------------
<S> <C> <C> <C>
Net Income
Quarter Ended
November 30............................... $ 1,907 $ 2,915 $ 2,915
February 28............................... 2,136 3,087 3,087
May 31.................................... 2,211 3,588(2) 2,256(1)
August 31................................. 101(3) 3,567 3,567
-------- -------- -------------
Total..................................... $ 6,355 $ 13,157 $11,825
========= ========= ==========
Income Per Share
Primary
Quarter Ended
November 30............................... $ .18 $ .28 $ .28
February 28............................... .21 .29 .29
May 31.................................... .21 .34(2) .21(1)
August 31................................. .01(3) .33 .33
Assuming Full Dilution
Quarter Ended
November 30............................... $ .18 $ .28 $ .28
February 28............................... .21 .29 .29
May 31.................................... .21 .34(2) .21(1)
August 31................................. .01(3) .33 .33
<FN>
- ---------------
(1) Includes a pre-tax write-off of $1,612 for investment in Hazleton
Environmental.
(2) Includes an after tax gain of $1,332 for early extinguishment of debt.
(3) Includes a pre-tax provision for business restructure totaling $2,551.
</TABLE>
F-23
<PAGE> 59
- ---------------------------------------------------------------
- ---------------------------------------------------------------
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS, AND, IF
GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS SHOULD NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY OF THE UNDERWRITERS.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
INFORMATION ABOUT THE COMPANY CONTAINED IN THIS PROSPECTUS SINCE THE DATE
HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER
THAN THOSE TO WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY ANY SECURITY OTHER THAN THE SECURITIES COVERED BY THIS PROSPECTUS,
NOR DOES IT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY JURISDICTION 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 ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Prospectus Summary........................... 3
Use of Proceeds.............................. 6
Capitalization............................... 6
Price Range of Common Shares and Dividends... 7
Selected Consolidated Financial Data......... 8
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................. 9
Business..................................... 12
Management, Directors and Principal
Shareholder................................ 21
Description of Notes......................... 22
Description of Capital Shares................ 29
Underwriting................................. 30
Legal Matters................................ 31
Experts...................................... 31
Available Information........................ 31
Information Incorporated by Reference........ 32
Index to Financial Statements................ F-1
</TABLE>
- ---------------------------------------------------------------
- ---------------------------------------------------------------
- ---------------------------------------------------------------
- ---------------------------------------------------------------
$50,000,000
ROBBINS & MYERS, INC.
% CONVERTIBLE SUBORDINATED
NOTES DUE 2003
SCHRODER WERTHEIM & CO.
ROBERT W. BAIRD & CO.
INCORPORATED
FIRST ANALYSIS SECURITIES CORPORATION
- ---------------------------------------------------------------
- ---------------------------------------------------------------
<PAGE> 60
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemized statement of the expenses (all but the SEC
registration fees and NASD fees are estimates) in connection with the offering.
<TABLE>
<S> <C>
SEC registration fee.................................................. $ 18,966
NASD fee.............................................................. 6,000
Trustee fees and expenses............................................. 10,000
Blue Sky fees and expenses............................................ 15,000
Printing and engraving expenses....................................... 85,000
Legal fees and expenses............................................... 75,000
Accounting fees and expenses.......................................... 25,000
Miscellaneous......................................................... 15,034
--------
TOTAL....................................................... $250,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 2 of Article V of the Code of Regulations of the Company sets forth
certain rights of directors and officers of the Company to indemnification. Such
rights provide indemnification by the Company to the extent permitted by Ohio
law. The liabilities against which a director and officer may be indemnified and
factors employed to determine whether a director and officer is entitled to
indemnification in a particular instance depend on whether the proceedings in
which the claim for indemnification arises were brought (a) other than by and in
the right of the Company ("Third Party Actions") or (b) by and in the right of
the Company ("Company Actions").
In Third Party Actions, the Company will indemnify each director and
officer against expenses, including attorneys' fees, judgments, decrees, fines,
penalties, and amounts paid in settlement actually and reasonably incurred by
him in connection with any threatened or actual proceeding in which he may be
involved by reason of his having acted in such capacity, 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 Company and with respect to any matter the subject of a
criminal proceeding, he had no reasonable cause to believe that his conduct was
unlawful.
In Company Actions, the Company will indemnify each director and officer
against expenses, including attorneys' fees, actually and reasonably incurred by
him in connection with the defense or settlement of any such proceeding if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company, except that no indemnification is
permitted with respect to (i) any matter as to which such person has been
adjudged to be liable for negligence or misconduct in the performance of his
duty to the Company unless a court determines such person is entitled to
indemnification and (ii) any liability asserted in connection with unlawful
loans, dividends, distribution, distribution of assets and repurchase of Company
shares under Section 1701.95 of the Ohio Revised Code.
Unless indemnification is ordered by a court, the determination as to
whether or not an individual has satisfied the applicable standards of conduct
(and therefore may be indemnified) is made by the Board of Directors of the
Company by a majority vote of a quorum consisting of directors of the Company
who were not parties to the action; or if such a quorum is not obtainable, or if
a quorum of disinterested directors so directs, by independent legal counsel in
a written opinion; or by shareholders of the corporation.
Section 2 of Article V of the Company's Code of Regulations does not limit
in any way other indemnification rights to which those seeking indemnification
may be entitled. The Company has
II-1
<PAGE> 61
entered into an indemnification agreement with each director of the Company, the
form of which was approved by the shareholders of the Company. A copy of such
agreement was filed as an exhibit to the Company's Annual Report on Form 10-K
for the year ended August 31, 1993.
The Company maintains insurance policies which presently provide
protection, within the maximum liability limits of the policies and subject to a
deductible amount for each claim, to the Company under its indemnification
obligations and to the directors and officers with respect to certain matters
which are not covered by the Company's indemnification obligations.
ITEM 16. EXHIBITS.
See Exhibit Index following the signature page to this Registration
Statement.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933 (the "Act"), each
filing of the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) 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.
The undersigned Registrant hereby undertakes to remove from registration by
means of a post-effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling person of the Registrant
pursuant to the foregoing provisions described under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that: (1) For purposes of
determining any liability under the Act, 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 Registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective; and (2) For the
purpose of determining any liability under the Act, each post-effective
amendment that contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-2
<PAGE> 62
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dayton, State of Ohio, on the 22nd day of August,
1996.
ROBBINS & MYERS, INC.
By: /s/ Daniel W. Duval
----------------------------
Daniel W. Duval, President and
Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby authorizes and appoints
Daniel W. Duval, George M. Walker and Joseph M. Rigot, or any of them, as his
attorney-in-fact, with full power of substitution and resubstitution, to sign
and file on his behalf individually and in each capacity stated below any and
all amendments (including post-effective amendments) to this Registration
Statement and any subsequent registration statement filed by the Company
pursuant to Rule 462(b) of the Securities Act of 1933, as fully as such person
could do in person, hereby verifying and confirming all that such
attorney-in-fact, or his substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
/S/ Daniel W. Duval
- --------------------------- Director, President and Chief August 22, 1996
Daniel W. Duval Executive Officer (principal
executive officer)
/s/ George M. Walker
- --------------------------- Vice President and Chief August 22, 1996
George M. Walker Financial Officer (principal
financial officer)
/s/ Kevin J. Brown
- --------------------------- Controller (principal August 22, 1996
Kevin J. Brown accounting officer)
/s/ Thomas P. Loftis
- --------------------------- Director August 22, 1996
Thomas P. Loftis
/s/ Maynard H. Murch, IV
- --------------------------- Director August 22, 1996
Maynard H. Murch, IV
/s/ William D. Manning, Jr.
- --------------------------- Director August 22, 1996
William D. Manning, Jr.
/s/ John N. Taylor, Jr.
- --------------------------- Director August 22, 1996
John N. Taylor, Jr.
/s/ Jerome F. Tatar
- --------------------------- Director August 22, 1996
Jerome F. Tatar
</TABLE>
II-3
<PAGE> 63
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- ---- -------------------------------------------------------------------------
<S> <C> <C> <C>
(1) UNDERWRITING AGREEMENT
1.1 Form of Underwriting Agreement........................................... 1
(4) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY
HOLDERS, INCLUDING INDENTURES
4.1 Amended Articles of Incorporation of Robbins & Myers,
Inc. were filed as Exhibit 3.1 to the Company's Quarterly Report on Form
10-Q for the quarter ended February 28, 1995............................. 2
4.2 Code of Regulations of Robbins & Myers, Inc. was filed as
Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q for the
quarter
ended February 28, 1995.................................................. 2
4.3 Indenture between Robbins & Myers, Inc. and Star Bank, N.A............... 1
4.4 Form of Note (included as part of Exhibit 4.3)........................... 1
(5) OPINION RE LEGALITY
5.1 Opinion of Thompson Hine & Flory P.L.L., counsel to the
Registrant............................................................... 1
(12) STATEMENTS RE COMPUTATIONS OF RATIOS
12.1 Computation of Ratio of Earnings to Fixed Charges........................ 1
(23) CONSENTS OF EXPERTS AND COUNSEL
23.1 Consent of Thompson Hine & Flory P.L.L., counsel to the
Registrant (contained in its opinion included as Exhibit 5.1)............ 1
23.2 Consent of Ernst & Young LLP............................................. 1
(24) POWERS OF ATTORNEY
24.1 Power of Attorney is set forth on the signature page
of the Registration Statement............................................ 1
(25) STATEMENT OF ELIGIBILITY OF TRUSTEE
25.1 Statement of Eligibility and Qualification of Star Bank, N.A............. 1
<FN>
- ---------------
1 -- Filed herewith
2 -- Incorporated by reference
</TABLE>
II-4
<PAGE> 1
EXHIBIT 1.1
$50,000,000
ROBBINS & MYERS, INC.
___% Convertible Subordinated Notes Due 2003
--------------------------------------------
UNDERWRITING AGREEMENT
New York, New York
September __, 1996
SCHRODER WERTHEIM & CO. INCORPORATED
ROBERT W. BAIRD & CO., INCORPORATED
FIRST ANALYSIS SECURITIES CORPORATION
As Representatives of the several
Underwriters named in Schedule I hereto
c/o Schroder Wertheim & Co. Incorporated
Equitable Center
787 Seventh Avenue
New York, New York 10019-6016
Dear Sirs:
ROBBINS & MYERS, INC., an Ohio corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
Underwriters named in Schedule I hereto (the "Underwriters"), $50,000,000
principal amount of its ___% Convertible Subordinated Notes Due 2003 (the "Firm
Securities"). In addition, the Company proposes to grant to the Underwriters an
option to purchase up to an additional $5,000,000 principal amount of such Notes
(the "Option Securities"), on the terms and for the purposes set forth in
Section 2 hereof. The Firm Securities and the Option Securities are herein
collectively referred to as the "Securities." Except as may be expressly set
forth below, any reference to you in this Agreement shall be solely in your
capacity as the Representatives.
1. The Company represents and warrants to, and agrees with, each of the
Underwriters that:
(a) A registration statement on Form S-3 (File No. 333- ), and
as a part thereof a preliminary prospectus, in respect of the
Securities, has been filed with the Securities and Exchange Commission
(the "Commission") in the form heretofore delivered to you and, with
the exception of exhibits to the registration statement, to you for
each of the other Underwriters; if such registration statement has not
become effective, an
<PAGE> 2
2
amendment (the "Final Amendment") to such registration statement,
including a form of final prospectus, necessary to permit such
registration statement to become effective, will promptly be filed by
the Company with the Commission; if such registration statement has
become effective and any post-effective amendment to such registration
statement has been filed with the Commission prior to the execution and
delivery of this Agreement, which amendment or amendments shall be in
form acceptable to you, the most recent such amendment has been
declared effective by the Commission; if such registration statement
has become effective, a final prospectus (the "Rule 430A Prospectus")
relating to the Securities containing information permitted to be
omitted at the time of effectiveness by Rule 430A of the rules and
regulations of the Commission under the Securities Act of 1933, as
amended (the "Act"), will promptly be filed by the Company pursuant to
Rule 424(b) of the rules and regulations of the Commission under the
Act (any preliminary prospectus filed as part of such registration
statement being herein called a "Preliminary Prospectus," such
registration statement as amended at the time that it becomes or became
effective, or, if applicable, as amended at the time the most recent
post-effective amendment to such registration statement filed with the
Commission prior to the execution and delivery of this Agreement became
effective (the "Effective Date"), including all exhibits thereto and
all information deemed to be a part thereof at such time pursuant to
Rule 430A of the rules and regulations of the Commission under the Act,
being herein called the "Registration Statement" and the final
prospectus relating to the Securities in the form first filed pursuant
to Rule 424(b)(1) or (4) of the rules and regulations of the Commission
under the Act or, if no such filing is required, the form of final
prospectus included in the Registration Statement, being herein called
the "Prospectus"); any reference herein to any Preliminary Prospectus
or the Prospectus or the Registration Statement shall be deemed to
include any information incorporated by reference therein, as of the
date of such Preliminary Prospectus, the Prospectus or the Registration
Statement, as the case may be, and any reference to any amendment or
supplement to any Preliminary Prospectus, the Prospectus or the
Registration Statement shall be deemed to include any documents filed
after such date under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and the rules and regulations of the Commission
thereunder and so incorporated by reference;
(b) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, and each
Preliminary Prospectus, at the time of filing thereof, conformed in all
material respects to the requirements of the Act and the rules and
regulations of the Commission thereunder, and did not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the Company
by an Underwriter through you expressly for use therein;
(c) On the Effective Date and the date the Prospectus is filed
with the Commission, and when any further amendment or supplements
thereto become effective or are filed with the Commission, as the case
may be, the Registration Statement, the Prospectus and such amendment
or supplements did and will conform in all material respects to the
requirements of the Act, the Trust Indenture Act of 1939, as amended
(the
<PAGE> 3
3
"Trust Indenture Act"), and the rules and regulations of the Commission
thereunder; the indenture, including any amendments and supplements
thereto, pursuant to which the Securities will be issued (the
"Indenture") will conform in all material respects with the
requirements of the Trust Indenture Act and the rules and regulations
of the Commission thereunder; and on the Effective Date and the date
the Prospectus is filed with the Commission, and when any further
amendment or supplements thereto become effective or are filed with the
Commission, as the case may be, the Registration Statement, the
Prospectus and such amendment or supplements did not and will not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that this
representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Company by an Underwriter through you
expressly for use therein;
(d) The documents incorporated by reference in the Prospectus,
when they were filed with the Commission, conformed in all material
respects to the requirements of the Exchange Act and the rules and
regulations of the Commission thereunder, and none of such documents
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading;
(e) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Ohio, with power and authority (corporate and other) to own its
properties and to conduct its business as described in the Prospectus,
and has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each
other jurisdiction in which it owns or leases property, or conducts any
business, so as to require such qualification (except where the failure
to so qualify would not have a material adverse effect on the
condition, financial or otherwise, or the business affairs or prospects
of the Company and its subsidiaries, taken as a whole); and each of the
Company's subsidiaries has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, with power and authority (corporate and
other) to own its properties and to conduct its business as described
in the Prospectus, and has been duly qualified as a foreign corporation
for the transaction of business and is in good standing under the laws
of each other jurisdiction in which it owns or leases property, or
conducts any business, so as to require such qualification (except
where the failure to so qualify would not have a material adverse
effect on the condition, financial or otherwise, or the business
affairs or prospects of the Company and its subsidiaries, taken as a
whole);
(f) Except as set forth in the Prospectus and except for
[Chemineer Asia], all the issued shares of capital stock of each
subsidiary of the Company have been duly and validly authorized and
issued, are fully paid and non-assessable and are owned by the Company
free and clear of all liens, encumbrances, equities, security
interests, or claims; and there are no outstanding options, warrants or
other rights calling for the issuance of, and there are no commitments,
plans or arrangements to issue, any shares of capital stock of any
subsidiary or any security convertible or exchangeable or exercisable
for capital stock of any subsidiary; except for the shares of stock of
each subsidiary owned by the
<PAGE> 4
4
Company, neither the Company nor any subsidiary owns, directly or
indirectly, any shares of capital stock of any corporation or has any
equity interest in any firm, partnership, joint venture, association or
other entity;
(g) The Company has all requisite power and authority to
execute, deliver and perform its obligations under this Agreement, the
Indenture and the Securities; the execution, delivery and performance
by the Company of its obligations under this Agreement have been duly
and validly authorized by all requisite corporate action of the
Company; and this Agreement constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in
accordance with its terms;
(h) Neither the Company nor any of its subsidiaries has
sustained since the date of the latest audited financial statements
included in the Prospectus, any loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental
action, order or decree, which loss or interference is material to the
Company and its subsidiaries, taken as a whole; and, since the
respective dates as of which information is given in the Registration
Statement and the Prospectus, there has not been, and prior to a
Delivery Date (as defined in Section 4 hereof) there will not be, any
change in the capital stock (other than shares issued pursuant to the
exercise of employee stock options that the Prospectus indicates are
outstanding (the "Employee Option Shares") or pursuant to the terms of
convertible securities of the Company outstanding on the date hereof or
pursuant to the terms of the Securities) or short-term debt or
long-term debt of the Company or any of its subsidiaries, or any
material adverse change, or any development involving a prospective
material adverse change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, taken as a whole,
otherwise than as set forth or contemplated in the Prospectus;
(i) The Company and its subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title
to all personal property owned by them, in each case free and clear of
all liens, encumbrances and defects except such as are described or
contemplated by the Prospectus, or such as do not materially affect the
value of such property and do not interfere with the use made and
proposed to be made of such property by the Company and its
subsidiaries, and any real property and buildings held under lease by
the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made
of such real property and buildings by the Company and its
subsidiaries;
(j) On or prior to the Firm Securities Delivery Date (as
defined in Section 4 hereof), (i) the Indenture will have been validly
authorized, executed and delivered by the Company and will constitute
the legally binding obligation of the Company, (ii) the Securities will
have been validly authorized and, upon payment therefor as provided in
this Agreement, will be validly issued and outstanding, and will
constitute legally binding obligations of the Company, entitled to the
benefits of the Indenture, (iii) the Securities, the Indenture and the
Common Shares of the Company, without par value ("Common Shares"), will
conform in all material respects to the descriptions thereof contained
in the
<PAGE> 5
5
Prospectus and (iv) the authorized Common Shares, including the Common
Shares into which the Securities will be convertible, will have been
duly authorized, the Common Shares into which the Securities will be
convertible will have been duly reserved for issuance upon such
conversion, and the issued and outstanding Common Shares are, and the
Common Shares into which the Securities will be convertible when issued
pursuant to the terms of the Indenture will be, validly issued and
outstanding, fully paid and non-assessable and free of preemptive
rights, rights of first refusal or similar rights, with no personal
liability attaching to the ownership thereof, and none of the Common
Shares into which the Securities will be convertible will be subject to
any preemptive right, right of first refusal or similar right, or any
lien, charge or encumbrance or any other claim of any third party
(other than any such lien, charge, encumbrance or claim created or
permitted by a holder thereof);
(k) The performance of this Agreement, the consummation of the
transactions herein contemplated and the issue and sale of the
Securities and the compliance by the Company with all the provisions of
this Agreement, the Indenture and the Securities will not conflict with
or result in a breach or violation of any of the terms or provisions
of, or constitute a default under, or result in the creation or
imposition of any lien, charge, claim, or encumbrance upon, any of the
property or assets of the Company or any of its subsidiaries pursuant
to, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries is bound
or to which any of the property or assets of the Company or any of its
subsidiaries is subject, nor will such action result in any violation
of the provisions of the Articles of Incorporation or the Code of
Regulations, in each case as amended to the date hereof, of the Company
or any of its subsidiaries or any statute or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of
their properties; and no consent, approval, authorization, order,
registration or qualification of or with any court or governmental
agency or body is required for the issue and sale of the Securities or
the consummation of the other transactions contemplated by this
Agreement, except the registration under the Act of the Securities, the
qualification of the Indenture under the Trust Indenture Act, and such
consents, approvals, authorizations, registrations or qualifications as
may be required under state or foreign securities or Blue Sky laws in
connection with the purchase and distribution of the Securities by the
Underwriters; there are no holders of securities of the Company who, by
reasons of the filing of the Registration Statement have the right (and
have not waived such right) to request the Company to include in the
Registration Statement securities owned by them;
(l) Except as set forth in the Prospectus, there are no legal
or governmental proceedings pending to which the Company or any of its
subsidiaries or any of their respective officers or directors is a
party or of which any property of the Company or any of its
subsidiaries is the subject, other than litigation or proceedings
incident to the business conducted by the Company and its subsidiaries
which will not individually or in the aggregate have a material adverse
effect on the current or future financial position, stockholders'
equity or results of operations of the Company and its subsidiaries,
taken as a whole; and, to the best of the Company's knowledge, no such
proceedings are threatened or contemplated by
<PAGE> 6
6
governmental authorities or threatened or contemplated by others; and
neither the Company nor any of its subsidiaries is involved in any
labor dispute, nor, to the Company's knowledge, is any labor dispute
threatened;
(m) The Company and its subsidiaries have such licenses,
permits and other approvals or authorizations of and from governmental
or regulatory authorities ("Permits") as are necessary under applicable
law to own their respective properties and to conduct their respective
businesses in the manner now being conducted and as described in the
Prospectus; and the Company and its subsidiaries have fulfilled and
performed all of their respective obligations with respect to such
Permits, and no event has occurred which allows, or after notice or
lapse of time or both would allow, revocation or termination thereof or
result in any other material impairment of the rights of the holder of
any such permits;
(n) Ernst & Young LLP who have certified certain financial
statements of the Company and its consolidated subsidiaries and
delivered their report with respect to the audited consolidated
financial statements and schedules included in the Registration
Statement and the Prospectus, are independent public accountants as
required by the Act and the rules and regulations of the Commission
thereunder;
(o) The consolidated financial statements and schedules of the
Company and its subsidiaries included or incorporated by reference in
the Registration Statement and the Prospectus present fairly the
financial condition, the results of operations and the cash flows of
the Company and its subsidiaries as of the dates and for the periods
therein specified in conformity with generally accepted accounting
principles consistently applied throughout the periods involved, except
as otherwise stated therein; and the other financial and statistical
information and data set forth in the Registration Statement and the
Prospectus is accurately presented and, to the extent such information
and data is derived from the financial statements and books and records
of the Company and its subsidiaries, is prepared on a basis consistent
with such financial statements and the books and records of the Company
and its subsidiaries; no other financial statements or schedules are
required to be included in the Registration Statement and the
Prospectus;
(p) There are no statutes or governmental regulations, or any
contracts or other documents that are required to be described in or
filed as exhibits to the Registration Statement which are not described
therein or filed or incorporated by reference as exhibits thereto; and
all such contracts to which the Company or any subsidiary is a party
have been duly authorized, executed and delivered by the Company or
such subsidiary, constitute valid and binding agreements of the Company
or such subsidiary and are enforceable against the Company or such
subsidiary in accordance with the terms thereof;
(q) The Company and its subsidiaries own or possess adequate
patent rights or licenses or other rights to use patent rights,
inventions, trademarks, service marks, trade names, copyrights,
technology and know-how necessary to conduct the general business
now or proposed to be operated by them as described in the Prospectus;
neither the Company nor any of its subsidiaries has received any notice
of infringement of or conflict with asserted rights of others with
respect to any patent, patent rights, inventions, trademarks, service
marks, trade names, copyrights, technology or know-how which, singly or
in the aggregate, could materially adversely affect the business,
operations,
<PAGE> 7
7
financial condition, income or business prospects of the Company and
its subsidiaries considered as a whole; and, the discoveries,
inventions, products or processes of the Company and its subsidiaries
referred to in the Prospectus do not, to the Company's knowledge,
infringe or conflict with any patent or right of any third party, or
any discovery, invention, product or process which is the subject of a
patent application filed by any third party, known to the Company;
(r) Neither the Company nor any of and its subsidiaries are in
violation of any term or provision of its Articles of Incorporation or
Code of Regulations (or similar corporate constituent documents), in
each case as amended to the date hereof, or any law, ordinance,
administrative or governmental rule or regulation applicable to the
Company or any of its subsidiaries, or of any decree of any court or
governmental agency or body. having jurisdiction over the Company or
any of its subsidiaries;
(s) No default exists, and no event has occurred which with
notice or lapse of time, or both, would constitute a default in the due
performance and observance of any term, covenant or condition of any
indenture, mortgage, deed of trust, bank loan or credit agreement,
lease or other agreement or instrument to which the Company or any of
its subsidiaries is a party or by which any of them or their respective
properties is bound or may be affected in any material adverse respect
with regard to the property, business or operations of the Company and
its subsidiaries;
(t) The Company and its subsidiaries have timely filed all
necessary tax returns and notices and have paid all federal, state,
county, local and foreign taxes of any nature whatsoever for all tax
years through August 31, 1995, to the extent such taxes have become
due. The Company has no knowledge, or any reasonable grounds to know,
of any tax deficiencies which would have a material adverse effect on
the Company or any of its subsidiaries; the Company and its
subsidiaries have paid all taxes which have become due, whether
pursuant to any assessments, or otherwise, and there is no further
liability (whether or not disclosed on such returns) or assessments for
any such taxes, and no interest or penalties accrued or accruing with
respect thereto, except as may be set forth or adequately reserved for
in the financial statements included or incorporated by reference in
the Registration Statement; the amounts currently set up as provisions
for taxes or otherwise by the Company and its subsidiaries on their
books and records are sufficient for the payment of all their unpaid
federal, foreign, state, county and local taxes accrued through the
dates as of which they speak, and for which the Company and its
subsidiaries may be liable in their own right, or as a transferee of
the assets of, or as successor to any other corporation, association,
partnership, joint venture or other entity;
(u) The Company and its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with
management's general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted
only in accordance with management's general or specific authorization;
and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences;
<PAGE> 8
8
(v) Neither the Company nor any of its subsidiaries is in
violation of any foreign, federal, state or local law or regulation
relating to the protection of human health and safety, the environment
or hazardous or toxic substances or wastes, pollutants or contaminants,
nor any federal or state law relating to discrimination in the hiring,
promotion or paying of employees nor any applicable federal or state
wages and hours laws, nor any provisions of the Employee Retirement
Income Security Act of 1974, as amended, or the rules and regulations
promulgated thereunder, where such violation would have a material
adverse effect on the Company and its subsidiaries, taken as a whole;
(w) None of the Company or its subsidiaries, or its officers,
directors, employees or agents has used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expense
relating to political activity, or made any unlawful payment of funds
of the Company or any subsidiary or received or retained any funds in
violation of any law, rule or regulation;
(x) None of the Company or its subsidiaries, or its officers,
directors, employees or agents have taken or will take, directly or
indirectly, any action designed to or which has constituted or that
might be reasonably be expected to cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate
the sale or resale of the Securities; and
(y) The conditions for use of Form S-3 as set forth in the
General Instructions thereto, have been satisfied.
2. Subject to the terms and conditions herein set forth, the Company
agrees to sell to each of the Underwriters, severally and not jointly, and each
of the Underwriters, severally and not jointly, agrees to purchase the principal
amount of Securities set opposite that Underwriter's name in Schedule 1 hereto
at a purchase price equal to ___% of the principal amount thereof, plus accrued
interest, if any, from September __, 1996 to the Firm Securities Delivery Date.
In addition, subject to the terms and conditions herein set forth, the
Company agrees to sell to the Underwriters, severally and not jointly, as
required (for the sole purpose of covering over-allotments in the sale of the
Firm Securities), up to $5,000,000 principal amount of Option Securities at a
purchase price equal to ___% of the principal amount thereof, plus accrued
interest, if any, from September __, 1996 to the Option Securities Delivery
Date. The right to purchase the Option Securities may be exercised by your
giving 48 hours' prior written or telephonic notice (subsequently confirmed in
writing) to the Company of your determination to purchase all or a portion of
the Option Securities. Such notice may be given at any time within a period of
30 days following the date of this Agreement. Option Securities shall be
purchased severally for the account of each Underwriter in proportion to the
principal amount of Firm Securities set forth opposite the name of such
Underwriter in Schedule I hereto. No Option Securities shall be delivered to or
for the accounts of the Underwriters unless the Firm Securities shall be
simultaneously delivered or shall theretofore have been delivered as herein
provided. The respective purchase obligations of each Underwriter shall be
adjusted by you so that no Underwriter shall be obligated to purchase Option
Securities other than in principal amounts which are integral multiples of
$1,000. The Underwriters may cancel any purchase of Option Securities at any
time prior to the Option Securities Delivery Date (as defined in Section 4
hereof) giving by written notice of such cancellation to the Company.
<PAGE> 9
9
3. The Underwriters propose to offer the Securities for sale upon the
terms and conditions set forth in the Prospectus.
4. The Firm Securities, in definitive form, to be purchased by each
Underwriter hereunder shall be delivered by or on behalf of the Company to you
for the account of such Underwriter, against payment by such Underwriter or on
its behalf of the purchase price therefor by certified or official bank check or
checks, payable in next-day funds, to the order of the Company, for the purchase
price of the Firm Securities being sold by the Company at the office of Schroder
Wertheim & Co. Incorporated, Equitable Center, 787 Seventh Avenue, New York, New
York, at 9:30 A.M., New York City time, on September __, 1996, or at such other
time, date and place as you and the Company may agree upon in writing, such time
and date being herein called the "Firm Securities Delivery Date."
The Option Securities, in definitive form, to be purchased by each
Underwriter hereunder shall be delivered by or on behalf of the Company to you
for the account of such Underwriter, against payment by such Underwriter or on
its behalf of the purchase price thereof by certified or official bank check or
checks, payable in next-day funds, to the order of the Company, for the purchase
price of the Option Securities, in New York, New York, at such time and on such
date (not earlier than the Firm Securities Delivery Date nor later than ten
business days after giving of the notice delivered by you to the Company with
reference thereto) and in such denominations and registered in such names as
shall be specified in the notice delivered by you to the Company with respect to
the purchase of such Option Securities. The date and time of such delivery and
payment are herein sometimes referred to as the "Option Securities Delivery
Date" (and either of the Option Securities Delivery Date or the Firm Securities
Delivery Date may be referred to herein as a "Delivery Date").
The Firm Securities and the Option Securities so to be delivered will
be in good delivery form, and in such denominations and registered in such names
as you may request not less than 48 hours prior to the applicable Delivery Date,
respectively. Such Securities will be made available for checking and packaging
in New York, New York, at least 24 hours prior to the applicable Delivery Date.
5. The Company covenants and agrees with each of the Underwriters:
(a) If the Registration Statement has not become effective, to
file promptly the Final Amendment with the Commission and use its best
efforts to cause the Registration Statement to become effective; if the
Registration Statement has become effective, to file promptly the Rule
430A Prospectus with the Commission; to make no further amendment or
any supplement to the Registration Statement or Prospectus which shall
be disapproved by you after reasonable notice thereof; to advise you,
promptly after it receives notice thereof of the time when the
Registration Statement, or any amendment thereto, or any amended
Registration Statement has become effective or any supplement to the
Prospectus or any amended Prospectus has been filed, of the issuance by
the Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus, of
the suspension of the qualification of the Securities for offering or
sale in any jurisdiction, of the initiation or threatening of any
proceeding for any such purpose, or of any request by the Commission
for the amending or supplementing of the Registration Statement or
Prospectus or for additional information; and in the event of the
<PAGE> 10
10
issuance of any stop order or of any order preventing or suspending the
use of any Preliminary Prospectus or the Prospectus or suspending any
such qualification, to use promptly its best efforts to obtain
withdrawal of such order;
(b) Promptly from time to time to take such action as you may
request to qualify the Securities for offering and sale under the
securities laws of such jurisdictions as you may request and to comply
with such laws so as to permit the continuance of sales and dealings
therein in such jurisdictions for as long as may be necessary to
complete the distribution, provided that in connection therewith the
Company shall not be required to qualify as a foreign corporation or to
file a general consent to service of process in any jurisdiction;
(c) To furnish the Representatives and counsel for the
Underwriters, without charge, signed copies of the registration
statement originally filed with respect to the Securities and each
amendment thereto (in each case including all exhibits thereto) and to
each other Underwriter, without charge, a conformed copy of such
registration statement and each amendment thereto (in each case without
exhibits thereto, other than the Indenture, this Agreement and the
computation of the ratio of earnings to fixed charges) and, so long as
a prospectus relating to the Securities is required to be delivered
under the Act, as many copies of each Preliminary Prospectus, the
Prospectus and all amendments or supplements thereto as you may from
time to time reasonably request. If at any time when a prospectus is
required to be delivered under the Act an event shall have occurred as
a result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any
material fact necessary in order to make statements therein, in the
light of the circumstances under which they were made when such
Prospectus is delivered, not misleading, or if for any other reason it
shall be necessary to amend or supplement the Prospectus in order to
comply with the Act, the Company will forthwith prepare and, subject to
the provisions of Section 5(a) hereof, file with the Commission an
appropriate supplement or amendment thereto, and will furnish to each
Underwriter and to any dealer in securities, without charge, as many
copies as you may from time to time reasonably request of an amended
Prospectus or a supplement to the Prospectus or make an appropriate
filing under Section 13, 14 or 15(d) of the Exchange Act which will
correct such statement or omission or effect such compliance in
accordance with the requirements of Section 10 of the Act;
(d) To make generally available to its stockholders as soon as
practicable, but in any event not later than 45 days after the close of
the period covered thereby, an earning statement in form complying with
the provisions of Section 11(a) of the Act covering a period of 12
consecutive months beginning not later than the first day of the
Company's fiscal quarter next following the Effective Date;
(e) To file promptly all documents required to be filed with
the Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act
subsequent to the Effective Date and during any period when the
Prospectus is required to be delivered;
(f) For a period of five years from the Effective Date, to
furnish to its stockholders after the end of each fiscal year an annual
report (including a consolidated balance sheet and statements of
income, cash flow and stockholders' equity of the
<PAGE> 11
11
Company and its subsidiaries certified by independent public
accountants) and, as soon as practicable after the end of each of the
first three quarters of each fiscal year (beginning with the fiscal
quarter ending after the Effective Date), consolidated summary
financial information of the Company and its subsidiaries for such
quarter in reasonable detail;
(g) During a period of five years from the Effective Date, to
furnish to you copies of all reports or other communications (financial
or other) furnished to its stockholders, and deliver to you (i) as soon
as they are available, copies of any reports and financial statements
furnished to or filed with the Commission, the Nasdaq National Market
or any national securities exchange on which any class of securities of
the Company is listed; and (ii) such additional information concerning,
the business and financial condition of the Company as you may from
time to time reasonably request in connection with your obligations
hereunder;
(h) To apply the net proceeds from the sale of the Securities
in the manner set forth in the Prospectus under the caption "Use of
Proceeds";
(i) That it will not, and will cause its subsidiaries,
officers, directors, employees, agents and affiliates not to, take,
directly or indirectly, any action designed to cause or result in, or
that might reasonably be expected to cause or result in stabilization
or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities;
(j) During the period beginning on the date hereof and
continuing until the Underwriters have completed their distribution of
the Securities, the Company will not offer, sell, contract to sell or
otherwise dispose of any (i) debt securities of the Company with
maturities longer than one year, other than the Securities to the
Underwriters, or (ii) shares of capital stock of the Company (or
securities convertible into, or exchangeable for, capital stock of the
Company), directly or indirectly, without the prior written consent of
Schroder Wertheim & Co. Incorporated, except for grants of stock
options under the Company's employee stock option plan, or other
issuances of capital stock pursuant to existing employee or director
plans or the Company's proposed dividend reinvestment plan or pursuant
to the terms of convertible securities of the Company outstanding on
the date hereof or pursuant to the terms of the Securities;
(k) That prior to any Delivery Date there will not be any
change in the capital stock or material change in the short-term debt
or long-term debt of the Company or any of its subsidiaries, or any
material adverse change, or any development involving a prospective
material adverse change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of
operations of the Company or any of its subsidiaries, otherwise than as
set forth or contemplated in the Prospectus; and
(l) That it has caused the Common Shares issuable upon
conversion of the Securities to be authorized for quotation on the
Nasdaq National Market upon notice of issuance.
<PAGE> 12
12
6. The Company covenants and agrees with the several Underwriters that
the Company will pay or cause to be paid: (i) the fees, disbursements and
expenses of counsel and accountants for the Company, and all other expenses, in
connection with the preparation, printing and filing of the Registration
Statement and the Prospectus and amendments and supplements thereto and the
furnishing of copies thereof, including charges for mailing, air freight and
delivery and counting and packaging thereof and of any Preliminary Prospectus
and related offering documents to the Underwriters and dealers; (ii) the cost of
printing this Agreement, the Agreement Among Underwriters, the Selling
Agreement, communications with the Underwriters and selling group and the
Preliminary and Supplemental Blue Sky Memoranda and any other documents in
connection with the offering, purchase, sale and delivery of the Securities;
(iii) all expenses in connection with the qualification of the Securities for
offering and sale under securities laws as provided in Section 5(b) hereof,
including filing and registration fees and the fees, disbursements and expenses
for counsel for the Underwriters in connection with such qualification and in
connection with Blue Sky surveys or similar advice with respect to sales; (iv)
the filing fees incident to, and the fees and disbursements of counsel for the
Underwriters in connection with, securing any required review by the National
Association of Securities Dealers, Inc. of the terms of the sale of the
Securities; (v) all fees and expenses in connection with the quotation of the
Common Shares issuable upon conversion of the Securities on the Nasdaq National
Market; (vi) all fees paid to rating agencies in connection with the rating of
the Securities; and (vii) all other costs and expenses incident to the
performance of their obligations hereunder which are not otherwise specifically
provided for in this Section 6, including the fees of the Company's Transfer
Agent and Registrar, the cost of any stock issue or transfer taxes on sale of
the Securities to the Underwriters, the cost of the Company's personnel and
other internal costs, the cost of printing and engraving the certificates
representing the Securities and all expenses and taxes incident to the sale and
delivery of the Securities to be sold by the Company to the Underwriters
hereunder. It is understood, however, that, except as provided in this Section,
Section 8 and Section 11 hereof, the Underwriters will pay all their own costs
and expenses, including the fees of their counsel, stock transfer taxes on
resale of any of the Securities by them, and any advertising expenses connected
with any offers they may make.
7. The obligations of the Underwriters hereunder shall be subject, in
their discretion, to (i) the condition that all representations and warranties
and other statements of the Company herein are true and correct, when made and
on each Delivery Date, (ii) the condition that the Company shall have performed
all its obligations hereunder theretofore to be performed and (iii) the
following additional conditions:
(a) The Registration Statement shall have become effective,
and you shall have received notice thereof not later than 10:00 P.M.,
New York City time, on the date of execution of this Agreement, or at
such other time as you and the Company may agree; if required, the
Prospectus shall have been filed with the Commission in the manner and
within the time period required by Rule 424(b); no stop order
suspending the effectiveness of the Registration Statement shall have
been issued and no proceeding for that purpose shall have been
initiated or threatened by the Commission; and all requests for
additional information on the part of the Commission shall have been
complied with to your reasonable satisfaction;
(b) All corporate proceedings and related legal and other
matters in connection with the organization of the Company and the
registration, authorization, issue, sale and
<PAGE> 13
13
delivery of the Securities shall have been reasonably satisfactory to
Simpson Thacher & Bartlett (a partnership which includes professional
corporations), counsel to the Underwriters, and Simpson Thacher &
Bartlett shall have been timely furnished with such papers and
information as they may reasonably have requested to enable them to
pass upon the matters referred to in this subsection;
(c) You shall not have advised the Company that the
Registration Statement or Prospectus, or any amendment or supplement
thereto, contains an untrue statement of fact or omits to state a fact
which in your judgment is in either case material and in the case of an
omission is required to be stated therein or is necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading;
(d) Thompson, Hine & Flory P.L.L., counsel to the Company,
shall have furnished to you their written opinion, dated such Delivery
Date, in form and substance satisfactory to you, to the effect that:
(i) The Company has been duly and validly
incorporated and is validly existing as a corporation in good
standing under the laws of the State of Ohio, and is qualified
to do business and is in good standing in each jurisdiction in
which its ownership or leasing of properties requires such
qualification or the conduct of its business requires such
qualification (except where the failure to so qualify would
not have a material adverse effect on the condition, financial
or otherwise, or the business affairs or prospects of the
Company and its subsidiaries, taken as a whole); and the
Company has all necessary corporate power and all material
governmental authorizations, permits and approvals required to
own, lease and operate its properties and conduct its business
as described in the Prospectus;
(ii) Each of the Company's domestic subsidiaries and
Robbins & Myers U.K. Ltd. and Pfaudler Werke GmbH has been
duly and validly incorporated and is validly existing as a
corporation in good standing under the laws of the
jurisdiction of its incorporation, and is qualified to do
business and is in good standing in each jurisdiction in which
its ownership or leasing of properties requires such
qualification or the conduct of its business requires such
qualification (except where the failure to so qualify would
not have a material adverse effect on the condition, financial
or otherwise, or the business affairs or prospects of the
Company and its subsidiaries, taken as a whole); and each such
subsidiary has all necessary corporate power and all material
governmental authorizations, permits and approvals required to
own, lease and operate its properties and to conduct its
business as described in the Prospectus;
(iii) All the outstanding shares of capital stock
of each of the Company's domestic subsidiaries and Robbins &
Myers U.K. Ltd. and Pfaudler Werke GmbH have been duly
authorized and are validly issued and outstanding, are fully
paid and non-assessable and, except as otherwise set forth in
the Prospectus, are owned by the Company of record and to the
best knowledge of such counsel, (A) beneficially and (B) free
and clear of all liens, encumbrances, equities, security
interests or claims of any nature whatsoever; and neither the
Company nor any of its subsidiaries has granted any
outstanding options, warrants or commitments with
<PAGE> 14
14
respect to any shares of its capital stock, whether issued or
unissued, except as otherwise described in the Prospectus;
(iv) The Indenture has been validly authorized by
the Company, duly executed and delivered by the Company and
the Trustee and duly qualified under the Trust Indenture Act
and is a valid and legally binding instrument of the Company,
enforceable against the Company in accordance with its terms,
subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and
fair dealing;
(v) The Securities has been validly authorized,
duly executed by authorized officers of the Company, duly
authenticated by the Trustee or the authenticating agent and
delivered, and are the validly issued, outstanding and legally
binding obligations of the Company, entitled to the benefits
of the Indenture and enforceable against the Company in
accordance with their terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law) and
an implied covenant of good faith and fair dealing; and the
Securities are in valid and sufficient form;
(vi) The Company has an authorized capitalization
as set forth in the Registration Statement and all of the
authorized Common Shares, including the Common Shares into
which the Securities are convertible, have been duly
authorized, all of the Common Shares into which the Securities
are convertible have been duly reserved for issuance upon such
conversion, and all of the issued and outstanding Common
Shares are, and all the Common Shares into which the
Securities are convertible, when issued pursuant to the
Indenture, will be, validly issued and outstanding, fully paid
and nonassessable, with no personal liability attaching to the
ownership thereof; all of the outstanding Common Shares were
issued and sold in compliance with all applicable Federal and
state securities laws; except as described in the Prospectus
and except with respect to existing employee and director
plans and the Company's proposed dividend reinvestment plan,
to the knowledge of such counsel, there are no outstanding
options, warrants or other rights calling for the issuance of,
and there are no commitments, plans or arrangements to issue,
any shares of capital stock of the Company;
(vii) To the best of such counsel's knowledge,
except as set forth in the Prospectus, there are no legal or
governmental proceedings pending or threatened to which the
Company or any of its subsidiaries or any of their respective
officers or directors is a party or of which any property of
the Company or any of its subsidiaries is the subject which,
if resolved against the Company or any of its subsidiaries or
any of their respective officers or directors, individually,
or to the extent involving related claims or issues, in the
aggregate, is of a character required to be disclosed in the
Prospectus which has not been properly disclosed therein;
<PAGE> 15
15
(viii) This Agreement has been duly authorized,
executed and delivered by the Company and is a legal, valid
and binding agreement of the Company;
(ix) The Company has full corporate power and
authority to execute, deliver and perform this Agreement and
the Indenture, and the execution, delivery and performance of
this Agreement and the Indenture, the consummation of the
transactions herein and therein contemplated and the issue and
sale of the Securities and the compliance by the Company with
all the provisions of this Agreement, the Indenture and the
Securities will not conflict with, or result in a breach of
any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of any lien,
charge, claim or encumbrance upon any of the property or
assets of the Company or any of its subsidiaries pursuant to,
the terms of any indenture, mortgage, deed of trust, loan
agreement or other material agreement or instrument known to
such counsel to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries
is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, nor will such
action result in any violation of the provisions of the
Articles of Incorporation or the Code of Regulations, in each
case as amended, of the Company or any of its subsidiaries, or
any statute or any order, rule or regulation known to such
counsel of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or
any of their properties;
(x) No consent, approval, authorization, order,
registration or qualification of or with any court or any
regulatory authority or other governmental body is required
for the issue and sale of the Securities or the consummation
of the other transactions contemplated by this Agreement and
the Indenture, except such as have been obtained under the Act
and such consents, approvals, authorizations, registrations or
qualifications as may be required under state or foreign
securities or Blue Sky laws in connection with the purchase
and distribution of the Securities by the Underwriters;
(xi) To the best of such counsel's knowledge,
neither the Company nor any of its subsidiaries is currently
in violation of its Articles of Incorporation or Code of
Regulations or in default under any indenture, mortgage, deed
of trust, lease, bank loan or credit agreement or any other
agreement or instrument of which such counsel has knowledge to
which the Company or any of its subsidiaries is a party or by
which any of them or any of their property may be bound or
affected (in any respect that is material in light of the
financial condition of the Company and its subsidiaries, taken
as a whole);
(xii) As described in the Prospectus, there are no
preemptive or other rights to subscribe for or to purchase,
nor any restriction upon the voting or transfer of, any
Securities or Common Shares issuable upon conversion thereof,
pursuant to the Company's Articles of Incorporation or Code of
Regulations, in each case as amended to the date hereof, or
any agreement or other instrument known to such counsel; and
no holders of securities of the Company have rights
<PAGE> 16
16
to the registration thereof under the Registration Statement
or, if any such holders have such rights, such holders have
waived such rights;
(xiii) To the extent summarized therein, all
contracts and agreements summarized in the Registration
Statement and the Prospectus are fairly summarized therein,
conform in all material respects to the descriptions thereof
contained therein, and, to the extent such contracts or
agreements or any other material agreements are required under
the Act or the rules and regulations thereunder to be filed or
incorporated by reference therein, as exhibits to the
Registration Statement, they are so filed or incorporated by
reference; and such counsel does not know of any contracts or
other documents required to be summarized or disclosed in the
Prospectus or to be so filed or incorporated by reference as
an exhibit to the Registration Statement, which have not been
so summarized or disclosed, or so filed or incorporated by
reference;
(xiv) All descriptions in the Prospectus of
statutes, regulations or legal or governmental proceedings are
fair summaries thereof and fairly present the information
required to be shown with respect to such matters;
(xv) Nothing has come to such counsel's attention
to give such counsel reason to believe that any of the
representations and warranties of the Company contained in
this Agreement or in any certificate or document contemplated
under this Agreement to be delivered are not true or correct
or that any of the covenants and agreements herein contained
to be performed on the part of the Company or any of the
conditions herein contained, or set forth in the Registration
Statement and the Prospectus, to be fulfilled or complied with
by the Company have not been or will not be duly and timely
performed, fulfilled or complied with; and
(xvi) The Registration Statement has become
effective under the Act, the Prospectus has been filed in
accordance with Rule 424(b) of the rules and regulations of
the Commission under the Act, including the applicable time
periods set forth therein, or such filing is not required and,
to the best knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been
instituted or are pending or threatened under the Act, and the
Registration Statement, the Prospectus and each amendment or
supplement thereto, as of their respective effective or issue
dates, complied as to form in all material respects with the
requirements of the Act, the Trust Indenture Act and the rules
and regulations thereunder, it being understood that such
counsel need express no opinion as to the financial statements
and schedules or other financial data contained or
incorporated by reference in the Registration Statement or the
Prospectus; the documents incorporated by reference in the
Prospectus comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations
of the Commission thereunder, it being understood that such
counsel need express no opinion as to the financial statements
and schedules or other financial data contained or
incorporated by reference in such documents incorporated by
reference; and the condition for use of Form S-3 set forth in
the General Instructions thereto have been satisfied;
<PAGE> 17
17
(xvii) The Securities, the Indenture and the Common
Shares conform as to legal matters, in all material respects,
to the statements concerning them in the Registration
Statement and the Prospectus.
Such counsel shall also state that nothing has come to such
counsel's attention that would lead such counsel to believe that either
the Registration Statement or any amendment or supplement thereto, at
the time such Registration Statement or amendment or supplement became
effective and as of such Delivery Date, or the Prospectus or any
amendment or supplement thereto, as of its date and as of such Delivery
Date, contains or contained any untrue statement of a material fact or
omitted or omits to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
In rendering their opinions set forth in Section 7(d) above, such
counsel may rely, to the extent deemed advisable by such counsel (a) as
to factual matters, upon certificates of public officials and officers
of the Company and (b) as to the laws of any jurisdiction other than
the United States and jurisdictions in which they are admitted, on
opinions of counsel (provided, however, that you shall have received a
copy of each of such opinions which shall be dated such Delivery Date,
addressed to you or otherwise authorizing you to rely thereon, and
Thompson, Hine & Flory P.L.L., in their opinion to you delivered
pursuant to this subsection, shall state that such counsel are
satisfactory to them and they have no reason to believe that the
Underwriters and they are not justified to so rely);
(e) Simpson Thacher & Bartlett, counsel to the Underwriters,
shall have furnished to you their written opinion or opinions, dated
such Delivery Date, in form and substance satisfactory to you, with
respect to the incorporation of the Company, the validity of the
Securities, the Registration Statement, the Prospectus and other
related matters as you may reasonably request, and such counsel shall
have received such papers and information as they may reasonably
request to enable them to pass upon such matters;
(f) With respect to the letter of Ernst & Young LLP delivered
to the Representatives concurrently with the execution of this
Agreement (the "initial letter"), the Company shall have furnished to
the Representatives a letter (as used in this paragraph, the
"bring-down letter") of such accountants, addressed to the Underwriters
and dated such Delivery Date (i) confirming that they are independent
public accountants within the meaning of the Act and are in compliance
with the applicable requirements relating to the qualification of
accountants under Rule 2-01 of Regulation S-X of the Commission, (ii)
stating, as of the date of the bring-down letter (or, with respect to
matters involving changes or developments since the respective dates as
of which specified financial information is given in the Prospectus, as
of a date not more than five days prior to the date of the bring-down
letter), the conclusions and findings of such firm with respect to the
financial information and other matters covered by the initial letter
and (iii) confirming in all material respects the conclusions and
findings set forth in the initial letter.
(g) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus, any loss or
interference with its business from fire, explosion, flood or other
<PAGE> 18
18
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree; and since the
respective dates as of which information is given in the Prospectus,
there shall not have been any change in the capital stock (other than
shares issued pursuant to the exercise of Employee Option Shares or
pursuant to employee or director plans or the Company's proposed
dividend reinvestment plan or pursuant to the terms of convertible
securities of the Company outstanding on the date hereof or pursuant to
the terms of the Securities) or short-term debt or long-term debt of
the Company or any of its subsidiaries nor any change or any
development involving a prospective change, in or affecting the general
affairs, management, financial position, stockholders' equity or
results of operations of the Company and its subsidiaries, otherwise
than as set forth or contemplated in the Prospectus, the effect of
which, in any such case is in your judgment so material and adverse as
to make it impracticable or inadvisable to proceed with the public
offering or the delivery of the Securities on the terms and in the
manner contemplated in the Prospectus;
(h) Between the date hereof and such Delivery Date there shall
have been no declaration of war by the Government of the United States;
on such Delivery Date there shall not have occurred any material
adverse change in the financial or securities markets in the United
States or in political, financial or economic conditions in the United
States or any outbreak or material escalation of hostilities or other
calamity or crisis, the effect of which is such as to make it, in the
judgment of the Representatives, impracticable to market the Securities
or to enforce contracts for the resale of Securities and no event shall
have occurred resulting in (i) trading in securities generally on the
New York Stock Exchange or in the Common Shares on the principal
securities exchange or market in which the Common Shares are listed or
quoted being suspended or limited or minimum or maximum prices being
generally established on such exchange or market, or (ii) additional
material governmental restrictions, not in force on the date of this
Agreement, being imposed upon trading in securities generally by the
New York Stock Exchange or in the Common Shares on the principal
securities exchange or market in which the Common Shares are listed or
quoted or by order of the Commission or any court or other governmental
authority, or (iii) a general banking moratorium being declared by
either Federal or New York authorities;
(i) The Company shall have furnished or caused to be furnished
to you on such Delivery Date certificates signed by the chief executive
officer and the chief financial officer, on behalf of the Company,
satisfactory to you as to such matters as you may reasonably request
and as to (i) the accuracy of the Company's representations and
warranties herein at and as of such Delivery Date and (ii) the
performance by the Company of all its obligations hereunder to be
performed at or prior to such Delivery Date; the Company shall have
furnished or caused to be furnished to you on such Delivery Date
certificates signed by the chief executive officer and the chief
financial officer, on behalf of the Company, as to (i) the fact that
they have carefully examined the Registration Statement and Prospectus
and, (a) as of the Effective Date, the statements contained or
incorporated by reference in the Registration Statement and the
Prospectus were true and correct and neither the Registration Statement
nor the Prospectus omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading and (b) since the Effective Date, no event has occurred that
is required by the Act or the rules and regulations of the Commission
thereunder to be set
<PAGE> 19
19
forth in an amendment of, or a supplement to, the Prospectus that has
not been set forth in such an amendment or supplement; and (ii) the
matters set forth in subsection (a) of this Section 7; and
(j) The Company shall have delivered to you evidence that the
Common Shares issuable upon conversion of the Securities have been
authorized for quotation on the Nasdaq National Market upon notice of
issuance.
8. (a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon (i) any untrue statement or alleged untrue statement of a
material fact contained or incorporated by reference in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any amendment or
supplement thereto, or in any Blue Sky application or other document executed by
the Company specifically for that purpose or based upon written information
furnished by the Company filed in any state or other jurisdiction in order to
qualify any or all the Securities under the securities laws thereof or filed
with the Commission or any securities association or securities exchange (each,
an "Application"), or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
made or incorporated by reference therein not misleading, or (ii) any untrue
statement or alleged untrue statement made by the Company in Section 1 of this
Agreement, or (iii) the employment by the Company of any device, scheme or
artifice to defraud, or the engaging by the Company in any act, practice
or course of business which operates or would operate as a fraud or deceit, or
any conspiracy with respect thereto, in which the Company shall participate, in
connection with the issuance and sale of any of the Securities, and will
reimburse each Underwriter for any legal or other expenses reasonably incurred
by such Underwriter in connection with investigating, preparing to defend,
defending or appearing as a third-party witness in connection with any such
action or claim; provided, however, that the Company shall not be liable in any
such case to the extent that any such loss, claim, damage or liability arises
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission relating to an Underwriter made in any Preliminary
Prospectus, the Registration Statement, the Prospectus or such amendment or
supplement or any Application in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through you expressly
for use therein; and provided, further, that, the indemnity agreement contained
in this Section 8(a) with respect to any Preliminary Prospectus shall not inure
to the benefit of any Underwriter (or any persons controlling such Underwriter)
on account of any losses, claims, damages, liabilities or litigation arising
from the sale of Securities to any person, if such Underwriter fails to send or
give a copy of the Prospectus, as the same may be then supplemented or amended,
to such person, within the time required by the Act and the untrue statement or
alleged untrue statement or omission or alleged omission to state a material
fact contained in such Preliminary Prospectus was corrected in the Prospectus,
unless such failure is the result of noncompliance by the Company with Section
5(c) hereof.
(b) In addition to any obligations of the Company under Section 8(a),
the Company agrees that it shall perform its indemnification obligations under
Section 8(a) (as modified by the last paragraph of this Section 8(b)) with
respect to counsel fees and expenses and other expenses reasonably incurred by
making payments within 45 days to the Underwriters in the amount of the
statements of the Underwriters' counsel or other statements which shall be
forwarded by the
<PAGE> 20
20
Underwriters, and that they shall make such payments notwithstanding the absence
of a judicial determination as to the propriety and enforceability of the
obligation to reimburse the Underwriters for such expenses and the possibility
that such payments might later be held to have been improper by a court and a
court orders return of such payments.
The indemnity agreement in Section 8(a) shall be in addition to any
liability which the Company may otherwise have and shall extend upon the same
terms and conditions to each person, if any, who controls any Underwriter within
the meaning of the Act or the Exchange Act.
(c) Each Underwriter will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the Company may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or any amendment or supplement thereto, or any Application, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in any Preliminary Prospectus, the Registration Statement, the
Prospectus or such amendment or supplement or any Application in reliance upon
and in conformity with written information furnished to the Company by such
Underwriter relating to such Underwriter through you expressly for use therein,
and will reimburse the Company for any legal or other expenses reasonably
incurred by the Company in connection with investigating or defending any such
action or claim.
The indemnity agreement in this Section 8(c) shall be in addition to
any liability which the respective Underwriters may otherwise have and shall
extend, upon the same terms and conditions, to each officer and director of the
Company and to each person, if any, who controls the Company within the meaning
of the Act or the Exchange Act.
(d) Promptly after receipt by an indemnified party under Section 8(a)
or 8(c) of notice of the commencement of any action (including any governmental
investigation), such indemnified party shall, if a claim in respect thereof is
to be made against the indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but the omission so
to notify the indemnifying party shall not relieve it from any liability which
it may have to any indemnified party under Section 8(a) or 8(c) except to the
extent it was unaware of such action and has been prejudiced in any material
respect by such failure or from any liability which it may have to any
indemnified party otherwise than under such Section 8(a) or 8(c). In case any
such action shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate therein and, to the extent that it shall wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party under such subsection for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. If, however, (i) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party or (ii) an indemnified party
<PAGE> 21
21
shall have reasonably concluded that representation of such indemnified party
and the indemnifying party by the same counsel would be inappropriate under
applicable standards of professional conduct due to actual or potential
differing interests between them and the indemnified party so notifies the
indemnifying party, then the indemnified party shall be entitled to employ
counsel different from counsel for the indemnifying party at the expense of the
indemnifying party and the indemnifying party shall not have the right to assume
the defense of such indemnified party. In no event shall the indemnifying
parties be liable for fees and expenses of more than one counsel (in addition to
local counsel) for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same set of allegations or circumstances. The counsel with respect to which
fees and expenses shall be so reimbursed shall be designated in writing by
Schroder Wertheim & Co. Incorporated in the case of parties indemnified pursuant
to Section 8(a) and by the Company in the case of parties indemnified pursuant
to Section 8(c).
If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel as contemplated by Section 8(b), the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in accordance
with such request prior to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(e) In order to provide for just and equitable contribution under the
Act in any case in which (i) any Underwriter (or any person who controls any
Underwriter within the meaning of the Act or the Exchange Act) makes claim for
indemnification pursuant to Section 8(a) hereof, but is judicially determined
(by the entry of a final judgment or decree by a court of competent jurisdiction
and the expiration of time to appeal or the denial of the last right of appeal)
that such indemnification may not be enforced in such case notwithstanding the
fact that Section 8(a) provides for indemnification in such case or (ii)
contribution under the Act may be required on the part of any Underwriter or any
such controlling person in circumstances for which indemnification is provided
under Section 8(c), then, and in each such case, each indemnifying party shall
contribute to the aggregate losses, claims, damages or liabilities to which they
may be subject as an indemnifying party hereunder (after contribution from
others) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriters on the other from
the offering of the Securities. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if the
indemnified party failed to give the notice required under Section 8(d) above,
then each indemnifying party shall contribute to such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the Company on the one
hand and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering of the Securities purchased
<PAGE> 22
22
under this Agreement (before deducting expenses) received by the Company bear to
the total underwriting discounts and commissions received by the Underwriters
with respect to the Securities purchased under this Agreement, in each case as
set forth in the table on the cover page of the Prospectus. The relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company on the
one hand or the Underwriters on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Underwriters agree that it would not
be just and equitable if contributions pursuant to this Section 8(e) were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section
8(e). The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions in respect thereof) referred
to above in this Section 8(e) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8(e), no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the
Securities underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of a fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this Section 8(e) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(f) Promptly after receipt by any party to this Agreement of notice of
the commencement of any action, suit or proceeding, such party will, if a claim
for contribution in respect thereof is to be made against another party (the
"contributing party"), notify the contributing party of the commencement
thereof, but the omission so to notify the contributing party will not relieve
it from any liability which it may have to any other party for contribution
under the Act except to the extent it was unaware of such action and has been
prejudiced in any material respect by such failure or from any liability which
it may have to any other party other than for contribution under the Act. In
case any such action, suit or proceeding is brought against any party, and such
party notifies a contributing party of the commencement thereof, the
contributing party will be entitled to participate therein with the notifying
party and any other contributing party similarly notified.
9. (a) If, on either Delivery Date, any Underwriter shall default in
its obligation to purchase the Securities which it has agreed to purchase on
such Delivery Date, you may in your discretion arrange for you or another party
or other parties to purchase such Securities on the terms contained herein. If
the aggregate principal amount of Securities as to which Underwriters default on
either Delivery Date is more than one-eleventh of the aggregate principal amount
of all Securities to be purchased on such Delivery Date and within 36 hours
after such default by any Underwriter you do not arrange for the purchase of
such Securities which such defaulting Underwriter agreed but failed to purchase,
then the Company shall be entitled to a further period of 36 hours within which
to procure another party or other parties satisfactory to you to purchase such
Securities on such terms. In the event that, within the respective prescribed
periods, you notify the Company that you have so arranged for the purchase of
such Securities, or the
<PAGE> 23
23
Company notifies you that it has so arranged for the purchase of such
Securities, you or the Company shall have the right to postpone such Delivery
Date for a period of not more than seven days, in order to effect whatever
changes may thereby be made necessary in the Registration Statement or the
Prospectus or in any other documents or arrangements, and the Company agrees to
file promptly any amendments to the Registration Statement or the Prospectus
which in your opinion may thereby be made necessary. The term "Underwriter" as
used in this Agreement shall include any person substituted under this Section
with like effect as if such person had originally been a party to this Agreement
with respect to such Securities.
(b) If, after giving effect to any arrangements for the purchase of the
Securities of such defaulting Underwriter or Underwriters by you or the Company
or both as provided in subsection (a) above, the aggregate principal amount of
such Securities of such defaulting Underwriter or Underwriters which remain
unpurchased does not exceed one-eleventh of the aggregate principal amount of
all the Securities to be purchased on such Delivery Date, then the Company shall
have the right to require each nondefaulting Underwriter to purchase the
principal amount of the Securities which such nondefaulting Underwriter agreed
to purchase hereunder and, in addition, to require each nondefaulting
Underwriter to purchase its pro rata share (based on the principal amount of
Securities which such nondefaulting Underwriter agreed to purchase hereunder)
of the Securities of such defaulting Underwriter or Underwriters for which such
arrangements have not been made; but nothing herein shall relieve a defaulting
Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Underwriter or Underwriters by you or the Company as
provided in subsection (a) above, the aggregate principal amount of such
Securities of such defaulting Underwriter or Underwriters which remain
unpurchased exceeds one-eleventh of the aggregate principal amount of all
Securities to be purchased on such Delivery Date, or if the Company shall not
exercise the right described in subsection (b) above to require non-defaulting
Underwriters to purchase Securities of a defaulting Underwriter or Underwriters,
then this Agreement shall thereupon terminate without liability on the part of
any nondefaulting Underwriter or the Company, except for the expenses to be
borne by the Company and the Underwriters as provided in Section 6 hereof and
the indemnity agreement in Section 8 hereof; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the several Underwriters, as set forth
in this Agreement or made by or on behalf of them, respectively, pursuant to
this Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or the Company,
or an officer or director or controlling person of the Company, and shall
survive delivery of and payment for the Securities.
11. This Agreement shall become effective (a) if the Registration
Statement has not heretofore become effective, at the earlier of 12:00 Noon, New
York City time, on the first full business day after the Registration Statement
becomes effective, or at such time after the Registration Statement becomes
effective as you may authorize the sale of the Securities to the public by
Underwriters or other securities dealers, or (b) if the Registration Statement
has heretofore become effective, at the earlier of 24 hours after the filing of
the Prospectus with the Commission or at such time as you may authorize the sale
of the Securities to the public by
<PAGE> 24
24
Underwriters or securities dealers, unless, prior to any such time you shall
have received notice from the Company that it elects that this Agreement shall
not become effective, or you, or through you such of the Underwriters as have
agreed to purchase in the aggregate fifty percent or more of the Firm Securities
hereunder, shall have given notice to the Company that you or such Underwriters
elect that this Agreement shall not become effective; provided, however, that
the provisions of this Section and Section 6 and Section 8 hereof shall at all
times be effective.
If this Agreement shall be terminated pursuant to Section 9 hereof, or
if this Agreement, by election of you or the Underwriters, shall not become
effective pursuant to the provisions of this Section, the Company shall not then
be under any liability to any Underwriter except as provided in Section 6 and
Section 8 hereof, but if this Agreement becomes effective and is not so
terminated but the Securities are not delivered by or on behalf of the Company
as provided herein because the Company has been unable for any reason beyond its
control and not due to any default by it to comply with the terms and conditions
hereof, the Company will reimburse the Underwriters through you for all
out-of-pocket expenses approved in writing by you, including fees and
disbursements of counsel, reasonably incurred by the Underwriters in making
preparations for the purchase, sale and delivery of the Securities, but the
Company shall then be under no further liability to any Underwriter except as
provided in Section 6 and Section 8 hereof.
12. The statements set forth in the last paragraph on the front cover
page of the Prospectus, the paragraph on the [inside front] cover of the
Prospectus containing stabilization language and the [second] paragraph under
the caption "Underwriting" in the Prospectus constitute the only information
furnished by any Underwriter through the Representatives to the Company for
purposes of Sections 1(b), 1(c) and 8 hereof.
13. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by Schroder Wertheim & Co. Incorporated on behalf of you
as the Representatives.
All statements, requests, notices and agreements hereunder, unless
otherwise specified in this Agreement, shall be in writing and, if to the
Underwriters, shall be delivered or sent by mail, telex or facsimile
transmission (subsequently confirmed by delivery or by letter sent by mail) to
you as the Representatives in care of Schroder Wertheim & Co. Incorporated at
Equitable Center, 787 Seventh Avenue, New York, New York 10019, Attention:
Syndicate Department; and if to the Company, shall be delivered or sent by mail,
telex or facsimile transmission (subsequently confirmed by delivery or by letter
sent by mail) to the address of the Company set forth in the Registration
statement, Attention: Secretary; provided, however, that any notice to any
Underwriter pursuant to Section 8(d) hereof shall be delivered or sent by mail,
telex or facsimile transmission (subsequently confirmed by delivery or by letter
sent by mail) to such Underwriter at its address set forth in its Underwriters'
Questionnaire, or telex constituting such Questionnaire, which address will be
supplied to the Company by you upon request. Any such statements, requests,
notices or agreements shall take effect at the time of receipt thereof.
14. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Company and, to the extent provided in Section
8 and Section 10 hereof, the officers and directors of the Company and each
person who controls the Company or any
<PAGE> 25
25
Underwriter, and their respective heirs, executors, administrators, successors
and assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement. No purchaser of any of the Securities from any
Underwriter shall be deemed a successor or assign by reason merely of such
purchase.
15. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
16. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES
THEREOF.
17. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument. If the foregoing is in accordance with your understanding, please
sign and return to us two counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Underwriters, this letter and such acceptance
hereof shall constitute a binding agreement among each of the Underwriters and
the Company. It is understood that your acceptance of this letter on behalf of
each of the Underwriters is pursuant to the authority set forth in a form of
Agreement Among Underwriters, manually or facsimile executed counterparts of
which, to the extent practicable and upon request, shall be submitted to the
Company for examination, but without warranty on your part as to the authority
of the signers thereof.
Very truly yours,
ROBBINS & MYERS, INC.
By:____________________________________
Name:______________________________
Title:_____________________________
Accepted as of the date hereof:
SCHRODER WERTHEIM & CO. INCORPORATED
ROBERT W. BAIRD & CO., INCORPORATED
FIRST ANALYSIS SECURITIES CORPORATION
as Representatives of the several Underwriters
By: SCHRODER WERTHEIM & CO. INCORPORATED
By:________________________________
Managing Director
<PAGE> 26
SCHEDULE I
<TABLE>
<CAPTION>
Principal
Amount of Firm
Underwriter Securities
----------- ----------
<S> <C>
Schroder Wertheim & Co. Incorporated................................
Robert W. Baird & Co. Incorporated..................................
First Analysis Securities Corporation...............................
Total............................................................... -----------
$50,000,000
===========
</TABLE>
<PAGE> 1
EXHIBIT 4.3
================================================================================
INDENTURE
Between
ROBBINS & MYERS, INC.
and
STAR BANK. NATIONAL ASSOCIATION
Trustee
Dated as of September __, 1996
% CONVERTIBLE SUBORDINATED NOTES DUE 2003
================================================================================
<PAGE> 2
TABLE OF CONTENTS
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ARTICLE I
<S> <C> <C>
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION............................................ 1
SECTION 1.1 DEFINITIONS............................................................................... 1
SECTION 1.2 COMPLIANCE CERTIFICATES AND OPINIONS...................................................... 6
SECTION 1.3 FORM OF DOCUMENTS DELIVERED TO TRUSTEE.................................................... 6
SECTION 1.4 ACTS OF HOLDERS........................................................................... 7
SECTION 1.5 NOTICES, ETC., TO TRUSTEE AND COMPANY..................................................... 8
SECTION 1.6 NOTICE TO HOLDERS; WAIVER................................................................. 8
SECTION 1.7 CONFLICT WITH TRUST INDENTURE ACT......................................................... 8
SECTION 1.8 EFFECT OF HEADINGS AND TABLE OF CONTENTS.................................................. 9
SECTION 1.9 SUCCESSORS AND ASSIGNS.................................................................... 9
SECTION 1.10 SEPARABILITY CLAUSE...................................................................... 9
SECTION 1.11 BENEFITS OF INDENTURE.................................................................... 9
SECTION 1.12 GOVERNING LAW............................................................................ 9
SECTION 1.13 LEGAL HOLIDAYS........................................................................... 9
ARTICLE II
NOTE FORMS.................................................. 9
SECTION 2.1 FORMS GENERALLY........................................................................... 9
SECTION 2.2 FORM OF FACE OF NOTE...................................................................... 10
SECTION 2.3 FORM OF REVERSE OF NOTE................................................................... 11
SECTION 2.4 FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION........................................... 15
ARTICLE III
THE NOTES.................................................. 15
SECTION 3.1 TITLE AND TERMS........................................................................... 15
SECTION 3.2 DENOMINATIONS............................................................................. 16
SECTION 3.3 EXECUTION, AUTHENTICATION, DELIVERY AND DATING............................................ 16
SECTION 3.4 TEMPORARY NOTES........................................................................... 16
SECTION 3.5 REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE....................................... 17
SECTION 3.6 MUTILATED, DESTROYED, LOST AND STOLEN NOTES............................................... 18
Section 3.7 PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED............................................ 18
SECTION 3.8 PERSONS DEEMED OWNERS..................................................................... 20
SECTION 3.9 CANCELLATION.............................................................................. 20
SECTION 3.10 COMPUTATION OF INTEREST.................................................................. 20
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SECTION 3.11 CUSIP NUMBER............................................................................. 20
ARTICLE IV
SATISFACTION AND DISCHARGE.......................................... 20
SECTION 4.1 SATISFACTION AND DISCHARGE OF INDENTURE................................................... 20
SECTION 4.2 APPLICATION OF TRUST MONEY................................................................ 22
ARTICLE V
REMEDIES................................................... 22
SECTION 5.2 ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT........................................ 24
SECTION 5.3 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT
BY TRUSTEE.................................................................................... 24
SECTION 5.4 TRUSTEE MAY FILE PROOFS OF CLAIM.......................................................... 25
SECTION 5.5 TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
NOTES......................................................................................... 26
SECTION 5.6 APPLICATION OF MONEY COLLECTED............................................................ 26
SECTION 5.7 LIMITATION ON SUITS....................................................................... 26
SECTION 5.8 RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM AND
INTEREST AND TO CONVERT....................................................................... 27
SECTION 5.9 RESTORATION OF RIGHTS AND REMEDIES........................................................ 27
SECTION 5.10 RIGHTS AND REMEDIES CUMULATIVE........................................................... 27
SECTION 5.11 DELAY OR OMISSION NOT WAIVER............................................................. 27
SECTION 5.12 CONTROL BY HOLDERS....................................................................... 28
SECTION 5.13 WAIVER OF PAST DEFAULTS.................................................................. 28
SECTION 5.14 UNDERTAKING FOR COSTS.................................................................... 28
SECTION 5.15 WAIVER OF STAY, USURY OR EXTENSION LAWS.................................................. 29
ARTICLE VI
THE TRUSTEE................................................. 29
SECTION 6.1 CERTAIN DUTIES AND RESPONSIBILITIES....................................................... 29
SECTION 6.2 NOTICE OF DEFAULTS........................................................................ 30
SECTION 6.3 CERTAIN RIGHTS OF TRUSTEE................................................................. 30
SECTION 6.4 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF NOTES......................................... 31
SECTION 6.5 MAY HOLD NOTES............................................................................ 31
SECTION 6.6 MONEY HELD IN TRUST....................................................................... 32
SECTION 6.7 COMPENSATION AND REIMBURSEMENT............................................................ 32
SECTION 6.8 CORPORATE TRUSTEE REQUIRED ELIGIBILITY.................................................... 32
SECTION 6.9 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR......................................... 33
SECTION 6.10 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR................................................... 34
SECTION 6.11 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS...................................................................................... 34
</TABLE>
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SECTION 6.12 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY........................................ 35
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY.............................. 36
SECTION 7.1 COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF
HOLDERS....................................................................................... 36
SECTION 7.2 PRESERVATION OF INFORMATION COMMUNICATIONS TO
HOLDERS....................................................................................... 37
SECTION 7.3 REPORTS BY TRUSTEE........................................................................ 38
SECTION 7.4 REPORTS BY COMPANY........................................................................ 39
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER................................ 40
SECTION 8.1 COMPANY MAY CONSOLIDATE, ETC., Only on Certain Terms...................................... 40
SECTION 8.2 SUCCESSOR CORPORATION SUBSTITUTED......................................................... 40
ARTICLE IX
SUPPLEMENTAL INDENTURE............................................ 41
SECTION 9.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS........................................ 41
SECTION 9.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS........................................... 41
SECTION 9.3 EXECUTION OF SUPPLEMENTAL INDENTURES...................................................... 42
SECTION 9.4 EFFECT OF SUPPLEMENTAL INDENTURES......................................................... 42
SECTION 9.5 CONFORMITY WITH TRUST INDENTURE ACT....................................................... 42
SECTION 9.6 REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES............................................. 42
ARTICLE X
COVENANTS.................................................. 43
SECTION 10.1 PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST............................................... 43
SECTION 10.2 MAINTENANCE OF OFFICE OR AGENCY.......................................................... 43
SECTION 10.3 MONEY FOR NOTE PAYMENTS TO BE HELD IN TRUST.............................................. 43
SECTION 10.4 CORPORATE EXISTENCE...................................................................... 44
SECTION 10.5 MAINTENANCE OF PROPERTIES................................................................ 45
SECTION 10.6 PAYMENT OF TAXES AND OTHER CLAIMS........................................................ 45
SECTION 10.7 WAIVER OF CERTAIN COVENANTS.............................................................. 45
ARTICLE XI
REDEMPTION OF NOTES............................................. 45
SECTION 11.1 RIGHT OF REDEMPTION...................................................................... 45
SECTION 11.2 APPLICABILITY OF ARTICLE................................................................. 45
</TABLE>
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<S> <C> <C>
SECTION 11.3 ELECTION TO REDEEM; NOTICE TO TRUSTEE.................................................... 46
SECTION 11.4 SELECTION BY TRUSTEE OF NOTES TO BE REDEEMED............................................. 46
SECTION 11.5 NOTICE OF REDEMPTION..................................................................... 46
SECTION 11.6 DEPOSIT OF REDEMPTION PRICE.............................................................. 47
SECTION 11.7 NOTES PAYABLE ON REDEMPTION DATE......................................................... 47
SECTION 11.8 NOTES REDEEMED IN PART................................................................... 47
ARTICLE XII
CONVERSION OF NOTES............................................. 48
SECTION 12.1 CONVERSION PRIVILEGE AND CONVERSION PRICE................................................ 48
SECTION 12.2 EXERCISE OF CONVERSION PRIVILEGE......................................................... 48
SECTION 12.3 FRACTIONS OF SHARES...................................................................... 49
SECTION 12.4 ADJUSTMENT OF CONVERSION PRICE........................................................... 49
SECTION 12.5 NOTICE OF ADJUSTMENT OF CONVERSION PRICE................................................. 58
SECTION 12.6 NOTICE OF CERTAIN CORPORATE ACTION....................................................... 58
SECTION 12.7 COMPANY TO RESERVE COMMON SHARES......................................................... 59
SECTION 12.8 TAXES ON CONVERSION...................................................................... 59
SECTION 12.9 COVENANT AS TO COMMON SHARES............................................................. 59
SECTION 12.10 PROVISIONS IN CASE OF CONSOLIDATION, MERGER OR
CONVEYANCE OR TRANSFER OF PROPERTIES AND ASSETS............................................... 60
SECTION 12.11 RESPONSIBILITY OF TRUSTEE............................................................... 60
ARTICLE XIII
SUBORDINATION OF NOTES............................................ 61
SECTION 13.1 NOTES SUBORDINATE TO SENIOR INDEBTEDNESS................................................. 61
SECTION 13.2 NO PAYMENT WHEN SENIOR INDEBTEDNESS IN DEFAULT;
PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC................................................ 61
SECTION 13.3 TRUSTEE TO EFFECTUATE SUBORDINATION...................................................... 63
SECTION 13.4 TRUSTEE NOT CHARGED WITH KNOWLEDGE OF PROHIBITION........................................ 63
SECTION 13.5 RIGHTS OF TRUSTEE AS HOLDER OF SENIOR INDEBTEDNESS....................................... 64
SECTION 13.6 ARTICLE APPLICABLE TO PAYING AGENT....................................................... 64
ARTICLE XIV
RIGHT TO REQUIRE REPURCHASE......................................... 64
SECTION 14.1 RIGHT TO REQUIRE REPURCHASE.............................................................. 64
SECTION 14.2 NOTICE; METHOD OF EXERCISING REPURCHASE RIGHT............................................ 64
SECTION 14.3 DEPOSIT OF REPURCHASE PRICE.............................................................. 65
SECTION 14.4 NOTES NOT REPURCHASED ON REPURCHASE DATE................................................. 65
SECTION 14.5 "CHANGE IN CONTROL" DEFINED.............................................................. 66
</TABLE>
iv
<PAGE> 6
INDENTURE dated as of September ___, 1996, between ROBBINS &
MYERS, INC., a corporation duly organized and existing under the laws of the
State of Ohio (herein called the "COMPANY"), having its principal office at 1400
Kettering Tower, Dayton, Ohio 45402, and STAR BANK, NATIONAL ASSOCIATION, a
national banking association organized and existing under the laws of the United
States of America, as Trustee (herein called the "TRUSTEE").
The Company has duly authorized the creation of an issue of
its Notes (herein called the "NOTES") of substantially the tenor and amount
hereinafter set forth and to provide therefor the Company has duly authorized
the execution and delivery of this Indenture.
All things necessary to make the Notes, when executed by the
Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company, and to make this Indenture a
valid agreement of the Company, in accordance with their and its terms, have
been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of
the Notes by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Notes, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.1 DEFINITIONS. For all purposes of this Indenture,
except as otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular;
(b) all other terms used herein which are defined in the Trust
Indenture Act (as hereinafter defined), either directly or by reference
therein, have the meanings assigned to them therein;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles; and
(d) the words "HEREIN", "HEREOF" and "HEREUNDER" and other
words of similar import refer to this Indenture as a whole and not to
any particular Article, Section or other subdivision.
"ACT" when used with respect to any Holder has the meaning
specified in Section 1.4.
<PAGE> 7
2
"AFFILIATE" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"CONTROL" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "CONTROLLING" and "CONTROLLED" have meanings correlative to the
foregoing.
"AUTHENTICATING AGENT" means any Person authorized by the
Trustee to act on behalf of the Trustee to authenticate Notes.
"BOARD OF DIRECTORS" means either the board of directors of
the Company or any duly authorized committee of that 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 and delivered to the Trustee.
"BUSINESS DAY" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in The City of New
York or in Cincinnati, Ohio are authorized or obligated by law or executive
order to be closed.
"CHANGE IN CONTROL" has the meaning specified in Section 14.5.
"CLOSING PRICE" has the meaning specified in Section 14.5.
"COMMISSION" means the Securities and Exchange Commission, as
from time to time constituted, created under the Securities Exchange Act of
1934, or, if at any time after the execution of this instrument such Commission
is not existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties at such time.
"COMMON SHARE", as applied to the capital shares of any
corporation, shall mean the capital shares of any class which has no preference
in respect of dividends or other distributions of assets or of amounts payable
in the event of any voluntary or involuntary liquidation, dissolution or winding
up of such corporation and which is not subject to redemption by such
corporation; provided, however, that, subject to the provisions of Section
12.10, shares issuable on conversion of Notes shall include only shares of the
class designated as Common Shares of the Company at the date of the execution of
this instrument or shares of any class or classes resulting from any
reclassification or reclassifications thereof which have no preference in
respect of dividends or other distributions of assets or of amounts payable in
the event of any voluntary or involuntary liquidation, dissolution or winding up
of the Company and which are not subject to redemption by the Company; provided
further that, if at any time there shall be more than one such resulting class,
the shares of each such class then so issuable shall be substantially in the
proportion which the total number of shares of such class resulting from all
such reclassifications bears to the total number of shares of all such classes
resulting from all such reclassifications.
<PAGE> 8
3
"COMPANY" means the Person named as the "Company" in the first
paragraph of this instrument until a successor corporation shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor corporation.
"COMPANY REQUEST" or "COMPANY ORDER" means a written request
or order signed in the name of the Company by its Chairman of the Board, its
President or a Vice President and by its Chief Financial Officer, its Treasurer,
an Assistant Treasurer, its Secretary or an Assistant Secretary and delivered to
the Trustee.
"CORPORATE TRUST OFFICE" means the principal office of the
Trustee in Cincinnati, Ohio at which at any particular time its corporate trust
business shall be administered, which office at the time of the execution of
this indenture is located at 425 Walnut Street, ML 5125, Cincinnati, Ohio 45202,
Attention of Corporate Trust Administration.
"CORPORATION" includes corporations, associations, companies
and business trusts.
"CURRENT MARKET PRICE" has the meaning specified in Section
14.5, except for purposes of Section 12.4 where it has the meaning set forth in
such Section.
"NOTE REGISTER" and "NOTE REGISTRAR" have the respective
meanings specified in Section 3.5.
"DEFAULTED INTEREST" has the meaning specified in Section 3.7.
"EVENT OF DEFAULT" has the meaning specified in Section 5.1.
"HOLDER" means a Person in whose name a Note is registered in
the Note Register.
"INDENTURE" means this instrument as originally executed or as
it may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.
"INTEREST PAYMENT DATE" means the Stated Maturity of an
installment of interest on the Notes.
"MATURITY" when used with respect to any Note means the date
on which the principal of such Note becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration of acceleration, call
for redemption or otherwise.
"OFFICERS' CERTIFICATE" means a certificate signed by the
Chairman of the Board, the President or a Vice President and by the Chief
Financial Officer, the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary of the Company and delivered to the Trustee.
"OPINION OF COUNSEL" means a written opinion of counsel
acceptable to the Trustee, who may be counsel for, or employed by, the Company.
<PAGE> 9
4
"OUTSTANDING" when used with respect to Notes means, as of the
date of determination, all Notes theretofore authenticated and delivered under
this Indenture, except:
(i) Notes theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Notes for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its own
Paying Agent) for the Holders of such Notes; provided that, if such
Notes are to be redeemed, notice of such redemption has been duly given
pursuant to this Indenture or provision therefor satisfactory to the
Trustee has been made; and
(iii) Notes in exchange for or in lieu of which other
Notes have been authenticated and delivered pursuant to this Indenture;
provided, however, that, in determining whether the Holders of the requisite
principal amount of the Outstanding Notes have given any request, demand,
authorization, direction, notice, consent or waiver or taken any other action
hereunder, Notes owned by the Company or any other obligor upon the Notes or any
Affiliate of the Company or of such other obligor shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent, waiver or other action, only Notes which the Trustee
has actual knowledge of being so owned shall be so disregarded. Notes so owned
which have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Trustee the pledgee's right so to
act with respect to such Notes and that the pledgee is not the Company or any
other obligor upon the Notes or any Affiliate of the Company or of such other
obligor.
"PAYING AGENT" means any Person authorized by the Company to
pay the principal of (and premium, if any) or interest on any Notes on behalf of
the Company, which may include the Company or any Affiliate of the Company.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"PREDECESSOR NOTE" of any particular Note means every previous
Note evidencing all or a portion of the same debt as that evidenced by such
particular Note; and, for the purposes of this definition, any Note
authenticated and delivered under Section 3.6 in exchange for or in lieu of all
or a portion of a mutilated, destroyed, lost or stolen Note shall be deemed to
evidence the same debt as such mutilated, destroyed, lost or stolen Note or
portion thereof.
"REDEMPTION DATE", when used with respect to any Note to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
<PAGE> 10
5
"REDEMPTION PRICE", when used with respect to any Note to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"REGULAR RECORD DATE" for the interest payable on any Interest
Payment Date means the or (whether or not a Business Day),
as the case may be, next preceding such Interest Payment Date.
"REPURCHASE DATE" has the meaning specified in Section 14.1.
"REPURCHASE PRICE" has the meaning specified in Section 14.1.
"RESPONSIBLE OFFICER", when used with respect to the Trustee,
means any officer within the Corporate Trust Department (or any successor
department) of the Trustee, including, without limitation, any Vice President,
any Senior Trust Officer, any Trust Officer or any other officer of the 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 master is referred because of his
knowledge of and familiarity with the particular subject.
"SENIOR INDEBTEDNESS" means the principal of (and premium, if
any) and interest on and other amounts due on any indebtedness, whether
outstanding on the date of execution of this Indenture or thereafter created,
incurred, assumed or guaranteed by the Company, for money borrowed from others
(including, for this purpose, all obligations under, respecting or constituting
capitalized leases or purchase money indebtedness) or in connection with the
acquisition by the Company or a Subsidiary of any other business or entity, or
in respect of letters of credit or bid, performance or surety bonds issued for
the account or on the credit of the Company or a Subsidiary, and, in each case,
all renewals, extensions and refundings thereof, other than (a) any such
indebtedness as to which, in the instrument creating or evidencing the same, it
is provided that such indebtedness is not superior in right of payment to the
Notes, (b) indebtedness of the Company to any Affiliate of the Company and (c)
the Notes.
"SPECIAL RECORD DATE" for the payment of any Defaulted
Interest means a date fixed by the Trustee pursuant to Section 3.7.
"STATED MATURITY", when used with respect to any Note or any
installment of interest thereon, means the date specified in such Note as the
fixed date on which the principal of such Note or such installment of interest
is due and payable; provided, however, that, if such date shall not be a
Business Day, then the Stated Maturity shall be the next Business Day.
"SUBSIDIARY" means a corporation more than 50% of the
outstanding voting shares of which are owned, directly or indirectly, by the
Company or by one or more other Subsidiaries or by the Company and one or more
other Subsidiaries. For the purposes of this definition, "VOTING SHARES" means
capital shares or shares of capital stock which ordinarily have voting power for
the election of directors, whether at all times or only so long as no senior
class of capital shares or capital stock has such voting power by reason of any
contingency.
<PAGE> 11
6
"TRADING DAY" has the meaning specified in Section 14.5.
"TRIGGER EVENT" has the meaning specified in Section 12.4.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990 and as in force at the date
as of which this instrument was executed, except as provided in Section 9.5.
"TRUSTEE" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"VICE PRESIDENT", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president".
SECTION 1.2 COMPLIANCE CERTIFICATES AND OPINIONS. Upon any
application or request by the Company to the Trustee to take any action under
any provision of this Indenture, the Company shall furnish to the Trustee an
Officers' Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with
and an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that, in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than certificates
delivered pursuant to Section 7.4(d)) shall include:
(a) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of each such individual,
he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 1.3 FORM OF DOCUMENTS DELIVERED TO TRUSTEE. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person,
<PAGE> 12
7
it is not necessary that all such matters be certified by, or covered by the
opinion of, only one such Person, or that they be so certified or covered by
only one document, but one such Person may certify or give an opinion with
respect to some matters and one or more other such Persons as to other matters,
and any such Persons may certify or give an opinion as to such matters in one or
several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
SECTION 1.4 ACTS OF HOLDERS. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Holders may be embodied and evidenced by
one or more instruments of substantially similar tenor signed by such Holders in
person or by an agent duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee and, where it is hereby expressly
required, to the Company. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as the
"ACT" of the Holders signing such instrument or instruments. Proof of execution
of any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and (subject to Section 6.1)
conclusive in favor of the Trustee and the Company, if made in the manner
provided in this Section.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgements of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(c) The ownership of Notes shall be proved by the Note
Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Note shall bind every future
Holder of the same Note and the
<PAGE> 13
8
Holder of every Note issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof in respect of anything done, omitted or
suffered to be done by the Trustee or the Company in reliance thereon, whether
or not notation of such action is made upon such Note.
SECTION 1.5 NOTICES, ETC., TO TRUSTEE AND COMPANY. Any
request, demand, authorization, direction, notice, consent, waiver or Act of
Holders or other document provided or permitted by this Indenture to be made
upon, given or furnished to, or filed with,
(a) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or
filed in writing and delivered by hand or mailed, first-class, postage
prepaid, to the Trustee at its Corporate Trust Office, or
(b) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and delivered by hand or mailed,
first-class, postage prepaid, to the Company addressed to it at the
address of its principal office specified in the first paragraph of
this instrument or at any other address previously furnished in writing
to the Trustee by the Company, or
(c) the Company by the Trustee or the Trustee by the Company
shall be sufficient for every purpose hereunder (unless otherwise
herein expressly provided) if transmitted by facsimile transmission to
the Company at ( ) or to the Trustee at (513) 632-5511 (or to such
other facsimile transmission number previously furnished in writing to
the Company by the Trustee or to the Trustee by the Company) and in
each case confirmed by a copy sent to the Company or to the Trustee, as
the case may be, by guaranteed overnight courier; each such number may
be changed from time to time or at any time without notice from the
Company to the Trustee or from the Trustee to the Company.
SECTION 1.6 NOTICE TO HOLDERS; WAIVER. Where this Indenture
provides for notice to Holders of any event, such notice shall be sufficiently
given (unless otherwise herein expressly provided) if in writing and delivered
by hand or mailed, first-class, postage prepaid, to each Holder affected by such
event, at his address as it appears in the Note Register, not later than the
latest date and not earlier than the earliest date, prescribed for the giving of
such notice. In any case where notice to Holders is given by mail, neither the
failure to mail such notice nor any defect in any notice so mailed to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or
by reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the Trustee
shall constitute a sufficient notification for every purpose hereunder.
<PAGE> 14
9
SECTION 1.7 CONFLICT WITH TRUST INDENTURE ACT. If and to the
extent that any provision hereof limits, qualifies or conflicts with the duties
imposed by, or with another provision (an "INCORPORATED PROVISION") included in
this Indenture by operation of, any of Sections 310 to 318, inclusive, of the
Trust Indenture Act, such imposed duties or incorporated provision shall
control.
SECTION 1.8 EFFECT OF HEADINGS AND TABLE OF CONTENTS. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 1.9 SUCCESSORS AND ASSIGNS. All covenants and
agreements in this Indenture by the Company shall bind its successors and
assigns, whether so expressed or not.
SECTION 1.10 SEPARABILITY CLAUSE. In case any provision in
this Indenture or in the Notes shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 1.11 BENEFITS OF INDENTURE. Nothing in this Indenture
or in the Notes, expressed or implied, shall give to any Person, other than the
parties hereto and their successors hereunder, the holders of Senior
Indebtedness and the Holders of Notes, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
SECTION 1.12 GOVERNING LAW. This Indenture and the Notes
shall be governed by and construed in accordance with the laws of the State of
Ohio.
SECTION 1.13 LEGAL HOLIDAYS. In any case where any Interest
Payment Date, Redemption Date, Repurchase Date or Stated Maturity of any Note or
the last date on which a Holder has the right to convert his Notes shall not be
a Business Day, then (notwithstanding any other provision of this Indenture or
of the Notes) payment of interest or principal (and premium, if any) or
Repurchase Price or conversion of the Notes need not be made on such date, but
may be made on the next succeeding Business Day with the same force and effect
as if made on the Interest Payment Date, Redemption Date or Repurchase Date or
at the Stated Maturity or on such last day for conversion; provided that no
additional interest shall accrue on any amount that would otherwise be payable
on such Interest Payment Date, Redemption Date, Repurchase Date or Stated
Maturity, as the case may be, for the period from and after such Interest
Payment Date, Redemption Date, Repurchase Date or Stated Maturity, as the case
may be, to such Business Day if such payment is made or duly provided for on
such Business Day.
ARTICLE II
NOTE FORMS
SECTION 2.1 FORMS GENERALLY. The Notes and the Trustee's
certificates of authentication shall be in substantially the forms set forth in
this Article, with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this
<PAGE> 15
10
Indenture, including forms of conversion and forms of assignment, if requested
by the Company, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Notes, as
evidenced by their execution of the Notes. The Company shall furnish any such
legends or endorsements to the Trustee in writing.
The definitive Notes shall be printed, lithographed or
engraved or produced by any combination of these methods on steel-engraved
borders or may be produced in any other manner permitted by the rules of any
securities exchange on which the Notes may be listed, all as determined by the
officers executing such Notes, as evidenced by their execution of such Notes.
SECTION 2.2 FORM OF FACE OF NOTE.
ROBBINS & MYERS, INC.
% CONVERTIBLE SUBORDINATED NOTE DUE 2003
No. $
ROBBINS & MYERS, INC., an Ohio corporation (hereinafter called
the "COMPANY", which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
or registered assigns the principal sum of dollars
on , 2003, and to pay interest thereon from , 1996, or
from the most recent Interest Payment Date to which interest has been paid or
duly provided for, semiannually on and in each year,
commencing , 1997, at the rate of % per annum, until the principal
hereof is paid or made available for payment. Interest will be computed on the
basis of a 360-day year of twelve 30-day months. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in such Indenture, be paid to the Person in whose name this Note (or
one or more Predecessor Notes) is registered at the close of business on the
Regular Record Date for such interest, which shall be the or
(whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date. Any such interest not so punctually paid or duly
provided for on the due date for such payment will forthwith cease to be
payable to the Holder on such Interest Payment Date and may either be paid to
the Person in whose name this Note (or one or more Predecessor Notes) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice of which shall be
given to the Holders of Notes not less than ten days prior to such Special
Record Date, or be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Notes may be
listed, and upon such notice as may be required by such exchange, all as more
fully provided in said Indenture. Payment of the principal of (and premium, if
any) and interest on this Note will be made at the office or agency of the
Company maintained for that purpose in The City of New York or at any other
office or agency maintained by the Company for such purpose, in such coin or
currency of the United States of America as at the time of
<PAGE> 16
11
payment is legal tender for payment of public and private debts; provided,
however, that at the option of the Company payment of interest may be made by
check mailed to the address of the Person entitled thereto as such address shall
appear in the Note Register.
Reference is hereby made to the further provisions of this
Note set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual signature,
this Note shall not be entitled to any benefit under the Indenture or be valid
or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed under its corporate seal.
Dated:
ROBBINS & MYERS, INC.
By _________________________________
Title:
Attest:
____________________________
Title:
SECTION 2.3 FORM OF REVERSE OF NOTE. This Note is one of a
duly authorized issue of Notes of the Company designated as its % Convertible
Subordinated Notes Due 2003 (herein called the "NOTES"), limited in aggregate
principal amount to $50,000,000 (subject to increase as provided in the
Indenture of up to $5,000,000 additional principal amount), issued and to the
issued under an Indenture dated as of September ___, 1996 (herein called the
"INDENTURE"), between the Company and Star Bank, N.A., as Trustee (herein called
the "TRUSTEE", which term includes any successor trustee under the Indenture),
to which Indenture and all indentures supplemental thereto reference is hereby
made for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee, the holders of Senior
Indebtedness and the Holders of the Notes and of the terms upon which the Notes
are, and are to be, authenticated and delivered.
Subject to and upon compliance with the provisions of the
Indenture, the Holder of this Note is entitled, at such Holder's option, at any
time on or before the close of business on , 2003, or, in case this Note or a
portion hereof is called for redemption, then in respect of this Note or such
portion hereof until and including, but (unless the Company defaults in
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making the payment due upon redemption) not after, the close of business on the
Business Day prior to the Redemption Date, to convert this Note (or any portion
of the principal amount hereof which is $1,000 or any integral multiple
thereof), at the principal amount hereof, or of such portion, into fully paid
and nonassessable Common Shares (calculated as to each conversion to the nearest
1/100 of a share) of the Company at a conversion price equal to $ aggregate
principal amount of Notes for each Common Share (or at the current adjusted
conversion price if an adjustment has been made as provided in the Indenture) by
surrender of this Note, duly endorsed or assigned to the Company or in blank, at
the office or agency of the Company maintained for that purpose in The City of
New York or at any other office or agency maintained by the Company for such
purpose, accompanied by written notice to the Company that the Holder hereof
elects to convert this Note or, if less than the entire principal amount hereof
is to be converted the portion hereof to be converted, and, in case such
surrender shall be made during the period from the close of business on any
Regular Record Date next preceding any Interest Payment Date to the opening of
business on such Interest Payment Date (unless this Note or the portion hereof
being converted has been called for redemption on a Redemption Date within such
period), also accompanied by payment in New York Clearing House or other funds
acceptable to the Company of an amount equal to the interest payable on such
Interest Payment Date on the principal amount of this Note then being converted.
Subject to the aforesaid requirement for payment and, in the case of a
conversion after the Regular Record Date next preceding any Interest Payment
Date and on or before such Interest Payment Date, to the right of the Holder of
this Note (or any Predecessor Note) of record at such Regular Record Date to
receive an installment of interest (with certain exceptions provided in the
Indenture), no payment or adjustment is to be made on conversion for interest
accrued hereon or for dividends on the Common Shares issued on conversion. No
fractions of shares or scrip representing fractions of shares will be issued on
conversion, but instead of any fractional interest the Company shall pay a cash
adjustment as provided in the Indenture. The conversion price is subject to
adjustment as provided in the Indenture. In addition, the Indenture provides
that, in case of certain consolidations or mergers to which the Company is a
party or the conveyance or transfer of the properties and assets of the Company
substantially as an entirety, the Indenture shall be amended, without the
consent of any Holders of Notes, so that this Note, if then outstanding, will be
convertible thereafter, during the period this Note shall be convertible as
specified above, only into the kind and amount of securities, cash and other
property receivable upon the consolidation, merger, conveyance or transfer by a
holder of the number of Common Shares of the Company into which this Note might
have been converted immediately prior to such consolidation, merger, conveyance
or transfer, assuming such holder of Common Shares of the Company failed to
exercise his rights of election, if any, as to the kind or amount of securities,
cash and other property receivable upon such consolidation, merger, conveyance
or transfer (provided that, if the kind or amount of securities, cash and other
property so receivable is not the same for each nonelecting Common Share of the
Company, then the kind and amount of securities, cash and other property so
receivable by each nonelecting share shall be deemed to be the kind and amount
so receivable per share by a plurality of the nonelecting shares).
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The Notes are subject to redemption upon not less than 30 nor
more than 60 days' notice by mail at any time on or after , 1999 as a whole or
in part, at the election of the Company, at the following Redemption Prices
(expressed as percentages of the principal amount) if redeemed during the
12-month period beginning of the years indicated:
Redemption
Year Price
---- -----
1999 ........... %
2000............ %
2001............ %
and thereafter at a Redemption Price equal to 100% of the principal amount,
together in the case of any such redemption with accrued interest to the
Redemption Date, but interest installments whose Stated Maturity is on or prior
to such Redemption Date will be payable to the Holders of such Notes, or one or
more Predecessor Notes, of record at the close of business on the relevant
Record Dates referred to on the face hereof, all as provided in the Indenture.
The Company may not redeem any Notes prior to ____________, 1999.
In certain circumstances involving the occurrence of a Change
in Control (as defined in the Indenture), the Holder hereof shall have the right
to require the Company to repurchase this Note at 100% of the principal amount
hereof, together with accrued interest to the Repurchase Date, but interest
installments whose Stated Maturity is on or prior to such Repurchase Date will
be payable to the Holders of such Notes, or one or more Predecessor Notes, of
record at the close of business on the relevant Record Dates referred to on the
face hereof, all as provided in the Indenture. In connection with the exercise
of the repurchase right by a Holder prior to a Redemption Date, a Holder's right
to exercise such repurchase right shall terminate at the close of business on
the Business Day prior to the Redemption Date.
In the event of redemption, repurchase or conversion of this
Note in part only, a new Note or Notes for the unredeemed, unrepurchased or
unconverted portion hereof will be issued in the name of the Holder hereof upon
the cancellation hereof.
The indebtedness evidenced by the Notes is, to the extent and
in the manner set forth in the Indenture, expressly subordinated and subject in
right of payment to the prior payment in full of all Senior Indebtedness, as
defined in the Indenture, and this Note is issued subject to such provisions of
the Indenture, and each Holder of this Note, by accepting the same, agrees to
and shall be bound by such provisions and authorizes and directs the Trustee on
his behalf to take such action as may be necessary or appropriate to acknowledge
or effectuate the subordination as provided in the Indenture and appoints the
Trustee his attorney-in-fact for any and all such purposes.
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If an Event of Default shall occur and be continuing, the
principal of all the Notes may be declared due and payable in the manner and
with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Notes under the
Indenture at any time by the Company and the Trustee with the consent of the
Holders of not less than two-thirds in aggregate principal amount of the Notes
at the time Outstanding. The Indenture also contains provisions permitting the
Holders of a majority in aggregate principal amount of the Notes at the time
Outstanding, on behalf of the Holder of all the Notes, to waive compliance by
the Company with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver by the
Holder of this Note shall be conclusive and binding upon such Holder and upon
all future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Note.
Except with respect to the rights of the holders of Senior
Indebtedness set forth in the Indenture and in this Note, no reference herein to
the Indenture and no provision of this Note 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 Note at the
times, place and rate, and in the coin or currency, herein prescribed or to
convert this Note as provided in the Indenture.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Note is registrable in the
Note Register, upon surrender of this Note for registration of transfer at the
office or agency of the Company maintained for that purpose in The City of New
York or at any other office or agency maintained by the Company for such
purpose, duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to the Company, the Trustee and the Note Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Notes, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
The Notes are issuable only in registered form without coupons
in denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Notes are
exchangeable for a like aggregate principal amount of Notes of a different
authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to the presentment of this Note for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Note is registered as the owner hereof
for all purposes, whether or not this Note be overdue, and neither the Company,
the Trustee nor any such agent shall be affected by notice to the contrary.
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All terms used in this Note which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
SECTION 2.4 FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
This is one of the Notes referred to in the within-mentioned Indenture.
Dated:
STAR BANK, NATIONAL ASSOCIATION,
as Trustee,
By __________________________________
Authorized Signatory
ARTICLE III
THE NOTES
SECTION 3.1 TITLE AND TERMS. The aggregate principal amount of
Notes which may be authenticated and delivered under this Indenture is limited
to (a) $50,000,000 plus (b) such additional principal amount (which may not
exceed $5,000,000 principal amount) of Notes as shall be purchased by the
underwriters pursuant to the overallotment option provided in the Underwriting
Agreement dated as of September ___, 1996, between the Company and Schroder
Wertheim & Co. Incorporated, Robert W. Baird & Co. Incorporated and First
Securities Analysis Corporation, as representatives of the underwriters, except
for Notes authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu of, other Notes pursuant to Section 3.4, 3.5, 3.6, 9.6,
11.8, 12.2 or 14.2(c).
The Notes shall be known and designated as the " %
Convertible Subordinated Notes Due 2003" of the Company. Their Stated Maturity
shall be , 2003, and they shall bear interest at the rate of % per
annum, from , 1996, or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, as the case may be, payable
semiannually on and , commencing , 1997, until
the principal thereof is paid or made available for payment.
The principal of (and premium, if any) and interest on the
Notes shall be payable at the office or agency of the Company maintained for
such purpose in The City of New York and at any other office or agency
maintained by the Company for such purpose, in such coin or currency of the
United States of America as at the time of payment is legal tender for payment
of public and private debts; provided, however, that at the option of the
Company payment of interest may be made by check mailed to the address of the
Person entitled thereto as such address shall appear in the Note Register.
The Notes shall be redeemable as provided in Article XI.
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The Notes shall be convertible into Common Shares of the
Company as provided in Article XII.
The Notes shall be subordinated in right of payment to Senior
Indebtedness as provided in Article XIII.
The Notes shall become subject to a Holder's right of
repurchase in the event of a Change in Control as provided in Article XIV.
SECTION 3.2 DENOMINATIONS. The Notes shall be issuable only in
registered form without coupons and only in denominations of $1,000 and any
integral multiple thereof.
SECTION 3.3 EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Notes shall be executed on behalf of the Company by its Chairman of the
Board, its President or one of its Vice Presidents, under its corporate seal
reproduced thereon attested by its Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the Notes may be manual
or facsimile.
Notes bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Notes or did
not hold such offices at the date of such Notes.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Notes executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Notes; and the Trustee in accordance with
such Company Order shall authenticate and deliver such Notes as in this
Indenture provided and not otherwise.
Each Note shall be dated the date of its authentication.
No Note shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any Note
shall be conclusive evidence, and the only evidence, that such Note has been
duly authenticated and delivered hereunder.
SECTION 3.4 TEMPORARY NOTES. Pending the preparation of
definitive Notes, the Company may execute, and upon Company Order the Trustee
shall authenticate and deliver, temporary Notes which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Notes in lieu of which they are
issued and with such appropriate insertions, omissions, substitutions and other
variations as the officers executing such Notes may determine, as evidenced by
their execution of such Notes.
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If temporary Notes are issued, the Company will cause
definitive Notes to be prepared without unreasonable delay. After the
preparation of definitive Notes, the temporary Notes shall be exchangeable for
definitive Notes upon surrender of the temporary Notes, at any office or agency
of the Company designated pursuant to Section 10.2, without charge to the
Holder. Upon surrender for cancellation of any one or more temporary Notes, the
Company shall execute and the Trustee shall authenticate and deliver in exchange
therefor a like principal amount of definitive Notes of authorized
denominations. Until so exchanged, the temporary Notes shall in all respects be
entitled to the same benefits under this Indenture as definitive Notes.
SECTION 3.5 REGISTRATION, REGISTRATION OF TRANSFER AND
EXCHANGE. The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office being herein
sometimes referred to as the "NOTE REGISTER") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Notes and of transfers of Notes. The Trustee is hereby appointed
"Note Registrar" (in such capacity, together with its successors as such, the
"NOTE REGISTRAR") for the purpose of registering Notes and transfers of Notes as
herein provided.
Upon surrender for registration of transfer of any Note at an
office or agency of the Company, the Company shall execute, and the Trustee
shall register on the Note Register and shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Notes of any
authorized denominations, of a like aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other
Notes of any authorized denominations, of a like aggregate principal amount,
upon surrender of the Notes to be exchanged at such office or agency. Whenever
any Notes are so surrendered for exchange, the Company shall execute, and the
Trustee shall authenticate and deliver, the Notes which the Holder making the
exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange
of Notes shall be the valid obligations of the Company, evidencing the same debt
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company or the Trustee) be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company, the Trustee and the Note Registrar duly executed,
by the Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of
transfer or exchange of Notes, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes, other than an
exchange pursuant to Section 3.4, 9.6, 11.8, 12.2 or 14.2(c) not involving any
transfer.
Neither the Company nor the Trustee or Note Registrar shall be
required (a) to issue, authenticate, register the transfer of, or exchange, any
Note during a period beginning at the opening of business 15 days before the day
of the mailing of a notice of redemption of Notes
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selected for redemption under Section 11.4 and ending at the close of business
on the day of such mailing or (b) to register the transfer of or exchange any
Note so selected for redemption in whole or in part, except the unredeemed
portion of any Note being redeemed in part.
SECTION 3.6 MUTILATED, DESTROYED, LOST AND STOLEN NOTES. If
any mutilated Note is surrendered to the Trustee, the Company shall execute and
the Trustee shall authenticate and deliver in exchange therefor a new Note of
like tenor and principal amount and bearing a number not contemporaneously
outstanding.
If there shall be delivered to the Company and the Trustee (a)
evidence to their satisfaction of the destruction, loss or theft of any Note and
(b) such security or indemnity as may be required by them to save each of them
and any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Note has been acquired by a bona fide
purchaser, the Company shall execute and upon its request the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen Note, a
new Note of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Note has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Note, pay such Note.
Upon the issuance of any new Note under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Note issued pursuant to this Section in lieu of any
destroyed, lost or stolen Note shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Note shall be at any time enforceable by anyone, and shall be entitled to
all the benefits of this Indenture equally and proportionately with any and all
other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 3.7 PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Interest on any Note which is payable, and is punctually paid or duly provided
for, on any Interest Payment Date shall be paid to the Person in whose name that
Note (or one or more Predecessor Notes) is registered at the close of business
on the Regular Record Date for such interest. The Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be paid in
respect of such interest in immediately available funds 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 interest as in this clause provided.
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Any interest on any Note which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "DEFAULTED INTEREST") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in clause (a) or (b) below.
(a) The Company may elect to make payment of Defaulted
Interest to the Persons in whose names the Notes (or their respective
Predecessor Notes) 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
Note and the date of the proposed payment, and at the same time the
Company shall deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for
such deposit prior to the date of the proposed payment, such money when
deposited to be held in a trust for the benefit of the Persons entitled
to such Defaulted Interest as in this clause provided. Thereupon the
Trustee shall fix a Special Record Date for the payment of such
Defaulted Interest which shall be not more than 15 days and not less
than ten days prior to the date of the proposed payment and not less
than ten days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company of such
Special Record Date and, in the name and at the expense of the Company,
shall cause notice of the proposed payment of such Defaulted Interest
and the Special Record Date therefor to be mailed, first-class postage
prepaid, to each Holder at his address as it appears in the Note
Register, not less than ten days prior to such Special Record Date.
Notice of the proposed payment of such Defaulted Interest and Special
Record Date therefor having been so mailed, such Defaulted Interest
shall be paid to the Persons in whose names the Notes (or their
respective Predecessor Notes) are registered at the close of business
on such Special Record Date and shall no longer be payable pursuant to
the following clause (b).
(b) The Company may make payment of any Defaulted Interest in
any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Notes may be listed, and upon such
notice as may be required by such exchange, if, after notice given by
the Company to the Trustee of the proposed payment pursuant to this
clause, such manner of payment shall be deemed practicable by the
Trustee.
Subject to the foregoing provisions of this Section, each Note
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Note shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Note.
In the case of any Note which is converted after any Regular
Record Date and on or prior to the next succeeding Interest Payment Date (other
than any Note whose Maturity is prior to such Interest Payment Date),
installments of interest whose Stated Maturity is on such Interest Payment Date
shall be payable on such Interest Payment Date notwithstanding such conversion,
and such interest (whether or not punctually paid or duly provided for) shall be
paid
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to the Person in whose name the Note (or one or more Predecessor Notes) is
registered at the close of business on such Regular Record Date. Except as
otherwise expressly provided in the immediately preceding sentence, in the case
of any Note which is converted, installments of interest whose Stated Maturity
is after the date of conversion of such Note shall not be payable.
SECTION 3.8 PERSONS DEEMED OWNERS. Prior to due presentment of
a Note for registration of transfer, the Company, the Trustee and any agent of
the Company or the Trustee may treat the Person in whose name such Note is
registered as the owner of such Note for the purpose of receiving payment of
principal of (and premium, if any) and (subject to Section 3.7) interest on such
Note and for all other purposes whatsoever, whether or not such Note be overdue,
and neither the Company, the Trustee nor any agent of the Company or the Trustee
shall be affected by notice to the contrary.
SECTION 3.9 CANCELLATION. All Notes surrendered for payment,
redemption, registration of transfer or exchange or conversion shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly canceled by it. The Company may at any time deliver to the
Trustee for cancellation any Notes previously authenticated and delivered
hereunder which the Company may have acquired in any manner whatsoever, and all
Notes so delivered shall be promptly canceled by the Trustee. No Notes shall be
authenticated in lieu of or in exchange for any Notes canceled as provided in
this Section, except as expressly permitted by this Indenture. All canceled
Notes held by the Trustee shall be destroyed and a certificate of destruction
shall be delivered to the Company by the Trustee.
SECTION 3.10 COMPUTATION OF INTEREST. Interest on the Notes
shall be computed on the basis of a 360 day year of twelve 30-day months.
SECTION 3.11 CUSIP NUMBER. The Company in issuing Notes may
use a "CUSIP" number, and if so, the Trustee may use the CUSIP number in notices
of redemption or exchange as a convenience to Holders; provided, that any such
notice may state that no representation is made as to the correctness or
accuracy of the CUSIP number printed in the notice or on the Notes, and that
reliance may be placed only on the other identification numbers printed on the
Notes.
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1 SATISFACTION AND DISCHARGE OF INDENTURE. This
Indenture shall cease to be of further effect (except as to any surviving rights
of conversion, registration of transfer or exchange of Notes herein expressly
provided for), and the Trustee, on demand of and
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at the expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(a) either
(i) all Notes theretofore authenticated and
delivered (other than (A) Notes which have been destroyed,
lost or stolen and which have been replaced or paid as
provided in Section 3.6 and (B) Notes for whose payment money
has theretofore been deposited in trust or segregated and held
in trust by the Company and thereafter repaid to the Company
or discharged from such trust, as provided in Section 10.3)
have been delivered to the Trustee for cancellation; or
(ii) all such Notes not theretofore delivered
to the Trustee for cancellation
(A) have become due and payable, or
(B) will become due and payable at their
Stated Maturity within one year, or
(C) are to be called for redemption within
one year under arrangements satisfactory to the
Trustee for the giving of notice of redemption by the
Trustee in the name, and at the expense, of the
Company.
and the Company, in the case of (A), (B) or (C) above, has deposited or
caused to be deposited with the Trustee as trust funds in trust for
that purpose funds sufficient to pay and discharge the entire
indebtedness on such Notes not theretofore delivered to the Trustee for
cancellation, for principal (and premium, if any) and interest to the
date of such deposit (in the case of Notes which have become due and
payable) or to the Stated Maturity or Redemption Date, as the case may
be and, in the case of (B) or (C) above, has delivered to the Trustee
an Opinion of Counsel stating that (1) the Company has received from,
or there has been published by, the Internal Revenue Service a ruling
or (2) since the date of the Indenture, there has been a change in the
applicable United States Federal income tax law, in either case to the
effect that, and based thereon such Opinion of Counsel shall confirm
that, the Holders of the Notes will not recognize income, gain or loss
for United States Federal income tax purposes as a result of such
satisfaction and discharge and will be subject to United States Federal
income tax on the same amounts, in the same manner and at the same
times as would have been the case if such satisfaction and discharge
had not occurred;
(b) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
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(c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.7 and the obligations
of the Trustee to any Authenticating Agent under Section 6.13 shall survive.
SECTION 4.2 APPLICATION OF TRUST MONEY. All money deposited
with the Trustee pursuant to Section 4.1 shall be held in trust and applied by
it, in accordance with the provisions of the Notes and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent) as the Trustee may determine, to the Persons
entitled thereto, of the principal (and premium, if any) and interest for whose
payment such money has been deposited with the Trustee. All moneys deposited
with the Trustee pursuant to Section 4.1 (and held by it or any Paying Agent)
for the payment of Notes subsequently converted shall be returned to the Company
upon receipt by the Trustee of an Officers' Certificate.
ARTICLE V
REMEDIES
SECTION 5.1 EVENTS OF DEFAULT. "EVENT OF DEFAULT", wherever
used herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be occasioned by the provisions of Article
XIII or be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a) default in the payment of any interest upon any Note when
it becomes due and payable, and continuance of such default for a
period of 30 days; or
(b) default in the payment of the principal of (or premium, if
any, on) any Note at its Maturity; or
(c) default in the payment of the Repurchase Price in respect
of any Note on the Repurchase Date therefor in accordance with the
provisions of Article XIV; or
(d) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or
warranty a default in whose performance or whose breach is elsewhere in
this Section specifically dealt with), and continuance of such default
or breach for a period of 60 days after there has been given, by
registered or certified mail, to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 25% in principal
amount of the Outstanding Notes a written notice specifying such
default or breach and requiring it to be remedied and stating that such
notice is a "Notice of Default" hereunder; or
<PAGE> 28
23
(e) a default under any bond, note, note or other evidence of
indebtedness for money borrowed by the Company or under any mortgage,
indenture or instrument under which there may be issued or by which
there may be secured or evidenced any indebtedness for money borrowed
by the Company, whether such indebtedness now exists or shall hereafter
be created, which default shall have resulted in $____________ or more
of such indebtedness becoming or being declared due and payable prior
to the date on which it would otherwise have become due and payable,
without such indebtedness having been discharged, or acceleration
having been rescinded or annulled, within a period of 30 days after
there shall have been given, by registered or certified mail, to the
Company by the Trustee or to the Company and the Trustee by the Holders
of at least 25% in principal amount of the Outstanding Notes a written
notice specifying such default and requiring the Company to cause such
indebtedness to be discharged or cause such acceleration to be
rescinded or annulled and stating that such notice is a "Notice of
Default" hereunder; provided, however, that, subject to the provisions
of Sections 6.1 and 6.2, the Trustee shall not be deemed to have
knowledge of such default unless either (i) a Responsible Officer of
the Trustee shall have actual knowledge of such default or (ii) the
Trustee shall have received written notice thereof from the Company,
from any Holder, from the holder of any such indebtedness or from the
trustee under any such mortgage, indenture or other instrument; or
(f) the entry by a court having jurisdiction in the premises
of (i) a decree or order for relief in respect of the Company in an
involuntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or (ii) a
decree or order adjudging the Company bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the Company
under any applicable Federal or State law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the
continuance of any such decree or order for relief or any such other
decree or order unstayed and in effect for a period of 60 consecutive
days; or
(g) the commencement by the Company of a voluntary case or
proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or of any other case or
proceeding to be adjudicated bankrupt or insolvent, or the consent by
it to the entry of a decree or order for relief in respect of the
Company in an involuntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or insolvency case
or proceeding against it, or the filing by it of a petition or answer
or consent seeking reorganization or relief under any applicable
Federal or State law, or the consent by it to the filing of such
petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or similar
official of the Company or of any substantial part of its property, or
the making by it of an assignment for the benefit of creditors, or the
admission by it in writing of its inability to pay its debts generally
as they become due, or the taking of corporate action by the Company in
furtherance of any such action.
<PAGE> 29
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SECTION 5.2 ACCELERATION OF MATURITY; RESCISSION AND
ANNULMENT. If an Event of Default occurs and is continuing, then and in every
such case the Trustee or the Holders of not less than 25% in principal amount of
the Outstanding Notes may declare the principal of all the Notes to be due and
payable immediately, by a notice in writing to the Company (and to the Trustee
if given by Holders), and upon any such declaration such principal shall become
immediately due and payable.
At any time after such a declaration of acceleration has been
made and before a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter in this Article provided, the Holders of
a majority in principal amount of the Outstanding Notes, by written notice to
the Company and the Trustee, may rescind and annul such declaration and its
consequence if:
(a) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(i) all overdue installments of interest on
all Notes;
(ii) the principal of (and premium, if any, on)
any Notes which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate
borne by the Notes;
(iii) to the extent that payment of such
interest is lawful, interest upon overdue installments of
interest at the rate borne by the Notes; and
(iv) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel;
and
(b) all Events of Default, other than the nonpayment of the
principal of Notes which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 5.13.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 5.3 COLLECTION OF INDEBTEDNESS AND SUITS FOR
ENFORCEMENT BY TRUSTEE. The Company covenants that if:
(a) default is made in the payment of any installment of
interest on any Notes when such interest becomes due and payable and
such default continues for a period of 30 days;
(b) default is made in the payment of the principal of (or
premium, if any, on) any Note at the Maturity thereof; or
<PAGE> 30
25
(c) default is made in the payment of the Repurchase Price in
respect of any Note on the Repurchase Date therefor in accordance with
the provisions of Article XIV;
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Notes, the whole amount then due and payable on such Notes for
principal (and premium, if any) and interest, with interest upon the overdue
principal (and premium, if any) and, to the extent that payment of such interest
shall be legally enforceable, upon overdue installments of interest, at the rate
borne by the Notes; and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
If the Company fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of sums so due and unpaid,
may prosecute such proceeding to judgment or final decree and may enforce the
same against the Company or any other obligor upon the Notes and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon the Notes, wherever
situated.
If an Event of Default occurs and is continuing, the Trustee
may in its discretion proceed to protect and enforce its rights and the rights
of the Holders by such appropriate judicial proceedings, as the Trustee shall
deem most effectual to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in aid of
the exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 5.4 TRUSTEE MAY FILE PROOFS OF CLAIM. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Company or any other obligor upon the Notes or the
property of the Company or of such other obligor or their creditors, the Trustee
(irrespective of whether the principal of the Notes shall then be due and
payable as therein expressed or by declaration or otherwise and irrespective of
whether the Trustee shall have made any demand on the Company for the payment of
overdue principal or interest) shall be entitled and empowered, by intervention
in such proceeding or otherwise,
(a) to file and prove a claim for the whole amount of
principal (and premium, if any) and interest owing and unpaid in
respect of the Notes and to file such other papers or documents as may
be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and
of the Holders allowed in such judicial proceeding; and
(b) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same
after deduction of its charges and expenses;
and any receiver, assignee, trustee, liquidator, sequestrator or other similar
official in any such judicial proceeding is hereby authorized by each Holder to
make such payments to the Trustee and, in the event that the Trustee shall
consent to the making of such payments directly to the
<PAGE> 31
26
Holders, to pay to the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 6.7.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Notes or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
SECTION 5.5 TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
NOTES. All rights of action and claims under this Indenture or the Notes may be
prosecuted and enforced by the Trustee without the possession of any of the
Notes or the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment shall, after provisions for
the payment of the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel, be for the ratable benefit of the
Holders of the Notes in respect of which such judgment has been recovered.
SECTION 5.6 APPLICATION OF MONEY COLLECTED. Subject to Article
XII, any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal (or premium,
if any) or interest, upon presentation of the Notes and the notation thereon of
the payment if only partially paid and upon surrender thereof if fully paid:
(a) to the payment of all amounts due the Trustee under
Section 6.7;
(b) to the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Notes 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 Notes for principal (and premium, if
any) and interest, respectively; and
(c) to the payment of the remainder, if any, to the Company,
its successors or assigns, or to whomsoever may be lawfully entitled to
the same, or as a court of competent jurisdiction may determine.
SECTION 5.7 LIMITATION ON SUITS. No Holder of any Note shall
have any right to institute any proceeding, judicial or otherwise, with respect
to this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless
(a) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(b) the Holders of not less than 25% in principal amount of
the Outstanding Notes shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own
name as Trustee hereunder;
<PAGE> 32
27
(c) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(e) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the Outstanding Notes;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provisions of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
SECTION 5.8 RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM AND
INTEREST AND TO CONVERT. Notwithstanding any other provision in this Indenture,
but subject to Article XIII, the Holder of any Note shall have the right to
receive payment of the principal of (and premium, if any) and (subject to
Section 3.7) interest on such Note on the Stated Maturity expressed in such Note
(or, in the case of redemption or repurchase, on the Redemption Date or
Repurchase Date) and to convert such Note in accordance with Article XII and to
institute suit for the enforcement of any such payment and right to convert, and
such rights shall not be impaired without the consent of such Holder.
SECTION 5.9 RESTORATION OF RIGHTS AND REMEDIES. If the Trustee
or any Holder has instituted any proceeding to enforce any right or remedy under
this Indenture and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee or to such Holder, then
and in every such case, subject to any determination in such proceeding, the
Company, the Trustee and the Holders shall be restored severally and
respectively to their former positions hereunder and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.
SECTION 5.10 RIGHTS AND REMEDIES CUMULATIVE. No right or
remedy herein conferred upon or reserved to the Trustee or to the Holders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 5.11 DELAY OR OMISSION NOT WAIVER. No delay or
omission of the Trustee or of any Holder of any Note to exercise any right or
remedy accruing upon any Event of Default shall impair any such right or remedy
or constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article or by law to
<PAGE> 33
28
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
SECTION 5.12 CONTROL BY HOLDERS. The Holders of a majority in
principal amount of the Outstanding Notes 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; provided
that:
(a) such direction shall not be in conflict with any rule of
law or with this Indenture;
(b) such direction shall not be unduly prejudicial to the
other security holders or involve the Trustee in personal liability and
the Trustee shall not have determined that it does not have sufficient
indemnity against any loss or expense connected to such action; and
(c) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
SECTION 5.13 WAIVER OF PAST DEFAULTS. The Holders of not less
than a majority in principal amount of the Outstanding Notes may on behalf of
the Holders of all the Notes waive any past default hereunder and its
consequences, except a default:
(a) in the payment of the principal of (or premium, if any) or
interest on any Note; or
(b) in respect of a covenant or provision hereof which under
Article IX cannot be modified or amended without the consent of the
Holder of each Outstanding Note affected.
Upon any such waiver, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
SECTION 5.14 UNDERTAKING FOR COSTS. All parties to this
Indenture agree, and each Holder of any Note 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, suffered or omitted by it as
Trustee, the filing by any party litigant in such suit of an undertaking to pay
the costs of such suit and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; but the provisions of this
Section shall not apply to any suit instituted by the Company, to any suit
instituted by the Trustee, to any suit instituted by any Holder, or group of
Holders, holding in the aggregate more than 10% in principal amount of the
Outstanding Notes or to any suit instituted by any Holder
<PAGE> 34
29
for the enforcement of the payment of the principal of (or premium, if any) or
interest on any Note on or after the Stated Maturity expressed in such Note (or,
in the case of redemption or repurchase, on or after the Redemption Date or
Repurchase Date) or for the enforcement of the right to convert any Note in
accordance with Article XII.
SECTION 5.15 WAIVER OF STAY, USURY OR EXTENSION LAWS. The
Company covenants (to the extent that it may lawfully do so) that it will not at
any time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay, usury or extension law whatever enacted, now
or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE VI
THE TRUSTEE
SECTION 6.1 CERTAIN DUTIES AND RESPONSIBILITIES. (a) Except
during the continuance of an Event of Default:
(i) the Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture, and
no implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(ii) in the absence of willful misconduct on its part,
the Trustee may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and conforming
to the requirements of this Indenture, but, in the case of any such
certificates or opinions which by any provisions hereof are
specifically required to be furnished to the Trustee, the Trustee shall
be under a duty to examine the same to determine whether or not they
conform to the requirements of this Indenture.
(b) In case an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture, and use the same degree of care and skill in their
exercise, as a prudent Person would exercise or use under the circumstances in
the conduct of his own affairs.
(c) No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except that:
(i) this subsection shall not be construed to limit the
effect of subsection (a) of this Section;
<PAGE> 35
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(ii) the Trustee shall not be liable for any error of
judgment made by a Responsible Officer, unless it shall be proved that
the Trustee was negligent in ascertaining the pertinent facts;
(iii) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in accordance with the
direction of the Holders of a majority in principal amount of the
Outstanding Notes 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;
and
(iv) no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably
assured to it.
(d) Whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or affecting the liability
of or affording protection to the Trustee shall be subject to the provisions of
this Section.
SECTION 6.2 NOTICE OF DEFAULTS. Within 90 days after the
occurrence of any default hereunder, the Trustee shall transmit by mail to all
Holders, as their names and addresses appear in the Note Register, notice of
such default hereunder known to the Trustee, unless such default shall have been
cured or waived; provided, however, that, except in the case of a default in the
payment of the principal of (or premium, if any) or interest on any Note, the
Trustee shall be protected in withholding such notice if and so long as a trust
committee of Responsible Officers of the Trustee in good faith determines that
the withholding of such notice is in the interest of the Holders; provided
further that, in the case of any default of the character specified in Section
5.1(d), no such notice to Holders shall be given until at least 30 days after
the occurrence thereof. For the purpose of this Section, the term "DEFAULT"
means any event which is, or after notice or lapse of time or both would become,
an Event of Default. The Trustee shall not be deemed to have knowledge of any
default other than those described in Sections 5.1(a), (b) and (c) unless a
Responsible Officer of the Trustee has actual knowledge of such default.
SECTION 6.3 CERTAIN RIGHTS OF TRUSTEE. Except as otherwise
provided in Section 6.1:
(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, direction, consent,
order, bond, debenture, note or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party
or parties;
(b) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order
and any resolution of the Board of Directors may be sufficiently
evidenced by a Board Resolution;
<PAGE> 36
31
(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officers'
Certificate;
(d) the Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon;
(e) subject to Section 6.1(b), the Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by this
Indenture at the request or direction of any of the Holders pursuant to
this Indenture, unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such
request or direction;
(f) prior to the occurrence of an Event of Default hereunder
and after the curing or waiving of all Events of Default, the Trustee
shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, note,
security or other paper or document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit, and, if the Trustee shall determine
to make such further inquiry or investigation, it shall be entitled to
examine the books, records and premises of the Company, personally or
by agent or attorney; and
(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 6.4 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF NOTES.
The recitals contained herein and in the Notes, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company,
and the Trustee assumes no responsibility for their correctness. The Trustee
makes no representations as to the validity or sufficiency of this Indenture or
of the Notes. The Trustee shall not be accountable for the use or application by
the Company or any Paying Agent other than the Trustee of Notes or the proceeds
thereof.
SECTION 6.5 MAY HOLD NOTES. The Trustee, any Authenticating
Agent, any Paying Agent, any Note Registrar or any other agent of the Company,
in its individual or any other capacity, may become the owner or pledgee of
Notes and, subject to Section 6.12 and to Section 310(b) of the Trust Indenture
Act, may otherwise deal with the Company with the same rights it would have if
it were not Trustee, Authenticating Agent, Paying Agent, Note Registrar or such
other agent.
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Subject to Section 310(b) of the Trust Indenture Act, the
Trustee may become and act as trustee under other indentures under which other
securities, or certificates of interest or participation in other securities, of
the Company are outstanding in the same manner as if it were not Trustee.
SECTION 6.6 MONEY HELD IN TRUST. Money held by the Trustee in
trust hereunder need not be segregated from other funds except to the extent
required by law. The Trustee shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed on with the Company.
SECTION 6.7 COMPENSATION AND REIMBURSEMENT. The Company
agrees:
(a) to pay to the Trustee from time to time such compensation
as may be agreed upon by the Trustee and the Company from time to time
for all services rendered by it hereunder (which compensation shall not
be limited by any provisions of law in regard to the compensation of a
trustee of an express trust);
(b) to reimburse the Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by the
Trustee in accordance with any provisions of this Indenture (including
the reasonable compensation and the expenses and disbursements of its
agents, counsel and other persons not regularly in its employ), except
to the extent any such expense, disbursement or advance may be
attributable to its negligence or bad faith; and
(c) to indemnify the Trustee (in its individual capacity and
as Trustee), its officers, directors, attorneys-in-fact and agents for,
and to hold each such person harmless against, any loss, claim, damage,
liability or expense, incurred without negligence or bad faith on such
person's part, arising out of or in connection with the acceptance or
administration of this trust, including the costs 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 obligations of the Company under this Section 6.7
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. To secure the Company's payment
obligations in this Section 6.7, the Trustee shall have a lien prior to
the Notes on all money or property held in trust to pay principal of
(and premium, if any) or interest on particular Notes and such lien
shall survive the satisfaction and discharge of this Indenture and any
other termination of this Indenture including any termination under any
bankruptcy law. When the Trustee incurs expenses or renders services in
connection with an Event of Default under Section 5.1(f) or 5.1(g), the
Holders by their acceptance of the Notes hereby agree that such
expenses and the compensation for such services are intended to
constitute expenses of administration under any bankruptcy law.
"Trustee" for the purposes of this Section 6.7 shall include any
predecessor Trustee, but the negligence or willful misconduct of any
Trustee shall not affect the indemnification of any other Trustee.
<PAGE> 38
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SECTION 6.8 CORPORATE TRUSTEE REQUIRED; ELIGIBILITY;
CONFLICTING INTEREST. The Trustee shall at all times satisfy the eligibility
requirements of Section 310 of the Trust Indenture Act and shall have a combined
capital and surplus of at least $50,000,000 and be subject to supervision or
examination by Federal or State authority. If such corporation publishes reports
of condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article. If the
Trustee has or shall acquire any conflicting interest within the meaning of the
Trust Indenture Act, the Trustee shall comply with the relevant provisions of
the Trust Indenture Act and this Indenture.
SECTION 6.9 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee under Section 6.10.
(b) The Trustee may resign at any time by giving written
notice thereof to the Company. If an instrument of acceptance by a successor
Trustee shall not have been delivered to the Trustee within 30 days after the
giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the
Holders of a majority in principal amount of the Outstanding Notes, delivered to
the Trustee and to the Company.
(d) If at any time:
(i) the Trustee shall cease to be eligible under
Section 6.8 and shall fail to resign after written request therefor by
the Company or by any such Holder; or
(ii) the Trustee shall become incapable of acting or
shall be adjudged bankrupt or insolvent or a receiver of the Trustee or
of its property shall be appointed or any public officer shall take
charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee, or (ii) subject to Section 5.14, any Holder who has been a bona fide
Holder of a Note for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Trustee for
any cause, the Company, by a Board Resolution, shall promptly appoint a
successor Trustee. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee shall be
appointed by Act of the Holders of a majority in principal amount of the
Outstanding Notes delivered to
<PAGE> 39
34
the Company and the retiring Trustee, the successor Trustee so appointed shall,
forthwith upon its acceptance of such appointment, become the successor Trustee
and supersede the successor Trustee appointed by the Company. If no successor
Trustee shall have been so appointed by the Company or the Holders and accepted
appointment in the manner hereinafter provided, the Trustee or any Holder who
has been a bona fide Holder of a Note for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee by mailing
written notice of such event by first-class mail, postage prepaid, to all
Holders as their names and addresses appear in the Note Register. Each notice
shall include the name of the successor Trustee and the address of its Corporate
Trust Office.
SECTION 6.10 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. Every
successor Trustee appointed hereunder 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 request of the Company or the successor
Trustee, such retiring Trustee shall, upon payment of its charges pursuant to
Section 6.7, 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. 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. Any retiring trustee shall, nevertheless, retain a lien on
all property or funds held or collected by such trustee to secure any amounts
then due pursuant to the provisions of Section 6.7.
Upon acceptance of appointment by a successor Trustee as
provided in this Section, the Company shall cause such successor Trustee to mail
notice of succession of such Trustee hereunder to all Holders of Notes as the
names and addresses of such Holders appear on the Note Register.
No successor Trustee shall accept its appointment unless at
the time of such acceptance such successor Trustee shall be eligible under this
Article and qualified under Section 310(b) of the Trust Indenture Act.
SECTION 6.11 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION
TO BUSINESS. Any corporation or national banking association into which the
Trustee may be merged or converted or with which it may be consolidated, or any
corporation or national banking association resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder; provided such
corporation or national banking association shall be otherwise eligible under
this Article and qualified under Section 310(b) of the Trust Indenture Act,
without the execution or filing of any
<PAGE> 40
35
paper or any further act on the part of any of the parties hereto. In case any
Notes 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 Notes so
authenticated with the same effect as if such successor Trustee had itself
authenticated such Notes.
SECTION 6.12 PREFERENTIAL COLLECTION OF CLAIMS AGAINST
COMPANY. The Trustee is subject to Section 311(a) and (b) of the Trust Indenture
Act. Any Trustee that has resigned or been removed shall be subject to Section
311(a) and (b) of the Trust Indenture Act to the extent indicated therein.
SECTION 6.13 APPOINTMENT OF AUTHENTICATING AGENT. The Trustee
may appoint an Authenticating Agent or Agents which shall be authorized to act
on behalf of the Trustee to authenticate Notes issued upon original issue,
exchange, registration of transfer or partial redemption or repurchase thereof
or pursuant to Section 3.6, and Notes so authenticated shall be entitled to the
benefits of this Indenture and shall be valid and obligatory for all purposes as
if authenticated by the Trustee hereunder. Wherever reference is made in this
Indenture to the authentication and delivery of Notes by the Trustee or the
Trustee's certificate of authentication, such reference shall be deemed to
include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a corporation organized and
doing business under the laws of the United States of America, any State thereof
or the District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $50,000,000 and
subject to supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
Any corporation or national banking association into which an
Authenticating Agent may be merged or converted or with which it may be
consolidated or any corporation or national banking association resulting from
any merger, conversion or consolidation to which such Authenticating Agent shall
be a party, or any corporation succeeding to the corporate agency or corporate
trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent; provided such corporation or national banking association
shall be otherwise eligible under this Section, without the execution or filing
of any paper or any further act on the part of the Trustee or the Authenticating
Agent.
An Authenticating Agent may resign at any time by giving
written notice thereof to the Trustee and to the Company. The Trustee may at any
time terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Company. Upon receiving such a
notice of resignation or upon such a termination, or in case
<PAGE> 41
36
at any time such Authenticating Agent shall cease to be eligible in accordance
with the provisions of this Section, the Trustee may appoint a successor
Authenticating Agent which shall be acceptable to the Company and shall mail
written notice of such appointment by first-class mail, postage prepaid, to all
Holders as their names and addresses appear in the Note Register. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder, with
like effect as if originally named as an Authenticating Agent herein. No
successor Authenticating Agent shall be appointed unless eligible under the
provisions of his Section.
The Company agrees to pay to each Authenticating Agent from
time to time reasonable compensation for its services under this Section.
If an appointment is made pursuant to this Section, the Notes
may have endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternate certificate of authentication in the following
form:
This is one of the Notes referred to in the within-mentioned
Indenture.
Dated:
STAR BANK, NATIONAL ASSOCIATION, as Trustee
By____________________________
As Authenticating Agent
By____________________________
Authorized Signatory
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 7.1 COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF
HOLDERS. The Company will furnish or cause to be furnished to the Trustee:
(a) semiannually, not more than 15 days after each Regular
Record Date, a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Holders as of such Regular
Record Date, and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than 15 days
prior to the time such list is furnished;
<PAGE> 42
37
excluding from any such list names and addresses received by the Trustee in its
capacity as Note Registrar.
SECTION 7.2 PRESERVATION OF INFORMATION COMMUNICATIONS TO
HOLDERS.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in the most
recent list furnished to the Trustee as provided in Section 7.1 and the names
and addresses of Holders received by the Trustee in its capacity as Note
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 7.1 upon receipt of a new list so furnished.
(b) The rights of the Holders to communicate with other
Holders with respect to their rights under this Indenture or under the Notes,
and the corresponding rights and duties of the Trustee, shall be as provided by
the Trust Indenture Act.
(c) Every Holder of Notes, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any agent of either of them shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the Holders
in accordance with Section 312 of the Trust Indenture Act regardless of the
source from which such information was derived, and that the Trustee shall not
be held accountable by reason of mailing any material pursuant to a request made
under Section 312(b) of the Trust Indenture Act.
SECTION 7.3 REPORTS BY TRUSTEE. (a) Within 60 days after May
15 of each year commencing with the year 1997, the Trustee shall transmit to the
Holders of Notes, in the manner and to the extent provided in Section 313(c) of
the Trust Indenture Act, a brief report if required by Section 313(a) of the
Trust Indenture Act, dated as of such May 15. The Trustee also shall comply with
Section 313(b) of the Trust Indenture Act and shall transmit to Holders, in the
manner and to the extent provided in Section 313(c) of the Trust Indenture Act,
all reports, if any, as may be required pursuant to the Trust Indenture Act.
(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which the Notes are listed, with the Commission and with the Company. The
Company will notify the Trustee when the Notes are listed on any stock exchange.
SECTION 7.4 REPORTS BY COMPANY. The Company shall:
(a) file with the Trustee and the Commission, and transmit to
Holders, such information, documents and reports, and such summaries
thereof and copies of portions thereof, as may be required pursuant to
the Trust Indenture Act at the times and in the manner provided
pursuant to the Trust Indenture Act; provided that any such
information, documents or reports required to be filed with the
Commission pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 shall be filed with the Trustee within 15 days after the
same shall be so required to be filed with the Commission; and
<PAGE> 43
38
(b) file with the Trustee within 120 days after the end of
each fiscal year of the Company (which on the date hereof is the 12
months ending August 31) commencing with the fiscal year ending August
31, 1997, a certificate of the principal executive officer, the
principal financial officer or the principal accounting officer of the
Company, stating whether or not, to the knowledge of the signer, the
Company has complied with all conditions and covenants on its part
contained in this Indenture, and, if the signer has obtained knowledge
of any default by the Company in the performance, observance or
fulfillment of any such condition or covenant, specifying each such
default and the nature thereof. For the purpose of this Section 7.4,
compliance shall be determined without regard to any grace period or
requirement of notice provided pursuant to the terms of this Indenture.
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER
SECTION 8.1 COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN
TERMS. The Company shall not consolidate with or merge into any other
corporation or convey or transfer its properties and assets substantially as an
entirety to any Person, unless:
(a) the corporation formed by such consolidation or into which
the Company is merged or the Person which acquires by conveyance or
transfer the properties and assets of the Company substantially as an
entirety shall be a corporation organized and existing under the laws
of the United States of America, any State thereof or the District of
Columbia and shall expressly assume, by an indenture supplemental
hereto, executed and delivered to the Trustee, in form satisfactory to
the Trustee, the due and punctual payment of the principal of (and
premium, if any) and interest on all the Notes and the performance of
every covenant of this Indenture on the part of the Company to be
performed or observed and shall have provided for conversion rights in
accordance with Section 12.10;
(b) immediately after giving effect to such transaction, no
Event of Default, and no event which, after notice or lapse of time or
both, would become an Event of Default, shall have happened and be
continuing; and
(c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance or transfer and such supplemental
indenture comply with this Article and that all conditions precedent
herein provided for relating to such transaction have been complied
with.
SECTION 8.2 SUCCESSOR CORPORATION SUBSTITUTED. Upon any
consolidation or merger or any conveyance or transfer of the properties and
assets of the Company substantially as an entirety in accordance with Section
8.1, the successor corporation formed by such consolidation or into which the
Company is merged or to which such conveyance or transfer is made shall succeed
to, and be substituted for, and may exercise every right and power of,
<PAGE> 44
39
the Company under this Indenture with the same effect as if such successor
corporation had been named as the Company herein, and thereafter the predecessor
corporation shall be relieved of all obligations and covenants under this
Indenture and the Notes.
ARTICLE IX
SUPPLEMENTAL INDENTURE
SECTION 9.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF
HOLDERS. Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
(a) to evidence the succession of another corporation to the
Company and the assumption by any such successor of the covenants of
the Company herein and in the Notes; or
(b) to add to the covenants of the Company for the benefit of
the Holders, or to surrender any right or power herein conferred upon
the Company; or
(c) to make provision with respect to the conversion rights of
Holders pursuant to the requirements of Section 12.10; or
(d) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture, provided such action shall not
adversely affect the interests of the Holders in any material respect;
or
(e) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect or maintain
the qualification of this Indenture under the Trust Indenture Act, or
under any similar Federal statute hereafter enacted.
SECTION 9.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the consent of the Holders of not less than two-thirds in principal amount
of the Outstanding Notes, by Act of said Holders delivered to the Company and
the Trustee, the Company, when authorized by a Board Resolution, and the Trustee
may enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders under this Indenture; provided, however, that no such supplemental
indenture shall, without the consent of the Holder of each Outstanding Note
affected thereby.
(a) change the Stated Maturity of the principal of, or any
installment of interest on, any Note, or reduce the principal amount
thereof or the rate of interest thereon or any premium payable upon the
redemption thereof, or change the place of payment where, or the coin
or currency in which, any Note or any premium or the interest thereon
is
<PAGE> 45
40
payable, or impair the right to institute suit for the enforcement of
any such payment on or after the Stated Maturity thereof (or, in the
case of redemption, on or after the Redemption Date), or adversely
affect the right to convert any Note as provided in Article XII, or
adversely affect the right to require the Company to repurchase the
Notes as provided in Article XIV or modify the provisions of this
Indenture with respect to the subordination of the Notes in a manner
adverse to the Holders, or
(b) reduce the percentage in principal amount of the
Outstanding Notes the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for
any waiver of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences provided for in this
Indenture, or
(c) modify any of the provisions of this Section, Section 5.13
or Section 10.7, except to increase any such percentage or to provide
that certain other provisions of this Indenture cannot be modified or
waived without the consent of the Holder of each Outstanding Note
affected thereby.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
SECTION 9.3 EXECUTION OF SUPPLEMENTAL INDENTURES. In
executing, or accepting the additional trusts created by, any supplemental
indenture permitted by this Article or the modifications thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive, and
(subject to Section 6.1) shall be fully protected in relying upon, an Opinion of
Counsel stating that the execution of such supplemental indenture is authorized
or permitted by this Indenture. The Trustee may, but shall not be obligated to,
enter into any such supplemental indenture which affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise.
SECTION 9.4 EFFECT OF SUPPLEMENTAL INDENTURES. Upon the
execution of any supplemental indenture under this Article, this Indenture shall
be, and shall be deemed to be, modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes; and
every Holder of Notes theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
SECTION 9.5 CONFORMITY WITH TRUST INDENTURE ACT. Every
supplemental indenture executed pursuant to this Article shall conform to the
requirements of the Trust Indenture Act as then in effect.
SECTION 9.6 REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES.
Notes authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article may, and shall if required by the Trustee,
bear a notation in form approved by the Trustee as to any matter provided for in
such supplemental indenture. If the Company or the Trustee shall so determine,
new Notes so modified as to conform, in the opinion of the Trustee and the
<PAGE> 46
41
Board of Directors, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Notes.
ARTICLE X
COVENANTS
SECTION 10.1 PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The
Company will duly and punctually pay or cause to be paid by no later than one
Business Day prior to the date such payment is due the principal of (and
premium, if any) and interest on the Notes in accordance with the terms of the
Notes and this Indenture.
SECTION 10.2 MAINTENANCE OF OFFICE OR AGENCY. The Company will
maintain in The City of New York an office or agency where Notes may be
presented or surrendered for payment or repurchase, where Notes may be
surrendered for registration of transfer or exchange, where Notes may be
surrendered for conversion and where notices and demands to or upon the Company
in respect of the Notes and this Indenture may be served. The Company will give
prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the Corporate Trust Office of the Trustee, and the
Company hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more
other offices or agencies (in or outside The City of New York) where the Notes
may be presented or surrendered for any or all such purposes and may from time
to time rescind such designations; provided, however, that no such designation
or rescission shall in any manner relieve the Company of its obligation to
maintain an office or agency in The City of New York for such purposes. The
Company will give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.
SECTION 10.3 MONEY FOR NOTE PAYMENTS TO BE HELD IN TRUST. If
the Company shall at any time act as its own Paying Agent it will, on or before
each due date of the principal of (and premium, if any) or interest on any of
the Notes, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal (and premium if any) or interest
so becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and will promptly notify the Trustee of its
action or failure so to act.
Whenever the Company shall have one or more Paying Agents, it
will prior to each due date of the principal of (and premium if any) or interest
on any Notes, deposit with a Paying Agent a sum sufficient to pay the principal
(and premium, if any) or interest so becoming due, such sum to be held in trust
for the benefit of the Persons entitled to such principal,
<PAGE> 47
42
premium or interest, and (unless such Paying Agent is the Trustee) the Company
will promptly notify the Trustee of its action or failure so to act.
The Company will cause each Paying Agent other than the
Trustee to execute and deliver to the Trustee an instrument in which such Paying
Agent shall agree with the Trustee, subject to the provisions of this Section,
that such Paying Agent will:
(a) hold all sums held by it for the payment of the principal
of (and premium, if any) or interest on Notes in trust for the benefit
of the Persons entitled thereto until such sums shall be paid to such
Persons or otherwise disposed of as herein provided;
(b) give the Trustee notice of any default by the Company (or
any other obligor upon the Notes) in the making of any payment of
principal (and premium, if any) or interest; and
(c) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of (and
premium, if any) or interest on any Note and remaining unclaimed for two years
after such principal (and premium, if any) or interest has become due and
payable shall be paid to the Company on Company Request, or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Note shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in the Borough of Manhattan, The City of New York, notice that such
money remains unclaimed and that, after a date specified therein, which shall
not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Company.
SECTION 10.4 CORPORATE EXISTENCE. Subject to Article VIII, the
Company will do or cause to be done all things necessary to preserve and keep in
full force and effect its corporate existence, rights (charter and statutory)
and franchises; provided, however, that the Company shall not be required to
preserve any such right or franchise if the Company shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
<PAGE> 48
43
the Company and that the loss thereof is not disadvantageous in any material
respect to the Holders.
SECTION 10.5 MAINTENANCE OF PROPERTIES. The Company will cause
all properties used or useful in the conduct of its business to be maintained
and kept in good condition, repair and working order in accordance with normal
industry practice and supplied with all necessary equipment and will cause to be
made all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Company may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times; provided, however, that nothing in this Section shall
prevent the Company from discontinuing the operation or maintenance of any of
such properties if such discontinuance is, in the judgment of the Company,
desirable in the conduct of its business and not disadvantageous in any material
respect to the Holders.
SECTION 10.6 PAYMENT OF TAXES AND OTHER CLAIMS. The Company
will pay or discharge or cause to be paid or discharged, before the same shall
become delinquent, (a) all taxes, assessments and governmental charges levied or
imposed upon the Company or upon the income, profits or property of the Company,
and (b) all lawful claims for labor, materials and supplies which, if unpaid,
might by law become a lien upon the property of the Company; provided, however,
that the Company shall not be required to pay or discharge or cause to be paid
or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings.
SECTION 10.7 WAIVER OF CERTAIN COVENANTS. The Company may omit
in any particular instance to comply with any covenant or condition set forth in
Sections 10.4 to 10.6, inclusive, if before the time for such compliance the
Holders of at least a majority in principal amount of the Outstanding Notes
shall, by Act of such Holders, either waive such compliance in such instance or
generally waive compliance with such covenant or condition, but no such waiver
shall extend to or affect such covenant or condition except to the extent so
expressly waived, and, until such waiver shall become effective, the obligations
of the Company and the duties of the Trustee in respect of any such covenant or
condition shall remain in full force and effect.
ARTICLE XI
REDEMPTION OF NOTES
SECTION 11.1 RIGHT OF REDEMPTION. The Notes may be redeemed at
the election of the Company, as a whole or from time to time in part, at any
time on or after , 1999 , at the Redemption Prices specified
in the form of Note hereinbefore set forth for redemptions, together with
accrued interest to the Redemption Date; provided, however, that the Company
may not redeem any of the Notes pursuant to such option prior to , 1999.
<PAGE> 49
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SECTION 11.2 APPLICABILITY OF ARTICLE. Redemption of Notes, at
the election of the Company or otherwise as permitted or required by any
provision of this Indenture, shall be made in accordance with such provision and
this Article.
SECTION 11.3 ELECTION TO REDEEM; NOTICE TO TRUSTEE. The
election of the Company to redeem any Notes pursuant to Section 11.1 shall be
evidenced by a Board Resolution. In case of any redemption at the election of
the Company of less than all the Notes, the Company shall, at least 60 days
prior to the Redemption Date fixed by the Company (unless a shorter notice shall
be satisfactory to the Trustee) notify the Trustee of such Redemption Date and
of the principal amount of Notes to be redeemed.
SECTION 11.4 SELECTION BY TRUSTEE OF NOTES TO BE REDEEMED. If
less than all the Notes are to be redeemed the particular Notes to be redeemed
shall be selected not more than 60 days prior to the Redemption Date by the
Trustee, from the Outstanding Notes not previously called for redemption, pro
rata or by lot or by such other method as the Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of portions
(equal to $1,000 or any integral multiple thereof) of the principal amount of
Notes of a denomination larger than $1,000.
If any Note selected for partial redemption is converted in
part before termination of the conversion right with respect to the portion of
the Note so selected, the converted portion of such Note shall be deemed (so far
as may be) to be the portion selected for redemption. Notes which have been
converted during a selection of Notes to be redeemed shall be treated by the
Trustee as Outstanding for the purpose of such selection.
The Trustee shall promptly notify the Company and the Note
Registrar in writing of the Notes selected for redemption and, in the case of
any Notes selected for partial redemption, the principal amount thereof to be
redeemed.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of Notes shall
relate, in the case of any Notes redeemed or to be redeemed only in part, to the
portion of the principal amount of such Note which has been or is to be
redeemed.
SECTION 11.5 NOTICE OF REDEMPTION. Notice of redemption shall
be given by first-class mail, postage prepaid, mailed not less than 30 nor more
than 60 days prior to the Redemption Date, to each Holder of Notes to be
redeemed, at such Holder's address appearing in the Note Register.
All notices of redemption shall state:
(1) the Redemption Date;
(2) the Redemption Price;
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(3) if less than all the Outstanding Notes are to be redeemed,
the identification (and, in the case of partial redemption, the
principal amounts) of the particular Notes to be redeemed;
(4) that on the Redemption Date the Redemption Price, together
with (unless the Redemption Date shall be an Interest Payment Date)
interest accrued and unpaid to the Redemption Date, will become due and
payable upon each such Note to be redeemed and that interest thereon
will cease to accrue on and after said date;
(5) the conversion price, the date on which the right to
convert the principal of the Notes to be redeemed will terminate and
the place or places where such Notes may be surrendered for conversion;
and
(6) the place or places where such Notes are to be surrendered
for payment of the Redemption Price.
Notice of redemption of Notes to be redeemed at the election
of the Company shall be given by the Company or, at the Company's request, by
the Trustee in the name and at the expense of the Company.
SECTION 11.6 DEPOSIT OF REDEMPTION PRICE. Prior to any
Redemption Date, the Company shall deposit with the Trustee or with a Paying
Agent (or, if the Company is acting as its own Paying Agent, segregate and hold
in trust) an amount of money sufficient to pay the Redemption Price of and,
subject to Section 11.7, accrued interest on all the Notes which are to be
redeemed on that date other than any Notes called for redemption on that date
which have been converted prior to the date of such deposit.
If any Note called for redemption is converted, any money
deposited with the Trustee or with any Paying Agent or so segregated and held in
trust for the redemption of such Note shall (subject to any right of the Holder
of such Note or any Predecessor Note to receive interest as provided in the last
paragraph of Section 3.7) be paid to the Company upon Company Request or, if
then held by the Company, shall be discharged from such trust.
SECTION 11.7 NOTES PAYABLE ON REDEMPTION DATE. Notice of
redemption having been given as aforesaid, the Notes so to be redeemed shall, on
the Redemption Date, become due and payable at the Redemption Price therein
specified, and from and after such date (unless the Company shall default in the
payment of the Redemption Price and accrued interest) such Notes shall cease to
bear interest. Upon surrender of any such Note for redemption in accordance with
said notice, such Note shall be paid by the Company at the Redemption Price,
together with accrued interest to the Redemption Date; provided, however, that
installments of interest whose Stated Maturity is on or prior to the Redemption
Date shall be payable to the Holders of such Notes, or one or more Predecessor
Notes, registered as such at the close of business on the relevant Record Dates
according to their terms and the provisions of Section 3.7.
<PAGE> 51
46
If any Note called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate borne by the
Note.
SECTION 11.8 NOTES REDEEMED IN PART. Any Note which is to be
redeemed only in part shall be surrendered at any office or agency of the
Company designated for that purpose (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company, the Trustee and the Note Registrar duly executed
by, the Holder thereof or his attorney duly authorized in writing), and the
Company shall execute, and the Trustee shall authenticate and deliver to the
Holder of such Note without service charge, a new Note or Notes, of any
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Note so surrendered.
ARTICLE XII
CONVERSION OF NOTES
SECTION 12.1 CONVERSION PRIVILEGE AND CONVERSION PRICE.
Subject to and upon compliance with the provisions of this Article, at the
option of the Holder thereof, any Note or any portion of the principal amount
thereof which is $1,000 or an integral multiple of $1,000 may be converted, at
any time and from time to time except as provided herein, at the principal
amount thereof, or of such portion thereof, into fully paid and nonassessable
Common Shares (calculated as to each conversion to the nearest 1/100 of a share)
of the Company, at the conversion price, determined as hereinafter provided, in
effect at the time of conversion. Such conversion right shall expire at the
close of business on ______, 2003. In case a Note or portion thereof is called
for redemption, such conversion right in respect of the Note or portion so
called shall expire at the close of business on the Business Day preceding the
Redemption Date, unless the Company defaults in making the payment due upon
redemption.
The price at which Common Shares shall be delivered upon
conversion (herein called the "CONVERSION PRICE") shall be initially $ per
Common Share. The Conversion Price shall be adjusted in certain instances as
provided in Section 12.4.
SECTION 12.2 EXERCISE OF CONVERSION PRIVILEGE. In order to
exercise the conversion privilege, the Holder of any Note to be converted shall
surrender such Note, duly endorsed or assigned to the Company or in blank, at
any office or agency of the Company maintained for that purpose, accompanied by
written notice to the Company at such office or agency that the Holder elects to
convert such Note or, if less than the entire principal amount thereof is to be
converted, the portion thereof to be converted. In connection with the exercise
of the conversion privilege by a Holder prior to a Redemption Date, a Holder's
right to exercise his conversion privilege shall terminate at the close of
business on the Business Day prior to the Redemption Date. Notes surrendered for
conversion during the period from the close of business on any Regular Record
Date next preceding any Interest Payment Date to the opening of business on such
Interest Payment Date shall (except in the case of Notes or portions thereof
which have
<PAGE> 52
47
been called for redemption on a Redemption Date within such period) be
accompanied by payment in New York Clearing House funds or other funds
acceptable to the Company of an amount equal to the interest payable on such
Interest Payment Date on the principal amount of Notes being surrendered for
conversion. Except as provided in the preceding sentence and subject to the last
paragraph of Section 3.7, no payment or adjustment shall be made upon any
conversion on account of any interest accrued on the Notes surrendered for
conversion or on account of any dividends on the Common Shares issued upon
conversion.
Notes shall be deemed to have been converted immediately prior
to the close of business on the day of surrender of such Notes for conversion in
accordance with the foregoing provisions, and at such time the rights of the
Holders of such Notes as Holders shall cease, and the person or persons entitled
to receive the Common Shares issuable upon conversion shall be treated for all
purposes as the record holder or holders of such Common Shares at such time. As
promptly as practicable on or after the conversion date, the Company shall issue
and shall deliver at such office or agency a certificate or certificates for the
number of full Common Shares issuable upon conversion, together with payment in
lieu of any fraction of a share, as provided in Section 12.3.
In the case of any Note which is converted in part only, upon
such conversion the Company shall execute and the Trustee shall authenticate and
deliver to the Holder thereof, at the expense of the Company, a new Note or
Notes of authorized denominations in aggregate principal amount equal to the
unconverted portion of the principal amount of such Note.
SECTION 12.3 FRACTIONS OF SHARES. No fractional Common Shares
shall be issued upon the conversion of Notes. If more than one Note shall be
surrendered for conversion at one time by the same Holder, the number of full
shares which shall be issuable upon conversion thereof shall be computed on the
basis of the aggregate principal amount of Notes (or specified portions thereof)
so surrendered. Instead of any fractional Common Share which would otherwise be
issuable upon conversion of any Note or Notes (or specified portions thereof),
the Company shall pay a cash adjustment in respect of such fraction in an amount
equal to the same fraction of the closing price per Common Share on the Business
Day prior to the day of conversion (determined as provided in clause (i) of
paragraph (g) of Section 12.4).
SECTION 12.4 ADJUSTMENT OF CONVERSION PRICE. The Conversion
Price shall be adjusted from time to time by the Company as follows:
(a) If the Company shall hereafter pay a dividend or make a
distribution to all holders of the outstanding Common Shares payable in
Common Shares, the Conversion Price in effect at the opening of
business on the date following the date fixed for the determination of
shareholders entitled to receive such dividend or other distribution
shall be reduced by multiplying such Conversion Price by a fraction of
which the numerator shall be the number of Common Shares outstanding at
the close of business on the Record Date (as defined in Section
12.4(g)) fixed for such determination and the denominator shall be the
sum of such number of shares and the total number of shares
constituting such dividend or other distribution, such reduction to
become effective immediately after the opening of business on the day
following the Record Date. If any dividend or
<PAGE> 53
48
distribution of the type described in this Section 12.4(a)
is declared but not so paid or made, the Conversion Price shall again
be adjusted to the Conversion Price which would then be in effect if
such dividend or distribution had not been declared.
(b) If the Company shall issue rights or warrants to all
holders of its outstanding Common Shares entitling them to subscribe
for or purchase Common Shares at a price per share less than the
Current Market Price (as defined in Section 12.4(g)) on the Record Date
fixed for the determination of shareholders entitled to receive such
rights or warrants, the Conversion Price shall be adjusted so that the
same shall equal the price determined by multiplying the Conversion
Price in effect at the opening of business on the date after such
Record Date by a fraction of which the numerator shall be the number of
Common Shares outstanding at the close of business on the Record Date
plus the number of Common Shares which the aggregate offering price of
the total number of Common Shares so offered would purchase at such
Current Market Price and of which the denominator shall be the number
of Common Shares outstanding at the close of business on the Record
Date plus the total number of additional Common Shares so offered for
subscription or purchase. Such adjustment shall become effective
immediately after the opening of business on the day following the
Record Date fixed for determination of shareholders entitled to receive
such rights or warrants. To the extent that Common Shares are not
delivered pursuant to such rights or warrants, upon the expiration or
termination of such rights or warrants, the Conversion Price shall
again be adjusted to be the Conversion Price which would then be in
effect had the adjustments made upon the issuance of such rights or
warrants been made on the basis of delivery of only the number of
Common Shares actually delivered. If such rights or warrants are not so
issued, the Conversion Price shall again be adjusted to be the
Conversion Price which would then be in effect if such date fixed for
the determination of shareholders entitled to receive such rights or
warrants had not been fixed. In determining whether any rights or
warrants entitle the holders to subscribe for or purchase Common Shares
at less than such Current Market Price, and in determining the
aggregate offering price of such Common Shares, there shall be taken
into account any consideration received for such rights or warrants,
with the value of such consideration, if other than cash, to be
determined by the Board of Directors.
(c) If the outstanding Common Shares shall be subdivided into
a greater number of Common Shares, the Conversion Price in effect at
the opening of business on the day following the day upon which such
subdivision becomes effective shall be proportionately reduced, and,
conversely, if the outstanding Common Shares shall be combined into a
smaller number of Common Shares, the Conversion Price in effect at the
opening of business on the day following the day upon which such
combination becomes effective shall be proportionately increased, such
reduction or increase, as the case may be, to become effective
immediately after the opening of business on the day following the day
upon which such subdivision or combination becomes effective.
(d) If the Company shall, by dividend or otherwise, distribute
to all holders of its Common Shares, capital shares of the Company of
any class (other than any dividends or distributions to which Section
12.4(a) applies) or evidences of its indebtedness, cash
<PAGE> 54
49
or other assets (including securities, but excluding any rights or
warrants of a type referred to in Section 12.4(b) and dividends and
distributions paid exclusively in cash and excluding any capital
shares, evidences of indebtedness, cash or assets distributed upon a
merger or consolidation to which Section 12.10 applies) (the foregoing
hereinafter in this Section 12.4(d) called the "SECURITIES"), then, in
each such case, the Conversion Price shall be reduced so that the same
shall be equal to the price determined by multiplying the Conversion
Price in effect immediately prior to the close of business on the
Record Date (as defined in Section 12.4(g)) with respect to such
distribution by a fraction of which the numerator shall be the Current
Market Price (determined as provided in Section 12.4(g)) on such date
less the fair market value (as determined by the Board of Directors,
whose determination shall be conclusive and described in a resolution
of the Board of Directors) on such date of the portion of the
Securities so distributed applicable to one Common Share and the
denominator shall be such Current Market Price, such reduction to
become effective immediately prior to the opening of business on the
day following the Record Date; provided, however, that, in the event
the then fair market value (as so determined) of the portion of the
Securities so distributed applicable to one Common Share is equal to or
greater than the Current Market Price on the Record Date, in lieu of
the foregoing adjustment, adequate provision shall be made so that each
holder of Notes shall have the right to receive upon conversion of a
Note (or any portion thereof) the amount of Securities such holder
would have received had such holder converted such Note (or portion
thereof) immediately prior to such Record Date. If such dividend or
distribution is not so paid or made, the Conversion Price shall again
be adjusted to be the Conversion Price which would then be in effect if
such dividend or distribution had not been declared. If the Board of
Directors determines the fair market value of any distribution for
purposes of this Section 12.4(d) by reference to the actual or when
issued trading market for any securities comprising all or part of such
distribution, it must in doing so consider the prices in such market
over the same period used in computing the Current Market Price
pursuant to Section 12.4(g) to the extent possible.
Rights or warrants distributed by the Company to all holders
of Common Shares entitling the holders thereof to subscribe for or
purchase the Company's capital shares (either initially or under
certain circumstances), which rights or warrants, until the occurrence
of a specified event or events ("TRIGGER EVENT"): (i) are deemed to be
transferred with such Common Shares; (ii) are not exercisable; and
(iii) are also issued in respect of future issuances of Common Shares,
shall be deemed not to have been distributed for purposes of this
Section 12.4(d) (and no adjustment to the Conversion Price under this
Section 12.4(d) shall be required) until the occurrence of the earliest
Trigger Event, whereupon such rights and warrants shall be deemed to
have been distributed and an appropriate adjustment to the Conversion
Price under this Section 12.4(d) shall be made. If any such rights or
warrants, including any such existing rights or warrants distributed
prior to the date of this Indenture, are subject to subsequent events,
upon the occurrence of each of which such rights or warrants shall
become exercisable to purchase different securities, evidences of
indebtedness or other assets, then the occurrence of each such event
shall be deemed to be such date of issuance and record date with
respect to new rights or warrants (and a termination or expiration of
the existing rights or warrants without exercise by the holder
thereof). In addition, in the event of any distribution (or
<PAGE> 55
50
deemed distribution) of rights or warrants, or any Trigger Event with
respect thereto, that was counted for purposes of calculating a
distribution amount for which an adjustment to the Conversion Price
under this Section 12.4 was made, (1) in the case of any such rights or
warrants which shall all have been redeemed or repurchased without
exercise by any holders thereof, the Conversion Price shall be
readjusted upon such final redemption or repurchase to give effect to
such distribution or Trigger Event, as the case may be, as though it
were a cash distribution, equal to the per share redemption or
repurchase price received by a holder or holders of Common Shares with
respect to such rights or warrants (assuming such holder had retained
such rights or warrants), made to all holders of Common Shares as of
the date of such redemption or repurchase, and (2) in the case of such
rights or warrants which shall have expired or been terminated without
exercise by any holders thereof, the Conversion Price shall be
readjusted as if such rights and warrants had not been issued.
Notwithstanding any other provision of this Section 12.4(d) to
the contrary, rights, warrants, evidences of indebtedness, other
securities, cash or other assets (including, without limitation, any
rights distributed pursuant to any shareholder rights plan) shall be
deemed not to have been distributed for purposes of this Section
12.4(d) if the Company makes proper provision so that each holder of
Notes who converts a Note (or any portion thereof) after the date fixed
for determination of shareholders entitled to receive such distribution
shall be entitled to receive upon such conversion, in addition to the
Common Shares issuable upon such conversion, the amount and kind of
such distributions that such holder would have been entitled to receive
if such holder had, immediately prior to such determination date,
converted such Note into Common Shares.
For purposes of this Section 12.4(d) and Sections 12.4(a) and
(b), any dividend or distribution to which this Section 12.4(d) is
applicable that also includes Common Shares, or rights or warrants to
subscribe for or purchase Common Shares to which Section 12.4(b)
applies (or both), shall be deemed instead to be (1) a dividend or
distribution of the evidences of indebtedness, assets, capital shares,
rights or warrants other than such Common Shares or rights or warrants
to which Section 12.4(b) applies (and any Conversion Price reduction
required by this Section 12.4(d) with respect to such dividend or
distribution shall then be made) immediately followed by (2) a dividend
or distribution of such Common Shares or such rights or warrants (and
any further Conversion Price reduction required by Sections 12.4(a) and
(b) with respect to such dividend or distribution shall then be made),
except that (i) the Record Date of such dividend or distribution shall
be substituted as "the date fixed for the determination of shareholders
entitled to receive such dividend or other distribution", "Record Date
fixed for such determination" and "Record Date" within the meaning of
Section 12.4(a) and as "the date fixed for the determination of
shareholders entitled to receive such rights or warrants", "the Record
Date fixed for the determination of the shareholders entitled to
receive such rights or warrants" and "such Record Date" within the
meaning of Section 12.4(b), and (ii) any Common Shares included in such
dividend or distribution shall not be deemed "outstanding at the close
of business on the date fixed for such determination" within the
meaning of Section 12.4(a).
<PAGE> 56
51
(e) If the Company shall, by dividend or otherwise, distribute
to all holders of its Common Shares cash (excluding any cash that is
distributed upon a merger or consolidation to which Section 12.10
applies or as part of a distribution referred to in Section 12.4(d)) in
an aggregate amount that, combined together with (1) the aggregate
amount of any other such distributions to all holders of its Common
Shares made exclusively in cash within the 12 months preceding the date
of payment of such distribution, and in respect of which no adjustment
pursuant to this Section 12.4(e) has been made, and (2) the aggregate
of any cash plus the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a
resolution of the Board of Directors) of consideration payable in
respect of any tender offer by the Company or any of its subsidiaries
for all or any portion of the Common Shares concluded within the 12
months preceding the date of payment of such distribution, and in
respect of which no adjustment pursuant to Section 12.4(f) has been
made, exceeds 10% of the product of the Current Market Price
(determined as provided in Section 12.4(g)) on the Record Date with
respect to such distribution times the number of Common Shares
outstanding on such date, then, and in each such case, immediately
after the close of business on such date, the Conversion Price shall be
reduced so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the
close of business on such Record Date by a fraction (i) the numerator
of which shall be equal to the Current Market Price on the Record Date
less an amount equal to the quotient of (x) the excess of such combined
amount over such 10% and (y) the number of Common Shares outstanding on
the Record Date and (ii) the denominator of which shall be equal to the
Current Market Price on such Record Date; provided, however, that, if
the portion of the cash so distributed applicable to one Common Share
is equal to or greater than the Current Market Price of the Common
Shares on the Record Date, in lieu of the foregoing adjustment,
adequate provision shall be made so that each holder of Notes shall
have the right to receive upon conversion of a Note (or any portion
thereof) the amount of cash such holder would have received had such
holder converted such Note (or portion thereof) immediately prior to
such Record Date. If such dividend or distribution is not so paid or
made, the Conversion Price shall again be adjusted to be the Conversion
Price which would then be in effect if such dividend or distribution
had not been declared. Any cash distribution to all holders of Common
Shares as to which the Company makes the election permitted by Section
12.4(m) and as to which the Company has complied with the requirements
of such Section shall be treated as not having been made for all
purposes of this Section 12.4(e).
(f) If a tender offer made by the Company or any of its
subsidiaries for all or any portion of the Common Shares expires and
such tender offer (as amended upon the expiration thereof) requires the
payment to shareholders (based on the acceptance (up to any maximum
specified in the terms of the tender offer) of Purchased Shares (as
defined below)) of an aggregate consideration having a fair market
value (as determined by the Board of Directors, whose determination
shall be conclusive and described in a resolution of the Board of
Directors) that, combined together with (1) the aggregate of the cash
plus the fair market value (as determined by the Board of Directors,
whose determination shall be conclusive and described in a resolution
of the Board of Directors), as of the expiration of such tender offer,
of consideration payable in respect of any other tender offers, by the
<PAGE> 57
52
Company or any of its subsidiaries for all or any portion of the Common
Shares expiring within the 12 months preceding the expiration of such
tender offer and in respect of which no adjustment pursuant to this
Section 12.4(f) has been made and (2) the aggregate amount of any
distributions to all holders of the Common Shares made exclusively in
cash within 12 months preceding the expiration of such tender offer and
in respect of which no adjustment pursuant to Section 12.4(e) has been
made, exceeds 10% of the product of the Current Market Price
(determined as provided in Section 12.4(g)) as of the last time (the
"EXPIRATION TIME") tenders could have been made pursuant to such tender
offer (as it may be amended) times the number of Common Shares
outstanding (including any tendered shares) at the Expiration Time,
then, and in each such case, immediately prior to the opening of
business on the day after the date of the Expiration Time, the
Conversion Price shall be adjusted so that the same shall equal the
price determined by multiplying the Conversion Price in effect
immediately prior to the close of business on the date of the
Expiration Time by a fraction of which the numerator shall be the
number of Common Shares outstanding (including any tendered shares) at
the Expiration Time multiplied by the Current Market Price of the
Common Shares on the trading day next succeeding the Expiration Time
and the denominator shall be the sum of (x) the fair market value
(determined as aforesaid) of the aggregate consideration payable to
shareholders based on the acceptance (up to any maximum specified in
the terms of the tender offer) of all shares validly tendered and not
withdrawn as of the Expiration Time (the shares deemed so accepted, up
to any such maximum, being referred to as the "PURCHASED SHARES") and
(y) the product of the number of Common Shares outstanding (less any
Purchased Shares) at the Expiration Time and the Current Market Price
of the Common Shares on the trading day next succeeding the Expiration
Time, such reduction (if any) to become effective immediately prior to
the opening of business on the day following the Expiration Time. If
the Company is obligated to purchase shares pursuant to any such tender
offer, but the Company is permanently prevented by applicable law from
effecting any such purchases or all such purchases are rescinded, the
Conversion Price shall again be adjusted to be the Conversion Price
which would then be in effect if such tender offer had not been made.
If the application of this Section 12.4(f) to any tender offer would
result in an increase in the Conversion Price, no adjustment shall be
made for such tender offer under this Section 12.4(f).
(g) For purposes of this Section 12.4, the following terms
shall have the meanings indicated:
(i) "CLOSING PRICE" with respect to any
securities on any day means the closing price on such day or,
if no such sale takes place on such day, the average of the
reported high and low prices on such day, in each case on the
Nasdaq National Market or the New York Stock Exchange, as
applicable, or, if such security is not listed or admitted to
trading on the Nasdaq National Market or such exchange, on the
principal national securities exchange or quotation system on
which such security is quoted or listed or admitted to
trading, or, if not quoted or listed or admitted to trading on
any national securities exchange or quotation system, the
average of the high and low prices of such security on the
over-the-counter market on the day in question as reported by
the National Quotation
<PAGE> 58
53
Bureau Incorporated or a similar generally accepted reporting
service, or, if not so available, in such manner as furnished
by any New York Stock Exchange member firm selected from time
to time by the Board of Directors for that purpose, or a price
determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a
resolution of the Board of Directors.
(ii) "CURRENT MARKET PRICE" means the average of
the daily closing prices per Common Share for the ten
consecutive trading days immediately prior to the date in
question; provided, however, that (A) if the "ex" date (as
hereinafter defined) for any event (other than the issuance or
distribution requiring such computation) that requires an
adjustment to the Conversion Price pursuant to Section
12.4(a), (b), (c), (d), (e) or (f) occurs during such ten
consecutive trading days, the closing price for each trading
day prior to the "ex" date for such other event shall be
adjusted by multiplying such closing price by the same
fraction by which the Conversion Price is so required to be
adjusted as a result of such other event, (B) if the "ex" date
for any event (other than the issuance or distribution
requiring such computation) that requires an adjustment to the
Conversion Price pursuant to Section 12.4(a), (b), (c), (d),
(e) or (f) occurs on or after the "ex" date for the issuance
or distribution requiring such computation and prior to the
day in question, the closing price for each trading day on and
after the "ex" date for such other event shall be adjusted by
multiplying such closing price by the reciprocal of the
fraction by which the Conversion Price is so required to be
adjusted as a result of such other event and (C) if the "ex"
date for the issuance or distribution requiring such
computation is prior to the day in question, after taking into
account any adjustment required pursuant to clause (A) or (B)
of this proviso, the closing price for each trading day on or
after such "ex" date shall be adjusted by adding thereto the
amount of any cash and the fair market value (as determined by
the Board of Directors in a manner consistent with any
determination of such value for purposes of Section 12.4(d) or
(f), whose determination shall be conclusive and described in
a resolution of the Board of Directors) of the evidences of
indebtedness, capital shares or assets being distributed
applicable to one Common Share as of the close of business on
the day before such "ex" date. For purposes of any computation
under Section 12.4(f), the Current Market Price on any date
shall be deemed to be the average of the daily closing prices
per Common Share for such day and the next two succeeding
trading days; provided, however, that, if the "ex" date for
any event (other than the tender offer requiring such
computation) that requires an adjustment to the Conversion
Price pursuant to Section 12.4(a), (b), (c), (d), (e) or (f)
occurs on or after the Expiration Time for the tender or
exchange offer requiring such computation and prior to the day
in question, the closing price for each trading day on and
after the "ex" date for such other event shall be adjusted by
multiplying such closing price by the reciprocal of the
fraction by which the Conversion Price is so required to be
adjusted as a result of such other event. For purposes of this
paragraph, the term "ex" date (I) when used with respect to
any issuance or distribution, means the first date on which
the Common Shares trade regular way on the relevant exchange
or in the
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54
relevant market from which the closing price was obtained
without the right to receive such issuance of distribution,
(II) when used with respect to any subdivision or combination
of Common Shares, means the first date on which the Common
Shares trade regular way on such exchange or in such market
after the time at which such subdivision or combination
becomes effective and (III) when used with respect to any
tender or exchange offer means the first date on which the
Common Shares trade regular way on such exchange or in such
market after the Expiration Time of such offer.
Notwithstanding the foregoing, whenever successive adjustments
to the Conversion Price are called for pursuant to this
Section 12.4, such adjustments shall be made to the Current
Market Price as may be necessary or appropriate to effectuate
the intent of this Section 12.4 and to avoid unjust or
inequitable results, as determined in good faith by the Board
of Directors.
(iii) "FAIR MARKET VALUE" shall mean the amount
which a willing buyer would pay a willing seller in an
arm's-length transaction.
(iv) "RECORD DATE" shall mean, with respect to
any dividend, distribution or other transaction or event in
which the holders of Common Shares have the right to receive
any cash, securities or other property or in which the Common
Shares (or other applicable security) are exchanged for or
converted into any combination of cash, securities or other
property, the date fixed for determination of shareholders
entitled to receive such cash, securities or other property
(whether such date is fixed by the Board of Directors or by
statute, contract or otherwise).
(v) "TRADING DAY" shall mean (A) if the
applicable security is listed or admitted for trading on the
New York Stock Exchange or another national securities
exchange, a day on which the New York Stock Exchange or such
other national securities exchange is open for business, (B)
if the applicable security is quoted on the Nasdaq National
Market, a day on which trades may be made thereon or (C) if
the applicable security is not so listed, admitted for trading
or quoted, any day other than a Saturday or Sunday or a day on
which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
(h) The Company may make such reductions in the Conversion
Price, in addition to those required by Sections 12.4(a), (b), (c),
(d), (e) and (f), as the Board of Directors considers to be advisable
to avoid or diminish any income tax to holders of Common Shares or
rights to purchase Common Shares resulting from any dividend or
distribution of shares (or rights to acquire shares) or from any event
treated as such for income tax purposes.
To the extent permitted by applicable law, the Company from
time to time may reduce the Conversion Price by any amount for any
period of time if the period is at least 20 days, the reduction is
irrevocable during the period and the Board of Directors has
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made a determination that such reduction would be in the Company's best
interests, which determination shall be conclusive and described in a
resolution of the Board of Directors. Whenever the Conversion Price is
reduced pursuant to the preceding sentence, the Company shall mail to
the holders of Notes at their last addresses appearing on the register
of holders maintained for that purpose a notice of the reduction at
least 15 days prior to the date the reduced Conversion Price takes
effect, and such notice shall state the reduced Conversion Price and
the period during which it will be in effect.
(i) No adjustment in the Conversion Price shall be required
unless such adjustment would require an increase or decrease of at
least 1% in such price; provided, however, that any adjustments which
by reason of this Section 12.4(i) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment.
All calculations under this Article 12 shall be made by the Company and
shall be made to the nearest cent or to the nearest one-hundredth of a
share, as the case may be.
No adjustment need be made for a change in the par value or no
par value of the Common Shares.
(j) Whenever the Conversion Price is adjusted as herein
provided, the Company shall promptly file with the Trustee an Officers'
Certificate setting forth the Conversion Price after such adjustment
and setting forth a brief statement of the facts requiring such
adjustment. Promptly after delivery of such certificate, the Company
shall prepare a notice of such adjustment of the Conversion Price
setting forth the adjusted Conversion Price and the date on which each
adjustment becomes effective and shall mail, or shall cause the Trustee
to mail, such notice of such adjustment of the Conversion Price to each
Holder of Notes at such Holder's last address appearing on the register
of Holders maintained for that purpose within 20 days of the effective
date of such adjustment. Failure to deliver such notice shall not
affect the legality or validity of any such adjustment.
(k) In any case in which this Section 12.4 provides that an
adjustment shall become effective immediately after a Record Date for
an event, the Company may defer until the occurrence of such event
issuing to the Holder of any Note converted after such Record Date and
before the occurrence of such event the additional Common Shares
issuable upon such conversion by reason of the adjustment required by
such event over and above the Common Shares issuable upon such
conversion before giving effect to such adjustment.
(l) For purposes of this Section 12.4, the number of Common
Shares at any time outstanding shall not include shares held in the
treasury of the Company but shall include shares issuable in respect of
scrip certificates issued in lieu of fractions of Common Shares. The
Company shall not pay any dividend or make any distribution on Common
Shares held in the treasury of the Company.
(m) In lieu of making any adjustment to the Conversion Price
pursuant to Section 12.4(e), the Company may elect to reserve an amount
of cash for distribution to
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the Holders of Notes upon the conversion of the Notes so that any such
Holder converting Notes will receive upon such conversion, in addition
to the Common Shares and other items to which such Holder is entitled,
the full amount of cash which such Holder would have received if such
Holder had, immediately prior to the Record Date for such distribution
of cash, converted its Notes into Common Shares, together with any
interest accrued with respect to such amount, in accordance with this
Section 12.4(m). The Company may make such election by providing an
Officers' Certificate to the Trustee to such effect on or prior to the
payment date for any such distribution and depositing with the Trustee
on or prior to such date an amount of cash equal to the aggregate
amount that the Holders of Notes would have received if such Holders
had, immediately prior to the Record Date for such distribution,
converted all the Notes into Common Shares. Any such funds so deposited
by the Company with the Trustee shall be invested by the Trustee in
U.S. Government Obligations with a maturity not more than three months
from the date of issuance. Upon conversion of Notes by a Holder
thereof, such Holder shall be entitled to receive, in addition to the
Common Shares issuable upon conversion, an amount of cash equal to the
amount such Holder would have received if such Holder had, immediately
prior to the Record Date for such distribution, converted its Notes
into Common Shares, along with such Holder's pro rata share of any
accrued interest earned as a consequence of the investment of such
funds. Promptly after making an election pursuant to this Section
12.4(m), the Company shall give or shall cause to be given notice to
all Holders of Notes of such election, which notice shall state the
amount of cash per $1,000 principal amount of Notes such Holders shall
be entitled to receive (excluding interest) upon conversion of the
Notes as a consequence of the Company having made such election.
SECTION 12.5 NOTICE OF ADJUSTMENT OF CONVERSION PRICE.
Whenever the conversion price is adjusted as herein provided:
(a) the Company shall compute the adjusted Conversion Price in
accordance with Section 12.4 and shall prepare a certificate signed by
the President, any Vice President or the Treasurer of the Company
setting forth the adjusted Conversion Price and showing in reasonable
detail the facts upon which such adjustment is based and the effective
date of such adjustment, and such certificate shall forthwith be filed
at each office or agency maintained for the purpose of conversion of
Notes; and
(b) a notice stating that the Conversion Price has been
adjusted and setting forth the adjusted Conversion Price shall, as soon
as practicable, be mailed by the Company, or by the Trustee if the
Company so requests, to all Holders at their last addresses as they
shall appear in the Note Register.
SECTION 12.6 NOTICE OF CERTAIN CORPORATE ACTION. In case:
(a) the Company shall declare a dividend (or any other
distribution) on its Common Shares payable otherwise than in cash out
of its earned surplus; or
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(b) the Company shall authorize the granting to the holders of
its Common Shares of rights or warrants to subscribe for or purchase
any capital shares of any class or of any other rights; or
(c) of any reclassification of the Common Shares of the
Company (other than a subdivision or combination of its outstanding
Common Shares), or of any consolidation or merger to which the Company
is a party and for which approval of any shareholders of the Company is
required, or the sale or transfer of all or substantially all the
assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company;
then the Company shall cause to be filed with the Trustee and at each office or
agency maintained for the purpose of conversion of Notes, and shall cause to be
mailed to all Holders at their last addresses as they shall appear in the Note
Register, at least 20 days (or ten days in any case specified in clause (a) or
(b) above) prior to the applicable date hereinafter specified, a notice stating
(x) the date on which a record is to be taken for the purpose of such dividend,
distribution, rights or warrants, or, if a record is not to be taken, the date
as of which the holders of Common Shares of record to be entitled to such
dividend, distribution, rights or warrants are to be determined or (y) the date
on which such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up is expected to become effective, and the
date as of which it is expected that holders of Common Shares of record shall be
entitled to exchange their Common Shares for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up. Failure to give the notice required by
this Section or any defect therein shall not affect the legality or validity of
any dividend, distribution, right, warrant, reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation or winding up, or the vote upon
any such action.
SECTION 12.7 COMPANY TO RESERVE COMMON SHARES. The Company
shall at all times reserve and keep available, free from preemptive rights, out
of its authorized but unissued Common Shares, for the purpose of effecting the
conversion of Notes, the full number of Common Shares then issuable upon the
conversion of all outstanding Notes.
SECTION 12.8 TAXES ON CONVERSION. The Company will pay any and
all taxes that may be payable in respect of the issue or delivery of Common
Shares on conversion of Notes pursuant hereto. The Company shall not, however,
be required to pay any tax which may be payable in respect of any transfer
involved in the issue and delivery of Common Shares in a name other than that of
the Holder of the Note or Notes to be converted, and no such issue or delivery
shall be made unless and until the Person requesting such issue or delivery has
paid the Company the amount of any such tax, or has established to the
satisfaction of the Company that such tax has been paid.
SECTION 12.9 COVENANT AS TO COMMON SHARES. The Company
covenants that all Common Shares which may be issued upon conversion of Notes
will upon issue be duly and
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validly issued and fully paid and nonassessable and, except as provided in
Section 12.8, the Company will pay all taxes, liens and charges with respect to
the issue thereof.
SECTION 12.10 PROVISIONS IN CASE OF CONSOLIDATION, MERGER OR
CONVEYANCE OR TRANSFER OF PROPERTIES AND ASSETS. In case of any consolidation of
the Company with, or merger of the Company into, any other corporation, or in
case of any merger of another corporation into the Company (other than a merger
which does not result in any reclassification, conversion, exchange or
cancellation of outstanding Common Shares of the Company), or in case of any
conveyance or transfer of the properties and assets of the Company substantially
as an entirety, the corporation formed by such consolidation or resulting from
such merger or which acquires by conveyance or transfer such properties and
assets, as the case may be, shall execute and deliver to the Trustee a
supplemental indenture providing that the Holder of each Note then outstanding
shall have the right thereafter, during the period such Note shall be
convertible as specified in Section 12.1, to convert such Note only into the
kind and amount of securities, cash and other property receivable upon such
consolidation, merger, conveyance or transfer by a holder of the number of
Common Shares of the Company into which such Note might have been converted
immediately prior to such consolidation, merger, conveyance or transfer,
assuming such holder of Common Shares of the Company failed to exercise his
rights of election, if any, as to the kind or amount of securities, cash and
other property receivable upon such consolidation, merger, conveyance or
transfer (provided that, if the kind or amount of securities, cash and other
property receivable upon such consolidation, merger, conveyance or transfer is
not the same for each Common Share of the Company in respect of which such
rights of election shall not have been exercised ("NONELECTING SHARE"), then for
the purpose of this Section the kind and amount of securities, cash and other
property receivable upon such consolidation, merger, conveyance or transfer by
each nonelecting share shall be deemed to be the kind and amount so receivable
per share by a plurality of the nonelecting shares). Such supplemental indenture
shall provide for adjustments which, for events subsequent to the effective date
of such supplemental indenture, shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article. The above
provisions of this Section shall similarly apply to successive consolidations,
mergers, conveyance or transfers.
SECTION 12.11 RESPONSIBILITY OF TRUSTEE. The Trustee, subject
to the provisions of Section 6.1, and any conversion agent shall not at any time
be under any duty or responsibility to any Holder to determine whether any facts
exist which may require any adjustment of the conversion price, or with respect
to the nature or extent of any such adjustment when made, or with respect to the
method employed, or herein or in any supplemental indenture, provided to be
employed, in making the same. Neither the Trustee nor any conversion agent shall
be accountable with respect to the validity or value (or the kind or amount) of
any Common Shares, or of any other securities or property, which may at any time
be issued or delivered upon the conversion of any Note; and it or they do not
make any representation with respect thereto. Neither the Trustee nor any
conversion agent shall be responsible for any failure of the Company to make any
cash payment or to issue, transfer or deliver any Common Shares or share
certificates or other securities or property upon the surrender of any Note for
the purpose of conversion; and the Trustee, subject to the provisions of Section
6.1, and any conversion agent shall not be responsible for any failure of the
Company to comply with any of the covenants of the Company contained in this
Article.
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ARTICLE XIII
SUBORDINATION OF NOTES
SECTION 13.1 NOTES SUBORDINATE TO SENIOR INDEBTEDNESS. The
Company, for itself, its successors and assigns, covenants and agrees, and each
Holder of Notes, by his acceptance thereof likewise covenants and agrees, that
all Notes issued hereunder shall be subordinated and subject, to the extent and
in the manner herein set forth, in right of payment to the prior payment in full
of all Senior Indebtedness.
SECTION 13.2 NO PAYMENT WHEN SENIOR INDEBTEDNESS IN DEFAULT;
PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC. In the event the Company shall
default in the payment of any Senior Indebtedness when the same becomes due and
payable, whether at maturity or at a date fixed for prepayment or by declaration
or otherwise, then, unless and until such default shall have been cured or
waived or shall have ceased to exist, no direct or indirect payment (in cash,
property, securities, by set-off or otherwise) shall be made or agreed to be
made on account of the principal of (or premium, if any) or interest on the
Notes, or in respect of any redemption, retirement, purchase or other
acquisition (except through the conversion thereof) of any of the Notes.
Upon the happening of an event of default with respect to any
Senior Indebtedness, as defined therein or in the instrument under which the
same is outstanding, permitting the holders thereof to accelerate the maturity
thereof (under circumstances when the terms of the preceding paragraph are not
applicable), unless and until such event of default shall have been cured or
waived or shall have ceased to exist, no direct or indirect payment (in cash,
property, securities, by set-off or otherwise) shall be made or agreed to be
made on account of the principal of (or premium, if any) or interest on the
Notes, or in respect of any redemption, retirement, purchase or other
acquisition (except through the conversion thereof) of any of the Notes.
In the event of:
(a) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceeding
relating to the Company or its property;
(b) any proceeding for the liquidation, dissolution or other
winding-up of the Company or its property;
(c) any assignment by the Company for the benefit of
creditors; or
(d) any other marshalling of the assets of the Company;
all Senior Indebtedness (including any interest thereon accruing after the
commencement of any such proceeding) shall first be paid in full before any
payment or distribution (direct or indirect), whether in cash, property or
securities, by set-off or otherwise, shall be made to any Holder on
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account of any Notes (except through the conversion thereof), and to that end
any payment or distribution, whether in cash, property or securities (other than
securities of the Company or any other corporation provided for by a plan of
reorganization or readjustment, the payment of which is subordinate, at least to
the extent provided in this Article with respect to the Notes, to the payment of
all Senior Indebtedness at the time outstanding and to any securities issued in
respect thereof under any such plan of reorganization or readjustment) which
would otherwise (but for the subordination provisions contained in this Article)
be payable or deliverable in respect of the Notes shall be paid or delivered
directly to the holders of Senior Indebtedness, as their respective interests
may appear, until all Senior Indebtedness (including any interest thereon
accruing after the commencement of any such proceedings) shall have been paid in
full.
If the Notes are declared due and payable before their Stated
Maturity because of the occurrence of an Event of Default (under circumstances
where the preceding paragraph is not applicable), no payment (direct or
indirect) shall be made in respect of any Note unless and until all Senior
Indebtedness has been paid in full or such declaration and its consequences
shall have been rescinded and all such defaults shall have been remedied or
waived.
If any payment or distribution (other than securities of the
Company or any other corporation provided for by a plan of reorganization or
readjustment the payment of which is subordinate, at least to the extent
provided in this Article with respect to the Notes, to the payment of all Senior
Indebtedness at the time outstanding and to any securities issued in respect
thereof under any such plan of reorganization or readjustment) shall be received
by the Trustee or the Holders in contravention of any of the terms of this
Article and before all the Senior Indebtedness has been paid in full, then,
subject to Section 13.4, such payment or distribution shall be held in trust for
the benefit of, and shall be paid over or delivered and transferred to, the
holders of such Senior Indebtedness at the time outstanding as their respective
interests may appear for application to the payment of Senior Indebtedness until
all Senior Indebtedness (including any interest thereon accruing after the
commencement of any such proceeding referred to in paragraphs (a), (b), (c) or
(d) above) shall have been paid in full. If the Trustee or any such Holder fails
to endorse or assign any such payment or distribution as required by this
Section, the Trustee and the Holder of each Note by his acceptance thereof
authorizes each holder of Senior Indebtedness, any representative or
representatives of holders of Senior Indebtedness and the trustee or trustees
under any indenture pursuant to which any instrument evidencing such Senior
Indebtedness may have been issued so to endorse or assign the same.
No holder of Senior Indebtedness shall be prejudiced in the
right to enforce subordination of the Notes by any act or failure to act on the
part of the Company.
Subject to the payment in full of all Senior Indebtedness, the
Holders shall be subrogated (equally and ratably with the holders of all
indebtedness of the Company which ranks on a parity with the Notes and is
entitled to like rights of subrogation) to the rights of the holders of Senior
Indebtedness to receive payments or distributions applicable to the Senior
Indebtedness until the Notes shall be paid in full, and no such payments or
distributions shall, as between the Company, its creditors other than the
holders of Senior Indebtedness and the Holders of the Notes, be deemed to be a
payment by the Company to or on account of the Notes. The provisions of this
Article are and are intended solely for the purpose of defining the relative
rights
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of the Holders of the Notes, on the one hand, and the holders of Senior
Indebtedness, on the other hand, and nothing contained in this Article or
elsewhere in this Indenture or in the Notes is intended to or shall impair, as
between the Company, its creditors other than the holders of Senior Indebtedness
and the Holders of the Notes, the obligation of the Company to pay the Holders
the principal of (and premium, if any) and interest on the Notes as and when the
same shall become due and payable in accordance with the terms thereof, or
prevent the Trustee or the Holders from exercising all rights, powers and
remedies otherwise permitted by applicable law or under this Indenture, upon a
default or Event of Default hereunder, all subject to the rights of the holders
of Senior Indebtedness to receive cash, property or securities otherwise payable
or deliverable to the Trustee or the Holders.
Upon any payment or distribution pursuant to this Section, the
Trustee shall be entitled to rely upon any order or decree of a court of
competent jurisdiction in which any proceedings of the nature referred to in
this Section are pending, and the Trustee, subject as between the Trustee and
the Holders to the provisions of Section 6.1, shall be entitled to rely upon a
certificate of the liquidating trustee or agent or other person making such
payment or distribution to the Trustee or to the Holders for the purpose of
ascertaining the Person entitled to participate in such payment or distribution,
the holders of the Senior Indebtedness and other indebtedness of the Company,
the amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Section. In the event
that the Trustee determines, in good faith, that evidence is required with
respect to the right of any Person as a holder of Senior Indebtedness to
participate in any payment or distribution pursuant to this Section, the Trustee
may request such Person to furnish evidence to the reasonable satisfaction of
the Trustee as to the amount of Senior Indebtedness held by such Person, as to
the extent to which such Person is entitled to participate in such payment or
distribution, and as to other facts pertinent to the rights of such Person under
this Section, and if such evidence is not furnished, the Trustee may defer any
payment to such Person pending judicial determination as to the right of such
Person to receive such payment.
SECTION 13.3 TRUSTEE TO EFFECTUATE SUBORDINATION. The Holder
of each Note by his acceptance thereof authorizes and directs the Trustee in his
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination as provided in this Article and appoints the
Trustee as attorney-in-fact for any and all such purposes.
SECTION 13.4 TRUSTEE NOT CHARGED WITH KNOWLEDGE OF
PROHIBITION. Notwithstanding the provisions of this Article or any other
provision of this Indenture, but subject as between the Trustee and the Holders
to the provisions of Section 6.1, the Trustee shall not be charged with
knowledge of the existence of any Senior Indebtedness, or of any default in the
payment of any Senior Indebtedness, or of any facts which would prohibit the
making of any payment of moneys to or by the Trustee, unless and until three
Business Days after the Trustee shall have received written notice thereof from
the Company or any holder of Senior Indebtedness or the representative or
representatives of such holder, and the Trustee may conclusively rely on any
writing purporting to be from a holder of Senior Indebtedness, or a
representative of such holder, as being genuine; nor shall the Trustee be
charged with knowledge of the curing of any such default or of the elimination
of the act or condition presenting any such payment unless and until the Trustee
shall have received an Officers' Certificate to such effect. The provisions of
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this Section shall not limit any rights of holders of Senior Indebtedness under
this Article XIII to recover from the Holders of Notes any payment made to any
such Holder.
SECTION 13.5 RIGHTS OF TRUSTEE AS HOLDER OF SENIOR
INDEBTEDNESS. The Trustee shall be entitled to all the rights set forth in this
Article with respect to any Senior Indebtedness which may at any time be held by
it, to the same extent as any other holder of Senior Indebtedness; and nothing
in Section 6.12, or elsewhere in this Indenture, shall deprive the Trustee of
any of its rights as such holder.
SECTION 13.6 ARTICLE APPLICABLE TO PAYING AGENT. In case at
any time any Paying Agent other than the Trustee shall have been appointed by
the Company and be then acting hereunder, the term "Trustee" as used in this
Article shall in such case (unless the context shall otherwise require) be
construed as extending to and including such Paying Agent within its meaning as
fully for all intents and purposes as if such Paying Agent were named in this
Article in addition to or in place of the Trustee; provided, however, that
Sections 13.4 and 13.5 shall not apply to the Company or any Affiliate if the
Company or such Affiliate acts as Paying Agent.
ARTICLE XIV
RIGHT TO REQUIRE REPURCHASE
SECTION 14.1 RIGHT TO REQUIRE REPURCHASE. In the event that
there shall occur a Change in Control (as defined in Section 14.5), each Holder
shall have the right, at such Holder's option, to require the Company to
purchase, and upon the exercise of such right, the Company shall, subject to the
provisions of Article XIII, purchase, all or any part of such Holder's Notes on
the date (the "REPURCHASE DATE") that is 75 days after the date the Company
gives notice of the Change in Control as contemplated in Section 14.2(a) at a
price (the "REPURCHASE PRICE") equal to 100% of the principal amount thereof,
together with accrued and unpaid interest to the Repurchase Date. In connection
with the exercise of the repurchase right by a Holder prior to a Redemption
Date, a Holder's right to exercise his repurchase right shall terminate at the
close of business on the Business Day prior to the Redemption Date.
SECTION 14.2 NOTICE; METHOD OF EXERCISING REPURCHASE RIGHT.
(a) On or before the 15th day after the occurrence of a Change in Control, the
Company or, at the request of the Company, the Trustee (in the name and at the
expense of the Company), shall give notice of the occurrence of the Change in
Control and of the repurchase right set forth herein arising as a result thereof
by first-class mail, postage prepaid, to each Holder of the Notes at such
Holder's address appearing in the Note Register. The Company shall also deliver
a copy of such notice of a repurchase right to the Trustee.
Each notice of a repurchase right shall state:
(i) the event constituting the Change in
Control and the date thereof;
(ii) the Repurchase Date;
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(iii) the date by which the repurchase right
must be exercised;
(iv) the Repurchase Price; and
(v) the procedures a Holder must follow to
exercise a repurchase right.
No failure of the Company to give the foregoing notice shall
limit any Holder's right to exercise a repurchase right. The Trustee shall have
no affirmative obligation to determine if there shall have occurred a Change in
Control.
(b) To exercise a repurchase right, a Holder shall deliver to
the Company (or an agent designated by the Company for such purpose in the
notice referred to in (a) above) and to the Trustee on or before the tenth day
prior to the Repurchase Date (i) written notice of the Holder's exercise of such
right, which notice shall set forth the name of the Holder, the principal amount
of the Note or Notes (or portion of a Note) to be repurchased and a statement
that an election to exercise the repurchase right is being made thereby and (ii)
the Note or Notes with respect to which the repurchase right is being exercised,
duly endorsed for transfer to the Company. Such written notice shall be
irrevocable. If the Repurchase Date falls between any Regular Record Date and
the next succeeding Interest Payment Date, Notes to be repurchased must be
accompanied by payment from the Holder of an amount equal to the interest
thereon which the registered Holder thereof is to receive on such Interest
Payment Date. A Holder that fails to exercise a repurchase right in accordance
with the terms hereof shall waive such repurchase right but the rights of such
Holder to receive principal of and interest on the Notes and all other rights of
such Holder under this Indenture shall not be affected thereby.
(c) In the event a repurchase right shall be exercised in
accordance with the terms hereof, the Company shall on the Repurchase Date pay
or cause to be paid in cash to the Holder thereof the Repurchase Price of the
Note or Notes as to which the repurchase right has been exercised. In the event
that a repurchase right is exercised with respect to less than the entire
principal amount of a surrendered Note, the Company shall execute and deliver to
the Trustee and the Trustee shall authenticate for issuance in the name of the
Holder a new Note or Notes in the aggregate principal amount of the
unrepurchased portion of such surrendered Note.
SECTION 14.3 DEPOSIT OF REPURCHASE PRICE. On or prior to the
Repurchase Date, the Company shall deposit with the Trustee or with a Paying
Agent (or, if the Company is acting as its own Paying Agent, segregate and hold
in trust as provided in Section 10.3) an amount of money sufficient to pay the
Repurchase Price of the Notes which are to be repaid on the Repurchase Date.
SECTION 14.4 NOTES NOT REPURCHASED ON REPURCHASE DATE. If any
Note surrendered for repurchase shall not be so paid on the Repurchase Date, the
principal shall, until paid, bear interest to the extent permitted by applicable
law from the Repurchase Date at the rate per annum borne by such Note.
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SECTION 14.5 "CHANGE IN CONTROL" DEFINED. For purposes of this
Article, "CHANGE IN CONTROL" means any of the following events that occur after
the date of this Indenture and on or prior to Maturity:
(a) all or substantially all of the Company's assets are sold
as an entirety to any person or related group of persons;
(b) there shall be consummated any consolidation or merger of
the Company (i) in which the Company is not the continuing or surviving
corporation (other than a consolidation or merger with a wholly-owned
subsidiary of the Company in which all Common Shares outstanding
immediately prior to the effectiveness thereof are changed into or
exchanged for the same consideration) or (ii) pursuant to which the
Common Shares are converted into cash, securities or other property, in
each case other than a consolidation or merger of the Company in which
the holders of the Common Shares immediately prior to the consolidation
or merger have, directly or indirectly, at least a majority of the
common shares of the continuing or surviving corporation immediately
after such consolidation or merger; or
(c) any person, or any persons acting together which would
constitute a "group" for purposes of Section 13(d) of the Securities
Exchange Act of 1934 (a "GROUP"), together with any Affiliates thereof,
shall acquire beneficial ownership (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934) of at least 50% of the total voting
power of all classes of capital shares of the Company entitled to vote
generally in the election of directors of the Company.
Notwithstanding anything to the contrary set forth in this
definition, a Change in Control shall not be deemed to have occurred:
(A) under paragraph (c) above, solely by virtue of the
Company, any Subsidiary, any employee share purchase plan, share option
plan or other share incentive plan or program, retirement plan or
automatic dividend reinvestment plan or any substantially similar plan
of the Company or any Subsidiary or any Person holding securities of
the Company for or pursuant to the terms of any such employee benefit
plan, filing or becoming obligated to file a report under or in
response to Schedule 13D or Schedule 14D-1 (or any successor schedule,
form or report) under the Securities Exchange Act of 1934 disclosing
beneficial ownership by it of shares or securities of the Company,
whether at least 50% of the total voting power referred to in paragraph
(c) above, or otherwise; or
(B) under paragraphs (a), (b) or (c) above if:
(1) the Current Market Price of the Common Shares on
the date the Change in Control shall have occurred is at least
equal to 105% of the Conversion Price in effect immediately
preceding the time of such Change in Control; or
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(2) all of the consideration (excluding cash payments
for fractional shares) in the transaction giving rise to such
Change in Control to the holders of Common Shares consists of
common shares that are, or immediately upon issuance will be,
listed on a national securities exchange or quoted on the
Nasdaq National Market, and as a result of such transaction
the Notes become convertible solely into such common shares;
or
(3) the consideration in the transaction giving rise
to such Change in Control to the holders of Common Shares
consists of cash, securities that are, or immediately upon
issuance will be, listed on a national securities exchange or
quoted on the Nasdaq National Market, or a combination of cash
and such securities, and the aggregate fair market value of
such consideration (which, in the case of such securities,
shall be equal to the average of the daily Closing Prices of
such securities during the ten consecutive Trading Days
commencing with the sixth Trading Day following consummation
of such transaction) is at least 105% of the Conversion Price
in effect on the date immediately preceding the closing date
of such transaction.
If a Change in Control shall have occurred under paragraph (b)
above, the Company shall deliver the Officers' Certificate and Opinion of
Counsel called for under Section 8.1(3) as well as the notices called for under
Section 14.2(a).
For purposes of this definition of Change of Control, "CURRENT
MARKET PRICE" on any date means the average daily Closing Prices for the five
consecutive Trading Days selected by the Company commencing not more than ten
Trading Days before, and ending not later than, the date in question; "CLOSING
PRICE" for any Trading Day means the last reported sale price (or, if none on
any day, the mean between the bid and asked quotations on such day) of the
securities in question for such date, in either case on the New York Stock
Exchange or, if the securities are not listed or admitted to trading on such
exchange, on the principal national securities exchange on which such securities
are listed or admitted to trading or, if not listed or admitted to trading on
any national securities exchange, on The Nasdaq National Market or, if the
securities are not listed or admitted to trading on any national securities
exchange or quoted on the Nasdaq National Market, the average of the closing bid
and asked prices in the over-the-counter market as furnished by any New York
Stock Exchange member firm selected by the Company for such purpose; and
"TRADING DAY", with respect to any stock exchange or securities market, means
any Monday, Tuesday, Wednesday, Thursday or Friday on which such stock exchange
or securities market is open for business.
* * *
This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
<PAGE> 71
66
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.
ROBBINS & MYERS, INC.,
By________________________
Name:
Title:
{Seal}
Attest:
- ------------------------------
Title:
STAR BANK, NATIONAL ASSOCIATION,
as Trustee
By________________________
Name:
Title:
{Seal}
Attest:
- ------------------------------
Title:
<PAGE> 72
ROBBINS & MYERS, INC.
Reconciliation and Tie Between the Trust Indenture Act
of 1939 and Indenture dated as of September __, 1996
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
----------- -----------------
<S> <C> <C>
(ss.) 310(a)(1)......................................................... 6.8
(a)(2)............................................................ 6.8
(a)(3)............................................................ Not Applicable
(a)(4)............................................................ Not Applicable
(a)(5)............................................................ 6.8
(b)............................................................... 6.8
6.9
(ss.) 311(a)............................................................ 6.12
(b)............................................................... 6.12
(b)(2)............................................................ 7.3(a)(2)
7.3(b)
(ss.) 312(a)............................................................ 7.1
7.2(a)
(b)............................................................... 7.2(b)
(c)............................................................... 7.2(c)
(ss.) 313(a)............................................................ 7.3(a)
(b)............................................................... 7.3(b)
(c)............................................................... 7.3(c)
(d)............................................................... 7.3(d)
(ss.) 314(a)............................................................ 7.4
(b)............................................................... Not Applicable
(c)(1)............................................................ 1.2
(c)(2)............................................................ 1.2
(c)(3)............................................................ Not Applicable
(d)............................................................... Not Applicable
(e)............................................................... 1.2
(ss.) 315(a)............................................................ 6.1(a)
(b)............................................................... 6.2
7.3(a)(6)
(c)............................................................... 6.1(b)
(d)............................................................... 6.1(c)
(d)(1)............................................................ 6.1(a)(1)
(d)(2)............................................................ 6.1(c)(2)
(d)(3)............................................................ 6.1(c)(3)
(e)............................................................... 5.14
(ss.) 316(a)............................................................ 1.1
(a)(1)(A)......................................................... 5.2
5.12
(a)(1)(B)......................................................... 5.13
(a)(2)............................................................ Not Applicable
</TABLE>
<PAGE> 73
<TABLE>
<S> <C> <C>
(b)............................................................... 5.8
(ss.) 317(a)(1)......................................................... 5.3
(a)(2)............................................................ 5.4
(b)............................................................... 10.3
(ss.) 318(a)............................................................ 1.7
<FN>
- ------------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to be
a part of the Indenture.
</TABLE>
<PAGE> 1
EXHIBIT 5.1
THOMPSON
HINE & FLORY P.L.L.
2000 COURTHOUSE PLAZA N.E.
P.O. BOX 8801
DAYTON, OH 45401-8801
Attorneys at Law
August 22, 1996
Robbins & Myers, Inc.
1400 Kettering Tower
Dayton, Ohio 45423
Gentlemen:
As counsel for Robbins & Myers, Inc., an Ohio corporation (the
"Company"), we have assisted the Company in the preparation and filing of the
Company's Form S-3 Registration Statement (the "Registration Statement")
relating to the proposed offering of up to $55,000,000 aggregate principal
amount of Convertible Subordinated Notes Due 2003 (the "Notes") and an
indeterminate number of Common Shares, without par value, of the Company, as may
be issued upon the conversion of the Notes (the "Shares"). The Notes are to be
issued under and in accordance with the terms and provisions of the Indenture
(the "Indenture") to be entered into between the Company and Star Bank N.A., as
Trustee (a proposed copy of which is being filed as an exhibit to the
Registration Statement).
In addition to having assisted the Company in the preparation
and filing of the Registration Statement, we have examined such corporate
proceedings and records of the Company and have made such other investigations
as we have deemed necessary for purposes of this opinion.
Based upon the foregoing, it is our opinion that:
(a) Upon execution and delivery of the Indenture and issuance
of the Notes in accordance with the terms and provisions of the Indenture and
the Underwriting Agreement (a proposed copy of which is being filed as an
exhibit to the Registration Statement), the Notes will be legally issued and
valid and binding obligations of the Company.
<PAGE> 2
(b) Upon conversion of any outstanding Notes in accordance
with their terms and the terms of the Indenture, the Shares issued by the
Company in connection therewith will be legally issued, fully paid and
nonassessable.
We do hereby consent to the use of this opinion as an exhibit
to the Registration Statement, and we consent to the reference to our firm under
the caption "Legal Matters" in the Prospectus forming a part of the Registration
Statement.
Very truly yours,
/s/ Thompson Hine & Flory P.L.L.
THOMPSON HINE & FLORY P.L.L.
<PAGE> 1
EXHIBIT 12.1
Computation of Ratio of Earnings to Fixed Charges
Robbins & Myers, Inc.
<TABLE>
<CAPTION>
Nine Months
Year ended August 31 Ended May 31
1991 1992 1993 1994 1995 1995 1996
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Fixed Charges:
Interest Expense 88 60 116 1,457 7,287 5,552 5,304
Capitalized Int 0 0 0 0 0 0 0
Debt Expense 0 0 0 23 135 101 101
Rental Expense
Interest Factor 240 293 280 278 649 499 532
------ ------ ------ ------ ------ ------ ------
Total Fixed Charges 328 353 396 1,758 8,071 6,152 5,937
====== ====== ====== ====== ====== ====== ======
Earnings:
IBIT 9,711 9,832 9,746 10,645 19,033 13,694 22,479
Plus Fixed Charges
per above less
Cap Int 328 353 396 1,758 8,071 6,152 5,937
Amort of Cap Int 0 0 0 0 0 0 0
------ ------ ------ ------ ------ ------ ------
Total Earnings 10,039 10,185 10,142 12,403 27,104 19,846 28,416
====== ====== ====== ====== ====== ====== ======
Ratio 30.6 28.9 25.6 7.1 3.4 3.2 4.8
====== ====== ====== ====== ====== ====== ======
</TABLE>
<PAGE> 1
EXHIBIT 23.2
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated October 3, 1995, except for SAR Redemption and Stock
Split notes, as to which the dates are October 24, 1995 and July 31, 1996,
respectively, in the Registration Statement (Form S-3) and related Prospectus
of Robbins & Myers, Inc. for the registration of $50,000,000 Convertible
Subordinated Notes.
/s/ Ernst & Young LLP
Dayton, Ohio
August 22, 1996
<PAGE> 1
EXHIBIT 25.1
Securities Act of 1933 File No.
-------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
-------------------------------------------------------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
PURSUANT TO SECTION 305(b) (2) / X /
-------------------------------------------------------
STAR BANK, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
A National Banking Association 31-0841368
----------------------------
(IRS Employer Identification No.)
425 Walnut Street
Cincinnati, Ohio 45202
----------------------------------------------- --------------
(Address of Principal Executive Offices) (Zip Code)
-----------------------------------------------------
Cheri Scott-Geraci
Senior Trust Officer
Star Bank, National Association
425 Walnut Street
Cincinnati, Ohio 45202
(513) 632-4389
(Name, address, and telephone number of agent for services)
----------------------------------------------------------
Robbins & Myers, Inc.
-----------------------------------------------------
(Exact name of obligor as specified in its charter)
Ohio 31-0424220
------------------------ --------------------------------
(State of Incorporation) (IRS Employer Identification No.)
1400 Kettering Tower, Dayton, Ohio 45423
------------------------------------------------ --------------
(Address of principal executive offices) (Zip Code)
% Convertible Subordinated Notes
---------------------------------------
(Title of the Indenture securities)
<PAGE> 2
1. GENERAL INFORMATION. Furnish the following information as
Trustee --
(a) Name and address of each examining or supervising authority to
which it is subject.
Comptroller of the Currency, Washington, D.C.
Federal Reserve Bank of Cleveland, Ohio
Federal Deposit Insurance Corporation, Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The Trustee is authorized to exercise corporate trust
powers.
2. AFFILIATIONS WITH OBLIGOR. If the obligor is an affiliate of the trustee,
describe each such affiliation.
The obligor is not an affiliate of the Trustee
(including its parent and any affiliates).
3. VOTING SECURITIES OF THE TRUSTEE. Furnish the following information as to
each class of voting securities of the trustee (and
its parent).
As of _____________ (insert date within 31 days)
Col A. Col B
---------------- -------------
(Title of Class) (Amount Outstanding)
4. TRUSTEESHIPS UNDER OTHER INDENTURES. If the trustee is a trustee under
another Indenture under which any other securities, or
certificates of interest or participation in any other
securities, of the obligor are outstanding, furnish the following
information:
(a) Title of the securities outstanding under each such
other indenture.
(b) A brief statement of the facts relied upon as a basis
for the claim that no conflicting interest within the
meaning of Section 310(b)(1) of the Act arises as a
result of the trusteeship under any such other
indenture, including a statement as to how the
indenture securities will rank as compared with the
securities issued under such other indenture.
<PAGE> 3
5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH THE OBLIGOR OR
UNDERWRITERS. If the trustee (including its parent and any other
affiliates) or any of the directors or executive officers of the
trustee is a director, officer, partner, employee, appointee, or
representative of the obligor or of any underwriter for the
obligor, identify each such person having any such connection and
state the nature of each such connection.
6. VOTING SECURITIES OF THE TRUSTEE (INCLUDING ITS PARENT AND ANY AFFILIATE)
OWNED BY THE OBLIGOR OR ITS OFFICIALS. Furnish the following
information as to the voting securities of the trustee (including its
parent and any affiliates) owned beneficially by the obligor and each
director, partner and executive officer of the obligor:
As of _______________________ (insert date within 31 days)
Col. A. Col. B. Col. C Col. D
Percentage of
Voting Securities
Represented by
Amount Owned Amount Given
Name of Owner Title of Class Beneficially in Col. C
------------- -------------- ------------ ----------------
7. VOTING SECURITIES OF THE TRUSTEE (INCLUDING ITS PARENT AND ANY
AFFILIATES) OWNED BY UNDERWRITERS OR THEIR OFFICIALS. Furnish the
following information as to the voting securities of the
trustee (including its parent and any affiliates) owned
beneficially by each underwriter for the obligor and each
director, partner, and executive officer of each such
underwriter:
As of ___________________(insert date within 31 days)
Col. A. Col B. Col. C Col. D
Percentage of
Voting Securities
Represented by
Amount Owned Amount Given
Name of Owner Title of Class Beneficially in Col. C
------------- -------------- ------------ ----------------
<PAGE> 4
8. SECURITIES OF THE OBLIGOR OWNED OR HELD BY THE TRUSTEE (INCLUDING ITS
PARENT AND ANY AFFILIATES). Furnish the following information as to
securities of the obligor owned beneficially or held as collateral
security for obligations default by the trustee (including its parent
and any affiliates):
As of ___________________(insert date within 31 days)
Col. A Col. B Col. C Col. D
Amount Owned
Whether the Beneficially or
Securities Are Held as Collateral Percent of
Voting or Security for Class Represented
Nonvoting obligations in by Amount Given
Title of Class Securities Default in Col. C
-------------- ---------- ------- ----------------
9. SECURITIES OF UNDERWRITERS OWNED OR HELD BY THE TRUSTEE (INCLUDING ITS
PARENT AND ANY AFFILIATES). If the trustee (including its parent and
any affiliates) owns beneficially or holds as collateral security for
obligations in default any securities of an underwriter for the
obligor, furnish the following information as to each class of
securities of such underwriter any of which are so owned or held by the
trustee:
Col. A Col. B Col. C Col. D
Amount Owned
Beneficially or
Held as Collateral Percent of
Security for Class Represented
Title of Issuer Obligations in by Amount
and Title of Amount Default by Given in
Class Outstanding Trustee Col. C
----- ----------- ------------- ---------------
10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE (INCLUDING ITS PARENT AND ANY
AFFILIATES) OF VOTING SECURITIES OF CERTAIN AFFILIATES OR SECURITY
HOLDERS OF THE OBLIGOR. If the trustee (including its parent and any
affiliates) owns beneficially or holds as collateral security for
obligations in default voting securities of a person who, to the
knowledge of the trustee (1) owns 10% or more of the voting securities
<PAGE> 5
of the obligor or (2) is an affiliate, other than a subsidiary, of the
obligor, furnish the following information as to the voting securities
of such person:
As of _______________________(insert date within 31 days)
Col. A Col. B Col. C Col. D
Amount Owned
Beneficially or
Held as Collateral Percent of
Security for Class Represented
Title of Issuer Obligations in by Amount
and Title of Amount Default by Given in
Class Outstanding Trustee Col. C
----- ----------- ----------- ---------------
11. OWNERSHIP OR HOLDINGS BY THE TRUSTEE (INCLUDING ITS PARENT AND ANY
AFFILIATES) OF ANY SECURITIES OF A PERSON OWNING 50 PERCENT OR MORE OF
THE VOTING SECURITIES OF THE OBLIGOR. If the trustee (including its
parent and any affiliates) owns beneficially or holds as collateral
security for obligations in default any securities of a person who, to
the knowledge of the trustee, owns 50 percent or more of the voting
securities of the obligor, furnish the following information as to each
class of securities of such person any of which are so owned or held by
the trustee (including its parent and affiliates):
As of ______________________(insert date within 31 days)
Col. A Col. B Col. C Col. D
Amount Owned
Beneficially or
Held as Collateral Percent of
Security for Class Represented
Title of Issuer Obligations in by Amount
and Title of Amount Default by Given in
Class Outstanding Trustee Col. C
----- ----------- ----------- ---------------
<PAGE> 6
12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE. Except as noted in the
instructions, if the obligor is indebted to the trustee, furnish the
following information:
As of ____________________(insert date with 31 days)
Col. A Col. B Col. C
Amount
Nature of Indebtedness Outstanding Due Date
---------------------- ----------- --------
13. DEFAULTS BY THE OBLIGOR.
a) State whether there is or has been a default with
respect to the securities under this indenture.
Explain the nature of any such default.
-NONE-
b) If the Trustee is a trustee under another indenture
under which any other securities, or certificates
interest or participation in any other securities, of
the obligor are outstanding, or is trustee for more
than one outstanding series or securities under the
indenture, state whether there has been a default
under any such indenture or series, identify the
indenture or series affected, and explain the nature
of any such default.
As of January 17, 1994 (insert date within 31 days)
-------------------------------------
-NONE-
Col. A Col. B Col. C Col. D
Amount Owned
Beneficially or
Held as Collateral Percent of
Security for Class Represented
Title of Issuer Obligations in by Amount
and Title of Amount Default by Given in
Class Outstanding Trustee Col. C
----- ----------- ----------- ---------------
<PAGE> 7
14. AFFILIATIONS WITH THE UNDERWRITERS. If any underwriter is an affiliate
of the trustee (including its parent and any affiliates), described each
such affiliation.
15. FOREIGN TRUSTEE. Identify the order or rule pursuant to which the foreign
trustee is authorized to act as sole trustee under indentures qualified
or to be qualified under the Act.
16. LIST OF EXHIBITS. List below all exhibits filed as part of this
statement of eligibility.
1. (a) A copy of the Articles of Association of Star Bank,
National Association, Cincinnati (now Star Bank,
National Association) as now in effect.
(b) A copy of the Amended Articles of Association dated
June 14, 1991, changing the name of the association
to Star Bank, National Association.
2. (a) A copy of the certificate of authority of The First
National Bank of Cincinnati (now Star Bank, National
Association) to commence business dated September 1,
1922.
(b) A copy of a Certificate of the Comptroller of the
Currency dated December 21, 1973, authorizing F N
National Bank to commence the business of banking.
(c) A copy of a Certificate of the Comptroller of the
Currency dated December 28, 1973, approving the
merger of The First National Bank of Cincinnati (now
Star Bank, National Association) into F N National
Bank under the title "The First National Bank of
Cincinnati" effective January 2, 1974.
(d) A copy of a letter dated June 8, 1988, from the
Comptroller of the Currency indicating the change in
the name of the association to Star Bank, National
Association, Cincinnati, effective July 1, 1988.
<PAGE> 8
(e) A copy of a letter dated July 15, 1991, from the
Comptroller of the Currency indicating the change in
the name of the association to Star Bank, National
Association, effective June 14, 1991.
3. A copy of the authorization of The First National Bank of
Cincinnati (now Star Bank, National Association) to exercise
corporate trust powers.
4. A copy of existing By-Laws to Star Bank, National Association,
Cincinnati (now Star Bank, National Association)
5. The consent of the Trustee required by section 321 (b) of the Trust
Indenture Act of 1939.
6. A copy of the latest report of condition of Star Bank, National
Association, published pursuant to law or the requirements of its
supervising or examining authority.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of
1939, the Trustee, Star Bank, National Association, a national banking
association organized and existing under the laws of the United States
of America, has duly caused this statement of eligibility to be signed
on its behalf by the undersigned, thereunto duly authorized, all in the
City of Cincinnati and State of Ohio on the 22nd day of August, 1996.
STAR BANK, NATIONAL ASSOCIATION
By: /s/ Stephen J. Blackstone
-----------------------------------
Stephen J. Blackstone
Trust Officer
<PAGE> 9
EXHIBIT 1 (a)
-------------
STAR BANK, NATIONAL ASSOCIATION, CINCINNATI
-------------------------------------------
CHARTER NO. 24
--------------
ARTICLES OF ASSOCIATION
-----------------------
FIRST: The title of this Association shall be "Star Bank, National
Association, Cincinnati."*
SECOND: The main office of the Association shall be in the City of Cincinnati,
County of Hamilton, State of Ohio. The general business of the Association
shall be conducted at its main office and its branches.
THIRD: The Board of Directors of this Association shall consist of not less
than five (5) nor more than twenty-five (25) shareholders, the exact number of
Directors within such minimum and maximum limits to be fixed and determined from
time to time by resolution of a majority of the full Board of Directors or by
resolution of the shareholders at any annual or special meeting thereof. Unless
otherwise provided by the laws of the United States, any vacancy in the Board of
Directors for any reason, including an increase in the number thereof, may be
filled by action of the Board of Directors.
FOURTH: The annual meeting of the shareholders for the election of Directors
and the transaction of whatever other business may be brought before said
meeting shall be held at the main office or such other place as the Board of
Directors may designate, on the day of each year specified therefor by the
Bylaws, but if no election is held on that day, it may be held on any subsequent
day according to the provisions of law; and all elections shall be held
according to such lawful regulations as may be prescribed by the Board of
Directors.
FIFTH: The authorized amount of capital stock of this Association shall be
3,640,000 shares of common stock of the par value of five dollars ($5.00) each,
but said capital stock may be increased or decreased from time to time, in
accordance with the provisions of the laws of the United States.
No holder of shares of the capital stock of any class of the Association shall
have any pre-emptive or preferential right of subscription to any shares of any
class of stock of the Association, whether now or hereafter authorized, or to
any obligations convertible into stock of the Association issued or sold, nor
any right of subscription to any thereof other than such, if any, as the Board
of Directors, in its discretion, may from time to time determine and at such
price as the Board of Directors may from time to time fix.
The Association, at any time and from time to time, may authorized and issue
debt obligations, whether or not subordinated, without the approval of the
shareholders.
*Amended June 14, 1991, see attached.
<PAGE> 10
SIXTH: The Board of Directors shall appoint one of its members President of
this Association, who shall be Chairman of the Board, unless the Board
appoints another Director to be the Chairman. The Board of Directors shall have
the power to appoint one or more Vice Presidents; and to appoint a Cashier and
such other officers and employees as may be required to transact the business of
this Association. The Board of Directors shall have the power to define the
duties of the officers and employees of the Association; to fix the salaries to
be paid to them; to dismiss them; to require bonds from them and to fix the
penalty thereof; to regulate the manner in which any increase of the capital of
the Association shall be made; to manage and administer the business and affairs
of the Association; to make all Bylaws that it may be lawful for them to make
and generally to do and perform all acts that it may be legal for a Board of
Directors to do and perform.
The Board of Directors, without need for approval of shareholders, shall have
the power to change the location of the main office of this Association, subject
to such limitations as from time to time may be provided by law; and shall have
the power to establish or change the location of any branch or branches of the
Association to any other location, without the approval of the shareholders, but
subject to the approval of the Comptroller of the Currency.
SEVENTH: The corporate existence of this Association shall continue until
terminated in accordance with the laws of the United States.
EIGHTH: The Board of Directors of this Association, the Chairman of the Board,
the President, or any three or more shareholders owning, in the aggregate, not
less twenty-five percent of the stock of this Association, may call a special
meeting of shareholders at any time. Unless otherwise provided by the laws of
the United States, a notice of the time, place, and purpose of every annual and
special meeting of the shareholders shall be given by first-class mail, postage
prepaid, mailed at least ten days prior to the date of such meeting to each
shareholder of record at his address as shown upon the books of this
Association.
NINTH: Any person, his heirs, executors, or administrators, may be
indemnified or reimbursed by the Association for reasonable expenses
actually incurred in connection with any action, suit, or proceeding, civil or
criminal, to which he or they shall be made a party by reason of his being or
having been a director, officer, or employee of the Association or of any firm,
corporation, or organization which he served in any such capacity at the request
of the Association. Provided, however, that no person shall be so indemnified or
reimbursed in relation to any matter in such action, suit, or proceeding as to
which he shall finally be adjudged to have been guilty of or liable for gross
negligence, willful misconduct or criminal acts in the performance of his duties
to the Association; and, provided further, that no person shall be so
indemnified or reimbursed in relation to any matter in such action, suit, or
proceeding which has been made the subject of a compromise settlement except
with the approval of a court of competent jurisdiction, or the holders of record
of a majority of the outstanding shares of the Association, or the Board of
Directors, acting by vote of Directors not parties to the same or substantially
the same action, suit, or proceeding, constituting a majority of the whole
number of Directors. The foregoing right of indemnification shall not be
exclusive of other rights to which such person, his heirs, executors, or
administrators, may be entitled as a matter of law. The
<PAGE> 11
Association may, upon the affirmative vote of a majority of its Board of
Directors, purchase insurance for the purpose of indemnifying its directors,
officers and other employees to the extent that such indemnification is allowed
in the preceding paragraph. Such insurance may, but need not, be for the benefit
of all directors, officers, or employees.
TENTH: These Articles of Association may be amended at any regular or special
meeting of the shareholders by the affirmative vote of the holders of a majority
of the stock of this Association, unless the vote of the holders of a greater
amount of stock is required by law and in that case by the vote of the holders
of such greater amount.
August 18, 1988
<PAGE> 12
EXHIBIT 1(B)
------------
STAR BANC
CORPORATION
June 14, 1991
Deputy Comptroller
Central District
Office of the Comptroller of the Currency
One Financial Place
440 S. LaSalle, Suite 2700
Chicago, Illinois 60605
Dear Deputy Comptroller:
Re: Letter of Notification
Star Bank, National Association, Cincinnati, Charter #24 intends to
change its corporate title to Star Bank, National Association. The effective
date of the change is June 14, 1991.
A certified copy of the amendment to the articles of association is
enclosed. The amendment conforms to the requirements of 12 USC 21 a.
Sincerely,
/s/
F. Kristen Koepcke
FKK:bjt
Enclosure
<PAGE> 13
EXHIBIT 1(b)
-------------
MINUTES OF SPECIAL MEETING OF THE SHAREHOLDER
STAR BANK, NATIONAL ASSOCIATION, CINCINNATI
A Special Meeting of the shareholder of Star Bank, National Association,
Cincinnati (the "Bank") was held on June 14, 1991.
Mr. Oliver W. Waddell called the meeting to order and selected Mr. F. Kristen
Koepke to act as Secretary.
The Secretary reported that all the outstanding shares of the Bank were
represented at this meeting and that the shareholder had waived notice of this
special meeting. Therefore, a quorum was present.
Mr. Waddell stated that the purpose of the meeting was to consider a proposed
name change for the Bank as recommended by the Board of Directors. On motion
duly made and carried, the following resolution was adopted:
RESOLVED, That Article First of the Articles of Association of
the Bank be amended in its entirely to read as follows:
FIRST: The title of this Association shall be "Star Bank,
National Association."
There being no further business to come before the meeting, on motion duly made
and carried, the meeting was adjourned.
/s/
----------------------------
F. Kristen Koepke, Secretary
Approved:
/s/
- --------------------------------
Oliver W. Waddell
Chairman, Star Banc Corporation,
Shareholder Certified Copy
/s/
----------------------------
Secretary
<PAGE> 14
EXHIBIT 2 (a)
--------------
COPY OF THE CERTIFICATE OF AUTHORITY OF THE TRUSTEE TO COMMENCE BUSINESS:
NO. 24
E Pluribus Unum
TREASURY DEPARTMENT
Office of Comptroller of the Currency
Washington, D.C., September 1, 1992
WHEREAS, the Act of Congress of the United States, entitled, "An Act to
amend section 5136, Revised Statutes of the United States, relating to corporate
powers of associations, so as to provide succession thereof for a period of
ninety-nine years or until dissolved, and to apply said section as so amended to
all national banking association", approved by the President on July 1, 1922,
provided that all national banking associations organized and operating under
any law of the United States on July 1, 1992 should have succession until
ninety-nine years from that date, unless such association should be sooner
dissolved by the act of its shareholders owning two-thirds of its stock, or
unless its franchise should become forfeited by reason of violation of law, or
unless it should be terminated by an Act of Congress hereinafter enacted;
NOW THEREFORE, I, D. R. CRISSINGER Comptroller of the Currency, do
hereby certify that THE FIRST NATIONAL BANK OF CINCINNATI and State of OHIO,
was organized and operating under the laws of the United States on July 1, 1922,
and that its corporate existence was extended for the period of ninety-nine
years from that date in accordance with and subject to the condition in the Act
of Congress hereinbefore recited.
(SEAL) IN TESTIMONY WHEREOF, witness my hand
and seal of office this FIRST day of
SEPTEMBER, 1922
(Signed) D. R. Crissinger
-----------------------------
Comptroller of the Currency
<PAGE> 15
EXHIBIT 2 (b)
--------------
Comptroller of the Currency
TREASURY DEPARTMENT OF THE UNITED STATES
Washington, D.C.
Whereas, satisfactory evidence has been presented to the Comptroller of
the Currency that "FN NATIONAL BANK".
located in CINCINNATI, State of OHIO, has complied with all
provisions of the Statutes of the United States required to be complied with
before being authorized to commence the business of banking as National Banking
Association;
Now, therefore, I hereby certify that the above-named association
is authorized to commence the business of banking as a National Banking
Association.
In testimony whereof, witness my signature and seal of
SEAL office this 21st day of December, 1913.
/S/
------------------------------------------------
<PAGE> 16
EXHIBIT 2 (c)
-------------
Comptroller of the Currency
TREASURY DEPARTMENT OF THE UNITED STATES
Washington, D.C.
WHEREAS, satisfactory evidence has been presented to the
Comptroller of the Currency that all requisite legal and corporate action has
been taken, in accordance with the statutes of the United States, to merge The
First National Bank of Cincinnati, Cincinnati, Ohio, into FN National Bank,
Cincinnati, Ohio, under the charter of FN National Bank and under the title
"The First National Bank of Cincinnati," with capital stock of $18,200,000;
NOW, THEREFORE, it is hereby certified that such merger was
approved November 29, 1973, and is effective as of the opening of business
January 2, 1974.
IN TESTIMONY WHEREOF< witness my signature and seal
of office this 28th day of December, 1973
SEAL /S/
------------------------------------------
James E. Smith
Comptroller of the Currency
<PAGE> 17
EXHIBIT 2(d)
------------
- ------------------------------------------------------------------------------
Comptroller of the Currency
Administrator of National Banks
- ------------------------------------------------------------------------------
Central District
One Financial Plaza, Suite 2700
440 South LaSalle Street
Chicago, Illinois 60605
June 8, 1988
Mr. Raymond D. Beck
Secretary & Counsel
First National Cincinnati Corporation
First National Bank Center
425 Walnut Street
Cincinnati, Ohio 45201-1038
Dear Mr. Beck:
The office of the Comptroller of the Currency acknowledges receipt of your
letters concerning First National Cincinnati Corporation's banking subsidiarys'
title changes and the appropriate amendments to each bank's articles of
association. The Office has recorded the following banks' title changes
effective July 1, 1988.
OLD TITLE NEW TITLE
The First National Bank of Ironton Star Bank, National Association,
Ironton, Ohio Tri-State
Charter No. 16607
Farmers and Traders National Bank Star Bank, National Association
Hillsboro, Ohio Hillsboro
Charter No. 17646
The First National Bank of Cincinnati Star Bank, National Association
Cincinnati, Ohio Cincinnati
Charter No. 24
The First National Bank & Trust Company Star Bank, National Association
Troy, Ohio Troy
Charter No. 9336
<PAGE> 18
Page 2
Mr. Raymond D. Beck (cont'd)
The Second National Bank of Hamilton Star Bank, National Association
Hamilton, Ohio Butler County
Charter No. 17200
The Second National Bank of Richmond Star Bank, National Association
Richmond, Indiana Eastern Indiana
Charter No. 1988
The First National Bank of Aurora Star Bank, National Association
Aurora, Indiana Aurora
Charter No. 699
The Peoples National Bank of Lawrenceburg Star Bank, National Association
Lawrenceburg, Indiana Southeastern Indiana
Charter No. 2612
Newport National Bank Star Bank, National Association
Newport, Kentucky Campbell County
Charter No. 4765
The First National Bank Star Bank, National Association
Sidney, Ohio Sidney
Charter No. 5214
Very truly yours,
David J. Rogers
National Bank Examiner
Analysis Division
<PAGE> 19
EXHIBIT 2(e)
------------
- ------------------------------------------------------------------------------
Comptroller of the Currency
Administrator of National Banks
- ------------------------------------------------------------------------------
Central District
One Financial Place
440 S. LaSalle, Suite 2700
Chicago, Illinois 60605
July 15, 1991
Mr. F. Kristen Koepcke
Vice President, General Counsel and Secretary
Star Banc Corporation
425 Walnut Street
P.O. Box 1038
Cincinnati, Ohio 45201-1038
Dear Mr. Koepcke:
The Office of the Comptroller of the Currency has received your letter
concerning the title change and the appropriate amendment to the bank's articles
of association. The Office has recorded that as of June 14, 1991, the title of
Star Bank, National Association, Cincinnati, Charter No. 24, was changed to Star
Bank, National Association.
As a result of the Garn-St Germain Depository Institutions Act of 1982, this
Office is no longer responsible for the approval of national bank name changes
nor does it maintain official records on the use of alternate titles. The use of
other titles or the retention of the rights to any previously used title is the
responsibility of the bank's board of directors. Legal counsel should be
consulted to determine whether or not the new title, or any previously used
title, could be challenged by competing institutions under the provisions of
federal or state law.
Very truly yours,
David J. Rogers
National Bank Examiner
Analysis Division
<PAGE> 20
EXHIBIT 3
---------
THE AUTHORIZATION OF THE TRUSTEE TO EXERCISE CORPORATE TRUST POWERS:
FEDERAL RESERVE BOARD
Washington, D.C.
October 9, 1919
Pursuant to authority vested in the Federal Reserve Board by the Act of
Congress approved December 23, 1913, known as the Federal Reserve Act, as
amended by the Act of September 26, 1918, the
FIRST NATIONAL BANK OF CINCINNATI
has been granted the right to act, when not in contravention of State or local
law, as TRUSTEE, EXECUTOR, ADMINISTRATOR, REGISTRAR OF STOCKS AND BONDS,
GUARDIAN OF ESTATES, ASSIGNEE, RECEIVER OR IN ANY OTHER FIDUCIARY CAPACITY IN
WHICH STATE BANKS, TRUST COMPANIES OR OTHER CORPORATIONS WHICH COME INTO
COMPETITION WITH NATIONAL BANKS ARE PERMITTED TO ACT UNDER THE LAWS OF THE STATE
OF OHIO. The exercise of such rights shall be subject to regulations prescribed
by the Federal Reserve Board.
Federal Reserve Board,
By W. P. G. Harding
Governor.
ATTEST:
W. T. Chapman
Secretary.
STATE OF OHIO
DEPARTMENT OF BANKS AND BANKING
Certificate of Authority No. 17
NATIONAL BANKS
I, Philip C. Berg, Superintendent of Banks, do hereby certify that the
First National Bank of Cincinnati, Hamilton County, Ohio has complied with all
the requirements provided by law and is authorized to transact the business of a
trust company and to perform all the functions granted to such companies by the
laws of this state.
Given under my hand and official Seal at Columbus,
Ohio, this twenty-fifth day of November, A.D. 1919
Philip C. Berg,
Superintendent of Banks.
(SEAL)
<PAGE> 21
EXHIBIT 4
---------
BY-LAWS
STAR BANK, N.A., CINCINNATI
ARTICLE I
MEETINGS OF SHAREHOLDERS
SECTION 1. ANNUAL MEETING
The annual meeting of shareholders shall be held in the main banking house of
the Association at 11:00 a.m. on the second Tuesday in February of each year.
Notice of such meeting shall be mailed to shareholders not less than ten (10)
nor more than sixty (60) days prior to the meeting date.
SECTION 2. SPECIAL MEETINGS
Special meetings of shareholders may be called and held at such times and upon
such notice as is specified in the Articles of Association.
SECTION 3. QUORUM
A majority of the outstanding capital stock represented in person or by proxy
shall constitute a quorum of any meeting of the shareholders, unless otherwise
provided by law, but less than a quorum may adjourn any meeting, from time to
time, and the meeting may be held as adjourned without further notice.
SECTION 4. INSPECTORS
The Board of Directors may, and in the event of its failure so to do, the
Chairman of the Board shall appoint Inspectors of Election who shall determine
the presence of a quorum, the validity of proxies, and the results of all
elections and all other matters voted upon by shareholders at all annual and
special meetings of shareholders.
SECTION 5. VOTING
In deciding on questions at meetings of shareholders, except in the election of
directors, each shareholder shall be entitled to one vote for each share of
stock held. A majority of votes cast shall decide each matter submitted to the
shareholders, except where by law a larger vote is required. In all elections of
directors, each shareholder shall have the right to vote the number of shares
owned by him for as many persons as there are directors to be elected, or to
cumulate such shares and give one candidate as many votes as the number of
directors multiplied by the number
<PAGE> 22
of his shares equal, or to distribute them on the same principle among as many
candidates as he shall think fit.
ARTICLE II
SECTION 1. TERM OF OFFICE
The directors of this Association shall hold office for one year and until their
successors are duly elected and qualified.
SECTION 2. REGULAR MEETINGS
The organization meeting of the Board of Directors shall be held as soon as
practical following the annual meeting of shareholders at the main banking
house. Other regular meetings of the Board of Directors shall be held without
notice at 11:00 a.m. on the second Tuesday of each month except February, at the
main banking house, or, provided notice is given by telegram, letter, telephone
or in person to every Director, at such time and place as may be designated in
the notice of the meeting. When any regular meeting of the Board falls on a
holiday, the meeting shall be held on the next banking business day, unless the
Board shall designate some other day.
SECTION 3. SPECIAL MEETINGS
Special meetings of the Board of Directors may be called by the Chairman of the
Board of the Association, or at the request of three or more Directors. Notice
of the time, place and purposes of such meetings shall be given by telegram,
letter, telephone or in person to every Director.
SECTION 4. QUORUM
A majority of the entire membership of the Board shall constitute a quorum at
any meeting of the Board.
SECTION 5. NECESSARY VOTE
A majority of those Directors present and voting at any meeting of the Board of
Directors shall decide each matter considered, except where otherwise required
by law or the Articles or By-Laws of this Association.
SECTION 6. COMPENSATION
Directors, excluding full-time employees of the Bank, shall receive such
reasonable compensation as may be fixed from time to time by the Board of
Directors.
SECTION 7. ELECTION-AGE LIMITATION
No person shall be elected or reelected a Director after reaching his seventieth
(70th) birthday, provided that any person who is a Director on December 10,
1985, may continue to be reelected a Director until he reaches his seventy-fifth
(75th) birthday.
<PAGE> 23
SECTION 8 RETIREMENT-AGE LIMITATION
Every Director of the Bank shall retire no later than the first month next
following his seventieth (70th) birthday, except for any person who was a
Director on December 10, 1985, who shall retire not later that the first of the
next month following his seventy-fifth (75th) birthday.
SECTION 9 DIRECTORS EMERITUS
The Board shall have the right from time to time to choose as Directors Emeritus
persons who have had prior service as members of the Board and who may receive
such compensation as shall be fixed from time to time by the Board of Directors.
ARTICLE III
OFFICERS
SECTION 1 WHO SHALL CONSTITUTE
The Officers of the Association shall be a Chairman of the Board, a President, a
Secretary, and other officers such as Chairman of the Executive Committee, Vice
Chairman of the Board, Executive Vice Presidents, Senior Vice Presidents, Vice
Presidents, Assistant Secretaries, Trust Officers, Trust Investment Officers,
Trust Real Estate Officers, Assistant Trust Officers, a Controller, Assistant
Controller, an Auditor and Assistant Auditors, as the Board may appoint from
time to time. Any person may hold two offices. The Chairman of the Board, all
Vice Chairmen of the Board and the President shall at all times be members of
the Board of Directors.
SECTION 2 TERM OF OFFICE
All officers shall be elected for and shall hold office for one year and until
their successors are elected and qualified, subject to the right in the Board of
Directors by a majority vote of the entire membership to discharge any officer
at any time.
SECTION 3 CHAIRMAN OF THE BOARD (Amended 12/13/88-see attachment)
The Chairman of the Board shall be the Chief Executive Officer of the
Association and shall have all duties, responsibilities and powers of the Chief
Executive Officer. He shall, when present, preside at all meetings of
shareholders and directors and shall be ex officio a member of all committees of
the Board. He shall name all members of the committees of the Board, subject to
the confirmation thereof by the Board.
In the event that there is a vacancy in the position of President or in the
event of the absence or incapacity of the President, the Chairman may appoint,
or in the event of his failure to do so, the Board of Directors or the Executive
Committee thereof may designate any Vice Chairman of the
<PAGE> 24
Board, any Executive Vice President or any Senior Vice President of the
Association temporarily to exercise the powers and perform the duties of the
Chairman as Chief Executive Officer when the Chairman is absent or
incapacitated.
The Board of Directors shall have the power to elect a Chairman of the Executive
Committee. Any such Chairman of the Executive Committee shall participate in the
formation of the policies of the Association and shall have such other duties as
may be assigned to him from time to time by the President or by the Board of
Directors.
SECTION 4 PRESIDENT (amended 12/13/88-see attachment)
The President shall participate in the formation and supervision of the policies
and operations of the Association and shall perform such other duties as may be
assigned to him from time to time by the Board of Directors or by the Chairman
of the Board. In the event that there is a vacancy in the position of the
Chairman of the Board, the President shall be the Chief Executive Officer of the
Association and shall have all the powers and perform all the duties of the
Chairman of the Board, including the same power to name temporarily a Chief
Executive Officer to serve in the absence of the President.
SECTION 5 CHAIRMAN OF THE EXECUTIVE COMMITTEE
The Board of Directors shall have the power to elect a Chairman of the Executive
Committee. Any such Chairman of the Executive Committee shall participate in the
formation of the policies of the Association and shall have such other duties as
may be assigned to him from time to time by the President or by the Board of
Directors.
SECTION 6 VICE CHAIRMEN OF THE BOARD
The Board of Directors shall have the power to elect one or more Vice Chairmen
of the Board of Directors. Any such Vice Chairmen of the Board shall participate
in the formation of the policies of the Association and shall have such other
duties as may be assigned to him from time to time by the Chairman of the Board
or by the Board of Directors.
SECTION 7 OTHER OFFICERS
The Secretary and all other officers appointed by the Board of Directors shall
have such duties as defined by law and as may from time to time be assigned to
them by the Chief Executive Officer or the Board of Directors.
SECTION 8 RETIREMENT
Every officer of the Association shall retire not later than the first of the
month next following his sixty-fifth (65th) birthday. The Board of Directors
may, in its discretion, set the retirement date and terms of retirement of an
officer at a date later than provided above.
<PAGE> 25
ARTICLE IV
COMMITTEES
SECTION 1 EXECUTIVE COMMITTEE
There shall be a standing committee of Directors in this Association to be known
as the Executive Committee. This Committee shall meet at 11:00 a.m. on the first
and fourth Tuesday of each month. It shall have all of the powers of the Board
of Directors between meetings of the Board, except as the Board only by law is
authorized to perform or exercise. All actions of the Executive Committee shall
be reported to the Board of Directors. In the event that any member of the
Executive Committee is unable to attend a meeting of that committee, the
Chairman of the Board or the President may, at his discretion, appoint another
Director to attend said meeting of the Executive Committee and for that meeting
to serve as a member of the Executive Committee with full power to act in place
of the absent regular member of the committee.
SECTION 2 COMPENSATION COMMITTEE
There shall be a standing committee of directors of this Association to be known
as the Compensation Committee who shall review the compensation of all Executive
Officers and those officers who participate in the Profit Sharing Pool as well
as fees for directors of the Association. They will recommend specific
compensation arrangements to the Board of Directors for their confirmation.
SECTION 3 COMMITTEE ON AUDIT
There shall be a standing committee of Directors of this Association to be known
as the Committee on Audit, none of whose members shall be active officers of the
Association. This Committee shall make or cause to be made a suitable
examination of the affairs of the Association and the Trust Department at least
once during each period of twelve months. The results of such examination shall
be reported in writing to the Board at the next regular meeting thereafter
stating whether the Association and/or Trust Department is in a sound solvent
condition, whether adequate internal audit controls and procedures are being
maintained and make such recommendations as it deems advisable.
SECTION 4 TRUST COMMITTEE
There shall be a standing committee of Directors of this Association to be known
as the Trust Committee. The Trust Committee shall determine policies of the
Department and review actions of the Trust Investment Committee. All actions of
the Trust Committee shall be reported to the Board of Directors.
SECTION 5 TRUST INVESTMENT COMMITTEE
There shall be a standing committee of this Association to be known as the Trust
Investment Committee composed of officers of the Association. The Trust
Investment Committee OR SUCH
<PAGE> 26
OFFICERS AS MAY BE DULY DESIGNATED BY THE TRUST INVESTMENT COMMITTEE, shall pass
upon the acceptance of all trusts, the closing out or relinquishment of all
trusts and the making, retention, or disposition of all investments of trust
funds in conformity with policies established by the Trust Committee. Actions of
the Trust Investment Committee shall be reported to the Trust Committee.
SECTION 6 PENSION COMMITTEE
There shall be a standing committee of directors or officers of this Association
to be known as the Pension Committee, who shall have the powers and duties as
set forth in the Association's Employees' Pension Plan. A report of the
condition of the pension fund shall be submitted annually to the Board of
Directors.
SECTION 7 OTHER COMMITTEES
The Chairman may appoint, from time to time, other committees for such purposes
and with such powers as he or the Board may direct.
ARTICLE V
SEAL
SECTION 1 IMPRESSION
The following is an impression of the seal of this Association.
August 25, 1988
<PAGE> 27
RESOLVED, That Section 3 of Article III of the By-Laws of the Bank shall be
amended to read:
SECTION 3 CHAIRMAN OF THE BOARD
The Chairman of the Board shall have general executive powers and duties and
shall perform such other duties as amy be assigned from time to time by the
Board of Directors. In addition, unless the Board of Directors shall have
designated the President to be the Chief Executive Officer, the Chairman of the
Board shall be the Chief Executive Officer and shall have all the powers and
duties of the Chief Executive Officer. He shall, when present, preside at all
meetings of shareholders and directors and shall be ex officio a member of all
committees of the Board. He shall name all members of the committees of the
Board, subject to the confirmation thereof by the Board.
If he is Chief Executive Officer, in the event that there is a vacancy in the
position of President or in the event of the absence or incapacity of the
President, the Chairman may appoint, or in the event of his failure to do so,
the Board of Directors or the Executive Committee thereof may designate, any
Vice Chairman of the Board, any Executive Vice President or any Senior Vice
President of the Association temporarily to exercise the powers and perform the
duties of the Chairman as Chief Executive Officer when the Chairman is absent or
incapacitated.
If the President has been designated Chief Executive Officer by the Board of
Directors, in the event that there is a vacancy in the position of the President
or in the event of the absence or incapacity of the President, the Chairman
shall be the Chief Executive Officer of the Association and shall have all the
powers and perform all the duties of the President, including the powers to name
temporarily a Chief Executive Officer to serve in the absence of the Chairman.
FURTHER RESOLVED, That Section 4 of Article III of the By-Laws of the bank shall
be amended to read:
SECTION 4 PRESIDENT
The President shall have general executive powers and duties and shall perform
such other duties as may be assigned from time to time by the Board of
Directors. In addition, if designated by the Board of Directors, the President
shall be the Chief Executive Officer and shall have all the powers and duties of
the Chief Executive Officer, including the same power to name temporarily a
Chief Executive Officer to serve in the absence of the President if there is a
vacancy in the position of the Chairman or in the event of the absence or
incapacity of the Chairman.
If the Chairman has been designated Chief Executive Officer by the Board of
Directors, in the event that there is a vacancy in the position of the Chairman
of the Board or in the event of the absence or incapacity of the Chairman of the
Board, the President shall be the Chief Executive Officer of the Association and
shall have all the powers and perform all the duties of the Chairman of the
Board, including the same power to name temporarily a Chief Executive Officer to
serve in the absence of the President.
<PAGE> 28
EXHIBIT 5
---------
THE CONSENT OF THE TRUSTEE
REQUIRED BY 321(b) OF THE ACT
Star Bank, National Association, the Trustee executing the statement
of eligibility and qualification to which this Exhibit is attached does hereby
consent that reports of examinations of the undersigned by Federal, State,
Territorial or District authorities may be furnished by such authorities to
the Securities and Exchange Commission upon request therefor in accordance with
the provisions of 321(b) of the Trust Indenture Act of 1939.
STAR BANK, NATIONAL ASSOCIATION
August 22, 1996 BY: /s/ Stephen J. Blackstone
- ---------------------------- -------------------------------
Date Stephen J. Blackstone
Trust Officer
<PAGE> 29
CONSOLIDATED REPORT OF CONDITION FOR INSURANCE COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR SEPTEMBER 30, 1995
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC--BALANCE SHEET
<TABLE>
<CAPTION>
C400
Dollar Amounts in Thousands RCFD Bil Mil Thou
<S> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule RC-A):
a. Noninterest-bearing balances and currency and coin (1) 451,065
b. Interest-bearing balances (2) 0
2. Securities:
a. Held-to-maturity securities (from Schedule RE-B, Column A) 1,447,188
b. Available-for-sale securities (from Schedule RC-B, Column D) 198,643
3. Federal funds sold and securities purchased under agreements to resell in domestic
offices of the bank and of its Edge and Agreements subsidiaries, and in YBFs:
a. Federal funds sold 5,924
b. Securities purchased under agreements to resell 0
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule RC-C)
b. LESS: Allowance for loan and lease losses
c. LESS: Allocated transfer risk reserve
d. Loans and leases, net of unearned income,
allowance, and reserve (item 4.a minus 4.b and 4.c) 5,919,755
5. Trading assets (from Schedule RC-D) 0
6. Premises and fixed assets (including capitalized leases) 100,250
7. Other real estate owned (from Schedule RC-M) 2,745
8. Investments in unconsolidated subsidiaries and associated companies 0
(from Schedule RC-M)
9. Customers' liability to this bank on acceptances outstanding 25,372
10. Intangible assets (from Schedule RC-M) 215,460
11. Other assets (from Schedule RC-F) 173,361
12. Total assets (sum of items 1 through 11) 8,539,763
</TABLE>
<PAGE> 30
SCHEDULE RC--CONTINUES
<TABLE>
<CAPTION>
C400
- -------------------------------------------------------------------------------------------------------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou
<S> <C> <C>
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of columns A and C from Schedule RC-B,
part I) 6,604,080
(1) Noninterest-bearing (1) 1,197,784
(2) Interest-bearing 5,406,296
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule 41,512
RC-E, Part II)
(1) Noninterest-bearing 0
(2) Interest-bearing 41,512
14. Federal funds purchased and securities sold under agreements ro repurchase
in domestic offices of the bank and of its Edge and Agreement subsidiaries, and
in IBFs:
a. Federal funds purchased 838,507
b. Securities sold under agreements ro repurchase 5,549
15. a. Demand notes issued to the U.S. Treasury 117,994
b. Trading liabilities (from Schedule RC-D) 0
16. Other borrowed money:
a. With original maturity of one year or less 2,422
b. With original maturity of more than one year 0
17. Mortgage indebtedness and obligations under capitalizated leases 11,711
18. Bank's liability on acceptances executed and outstanding 25,372
19. Subordinated notes and debentures 148,361
20. Other liabilities (from Schedule RC-G) 95,782
21. Total liabilities (sum of items 13 through 20) 7,891,290
22. Limited-life preferred stock and related surplus
23. Perpetual preferred stock and related surplus 0
24. Common Stock 18,200
25. Surplus [exclude all surplus related to preferred stock] 197,890
26. a. Undivided profits and capital reserves 437,179
-------------------------------
b. Net unrealized holding gains (losses) on available-for-sale securities (4,796)
-------------------------------
27. Cumulative foreign currency translation adjustments 0
-------------------------------
28. Total equity capital (sum of items 23 through 27) 648,473
-------------------------------
29. Total liabilities, limited-life preferred stock, and equity capital (sum ///////////////////////////////
of items 21, 22, and 28) 8,539,763
-------------------------------
</TABLE>
