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REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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DAYTON SUPERIOR CORPORATION
(Exact name of Registrant as specified in its charter)
OHIO
(State or other jurisdiction of incorporation or organization)
31-0676346
(I.R.S. Employer Identification No.)
7777 WASHINGTON VILLAGE DRIVE, SUITE 130
DAYTON, OHIO 45459
(937) 428-6360
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
DAYTON SUPERIOR CAPITAL TRUST
(Exact name of Registrant as specified in its Trust Agreement)
DELAWARE
(State or other jurisdiction of incorporation or organization)
TO BE APPLIED FOR
(I.R.S. Employer Identification No.)
7777 WASHINGTON VILLAGE DRIVE, SUITE 130
DAYTON, OHIO 45459
(937) 428-6360
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
J.A. CICCARELLI
PRESIDENT AND CHIEF EXECUTIVE OFFICER
DAYTON SUPERIOR CORPORATION
7777 WASHINGTON VILLAGE DRIVE, SUITE 130
DAYTON, OHIO 45459
(937) 428-6360
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
WITH COPIES TO:
David A. Neuhardt, Esq.
Thompson Hine & Flory LLP
2000 Courthouse Plaza N.E.
P.O. Box 8801
Dayton, Ohio 45401-8801
(937) 443-6775
Michael T. Pepke, Esq.
James M. Bedore, Esq.
Reinhart, Boerner, Van Deuren, Norris & Rieselbach, S.C.
1000 North Water Street
P.O. Box 514000
Milwaukee, Wisconsin 53203-3400
(414) 298-1000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
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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, check the following box and
list the Securities Act registration statement number of 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. [ ]
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED REGISTERED OFFERING PRICE PER UNIT AGGREGATE OFFERING PRICE
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<S> <C> <C> <C>
Convertible Trust Preferred Securities of Dayton
Superior Capital Trust... 1,380,000(1) $25(2)(3) $34,500,000(2)(3)
% Convertible Subordinated Debentures of
Dayton Superior Corporation... (4)
Class A Common Shares of Dayton Superior
Corporation............. (5)
Guarantee by Dayton Superior Corporation... (6)
Total................. 1,380,000 100% $34,500,000
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<CAPTION>
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AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED REGISTRATION FEE
<S> <C>
Convertible Trust Preferred Securities of Dayton
Superior Capital Trust... $9,591
% Convertible Subordinated Debentures of
Dayton Superior Corporation... (4)
Class A Common Shares of Dayton Superior
Corporation............. (5)
Guarantee by Dayton Superior Corporation... (6)
Total................. $9,591
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</TABLE>
(1) Includes 180,000 Convertible Trust Preferred Securities that may be issued
if the Underwriters exercise their over-allotment option.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(a).
(3) Exclusive of accrued interest and distributions, if any.
(4) $34,500,000 in aggregate principal amount of % Convertible Subordinated
Debentures of Dayton Superior Corporation to be sold to Dayton Superior
Capital Trust in connection with the issuance by the trust of its
Convertible Trust Preferred Securities. Under certain circumstances, the
debentures may be distributed to the holders of the Convertible Trust
Preferred Securities for no additional consideration. No separate
registration fee is required pursuant to Rule 457(i).
(5) Such number of Class A Common Shares as are issuable upon conversion of the
% Convertible Subordinated Debentures (including, without limitation, as
a result of anti-dilution adjustments). No separate registration fee is
required pursuant to Rule 457(i).
(6) Consists of the rights of the holders of the Convertible Trust Preferred
Securities under a Guarantee by Dayton Superior Corporation and certain
related obligations of Dayton Superior Corporation, as described in the
Registration Statement. No additional consideration is being paid for the
Guarantee and these related rights. No separate registration fee is required
pursuant to Rule 457(n).
------------------------------------
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, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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SUBJECT TO COMPLETION -- , 1999
PROSPECTUS DAYTON SUPERIOR LOGO
DAYTON SUPERIOR CAPITAL TRUST
0,000,000 PREFERRED SECURITIES
% Convertible Trust Preferred Securities
($25 liquidation amount per Preferred Security)
Guaranteed, to the extent described herein by,
and convertible into Class A Common Shares of,
DAYTON SUPERIOR CORPORATION
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DAYTON SUPERIOR CORPORATION
- - We manufacture and distribute metal accessories and forms used in concrete
construction and metal accessories used in masonry construction.
- - Dayton Superior Corporation
7777 Washington Village Dr., Suite 130
Dayton, Ohio 45459
(937) 428-6360
PROPOSED SYMBOL & MARKET
- - DSDpr/New York Stock Exchange
THE OFFERING:
- - Dayton Superior Capital Trust is offering ,000,000 of its preferred
securities
- - The underwriters have the option to purchase up to ,000 additional preferred
securities to cover over-allotments.
- - The trust will use the proceeds to purchase $ ,000,000 of our junior
subordinated debentures with terms that correspond to the preferred
securities.
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THIS INVESTMENT INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE 8.
<TABLE>
<CAPTION>
PER TRUST
PREFERRED SECURITY TOTAL
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<S> <C> <C>
Public offering price.................. $25.00 $ ,000,000
Underwriting commissions to be paid by
Dayton Superior Corporation......... $ 1.25 $ ,000,000
Proceeds to Dayton Superior Capital
Trust............................... $25.00 $ ,000,000
</TABLE>
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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ROBERT W. BAIRD & CO.
INCORPORATED
LEGG MASON WOOD WALKER
INCORPORATED
MCDONALD INVESTMENTS INC.
, 1999
THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PRELIMINARY
PROSPECTUS IS NOT AN OFFER TO SELL NOR DOES IT SEEK AN OFFER TO BUY THESE
SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
Summary................................... 1
Risk Factors.............................. 8
Forward Looking Statements and Cautionary
Matters................................. 14
Use of Proceeds........................... 15
Price Range of Common Shares.............. 15
Dividend Policy........................... 15
Capitalization............................ 16
Accounting Treatment...................... 16
Selected Financial Data................... 17
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.............................. 18
Business.................................. 30
Management................................ 40
Ownership of Common Shares................ 45
The Trust................................. 47
Description of the Preferred Securities... 48
Description of the Guarantee.............. 65
Description of the Junior Subordinated
Debentures.............................. 69
Relationship Among the Preferred
Securities, the Junior Subordinated
Debentures and the Guarantee............ 77
Description of Our Capital Shares......... 79
United States Taxation.................... 80
Book-Entry Issuance....................... 87
Underwriting.............................. 89
Legal Matters............................. 90
Experts................................... 90
Where You Can Find More Information....... 90
Index to Financial Statements............. F-1
</TABLE>
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[Page Intentionally Left Blank]
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SUMMARY
This summary highlights important information about our business and about
this offering. Because it is a summary, it does not include all information you
should consider before investing in preferred securities. Please review this
entire prospectus, including our financial statements, before you decide to
invest. Unless we indicate otherwise, we have not adjusted the information in
this prospectus to account for the exercise of the over-allotment option the
trust has granted to the underwriters. The terms "Dayton Superior," "we," "us"
and "our" refer to Dayton Superior Corporation and its subsidiaries. The term
"trust" refers to Dayton Superior Capital Trust.
DAYTON SUPERIOR
OUR COMPANY
We are Dayton Superior Corporation, an Ohio corporation incorporated in
1959 as the successor to a business founded in 1924. We believe that we are the
largest North American manufacturer and distributor of metal accessories and
forms used in concrete construction and of metal accessories used in masonry
construction. Our products are used primarily in two segments of the
construction industry:
- non-residential building projects such as schools, stadiums, prisons,
retail sites, commercial offices and manufacturing facilities; and
- infrastructure projects such as highways, bridges, utilities, water and
waste treatment facilities and airport runways.
We manufacture most of our products at ten plants in the United States
using, in many cases, high-volume, automated equipment designed and built or
customized by us.
We have four principal operating divisions, which are organized around the
following product lines:
- Concrete Accessories (Dayton/Richmond (R)). Concrete accessories are used
in connecting forms for poured-in-place concrete walls, anchoring or
bracing concrete walls and floors, supporting bridge framework and
positioning steel reinforcing bars, also known as rebar.
- Concrete Forming Systems (Symons (R)). Concrete forming systems are
comprised of reusable, highly-engineered forms used in the construction
of concrete walls, columns and bridge supports to hold liquid concrete in
place while it cures.
- Paving Products (American Highway Technology (R)). Paving products are
used to extend the longevity of roads and runways by transferring loads
between adjacent concrete slabs.
- Masonry Products (Dur-O-Wal (R)). Masonry products are placed between
layers of brick and covered with mortar to provide additional strength to
walls. Masonry products also include engineered products used to repair
or restore brick and stone buildings.
Collectively, we sell over 18,000 discrete products under a number of brand
names that are well-recognized in the construction industry. Most of our
products are consumable, providing us with a source of recurring revenue. In
addition, while our products represent a relatively small portion of a
construction project's total cost, our products assist in ensuring the on-time,
quality completion of those projects.
Our distribution system, which we believe is one of the largest in our
industry, consists of a network of 58 service/distribution centers in the United
States and Canada, ten of which also are manufacturing plants. Through this
network of service/distribution centers, we serve over 4,000 independent
distributors, as well as brokers, rebar fabricators, precast concrete
manufacturers, brick and concrete block manufacturers, general contractors,
subcontractors and metal fabricators. We also rent forming systems and tilt-up
bracing to contractors through rental centers and distributors nationwide.
Our revenues have grown rapidly through a focused strategy of internal
growth and a highly disciplined acquisition program. Since the beginning of
1994, we have completed eleven acquisitions, the
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largest of which was our 1997 acquisition of Symons Corporation. As a result of
these acquisitions and internal growth, our revenues have increased from $82.3
million in 1994 to $282.8 million in 1998, representing a compound annual growth
rate of 36.1%.
OUR STRATEGY
Our principal business objective is to achieve profitable growth through a
combination of acquisitions and internal operating initiatives. Key elements of
our strategy to achieve our principal business objective are outlined below:
- Compete Additional Strategic Acquisitions. Since the beginning of 1994,
we have successfully completed and integrated eleven strategic
acquisitions. We seek additional acquisitions that leverage our
significant economies of scale and manufacturing and distribution
expertise.
- Continue Product Innovation. We have a long and successful history of
innovation and continue to focus significant resources on new product
development.
- Continue Efficient Manufacturing and Continuous Improvement Programs. We
continue to implement strategic initiatives designed to reduce
manufacturing costs and improve product quality. To improve our
efficiency, we design and build or customize much of our high-volume,
automated manufacturing equipment.
- Leverage Our Extensive Distribution System. We leverage our extensive
distribution system, consisting of 58 service/distribution centers and
over 4,000 independent distributors located in virtually every major
domestic market, by acquiring new product lines, developing new products
and purchasing products sold by third parties, all of which can be sold
through our distribution system.
- Encourage Decentralized and Entrepreneurial Management. We encourage an
entrepreneurial spirit at each of our divisions. We believe utilizing the
capabilities, customer relationships and market knowledge of our managers
is essential to realizing our growth objectives.
OUR INDUSTRY
We believe the characteristics and trends in the non-residential
construction and infrastructure segments of the construction industry, the two
segments in which our products are primarily used, are favorable to our
business:
- These segments are less cyclical than the overall construction industry.
We have little exposure to single-family residential construction, which
is the most cyclical segment of the construction industry.
- We believe the significant decline in commercial real estate vacancy
rates over the past five years should continue to have a positive effect
on commercial construction even if an economic downturn occurs.
- We believe the May 1998 passage of The Transportation Equity Act for the
21st Century (TEA-21), the largest federal public works legislation in
U.S. history, will have a positive impact on infrastructure construction
within the United States.
- Competitors in our industry are mostly regional suppliers of limited
product lines and lack our economies of scale and manufacturing and
distribution strengths.
- Our industry is highly fragmented and it provides us with numerous
acquisition opportunities.
Our executive offices are located at 7777 Washington Village Drive, Suite
130, Dayton, Ohio 45459. Our telephone number is (937) 428-6360.
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THE OFFERING
DAYTON SUPERIOR CAPITAL
TRUST......................... The trust is a statutory business trust created
under the laws of Delaware. The trust will:
- issue and sell preferred securities,
representing beneficial interests in the
trust, to the public;
- issue and sell common securities to us; and
- use the proceeds from these sales to buy from
us junior subordinated debentures with terms
that correspond to the preferred securities.
The trust's executive offices are the same as
ours.
THE TRUSTEES.................. We will appoint three trustees to conduct the
trust's business. The trustees for the trust
will be:
- Firstar Bank, N.A., as property trustee;
- Mark A. Ferrucci, as the Delaware trustee;
and
- three of our officers or employees, as
individual administrative trustees.
DAYTON SUPERIOR............... We will:
- own the common securities of the trust;
- sell to the trust our junior subordinated
debentures, which we:
- will pay principal and interest on, subject
to payment of our senior debt; and
- may choose to distribute pro-rata to the
holders of the preferred securities and the
common securities if we dissolve the trust;
and
- guarantee payments on the preferred
securities on a junior subordinated basis, as
described under "Guarantee" below.
SECURITIES OFFERED............ ,000,000 % Convertible Trust Preferred
Securities ($25 liquidation amount per
security) issued by the trust. The trust also
has granted the underwriters an option for 30
days to purchase up to an additional ,000
preferred securities at the initial offering
price solely to cover any over-allotments.
OFFERING PRICE................ $25 per preferred security.
DISTRIBUTIONS................. Distributions on the preferred securities will
be:
- cumulative from the date of original
issuance;
- payable at the annual rate of % of the
liquidation preference of $25 per security;
- made quarterly in arrears on September 30,
December 31, March 31 and June 30, commencing
on , 1999;
- made only to the extent that funds of the
trust are available for distribution; and
- deferrable as described below.
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DEFERRAL OF DISTRIBUTIONS..... We may defer payment of interest on the junior
subordinated debentures. If we do that, the
trust will defer making distributions on the
preferred securities during the same period. We
may defer interest on the debentures for up to
20 consecutive quarters, but we may not defer
interest beyond , 2029, the
maturity date of the debentures. At the end of
the deferral period, we must pay all accrued
and unpaid interest, including accrued interest
on the deferred payments.
During any deferral, distributions will
continue to accrue on the preferred securities
at an annual rate of % of the liquidation
amount of $25 per security. Also, the deferred
distributions will themselves accrue interest
at an annual rate of %, to the extent
permitted by law. If a holder of preferred
securities converts preferred securities into
common shares during a deferral period, the
holder will not receive any of the deferred
distributions.
Once we have paid all deferred interest,
including accrued interest on the deferred
payments, we again can defer payment of
interest on the debentures for up to 20
consecutive quarters if no event of default
under the debentures exists.
During any deferral, we generally will not be
permitted to:
- pay a dividend or make any distributions on,
or repurchase, our capital shares; or
- make any payment on any of our debt that
ranks equal to or junior to the debentures.
TAX CONSEQUENCES OF
DEFERRAL...................... If we defer payments of interest on the junior
subordinated debentures, the holder of the
preferred securities will be required to
recognize interest income and include the
deferred amounts in gross income for federal
income tax purposes, even though the holder
will not have received any cash distributions
relating to that interest income. See "UNITED
STATES TAXATION -- Interest Income and Original
Issue Discount."
LIQUIDATION PREFERENCE........ $25 per preferred security, plus all accrued
and unpaid distributions.
CONVERSION INTO COMMON
SHARES...................... Each preferred security is convertible at the
option of the holder into our common shares at
the rate of 0. common shares for
each preferred security. This equates to an
initial conversion price of $ per common
share. The conversion ratio will be adjusted in
certain circumstances. We will pay cash in lieu
of issuing any fractional shares.
A holder desiring to convert preferred
securities into common shares must surrender
the securities, together with an irrevocable
conversion notice, to the property trustee, who
will serve as conversion agent. The conversion
agent then will exchange the preferred
securities for a corresponding portion of the
junior
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subordinated debentures held by the trust. The
conversion agent then will convert those
debentures into common shares.
- For example, if you convert 100 preferred
securities, the conversion agent will
exchange those securities for $2,500
principal amount of debentures, which the
agent then will convert into
common shares, which the agent
will deliver to you.
A holder will not recognize gain or loss for
United States federal income tax purposes upon
the exchange. See "UNITED STATES TAXATION
-- Conversion of Preferred Securities into
Common Shares."
REDEMPTION.................... The trust must redeem all of the preferred
securities and common securities when the
junior subordinated debentures are paid at
maturity on , 2029. In addition, if
we redeem any junior subordinated debentures
before maturity, the trust will use the cash it
receives to redeem, on a pro rata basis, the
same dollar amount of preferred securities and
common securities.
We can redeem some or all of the junior
subordinated debentures at any time on or after
, 2002. We must pay a premium if
we redeem junior subordinated debentures before
, 2009.
In addition, we may redeem some or all of the
junior subordinated debentures at a premium at
any time on or after , 2001 and
before , 2002 if the closing
price of our common shares has exceeded 150% of
the conversion price then in effect for at
least 20 trading days within a period of 30
consecutive trading days ending not more than
five trading days prior to the date of the
mailing of a notice of the redemption.
EXCHANGE OR REDEMPTION DUE TO
CHANGES IN TAX LAW.......... If changes in the tax law occur that result in
more than an insubstantial risk that:
- the trust would become subject to federal tax
with respect to income received on the junior
subordinated debentures, or
- interest payable by us on the debentures
would not be deductible by us, or
- the trust would be subject to other taxes,
the trust can redeem the preferred securities
or we can pay additional amounts to the trust
for distribution to the holders of the
preferred securities. If we do neither, the
preferred securities will be exchanged for
junior subordinated debentures. See
"DESCRIPTION OF THE PREFERRED SECURITIES
-- Tax Event Exchange or Redemption."
EXCHANGE DUE TO INVESTMENT
COMPANY STATUS............... If a change in the law creates more than an
insubstantial risk that the trust would be
considered an investment company
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required to register under the Investment
Company Act, the preferred securities will be
exchanged for junior subordinated debentures.
See "DESCRIPTION OF THE PREFERRED
SECURITIES -- Investment Company Event
Exchange."
DISTRIBUTION OF JUNIOR
SUBORDINATED DEBENTURES..... We may dissolve the trust at any time and
require the trust, after it satisfies its
creditors, to distribute junior subordinated
debentures to you, on a pro rata basis, in
satisfaction of the liquidation amount of $25
per preferred security plus accumulated and
unpaid distributions.
GUARANTEE..................... We will guarantee the payment of:
- the distributions payable by the trust on the
preferred securities to the extent the trust
has funds on hand available to make the
distributions;
- the redemption price, including all
accumulated and unpaid distributions, of the
preferred securities to the extent the trust
has funds on hand available to make the
distributions; and
- amounts due on liquidation with respect to
the preferred securities, unless the
debentures are distributed to the holders of
the preferred securities, to the extent that
there are assets of the trust available for
distribution to the holders of the preferred
securities.
The guarantee is unsecured and ranks
subordinate and junior in right of payment to
all our liabilities. It ranks equal in right of
payment with our most senior preferred shares,
if we issue any.
VOTING RIGHTS................. Generally, holders of preferred securities will
not have voting rights, except primarily for
those relating to the modification of the terms
of the preferred securities. See "DESCRIPTION
OF THE PREFERRED SECURITIES -- Voting Rights;
Amendment of the Trust Agreement."
JUNIOR SUBORDINATED
DEBENTURES.................. The junior subordinated debentures are
convertible into common shares, have a maturity
of 30 years from the date of issuance and bear
interest at the rate of % per annum,
payable quarterly in arrears. Payment of the
principal and interest on the debentures is
subordinate to payment of all of our senior
debt. See "DESCRIPTION OF THE JUNIOR
SUBORDINATED DEBENTURES -- Definition of Senior
Debt." We expect to use the proceeds of the
sale of the junior subordinated debentures to
repay some or all of our outstanding borrowings
under our revolving credit facility and for
general corporate purposes.
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SUMMARY FINANCIAL DATA
<TABLE>
<CAPTION>
THREE FISCAL MONTHS
ENDED
----------------------------- YEARS ENDED DECEMBER 31,
APRIL 2, APRIL 3, --------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
------------- ------------- -------- -------- -------- ------- -------
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Net sales........................ $68,196 $59,227 $282,849 $167,412 $124,486 $92,802 $82,341
Gross profit..................... 23,425 19,717 105,755(1) 56,368(1) 38,465 28,812 24,330
Income from operations........... 2,329 1,257 29,821 17,722 13,079 8,623 6,303
Net income (loss)................ (355) (1,009) 10,076 6,953 2,302 3,705 30,672(2)
Basic net income (loss) per
share.......................... (0.06) (0.18) 1.72 1.22 0.51 0.02 15.18(2)
Diluted net income (loss) per
share.......................... (0.06) (0.18) 1.65 1.17 0.47 0.02 14.93(2)
OTHER DATA:
Depreciation and amortization.... $ 3,662 $ 3,240 $ 12,289 $ 7,016 $ 6,053 $ 4,268 $ 3,499
Property, plant and equipment
additions, net................. 1,375 1,159 6,118 4,410 3,198 2,730 2,075
Rental equipment additions,
net............................ 3,041 1,642 6,783 1,247 534 99 (421)
EBITDA(3)........................ 5,991 4,497 42,110 24,738 19,132 12,891 8,378
Net cash provided by (used in):
Operating activities........... (6,075) (2,042) 19,601 10,367 7,766 8,325 (7,997)(2)
Investing activities........... (9,944) (2,801) (14,685) (39,139) (8,646) (26,420) (1,654)
Financing activities........... 15,441 4,837 (4,281) 28,615 446 18,256 3,912
Ratio of EBITDA to interest
expense........................ 2.0x 1.5x 3.6x 4.5x 4.0x 3.0x 1.4x
Ratio of earnings to fixed
charges(4)..................... 0.8x 0.5x 2.4x 2.9x 2.5x 1.9x 0.9x
Deficiency....................... $ 646 $ 1,740 $ -- $ -- $ -- $ -- $ 587
</TABLE>
<TABLE>
<CAPTION>
AS OF APRIL 2, 1999
-----------------------------
ACTUAL AS ADJUSTED(5)
----------- --------------
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Working capital........................................... $ 53,012 $
Total assets.............................................. 267,295
Long-term debt (including current portion)................ 133,767
Trust preferred securities................................ --
Shareholders' equity...................................... 74,130 74,130
</TABLE>
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(1) We made a reclassification to the 1998 and 1997 amounts to conform to the
1999 presentation.
(2) In May 1994, we recorded an extraordinary gain of $31,354, net of income tax
effect of $92, and paid $14,631 of accrued and unpaid interest as a result
of an agreement to restructure our senior debt. We had defaulted on certain
financial covenants in that debt in December 1992 and were unable to make
payments of principal and interest as they came due. From December 1992 to
May 1994, we accrued additional penalty interest on our senior debt.
(3) "EBITDA" is income from operations plus depreciation and amortization.
EBITDA does not represent and should not be considered as an alternative to
net income or cash flow from operations as determined by generally accepted
accounting principles, and our calculation of EBITDA may not be comparable
to that reported by other companies. We believe that it is widely accepted
that EBITDA provides useful information regarding a company's ability to
service and/or incur indebtedness. Our belief is based on EBITDA being a
component in our bank credit agreement financial covenants. EBITDA does not
take into account our working capital requirements, debt service
requirements and other commitments and, accordingly, is not necessarily
indicative of amounts that may be available for discretionary use.
(4) The ratio of earnings to fixed charges is computed by dividing (i) income
before income taxes, interest expense and the portion of rent determined to
be interest by (ii) total fixed charges, which includes interest expense,
minority interest and the portion of rent expense determined to be interest.
The portion of rent expense determined to be interest is 33% of gross rent
expense.
(5) As adjusted to reflect:
- the sale by the trust of ,000,000 preferred securities,
- our sale to the trust of an equivalent amount of junior subordinated
debentures, and
- our application of the net proceeds as described in "USE OF PROCEEDS." See
"CAPITALIZATION."
7
<PAGE> 12
RISK FACTORS
Your investment in the preferred securities will involve risks. You should
carefully consider the following discussion of risks and the other information
in this prospectus before buying the preferred securities.
RISKS RELATING TO OUR BUSINESS
THE CONSTRUCTION INDUSTRY IS CYCLICAL AND A SIGNIFICANT DOWNTURN IN THE
CONSTRUCTION INDUSTRY COULD DECREASE OUR REVENUES AND PROFITS AND ADVERSELY
AFFECT OUR FINANCIAL CONDITION.
Because our products primarily are used in nonresidential building and
infrastructure construction, our sales and earnings are strongly influenced by
construction activity, which historically has been cyclical. Construction
activity can decline because of many factors we cannot control, such as:
- weakness in the general economy,
- a decrease in government spending,
- interest rate increases,
- changes in banking and tax laws, and
- continued delay by the states in initiating construction projects under
the TEA-21 program.
OUR HIGH LEVEL OF DEBT MAY AFFECT OUR ABILITY TO IMPLEMENT OUR BUSINESS STRATEGY
AND PAY INTEREST ON THE JUNIOR SUBORDINATED DEBENTURES AND THE TRUST'S ABILITY
TO PAY DISTRIBUTIONS TO HOLDERS OF THE PREFERRED SECURITIES.
Although we intend to use the proceeds of this offering to reduce the
amount outstanding under our revolving credit facility, our long-term debt at
April 2, 1999 was approximately $133.8 million while our total shareholders'
equity was approximately $74.1 million. This substantial leverage can affect our
financial position in several ways:
- a substantial portion of our cash flow from operations must be dedicated
to pay interest on our debt and, therefore, will not be available for
other purposes;
- our ability to obtain additional financing in the future to meet working
capital needs or for capital expenditures, acquisitions and other
corporate purposes, or to refinance our existing debt upon maturity, may
be impaired;
- our vulnerability to the cyclicality of the construction industry and
economic downturns may be increased and our ability to withstand
competitive pressures may be limited;
- our ability to capitalize on significant business opportunities may be
limited; and
- a portion of our debt is subject to fluctuations in interest rates.
RESTRICTIONS IMPOSED BY OUR DEBT COVENANTS MAY LIMIT OUR ABILITY TO IMPLEMENT
OUR BUSINESS STRATEGY.
Our credit agreements contain a number of restrictive covenants, such as:
- restrictions on the amount of additional debt that we may incur;
- restrictions on the acquisitions and capital expenditures that we may
make;
- restrictions on our use of the proceeds from asset and stock sales; and
- restrictions on the amount of dividends we may declare.
8
<PAGE> 13
SYMONS MAY LOSE ITS APPEAL IN THE EFCO LITIGATION, WHICH COULD ADVERSELY AFFECT
OUR EARNINGS AND FINANCIAL CONDITION AND REDUCE THE FUNDS AVAILABLE TO IMPLEMENT
OUR BUSINESS STRATEGY.
Our Symons subsidiary was sued by a competitor, EFCO Corp., in 1996. In
April 1999, the trial court judge entered a judgment in the amount of $14.1
million against Symons. Symons is appealing that judgment and, while we believe
that Symons has grounds for a successful appeal, Symons nevertheless might lose
the appeal and be required to pay the full amount of the judgment plus interest.
We have not recorded any liability for the resolution of this amount, so payment
of the judgment plus interest would adversely affect our earnings. In addition,
a significant payment would adversely affect our financial condition and could
reduce our liquidity and the funds available to us for implementing our business
strategy. For more information, see "BUSINESS -- Legal Proceedings."
WE MAY LOSE OUR DISPUTE WITH THE FORMER OWNERS OF SYMONS, WHICH MAY ADVERSELY
AFFECT OUR FINANCIAL CONDITION AND REDUCE THE FUNDS AVAILABLE TO IMPLEMENT OUR
BUSINESS STRATEGY.
Our purchase agreement to acquire Symons provided for a post-closing
purchase price adjustment. We are currently in a dispute with the former
stockholders of Symons regarding this purchase price adjustment. The dispute
includes a lawsuit brought by the former stockholders in Delaware and an
arbitration proceeding which began in July 1999. We have demanded a number of
adjustments that would reduce the purchase price, while the former stockholders
have demanded adjustments that would increase the purchase price by $5.0 million
if all of their adjustments were made and none of our adjustments were made. At
this time, we are unable to determine the final amount of the adjustment, if
any, that will be made to the purchase price. If the former stockholders of
Symons prevail in this dispute, however, we may be required to make an
additional purchase price payment to them. We would expect to record any such
payment as additional goodwill with respect to the acquisition. A significant
payment would adversely affect our financial condition and could reduce our
liquidity and the funds available to us for implementing our business strategy.
IMPLEMENTATION OF OUR BUSINESS STRATEGY DEPENDS UPON OUR ABILITY TO IDENTIFY AND
COMPLETE ACQUISITIONS OF SUITABLE CANDIDATES.
Implementation of our business strategy depends on our ability to identify
and acquire complementary businesses. However, we may not be able to identify
suitable new acquisition candidates, obtain financing necessary to complete
acquisitions, acquire businesses on satisfactory terms or enter into definitive
acquisition agreements.
WE MAY COMPLETE ACQUISITIONS WHICH DISRUPT OUR BUSINESS AND DILUTE OUR
SHAREHOLDERS.
Our strategy of growing, in part, by making acquisitions can be risky. If
we do make acquisitions, we could do any of the following, which could adversely
affect our financial results, our ability to pay interest on the junior
subordinated debentures and our other borrowings, the trust's ability to pay
distributions on the preferred securities, the market price of the preferred
securities and the market price of our common shares:
- issue additional equity securities that dilute the percentage ownership
of the existing shareholders and might dilute the book value of their
shares;
- incur substantial additional debt, which may reduce funds available for
operations and future opportunities and increase our vulnerability to
adverse general economic and industry conditions and competition;
- assume contingent liabilities; or
- take substantial charges to amortize goodwill and other intangible
assets.
9
<PAGE> 14
In addition, acquisitions can involve other risks, such as:
- difficulty in integrating the acquired operations, products and personnel
into our existing business;
- unanticipated costs or cost savings which are less than anticipated;
- diversion of management time and attention;
- adverse effects on existing business relationships with our suppliers and
customers and the suppliers and customers of the acquired business;
- risk of entering new markets in which we have limited or no experience;
and
- loss of key employees from either the acquired business or our
pre-existing business.
WE MAY NOT BE ABLE TO PASS ON THE COST OF STEEL PRICE INCREASES TO OUR
CUSTOMERS.
Steel, in its various forms, is our principal raw material, constituting
approximately 40-45% of our cost of sales. Historically, steel prices have
fluctuated. If we are unable to pass on to our customers the cost of increases
in the price of steel, our operating results are likely to suffer.
WEATHER COULD ADVERSELY AFFECT THE DEMAND FOR OUR PRODUCTS AND DECREASE OUR
REVENUES.
Weather could adversely affect our business, operating results and
financial condition. Adverse weather, such as unusually prolonged periods of
cold or rain, blizzards, hurricanes and other severe weather patterns, could
delay or halt construction activity over wide regions of the country. For
example, an unusually severe winter can lead to reduced construction activity
and magnify the seasonal decline in our revenues and earnings during the winter
months. This could cause the market price of our common shares and the preferred
securities to decline if we fail to meet the expectations of public market
analysts and investors, and it may negatively impact our liquidity.
INCREASING CONSOLIDATION OF OUR DISTRIBUTORS MAY NEGATIVELY AFFECT OUR EARNINGS.
We believe that there is an increasing trend among our distributors to
consolidate into larger entities. As the size and market power of our
distributors increase, they may be able to exert pressure on us to reduce prices
or create price competition by dealing more readily with our competitors. If the
consolidation of our distributors does result in increased price competition,
our sales and profit margins may be adversely affected.
THE MIX OF PRODUCTS WE SELL CAN NEGATIVELY AFFECT OUR EARNINGS.
Some of our products historically have had narrow profit margins. If the
mix of products we sell shifts to include a larger percentage of products with
narrow profit margins, our earnings may be negatively affected.
OUR OPERATING RESULTS CAN FLUCTUATE FROM QUARTER TO QUARTER RESULTING IN
VOLATILITY IN THE MARKET PRICE OF THE PREFERRED SECURITIES AND OUR COMMON
SHARES.
Our operating results tend to fluctuate from quarter to quarter because,
due to weather, the construction industry is seasonal in most of North America,
which is where almost all of our sales are made. Demand for our products
generally is higher in the spring and summer than in winter and late fall. As a
result, our first quarter net sales typically are the lowest of the year and we
experience a net loss. Our net sales and net income in the fourth quarter also
generally are less than in the second and third quarters. The seasonality of our
business may make it more difficult for us to meet the expectations of public
market analysts and investors and increase volatility in the market price of the
preferred securities and our common shares.
10
<PAGE> 15
WE ARE SIGNIFICANTLY SMALLER THAN SOME OF OUR CONSTRUCTION CHEMICAL COMPETITORS.
In the sale of some construction chemicals, we must compete with a number
of national and international companies that are many times larger than we are
in terms of total assets and annual revenues. Because our resources are more
limited, we may not be able to compete effectively and profitably on a sustained
basis in the markets in which those competitors are actively present.
THE FAILURE OF OUR SUPPLIERS OR CUSTOMERS TO ADDRESS THEIR YEAR 2000 COMPUTER
PROBLEMS COULD HARM OUR BUSINESS.
Certain software and hardware systems are date sensitive. Older date
sensitive systems often use a two digit dating convention ("00" rather than
"2000") which could result in system failure and disruption of operations as the
year 2000 approaches. We believe our most significant continuing year 2000 risk
is the failure of third parties with which we do business to address their year
2000 problems. If our suppliers, particularly public utilities, or customers are
not year 2000 ready, we may not be able to receive orders, collect receivables
or supply our customers with products. For a more detailed discussion of this
risk, see "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS -- Year 2000."
RISKS RELATING TO THE PREFERRED SECURITIES
OUR OBLIGATIONS UNDER THE GUARANTEE AND THE JUNIOR SUBORDINATED DEBENTURES ARE
UNSECURED AND SUBORDINATED. IF WE ARE IN DEFAULT UNDER OUR SENIOR DEBT, WE
CANNOT MAKE ANY PAYMENTS ON THE JUNIOR SUBORDINATED DEBENTURES AND THE TRUST
CANNOT PAY ANY DISTRIBUTIONS TO THE HOLDERS OF THE PREFERRED SECURITIES.
Our obligations under the junior subordinated debentures are unsecured and
will rank junior in priority of payment to all of our senior debt. See
"DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES -- Definition of Senior
Debt." This means we cannot make any payments on the junior subordinated
debentures if we default on a payment of senior debt and do not cure the default
within the applicable grace period or if the senior debt becomes immediately due
because of a default and has not yet been paid in full. If we do not make
payments on the junior subordinated debentures, the trust cannot pay
distributions to the holders of the preferred securities. At April 2, 1999, we
had approximately $133.8 million of senior debt outstanding.
Our obligations under the guarantee rank in priority of payment as follows:
- subordinate and junior in right of payment to all of our other
liabilities;
- equal in rank to our most senior preferred shares, if any are issued; and
- senior to the common shares.
This means that we cannot make any payments on the guarantee if we are in
default on a payment on any of our other liabilities. In addition, in the event
of our bankruptcy, liquidation or dissolution, our assets will be available to
pay obligations under the guarantee only after we make all payments on our other
liabilities. See "DESCRIPTION OF THE GUARANTEE -- Subordination of the
Guarantee."
Neither the preferred securities, the junior subordinated debentures nor
the guarantee limit our ability, or the ability of our subsidiaries, to incur
additional debt, including debt that ranks senior in priority of payment to the
junior subordinated debentures and the guarantee.
11
<PAGE> 16
THE GUARANTEE COVERS PAYMENTS ONLY IF THE TRUST HAS CASH AVAILABLE.
The ability of the trust to pay scheduled distributions on the preferred
securities, the redemption price of the preferred securities and the liquidation
amount of each preferred security is solely dependent upon us making the related
payments on the junior subordinated debentures when due.
If we fail to pay principal or interest on the junior subordinated
debentures when due, the trust will not have sufficient funds to pay
distributions, the redemption price or the liquidation amount of each preferred
security. In those circumstances, you will not be able to rely upon the
guarantee for payment of those amounts.
DEFERRAL OF DISTRIBUTIONS WOULD HAVE ADVERSE TAX CONSEQUENCES FOR YOU AND MAY
DEPRESS THE TRADING PRICE OF THE PREFERRED SECURITIES.
So long as no event of default under the junior subordinated debentures has
occurred and is continuing, we can, on one or more occasions, defer making
interest payments on the junior subordinated debentures for up to 20 consecutive
quarterly periods. If we defer making interest payments on the junior
subordinated debentures, the trust will defer making distributions on the
preferred securities during the same period. Unpaid distributions will
accumulate and the deferred distributions themselves will accrue interest at the
rate of % per annum to the extent permitted by law.
If we defer making interest payments on the junior subordinated debentures,
you will be required to recognize interest income, in the form of original issue
discount, for United States federal income tax purposes, based on your pro rata
share of the interest on the junior subordinated debentures held by the trust,
before you receive any cash relating to that interest. In addition, you will not
receive the cash if you sell the preferred securities before the end of any
interest deferral period or before the record date relating to distributions
which are paid.
If we exercise our right to defer making interest payments, the preferred
securities may trade at a price that does not fully reflect the value of accrued
but unpaid interest on the junior subordinated debentures. If you sell the
preferred securities during a period in which interest is deferred, you may not
receive the same return on investment as someone else who continues to hold the
preferred securities. In addition, the existence of our right to defer payment
of interest on the junior subordinated debentures may mean that the market price
of the preferred securities may be more volatile than the price of other
securities that do not have these rights.
See "UNITED STATES TAXATION" for more information regarding the tax
consequences of purchasing, holding and selling the preferred securities.
IF THE PREFERRED SECURITIES ARE REDEEMED PRIOR TO MATURITY, YOU MAY BE TAXED ON
THE PROCEEDS AND MAY NOT BE ABLE TO REINVEST THE PROCEEDS AT THE SAME OR A
HIGHER RATE OF RETURN.
If certain changes in the tax law occur and other conditions are satisfied,
we may redeem some or all of the junior subordinated debentures. We also may
redeem the junior subordinated debentures at our option in whole or in part at
any time on or after , 2002 or, in some circumstances, after
, 2001. If we redeem the junior subordinated debentures, the trust
is required to redeem a corresponding amount of its preferred securities at a
redemption price equal to $25 per security plus any accrued and unpaid
distributions and, in the case of some redemptions, a redemption premium. Under
current United States federal income tax law, the redemption of the preferred
securities would be a taxable event to you. In addition, you may not be able to
reinvest the money you receive at a rate that is equal to or higher than the
rate of return on the preferred securities. See "UNITED STATES TAXATION --
Redemption of Preferred Securities for Junior Subordinated Debentures or Cash."
12
<PAGE> 17
YOU WILL NOT HAVE THE PROTECTION OF FINANCIAL COVENANTS OR A SINKING FUND.
Because neither the indenture under which the junior subordinated
debentures will be issued nor the trust agreement require us to meet any
financial tests that measure such things as our working capital, interest
coverage or net worth, these instruments will not protect you in the event of a
material adverse change in our financial condition nor will they limit our
ability to incur additional debt. You also do not have the protection of
periodic sinking fund payments by us. As a result, we may be able to take
actions that adversely affect our ability to repay the debentures or the market
price of the preferred securities.
WE MAY DISSOLVE THE TRUST AT ANY TIME AND YOU MAY BE TAXED ON THE RESULTING
DISTRIBUTION OF THE JUNIOR SUBORDINATED DEBENTURES.
We have the right to dissolve the trust at any time. If we exercise that
right, the trust will liquidate, after satisfying any liabilities to creditors
of the trust as provided by law, by distributing the junior subordinated
debentures to the holders of the preferred securities and the common securities
on a pro rata basis.
Under current United States federal income tax law, a distribution of
junior subordinated debentures to you on the dissolution of the trust will not
be taxable to you. However, if the trust is characterized for United States
federal income tax purposes as an association taxable as a corporation at the
time it is dissolved due to a change in law or a new judicial or administrative
tax decision, the distribution of junior subordinated debentures to you may be
taxable to you.
We may exercise this right if the expenses associated with maintaining the
trust are substantially greater than currently expected, such as an unfavorable
change in tax law or investment company law occurs. We cannot predict the other
circumstances under which we might exercise this right.
YOU MAY HAVE DIFFICULTY SELLING PREFERRED SECURITIES OR JUNIOR SUBORDINATED
DEBENTURES BECAUSE OF THE LIMITED TRADING MARKET.
We cannot assure you that there will be an active public market for the
preferred securities or the junior subordinated debentures that you may receive
in a liquidation of the trust or in an exchange. Although we will apply to list
the preferred securities for trading on the New York Stock Exchange and we will
use reasonable efforts to list the junior subordinated debentures on the New
York Stock Exchange or any other exchange on which the preferred securities then
are listed if they are distributed from the trust, we do not know whether there
will be sufficient investor interest for a trading market to develop nor do we
know how liquid the market might be.
WE CANNOT ASSURE YOU OF THE MARKET PRICES AT WHICH THE PREFERRED SECURITIES OR
THE JUNIOR SUBORDINATED DEBENTURES MAY TRADE.
The preferred securities or the junior subordinated debentures that you may
receive upon a liquidation of the trust or an exchange may trade at a discount
to the price you paid to purchase the preferred securities. As a result of our
right to defer making interest payments on the junior subordinated debentures,
the market price of the preferred securities and the junior subordinated
debentures may be more volatile than the market prices of other securities that
are not subject to similar optional deferrals.
YOU HAVE VOTING RIGHTS ONLY UNDER LIMITED CIRCUMSTANCES.
You have limited voting rights. In particular, generally only we can
appoint or remove the trustees of the trust. See "DESCRIPTION OF THE PREFERRED
SECURITIES -- Voting Rights; Amendment of the Trust Agreement."
13
<PAGE> 18
RISKS INVOLVING OUR COMMON SHARES
WE DO NOT INTEND TO PAY DIVIDENDS ON OUR COMMON SHARES.
We do not intend to pay dividends on our common shares in the foreseeable
future. We also are prohibited from paying dividends by the covenants in our
bank credit agreement.
ANTITAKEOVER PROVISIONS MAY DISCOURAGE A TAKEOVER OF OUR COMPANY.
Provisions in our Articles of Incorporation, bank credit agreement and Ohio
law may discourage, delay or prevent a merger or other change in control that a
shareholder may consider favorable. These provisions also could discourage proxy
contests or make other corporate action by shareholders more difficult. These
provisions include:
- the authority of the directors to authorize the issuance, without
shareholder approval, of preferred shares with conversion, voting and
other rights that could be superior to the rights of the shareholders;
- prohibition of cumulative voting in the election of directors;
- effective prohibition of shareholder action by written consent;
- prohibition on engaging in a merger, asset sale or other transaction
resulting in a financial benefit with a person who acquires 10% or more
of the voting shares without the prior approval of our Board of
Directors; and
- acceleration of all outstanding indebtedness under our bank credit
agreement if a person or group acquires more than 30% of the voting
power.
FORWARD LOOKING STATEMENTS AND
CAUTIONARY MATTERS
Some of our statements under "SUMMARY," "RISK FACTORS," "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS,"
"BUSINESS" and elsewhere in this prospectus are forward-looking statements.
These statements relate to things like future operating and financial
performance, growth opportunities and growth rates, acquisition opportunities
and other similar forecasts and statements of expectation. In some cases, you
can identify forward-looking statements by words such as "expects,"
"anticipates," "intends," "plans," "believes," "seeks," "estimates" and "should"
and variations of these words and other similar expressions. Forward-looking
statements which we make are based on our estimates, projections, beliefs and
assumptions and are not guarantees of future performance. We disclaim any
obligation to update or revise any forward-looking statement based on the
occurrence of future events, the receipt of new information or otherwise.
Actual future performance, outcomes and results may differ materially from
those expressed in forward-looking statements which we make as the result of a
number of important factors, including those discussed above under "RISK
FACTORS." In addition to those factors, actual future performance, outcomes and
results may differ materially because of other, more general, factors including
general industry and market conditions and growth rates, domestic economic
conditions, governmental and public policy changes and the continued
availability of financing in the amounts, at the terms and on the conditions
necessary to support our future business.
14
<PAGE> 19
USE OF PROCEEDS
The trust will use all of the proceeds it receives from the sale of the
preferred securities and common securities to purchase junior subordinated
debentures from us. We intend to use the proceeds we receive from the sale of
our junior subordinated debentures to repay some or all of our borrowings under
our revolving credit facility and for general corporate purposes.
Our revolving credit facility expires on September 29, 2002. On April 2,
1999, the interest rates for outstanding borrowings under our revolving credit
facility ranged from 6.2% to 8.0%. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- Liquidity and Capital
Resources."
PRICE RANGE OF COMMON SHARES
Our common shares are traded on the New York Stock Exchange under the
symbol "DSD." The following table shows the high and low closing prices for the
common shares for each fiscal quarter during 1997 and 1998 and the first three
fiscal quarters of 1999 through , 1999.
On , 1999, the last reported sale price of a common share on
the New York Stock Exchange was $ . As of March 18, 1999, we had 58
shareholders of record. Based on requests from brokers and other nominees, we
estimate that there are approximately 950 additional beneficial owners of the
common shares.
<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
FISCAL YEAR 1997
First Quarter............................................. $13.500 $11.250
Second Quarter............................................ 13.250 9.750
Third Quarter............................................. 19.438 12.500
Fourth Quarter............................................ 19.000 14.813
FISCAL YEAR 1998
First Quarter............................................. $20.375 $15.875
Second Quarter............................................ 22.125 16.500
Third Quarter............................................. 21.375 16.625
Fourth Quarter............................................ 20.875 14.375
FISCAL YEAR 1999
First Quarter............................................. $23.500 $17.313
Second Quarter............................................ 20.125 16.750
Third Quarter (through , 1999)...............
</TABLE>
DIVIDEND POLICY
We do not pay dividends on our common shares. We intend to retain future
earnings to fund the development and growth of our business and, therefore, we
do not anticipate paying cash dividends on the common shares in the foreseeable
future. Our Board of Directors will decide whether to pay dividends on the
common shares in the future based principally on the results of our operations,
our general financial condition, other uses for our available funds and any
obligation we may have to pay dividends on outstanding preferred shares.
The terms of our bank credit agreement, which covers both our revolving
credit facility and our term notes, prohibit the payment of cash dividends on
our common shares. Also, we are prohibited from paying cash dividends on our
common shares during any period in which we defer payments of interest on the
junior subordinated debentures. We are amending the revolving credit facility
portion of the bank credit agreement to permit us to issue and pay interest on
the junior subordinated debentures. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- Liquidity and Capital
Resources" and "DESCRIPTION OF THE PREFERRED SECURITIES -- Distributions."
15
<PAGE> 20
CAPITALIZATION
The following table summarizes our historical capitalization as of April 2,
1999 and our capitalization as adjusted to reflect:
- the sale of ,000,000 preferred securities, assuming no exercise of the
over-allotment option which the trust granted to the underwriters and
after deducting the underwriting commissions and estimated expenses of
the offering,
- the sale of the common securities of the trust, and
- the use of proceeds in the manner described under "USE OF PROCEEDS."
<TABLE>
<CAPTION>
AS OF APRIL 2, 1999
--------------------------
ACTUAL AS ADJUSTED
----------- -----------
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents................................... $ -- $
=========== ========
Long-term debt:
Bank credit agreement..................................... $ 128,570 $
Other..................................................... 5,197 5,197
Less: current maturities.................................. (32) (32)
----------- --------
Total long-term debt................................... 133,735
----------- --------
Company-obligated mandatorily redeemable convertible trust
preferred securities of Dayton Superior Capital Trust
which holds solely debentures............................. --
----------- --------
Shareholders' equity:
Preferred shares, without par value; 5,000,000 shares
authorized; none issued or outstanding................. -- --
Class A common shares, without par value; 22,005,850
shares authorized; 5,957,941 shares issued and
5,945,130 outstanding.................................. 47,353 47,353
Class A treasury shares, 12,811 shares.................... (266) (266)
Cumulative other comprehensive income..................... (263) (263)
Retained earnings......................................... 27,306
----------- --------
Total shareholders' equity............................. 74,130
----------- --------
Total capitalization................................. $ 207,865 $
=========== ========
</TABLE>
ACCOUNTING TREATMENT
The trust will be treated as our subsidiary for accounting purposes, and
the accounts of the trust will be included in our consolidated financial
statements. Currently the Financial Accounting Standards Board is considering
the proper classification of trust preferred securities within the balance
sheet. Pending clarification from the FASB, the preferred securities will be
presented as a separate line item on our balance sheet, and disclosures
concerning the preferred securities, the guarantee and the junior subordinated
debentures will be included in the notes to our consolidated financial
statements. We will record distributions paid on the preferred securities as
dividends on subsidiary preferred securities in our consolidated financial
statements.
16
<PAGE> 21
SELECTED FINANCIAL DATA
The following table sets forth summary financial data for the fiscal years
ended December 31, 1994 through 1998 which have been derived from our
consolidated financial statements which have been audited by Arthur Andersen
LLP, independent public accountants, and which, in the case of the three years
ended December 31, 1998, are included elsewhere in this prospectus. The table
also includes data as of and for the three fiscal months ended April 3, 1998 and
April 2, 1999 which have been derived from our unaudited consolidated financial
statements included elsewhere in this prospectus and which, in our opinion,
reflect all material adjustments of a normal and recurring nature necessary for
a fair presentation of the data. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS" below and our consolidated
financial statements and the accompanying notes.
<TABLE>
<CAPTION>
THREE FISCAL MONTHS
ENDED
------------------------- YEARS ENDED DECEMBER 31,
APRIL 2, APRIL 3, ----------------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
----------- ----------- ---------- ---------- ---------- ---------- ----------
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Net sales.................... $ 68,196 $ 59,227 $ 282,849 $ 167,412 $ 124,486 $ 92,802 $ 82,341
Cost of sales................ 44,771 39,510 177,094(1) 111,044(1) 86,021 63,990 58,011
---------- ---------- ---------- ---------- ---------- ---------- ----------
Gross profit................. 23,425 19,717 105,755(1) 56,368(1) 38,465 28,812 24,330
Selling, general, and
administrative expenses.... 20,449 17,965 73,721(1) 36,761(1) 23,637 18,698 16,722
Amortization of goodwill and
intangibles................ 647 495 2,213 1,885 1,749 1,491 1,305
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income from operations....... 2,329 1,257 29,821 17,722 13,079 8,623 6,303
Interest expense, net........ 2,975 2,993 11,703 5,556 4,829 4,231 6,017
Other expense (income),
net........................ -- 4 (202) (64) 96 (3) 873
Provision (benefit) for
income taxes............... (291) (731) 8,244 5,277 3,538 690(2) 95(2)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income (loss) before
extraordinary items........ (355) (1,009) 10,076 6,953 4,616 3,705 (682)
Extraordinary items, net of
tax........................ -- -- -- -- (2,314)(3) -- 31,354(4)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income (loss)............ $ (355) $ (1,009) $ 10,076 $ 6,953 $ 2,302 $ 3,705 $ 30,672
========== ========== ========== ========== ========== ========== ==========
Net income (loss) available
to common shareholders..... $ (355) $ (1,009) $ 10,076 $ 6,953 $ 2,302 $ 71 $ 30,175
========== ========== ========== ========== ========== ========== ==========
Basic income (loss) per share
before extraordinary
items...................... $ (0.06) $ (0.18) $ 1.72 $ 1.22 $ 1.02 $ 0.02 $ (0.34)
Basic net income (loss) per
share...................... $ (0.06) $ (0.18) $ 1.72 $ 1.22 $ 0.51 $ 0.02 $ 15.18
Basic weighted average common
and common share
equivalents
outstanding(5)............. 5,947,516 5,728,996 5,867,338 5,703,601 4,547,527 2,990,847 1,766,700
Diluted income (loss) per
share before extraordinary
items...................... $ (0.06) $ (0.18) $ 1.65 $ 1.17 $ 0.94 $ 0.02 $ (0.58)
Diluted net income (loss) per
share...................... $ (0.06) $ (0.18) $ 1.65 $ 1.17 $ 0.47 $ 0.02 $ 14.93
Diluted weighted average
common and common share
equivalents
outstanding(5)............. 5,947,516 5,728,996 6,098,205 5,933,244 4,925,464 3,558,908 2,020,717
</TABLE>
<TABLE>
<CAPTION>
AS OF AS OF DECEMBER 31,
------------------------- ---------------------------------------------------
APRIL 2, APRIL 3,
1999 1998 1998 1997 1996 1995 1994
----------- ----------- -------- -------- -------- -------- -------
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets............................. $267,295 $233,035 $253,620 $226,930 $107,835 $103,860 $72,371
Long-term debt (including current
portion)............................... 133,767 125,059 118,205 120,236 34,769 53,012 24,448
Shareholders' equity..................... 74,130 59,540 74,588 60,529 52,872 27,485 27,674
</TABLE>
- ---------------
(1) We made a reclassification to the 1998 and 1997 amounts to conform to the
1999 presentation.
(2) In 1994, the provision for income taxes related to alternative minimum
taxes. In 1995, the provision for income taxes was reduced to reflect the
utilization of net operating losses.
(3) During June 1996, we prepaid our $40,000 unsecured senior promissory notes.
In conjunction therewith, we paid a prepayment premium of $2,400 and
expensed unamortized financing costs of $795 and debt discount of $538. We
recorded an extraordinary loss of $2,314, net of an income tax effect of
$1,419. We funded this repayment with $23,041 in proceeds from our initial
public stock offering and $19,359 from our credit facility.
(4) In May 1994, we recorded an extraordinary gain of $31,354, net of an income
tax effect of $92, and paid $14,631 of accrued and unpaid interest as a
result of an agreement to restructure our senior debt. We had defaulted on
certain financial covenants in that debt in December 1992 and were unable to
make payments of principal and interest as they came due. From December 1992
to May 1994, we accrued additional penalty interest on that debt.
(5) Basic net income per share is computed by dividing net income available to
common shareholders by the weighted average number of common shares
outstanding during the year. Diluted net income per share is computed by
dividing net income available to common shareholders by the weighted average
number of common and common share equivalents outstanding during the year.
Common share equivalents include the number of shares issuable upon the
exercise of outstanding options and warrants, less the shares that could be
purchased with the proceeds from the exercise of the options and warrants,
based on the average trading price of our common shares for 1998, 1997 and
1996 and the initial public offering price of $13.00 per share for 1995 and
1994. Common equivalent shares are excluded in periods with a net loss
available to common shareholders. See Note 3(h) to our consolidated
financial statements.
17
<PAGE> 22
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
We believe we are the largest North American manufacturer and distributor
of metal accessories and forms used in concrete construction and of metal
accessories used in masonry construction. Although almost all of our products
are used in concrete or masonry construction, the function and nature of the
products differ widely. We have four principal operating divisions, which are
organized around the following product lines:
- Concrete Accessories;
- Concrete Forming Systems;
- Paving Products; and
- Masonry Products.
Through our divisions, we design, manufacture and distribute metal
accessories to independent distributors for resale to contractors, brokers and
other manufacturers. In some of our product lines we also may sell directly to
end users and may provide equipment for rental. When our business was started in
1924, it consisted primarily of the concrete accessories business and operated
primarily in the eastern United States. In 1982, we acquired Superior Concrete
Accessories, Inc., which expanded our geographic reach to include the rest of
the continental United States and doubled the size of our company. In 1995, we
acquired our masonry products division through the acquisition of Dur-O-Wal,
which we believe is the leading domestic manufacturer of masonry wall
reinforcement products and other metal masonry accessories. In 1996, we created
a separate paving products division to operate a business which previously was
part of our concrete accessories division. In 1997, we again doubled our size
when we acquired our concrete forming systems division and added to our concrete
accessories division through the acquisition of Symons Corporation. With the
addition of Symons, we also approximately doubled the number of our distribution
and manufacturing locations. We believe that Symons is the leading domestic
manufacturer of concrete forming systems. We also have expanded some of our
divisions through additional smaller acquisitions. Each of our businesses are
subject to seasonal and cyclical fluctuations in revenues.
Unless otherwise indicated, the discussion of our results of operations
that follows includes information for Symons, Dur-O-Wal and the other
acquisitions only from the dates that we acquired each of those companies. We
have also included a discussion of our results on a pro forma basis for the
years ended December 31, 1997 and 1998. This pro forma comparison adjusts our
historical results to give effect to the acquisition of Symons and our
refinancing of Symons' long term debt as if these transactions were consummated
on January 1, 1997.
CONCRETE ACCESSORIES (DAYTON/RICHMOND(R))
Our concrete accessories division derives its revenues from the sale of
products primarily to independent distributors. We also provide some equipment
on a rental basis. Our concrete accessories division manufactures substantially
all of the products it sells, which are shipped to customers based on orders. We
design and manufacture or customize most of the machines we use to produce
concrete accessories, and these proprietary designs allow for quick changeover
of machine set-ups. This flexibility, together with our extensive distribution
system, enable this division to deliver many of its products within 24 hours of
a customer order. Therefore, product inventories are maintained at relatively
low levels. Cost of sales for our concrete accessories division consists
primarily of purchased steel, as well as the costs associated with manufacture,
assembly, testing, internal shipping and associated overhead.
18
<PAGE> 23
CONCRETE FORMING SYSTEMS (SYMONS(R))
Our concrete forming systems division derives its revenues from the sale
and rental of highly engineered, reusable modular systems to independent
distributors and contractors. Sales of concrete forming systems generally
represent approximately two-thirds of the revenues of this division, and rentals
represent the remaining one-third. Sales of concrete forming systems generally
are more sensitive to economic cycles than rentals. Rental equipment also can be
sold as used equipment. The division's products include systems with steel
frames and a plywood face, also known as Steel-Ply(R), and systems that use
steel in both the frame and face. All-steel forming systems are characterized by
larger, project driven orders, which increases backlog relative to the
Steel-Ply(R) forms which are held in inventory for rental and sale. Our concrete
forming systems division manufactures and assembles Steel-Ply(R) forms and
outsources some of the manufacturing involved in all-steel forms. This
outsourcing strategy allows us to fulfill larger orders without increased
overhead. Cost of sales for our concrete forming systems division consists
primarily of purchased steel and specialty plywood, depreciation and maintenance
of rental equipment, as well as the costs associated with manufacturing,
assembly and overhead.
PAVING PRODUCTS (AMERICAN HIGHWAY TECHNOLOGY(R))
Our paving products division derives its revenues from sales to independent
distributors and contractors. Orders from customers are affected by state and
local governmental infrastructure expenditures and their related bid processes.
This is our division most affected by the demand expected to be generated as a
consequence of TEA-21. Due to the project-oriented nature of paving jobs, these
products generally are made to order. This serves to keep inventories low but
increases the importance of backlog in this division. Our paving products
division manufactures nearly all of its products. Cost of sales for our paving
products division consists primarily of steel, as well as the costs associated
with manufacturing and overhead.
MASONRY PRODUCTS (DUR-O-WAL(R))
Our masonry products division derives its revenues from sales to
independent distributors and brick and concrete block manufacturers who package
our products with other products for resale to customers. Our masonry products
division sells two principal categories of products: new construction products
and restoration and repair products. New construction products are used to
strengthen masonry walls or the connection between masonry and other portions of
the wall at the time a building is constructed. Restoration and repair products
are used to refurbish masonry and brick buildings and strengthen connections
between masonry and the interior portions of the wall and are more highly
engineered and generally generate higher margins than new construction products.
We maintain adequate inventories of finished product to meet ongoing demand. The
masonry products division manufactures and assembles the majority of its
products before shipping to customers based on orders. Cost of sales for the
masonry products division consists primarily of steel, as well as costs
associated with manufacture and overhead.
19
<PAGE> 24
RESULTS OF OPERATIONS
The following table summarizes our results of operations as a percentage of
net sales for the periods indicated:
<TABLE>
<CAPTION>
THREE FISCAL
MONTHS ENDED
------------------------- YEARS ENDED DECEMBER 31,
APRIL 2, APRIL 3, ---------------------------------------
1999 1998 1998 1997 1996
----------- ----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales.................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of goods sold........... 65.7 66.7 62.6(1) 66.3(1) 69.1
----- ----- ----- ----- -----
Gross profit................. 34.3 33.3 37.4(1) 33.7(1) 30.9
----- ----- ----- ----- -----
Selling, general and
administrative expenses.... 30.0 30.3 26.1(1) 22.0(1) 19.0
Amortization of goodwill and
intangibles................ 0.9 0.9 0.8 1.1 1.4
----- ----- ----- ----- -----
Total selling, general and
administrative expenses.... 30.9 31.2 26.9 23.1 20.4
----- ----- ----- ----- -----
Operating income............. 3.4 2.1 10.5 10.6 10.5
Interest expense, net........ 4.3 5.0 4.1 3.3 3.9
Other income, net............ -- -- (0.1) -- --
----- ----- ----- ----- -----
Income (loss) before income
taxes and extraordinary
item....................... (0.9) (2.9) 6.5 7.3 6.6
Provision (benefit) for
income taxes............... (0.4) (1.2) 2.9 3.1 2.9
----- ----- ----- ----- -----
Income (loss) before
extraordinary item......... (0.5) (1.7) 3.6 4.2 3.7
Extraordinary item, net of
tax........................ -- -- -- -- (1.9)(2)
----- ----- ----- ----- -----
Net income (loss).......... (0.5)% (1.7)% 3.6% 4.2% 1.8%
===== ===== ===== ===== =====
</TABLE>
- ---------------
(1) We made a reclassification to the 1998 and 1997 amounts to conform to
the 1999 presentation.
(2) In June 1996, we extinguished debt creating an extraordinary loss of
$2.3 million, net of tax effect.
20
<PAGE> 25
COMPARISON OF THREE FISCAL MONTHS ENDED APRIL 2, 1999 AND APRIL 3, 1998
Net Sales
Net sales increased $9.0 million, or 15.1%, to $68.2 million in the first
quarter of 1999 from $59.2 million in the first quarter of 1998. The following
table summarizes our net sales by segment for the periods indicated:
<TABLE>
<CAPTION>
THREE FISCAL MONTHS ENDED
---------------------------------
APRIL 2, 1999 APRIL 3, 1998
--------------- ---------------
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS)
NET NET %
SALES % SALES % CHANGE
------- ----- ------- ----- --------
<S> <C> <C> <C> <C> <C>
Concrete accessories......... $31,741 46.5% $29,072 49.1% 9.2%
Concrete forming systems..... 26,108 38.3 21,331 36.0 22.4
Paving products.............. 6,770 9.9 5,971 10.1 13.4
Masonry products............. 5,966 8.8 5,095 8.6 17.1
Intersegment eliminations.... (2,389) (3.5) (2,242) (3.8) (0.1)
------- ----- ------- -----
Net sales............... $68,196 100.0% $59,227 100.0% 15.1%
======= ===== ======= =====
</TABLE>
Net sales of concrete accessories increased by 9.2% to $31.7 million in the
first quarter of 1999 from $29.1 million in the first quarter of 1998, due to
the contribution of the recently-acquired Cempro business, increases in volume
and new product initiatives. Net sales of concrete forming systems were $26.1
million for the first quarter of 1999 compared to $21.3 million in the first
quarter of 1998, a 22.4% increase, due to the net sales of the acquired Symons
Concrete Forms (formerly known as CAI) and Northwoods businesses and, to a
lesser extent, increased volume. Net sales of paving products increased $0.8
million, or 13.4%, in the first quarter of 1999 compared to the first quarter of
1998 due to a program to increase winter sales. Net sales of masonry products
increased $0.9 million, or 17.1%, to tie a first quarter record of $6.0 million.
This was due to strategic pricing initiatives as well as a shift of resources to
engineered products.
Gross Profit
Gross profit for the first quarter of 1999 was $23.4 million, an 18.8%
increase from $19.7 million in the first quarter of 1998, due primarily to
increased volume. Gross margin was 34.3% in the first quarter of this year,
increasing from 33.3% last year due to lower raw material costs and greater
manufacturing efficiencies, primarily in the concrete accessories business.
Operating Expenses
Selling, general and administrative expenses, including amortization of
goodwill and intangibles, also known as SG&A expenses, increased $2.6 million to
$21.1 million in the first quarter of 1999, from $18.5 million in the first
quarter of 1998, due to our acquisitions of Cempro, Symons Concrete Forms and
Northwoods and higher volume. SG&A expenses were lower as a percent of net
sales, from 31.2% in the first quarter of 1998 to 30.9% in the first quarter of
1999, because of increased net sales, partially offset by investments in the
paving products business and new product development.
Interest Expense
Interest expense remained flat at $3.0 million in the first quarter of 1999
compared to the first quarter of 1998 despite the higher debt levels, due to
lower interest rates.
21
<PAGE> 26
Income Before Income Taxes
Our loss before income taxes in the first quarter of 1999 decreased to
($0.6) million from ($1.7) million in the first quarter of 1998, and was
comprised of the following:
<TABLE>
<CAPTION>
THREE FISCAL MONTHS ENDED
------------------------------
APRIL 2, APRIL 3,
1999 1998
------------- -------------
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
Concrete accessories............................ $2,515 $ 1,908
Concrete forming systems........................ 303 (640)
Paving products................................. (499) (242)
Masonry products................................ (386) (525)
Intersegment eliminations....................... (1,181) (1,084)
Corporate....................................... (1,398) (1,157)
------ -------
Income (loss) before income taxes............... $ (646) $(1,740)
====== =======
</TABLE>
Concrete accessories' income before income taxes of $2.5 million in the
first quarter of 1999 increased 31.8% from $1.9 million in the first quarter of
1998 due primarily to the increase in concrete accessories net sales. Concrete
forming systems' income before income taxes was $0.3 million in the first
quarter of 1999 compared to a loss before income taxes of ($0.6) million in the
first quarter of 1998 due to the contribution of the business now known as
Symons Concrete Forms as well as sales growth in the existing business. Loss
before income taxes from paving products increased to ($0.5) million in the
first quarter of 1999 from ($0.2) million in the first quarter of 1998 due to
increases in personnel made in anticipation of the growth of the business as a
result of TEA-21. Loss before income taxes from masonry products was ($0.4)
million in the first quarter of 1999 compared to ($0.5) million in the first
quarter of 1998 as a result of higher net sales. Corporate expenses increased to
$1.4 million from $1.2 million primarily due to the full quarter effect of 1998
additions of personnel in the finance, treasury, tax, purchasing, logistics, and
corporate development functions. Elimination of profit on intersegment sales was
$1.2 million in the first quarter of 1999 as compared to $1.1 million in the
first quarter of 1998.
Net Income
The effective tax rate was 45.0% in the first quarter of 1999 compared to
42.0% in the first quarter of 1998. The difference in effective tax rates from
statutory rates is due to nondeductible goodwill amortization and state and
local taxes. Net loss for the first quarter of 1999 was ($0.4) million, or
($0.06) per basic and diluted share, compared to ($1.0) million, or ($0.18) per
basic and diluted share, in the first quarter of 1998.
22
<PAGE> 27
COMPARISON OF YEARS ENDED DECEMBER 31, 1998 AND 1997
Net Sales
Our 1998 net sales were a record $282.8 million, a 69.0% increase from
$167.4 million in 1997 and a 12.1% increase from pro forma 1997 sales of $252.3
million as if Symons had been acquired on January 1, 1997. The following table
summarizes our net sales by segment for the periods indicated:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------
1998 1997
----------------- -----------------
(IN THOUSANDS)
NET NET %
SALES % SALES % CHANGE
-------- ----- -------- ----- --------
<S> <C> <C> <C> <C> <C>
Concrete accessories........ $131,467 46.4% $ 92,251 55.1% 42.5%
Concrete forming systems.... 104,711 37.0 21,066 12.6 397.1
Paving products............. 30,967 11.0 29,177 17.4 6.1
Masonry products............ 24,292 8.6 24,918 14.9 (2.5)
Intersegment eliminations... (8,588) (3.0) -- -- --
-------- ----- -------- -----
Net sales.............. $282,849 100.0% $167,412 100.0% 69.0%
======== ===== ======== =====
</TABLE>
Concrete accessories' net sales increased by 42.5% from $92.2 million in
1997 to $131.4 million in 1998, due to a full year's net sales resulting
primarily from the Richmond Screw Anchor division of Symons. Concrete
accessories' net sales increased 13.0% from pro forma 1997 net sales of $116.3
million due to strong heavy construction activity in the United States and new
product sales. Concrete forming systems net sales increased from $21.1 million
in 1997 to $104.7 million in 1998 due to a full year's net sales resulting from
the acquisition of Symons. Concrete forming systems net sales increased 19.9%
from 1997 pro forma net sales of $87.3 million due to the net sales of the
Symons Concrete Forms and the Northwoods businesses after their acquisition, as
well as strong heavy construction activity in the United States. Net sales of
paving products increased by 6.1% to $31.0 million in 1998 from $29.2 million in
1997 due to increased market gains. Net sales of masonry accessories decreased
to $24.3 million in 1998 from $24.9 million in 1997, due to a high level of
competition in the hot dipped and mill galvanized masonry wall reinforcement
product markets, which was somewhat offset by a shift to higher margin, lower
volume engineered products.
Gross Profit
Gross profit for 1998 was $105.8 million, an 87.6% increase over $56.4
million for 1997. Gross margin was 37.4% in 1998 compared to 33.7% in 1997.
Gross margin increased primarily due to the inclusion of the Symons business for
a full year as concrete forming systems have higher gross margins, primarily due
to rental revenues, than our other product lines. The 1998 gross margin of 37.4%
also increased from the 1997 pro forma gross margin of 35.3% due to better
product mix with higher net sales of concrete forming systems and less net sales
of paving products and masonry products as a percent of consolidated net sales,
as well as cost savings in the concrete accessories business.
Operating Expenses
Our SG&A expenses increased from $38.6 million in 1997 to $75.9 million in
1998. The increase is due to a full year of expenses resulting from the
acquisition of Symons. SG&A expenses increased as a percent of sales from 23.1%
in 1997 to 26.9% in 1998, due to concrete forming systems having a higher
percentage of SG&A expenses to net sales than our other operating segments. This
reflects the additional distribution costs associated with the management of the
rental equipment fleet. SG&A expenses as a percent of sales also increased from
pro forma 1997 of 25.9%, primarily due to product mix of higher concrete forming
systems, including Symons Concrete Forms, and less paving products and masonry
products as a percent of total net sales.
23
<PAGE> 28
Interest Expense
Interest expense increased to $11.7 million in 1998 from $5.6 million in
1997 due primarily to the full year effect of higher debt resulting from the
Symons acquisition, and to a lesser extent, higher capital expenditures.
Income Before Income Taxes
Income before income taxes in 1998 increased 49.8% to a record $18.3
million from $12.2 million in 1997, and was comprised of the following:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
------------------
1998 1997
------- -------
(IN THOUSANDS)
<S> <C> <C>
Concrete accessories...................................... $19,387 $13,723
Concrete forming systems.................................. 6,133 364
Paving products........................................... 1,677 1,377
Masonry products.......................................... 487 5
Intersegment eliminations................................. (4,153) --
Corporate................................................. (5,211) (3,239)
------- -------
Income before income taxes................................ $18,320 $12,230
======= =======
</TABLE>
Concrete accessories' income before income taxes of $19.4 million in 1998
increased 41.3% from $13.7 million due primarily to the increase in concrete
accessories' net sales. Concrete forming systems' income before income taxes of
$6.1 million in 1998 increased from $0.4 million in 1997 due primarily to the
full year effect of the acquisition of Symons. Income before income taxes from
paving products increased to $1.7 million, or 5.5% of net sales, in 1998 from
$1.4 million, or 4.8% of net sales in 1997 due to higher net sales. Income
before income taxes from masonry products was $0.5 million in 1998 compared to
virtually breakeven in 1997, despite the decrease in net sales, due to a shift
to higher margin, lower volume engineered products. Corporate expenses increased
to $5.2 million from $3.2 million primarily due to the addition of personnel in
the finance, treasury, tax, purchasing, logistics and corporate development
functions. Elimination of profit on intersegment sales was $4.2 million in 1998.
Net Income
Our effective tax rate in 1998 was 45.0%, or $8.2 million, compared to a
rate of 43.1%, or $5.3 million, in 1997. Nondeductible goodwill amortization and
state and local taxes caused our effective tax rate to exceed federal statutory
levels. Net income increased $3.2 million to $10.1 million in 1998 from $6.9
million in 1997 due to the factors described above.
24
<PAGE> 29
COMPARISON OF YEARS ENDED DECEMBER 31, 1997 AND 1996
Net Sales
Our 1997 net sales reached a record of $167.4 million, a 34.5% increase
from $124.5 million in 1996. The following table summarizes our net sales by
segment for the periods indicated:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------
1997 1996
----------------- -----------------
(IN THOUSANDS)
NET NET %
SALES % SALES % CHANGE
-------- ----- -------- ----- --------
<S> <C> <C> <C> <C> <C>
Concrete accessories........ $ 92,251 55.1% $ 76,637 61.6% 20.4%
Concrete forming systems.... 21,066 12.6 -- -- --
Paving products............. 29,177 17.4 21,930 17.6 33.0
Masonry products............ 24,918 14.9 25,919 20.8 (3.9)
-------- ----- -------- -----
Net sales.............. $167,412 100.0% $124,486 100.0% 34.5%
======== ===== ======== =====
</TABLE>
Concrete accessories net sales increased by 20.4% from $76.7 million in
1996 to $92.2 million in 1997, due to the addition of the Richmond Screw Anchor
division of Symons for three months, which contributed 38.0% of the increase.
Additionally, strong heavy construction activity in the U.S. and new product
sales of concrete accessories also contributed to the increased net sales. Net
sales of paving products increased by 33.0% to $29.2 million in 1997 from $21.9
million in 1996 due to the acquisition of Ironco, a full year's net sales
resulting from the acquisition of Steel Structures, and an increased presence in
the market place. Net sales of masonry accessories were $24.9 million for 1997
versus $25.9 million in 1996. Competition continued at a high level in the hot
dipped and mill galvanized masonry wall reinforcement product markets. Concrete
forming systems net sales were $21.1 million in 1997 as a result of the
acquisition of Symons at the beginning of the fourth quarter of 1997.
Gross Profit
Gross profit for 1997 was $56.4 million, a 46.5% increase over $38.5
million for 1996. Gross margin was 33.7% in 1997 compared to 30.9% in 1996. The
gross margin increased primarily as a result of the inclusion of the sales of
Symons in the fourth quarter, as concrete forming systems have higher gross
margins, primarily due to rental revenues, than our other product lines. The
increase in gross profit dollars is attributable to the fourth quarter
contribution of Symons, and, to a lesser extent, improved selling prices and a
shift in sales mix in favor of higher margin products in our concrete
accessories business. Continued investments in fixed assets also added to gross
margin in 1997 by allowing us to reduce our manufacturing costs. We also
continued our focus on cost improvement programs.
Operating Expenses
SG&A expenses increased $13.2 million, or 52.2%, from $25.4 million in 1996
to $38.6 million in 1997. Approximately 70% of the increase resulted from the
acquisition of Symons. SG&A expenses also were up due to the acquisition of
Ironco, management personnel relocations, and integration costs from the Symons
acquisition. SG&A expenses were up as a percent of sales from 20.4% in 1996 to
23.1% in 1997, due to concrete forming systems having a higher percentage of
SG&A expenses to net sales than our other businesses.
Interest Expense
Interest expense increased 15.1% to $5.6 million in 1997 from $4.8 million
in 1996 due to higher debt resulting from the Symons acquisition. Additionally,
deferred financing costs of $0.3 million related to the previous credit facility
were expensed. The lower average debt outstanding in the first three quarters of
25
<PAGE> 30
1997 and the lower interest rates obtained in the June 1996 debt restructuring
were offset by the increased long-term debt for the Symons acquisition.
Income Before Income Taxes
Income before income taxes in 1997 increased 50.0% to $12.2 million from
$8.2 million in 1996, and was comprised of the following:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
-----------------
1997 1996
------- ------
(IN THOUSANDS)
<S> <C> <C>
Concrete accessories....................................... $13,723 $9,477
Concrete forming systems................................... 364 --
Paving products............................................ 1,377 906
Masonry products........................................... 5 601
Corporate.................................................. (3,239) (2,830)
------- ------
Income before income taxes................................. $12,230 $8,154
======= ======
</TABLE>
Concrete accessories' income before income taxes of $13.7 million in 1997
increased 44.8% from $9.5 million due primarily to the increase in concrete
accessories net sales. Concrete forming systems' income before income taxes was
$0.4 million for the three months following the acquisition of Symons. Income
before income taxes in 1997 from paving products increased to $1.4 million, or
4.8% of net sales, from $0.9 million, or 4.1% of net sales, in 1996 due to the
increase in net sales. Income before income taxes from masonry products was
virtually breakeven in 1997 compared to income before income taxes of $0.6
million in 1996 due to the decrease in net sales. Corporate expenses increased
to $3.2 million in 1997 from $2.8 million in 1996 due to the hiring of an
additional financial officer in December 1996 and the full year effect of
directors and officers insurance and other expenses related to being a public
company.
Net Income
The effective tax rate in 1997 was 43.1%, or $5.3 million, compared to a
rate of 43.4%, or $3.5 million, in 1996. Nondeductible goodwill amortization and
state and local taxes caused our effective tax rate to exceed federal statutory
levels.
As described in Note 4 to our consolidated financial statements, we prepaid
certain indebtedness in June 1996 that resulted in an extraordinary charge of
$2.3 million. Net income increased $4.7 million to $7.0 million in 1997 from
$2.3 million in 1996 due to the factors described above.
LIQUIDITY AND CAPITAL RESOURCES
Our key statistics for measuring liquidity and capital resources are net
cash provided by operating activities, capital expenditures, debt to total
capitalization ratio, amounts available under our revolving credit facility and
cash gap. We define cash gap as the number of days our accounts receivable are
outstanding plus the number of days of inventory we have, less the number of
days our accounts payable are outstanding.
Our capital requirements relate primarily to capital expenditures, debt
service and the cost of acquisitions. Historically, our primary sources of
financing have been cash generated from operations, borrowings under our
revolving credit facility and the issuance of long-term debt and equity.
Net cash provided by operating activities for 1998 was $19.6 million.
Sources of operating cash flow for 1998 were comprised of:
- $10.1 million in net income;
- $6.6 million in non-cash reductions of net income; and
- $2.9 million of working capital changes.
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This cash was used for:
- net capital expenditures of $12.9 million;
- acquisitions of $1.8 million; and
- repayment of long-term debt of $4.3 million.
Capital expenditures in 1998 included net additions to the rental equipment
fleet of $6.8 million to support the growth of our concrete forming systems
division and, to a lesser extent, our concrete accessories division, as well as
property, plant and equipment additions of $7.2 million as we continued to focus
on cost improvement programs. Proceeds from sales of property, plant and
equipment of $1.1 million related to the sales of duplicate facilities as a
result of the acquisition of Symons. We anticipate that our net capital
expenditures in each of 1999 and 2000 will be comparable to 1998.
At April 2, 1999, our working capital was $53.0 million, compared to $44.7
million at December 31, 1998. The growth in our working capital primarily is
attributable to seasonal growth as we prepare for the spring and summer
construction season.
At April 2, 1999, all of our $40.0 million revolving credit facility was
available, of which $28.6 million was outstanding. The aggregate outstanding
amount of the term loans under our credit agreement at April 2, 1999 was $100.0
million. We also had other long-term debt, consisting of a $5.0 million note we
owed to one of the former stockholders of Symons and $200,000 we owed to the
City of Parsons, Kansas. At April 2, 1999, we had a total of $133.8 million of
long-term debt outstanding, of which $32,000 was current. Our debt to total
capitalization ratio increased to 64.3% as of April 2, 1999 from 61.3% as of
December 31, 1998 due to our purchase of the Cempro business and due to the
normal seasonal increase in our long-term debt. Effective May 14, 1999, our
banks agreed to increase the maximum amount we can borrow under our revolving
credit facility to $50.0 million.
For 1998, our average net cash gap days were 79, as compared to 70 for
1997, due to the effects of the acquisition of Symons, which has higher average
cash gap days. Average cash gap days improved from pro forma 1997 average cash
gap of 88 days due to our focus on working capital management.
We believe our liquidity, capital resources and cash flows from operations
are sufficient, in the absence of additional acquisitions, to fund the capital
expenditures we have planned and our working capital and debt service
requirements.
We intend to fund future acquisitions with cash, securities or a
combination of cash and securities. To the extent we use cash for all or part of
any future acquisitions, we expect to raise the cash primarily from our business
operations, from borrowings under our credit agreement or, if feasible and
attractive, by issuing long-term debt or selling additional common shares.
SEASONALITY
Our operations are seasonal with approximately 60% of our sales
historically occurring in the second and third quarters of the year. Our working
capital and borrowings fluctuate with the volume of our sales. Historically,
more than 50% of our annual cash flow from operations is generated in the fourth
quarter.
INFLATION
We do not believe inflation has had a significant impact on our operations
over the past two years. In the past, we have been able to pass along all or a
portion of increases in the price of steel (our principal raw material). We may
not be able to pass on steel price increases in the future.
YEAR 2000
Certain software and hardware systems are date sensitive. Older date
sensitive systems often use a two digit dating convention ("00" rather than
"2000") that could result in system failure and disruption of operations as the
year 2000 approaches. This is referred to as the "Year 2000" issue. The Year
2000 issue will impact us, our suppliers, our customers and others with whom we
transact business.
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We have a Year 2000 compliance team. This team is reviewing substantially
all hardware and software systems we use, the products we sell and significant
suppliers and others with whom we transact business. We have established
projects to address all significant Year 2000 issues that we have identified in
our review. The Year 2000 team reports regularly to our senior management on the
progress of significant Year 2000 projects. Our senior management reports to the
Board of Directors concerning our progress with Year 2000 projects.
Our compliance review has involved testing of our hardware and software
systems, including non-information technology systems such as telephones and
Computer Numerically Controlled machines. We have determined that we need to
replace or modify some of our software and hardware systems, and we are in the
process of replacing or upgrading the systems which we have identified as having
Year 2000 issues.
We believe that we have no material exposure to contingencies related to
Year 2000 issues concerning our products since almost none of our products
contain time sensitive hardware or software systems.
We have initiated communications with our significant suppliers, customers
and others to identify and minimize the possibility of disruptions to our
operations and to assist in resolving Year 2000 issues. We have given particular
attention to those suppliers who may be our only source for certain products or
components. Approximately 85% of the parties we have contacted have responded
indicating their Year 2000 readiness. We are diligently attempting to obtain
responses from the remaining parties who have not responded and to clarify the
readiness of those parties whose responses were not clear. Nevertheless, there
can be no certainty that the systems and products of other parties on whom we
rely will be Year 2000 compliant. We also have given particular attention to our
customers and their ability to communicate orders and pay for goods received.
Our estimates of our Year 2000 costs are based on numerous assumptions, and
our actual costs could be greater than our estimates. A few of the specific
factors that might cause such differences are the continuing availability of
personnel trained in this area, our ability to identify and correct all relevant
software and hardware systems on a timely basis and the success of our suppliers
in addressing their own Year 2000 issues. To date, we have incurred $862,000 in
costs, of which $782,000 was capitalized and $80,000 was expensed. These costs
were to replace existing hardware and third party software and professional fees
for external assistance. We estimate that our future cost to resolve remaining
Year 2000 issues is approximately $58,000, of which we expect $48,000 to be
capitalized and $10,000 to be expensed. These costs are to replace or upgrade
existing hardware and third party software, including professional fees for
external assistance.
We believe that we are diligently addressing the Year 2000 issues and that
we will satisfactorily resolve all significant internal Year 2000 problems. We
successfully completed tests of our integrated systems in the fourth quarter of
1998 and the second quarter of 1999. We completed substantially all of our major
Year 2000 projects by the end of the second quarter of 1999. We will continue to
focus internal resources on ongoing contingency planning throughout the balance
of 1999.
We believe that the most reasonably likely worst case scenario for us would
be related to the lack of success of third party vendors in addressing their own
Year 2000 issues, particularly suppliers who are our only source, such as local
electricity providers. If one of our facilities is unable to manufacture
products due to a lack of electricity, our contingency plans include the
transfer of production orders to other facilities. We believe that the impact on
us would not be significant due to the seasonal capacity that we have in
January.
RECENTLY ISSUED ACCOUNTING STANDARDS
In July 1997, the FASB issued Statement No. 131, "Disclosures About
Segments of an Enterprise and Related Information." Statement 131 introduced a
new model for segment reporting, called the "management approach." The
management approach is based on the way that the chief operating decision maker
organizes segments within a company for making operating decisions and assessing
performance. Reportable segments are based on products and services, geography,
legal structure, management
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structure -- any manner in which management disaggregates a company. The
management approach replaces the notion of industry and geographic segments in
current FASB standards. We adopted SFAS 131 for our 1998 financial statements.
See Note 9 to our consolidated financial statements.
In February 1998, the FASB issued Statement No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits" Statement 132
amends the disclosures required for pensions and other postretirement benefits.
We have adopted Statement No. 132. See Note 7 to our consolidated financial
statements and "Quantitative and Qualitative Disclosures About Market Risk"
below.
In June 1998, the FASB issued Statement No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which requires companies to recognize all
derivative contracts at their fair values, as either assets or liabilities on
the balance sheet. Our only derivatives are our interest rate swap agreements.
Changes in the fair value of the swaps would be recorded each period as an
adjustment to interest expense. The adoption of SFAS No. 133 as of April 2,
1999, would have resulted in our recording a $1.0 million liability and a
related future tax benefit, with a corresponding reduction of shareholders'
equity. We do not expect the adoption of SFAS No. 133 to have a material impact
on the consolidated statements of income. In June 1999, the FASB issued
Statement No. 137, which amended SFAS No. 133 such that the effective date of
adoption will be for all fiscal quarters beginning after June 15, 2000. We do
not intend to adopt SFAS No. 133 prior to its effective date.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As of April 2, 1999, we had financial instruments which were sensitive to
changes in interest rates. These financial instruments consisted of:
- $40.0 million revolving credit facility, of which $28.6 million was
outstanding;
- $100.0 million term loan;
- $5.2 million in other fixed-rate, long-term debt; and
- variable-to-fixed interest rate swaps on $50.0 million of the term loan.
Our revolving credit facility terminates in 2002 and has several interest
rate options which re-price on a short-term basis. Accordingly, the fair value
of the revolving credit facility as of April 2, 1999 approximated its $28.6
million face value. The weighted average interest rate at April 2, 1999 was
6.4%.
Our $100.0 million term loan is due in 2005. The term loan permits us to
choose from various interest rate options which re-price on a short-term basis.
Accordingly, the fair value of the term loan as of April 2, 1999 approximated
its face value. The term loan had a weighted average interest rate of 7.8% at
April 2, 1999.
Our other long-term debt at April 2, 1999 consisted of a $5.0 million,
10.5% note payable due in 2004 with an estimated fair value of $6.0 million and
a $0.2 million, 7.0% loan due in installments of $31,500 per year with an
estimated fair value as of April 2, 1999 of $0.2 million.
We have two interest rate swap agreements on a total of $50.0 million of
our term loan that fixed the LIBOR-based component of the interest rate formula
(as required by our credit agreement). The swaps have a fixed 90-day LIBOR
component of 6.3% and expire on November 1, 2000. The 90-day LIBOR as of April
2, 1999 was 5.0%. These swaps are contracts to exchange floating rate for fixed
rate interest payments without the exchange of underlying amounts. The estimated
fair value of the interest rate swaps as of April 2, 1999 was a liability of
$1.0 million.
In the ordinary course of our business, we also are exposed to price
changes in raw materials (particularly steel rod) and products purchased for
resale. The prices of these items can change significantly due to changes in the
markets in which our suppliers operate. We generally do not, however, use
financial instruments to manage our domestic or international exposure to
changes in commodity prices.
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BUSINESS
OVERVIEW
We believe we are the largest North American manufacturer and distributor
of metal accessories and forms used in concrete construction and of metal
accessories used in masonry construction. Our products are used primarily in
non-residential and infrastructure construction projects. We have four principal
operating divisions, which are organized around the following product lines:
- Concrete Accessories (Dayton/Richmond(R))
- Concrete Forming Systems (Symons(R))
- Paving Products (American Highway Technology(R))
- Masonry Products (Dur-O-Wal(R))
Collectively, we sell over 18,000 discrete products under a number of brand
names that are well recognized in the construction industry.
BUSINESS STRENGTHS
We believe we have the following competitive advantages:
Industry Leader. We believe we are the leading North American provider of
concrete wall forming accessories, concrete wall tilt-up braces, concrete
forming systems, concrete paving load transfer devices and masonry wall
reinforcement products. We believe this market share leadership allows us to
attract and maintain customers who prefer to deal with a "one-stop" supplier. In
addition, our size allows us to achieve purchasing economies and also allows us
to distribute acquired product lines efficiently and effectively.
Leadership in Manufacturing Efficiency. We design and build or customize
much of the equipment we use to manufacture our products. These proprietary
designs would be difficult for a competitor to duplicate cost effectively. By
developing our own automatic, high-speed manufacturing equipment, we believe we
generally have achieved significantly greater productivity, lower capital
equipment costs, lower scrap rates, higher product quality, faster changeover
times and lower inventory levels than most of our competitors.
Extensive Distribution System. We believe our distribution system is one of
the largest in our industry. We operate a network of 58 service/distribution
centers in the United States and Canada, ten of which also are manufacturing
plants. We serve over 4,000 independent distributors, as well as brokers, rebar
fabricators, precast concrete manufacturers, brick and concrete block
manufacturers, general contractors, subcontractors and metal fabricators. We
also rent forming systems and tilt-up bracing to contractors through rental
centers and distributors nationwide. This extensive network allows us to provide
our products to every major geographic construction market within the
continental United States.
Experienced Management Team. Our management team is one of the most
experienced in the concrete and masonry accessories businesses. Our executive
officers average approximately 20 years of experience in these industries. Our
management team has demonstrated its ability to succeed in each of our business
lines. The senior management team has a strong record of integrating
acquisitions into the organization profitability and efficiently, while
realizing targeted synergies on schedule.
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OUR STRATEGY
Our principal business objective is to achieve profitable growth through a
combination of acquisitions and internal operating initiatives. Key elements of
our strategy to achieve our principal business objective are outlined below:
Complete Additional Strategic Acquisitions. We compete in a highly
fragmented market that provides numerous potential acquisition opportunities.
Since the beginning of 1994, we have successfully completed and integrated
eleven strategic acquisitions. We seek additional acquisitions that leverage our
significant economies of scale and manufacturing and distribution expertise.
Most of our acquisition targets are small, privately held producers of one or
two product lines for a single geographic market. In addition, we pursue larger
stand-alone acquisitions in markets that we do not yet serve, but that represent
complementary product line extensions.
Continue Product Innovation. We have a long and successful history of
innovation and continue to focus significant resources on new product
development. We have benefited from the ability of our engineers and
manufacturing and marketing managers to develop innovative, leading-edge
products and to successfully introduce them to the market. For example, we
recently introduced a post tensioning system for concrete block walls, as well
as a unique wall bracing system for our masonry business.
Continue Efficient Manufacturing and Continuous Improvement Programs. We
continue to implement strategic initiatives designed to reduce manufacturing
costs and improve product quality. To improve our efficiency, we design and
build or customize much of our high-volume, automated manufacturing equipment.
To develop this proprietary equipment, we employ a team of experienced
manufacturing engineers and tool and die makers. Since the beginning of 1994, we
have made over $20 million in capital expenditures, primarily to increase
factory efficiency and upgrade computer systems.
Leverage Our Extensive Distribution System. We use our distribution system
to sell products manufactured by third parties, which enables us to increase our
sales without making significant capital investments. In addition, we leverage
our extensive distribution system by purchasing and licensing new product lines,
and developing new products internally, that can be sold through our
distribution system. For example, our concrete forming systems division
currently is testing two European forming systems for possible introduction into
the United States and our concrete accessories division is negotiating an
exclusive domestic distribution arrangement for a new rebar splicing system
developed in the Far East.
Encourage Decentralized and Entrepreneurial Management. We encourage an
entrepreneurial spirit at each of our divisions. We believe utilizing the
capabilities, customer relationships and market knowledge of our managers is
essential to realizing our growth objectives. We provide managers a high degree
of autonomy in achieving their objectives and we effectively utilize the
managerial talent gained through acquisitions.
INDUSTRY
The construction industry is comprised of three major segments:
- non-residential building projects, such as institutional buildings,
retail sites, commercial offices and manufacturing facilities;
- infrastructure projects, such as highways, bridges, utilities, water and
waste treatment facilities and airport runways; and
- residential building projects, comprised of single- and multi-family
residential units and improvements.
Our products are used primarily in non-residential and infrastructure
construction and to a limited extent in multi-family residential construction.
As a result, we have limited exposure to the single-family construction market.
Historically, based upon the dollar volume of contracts awarded for new
construc-
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tion starts, infrastructure, non-residential building and multi-family
residential construction, taken together, have been less cyclical than single
family residential construction.
Non-residential Building Construction. Non-residential building
construction includes institutional buildings (such as government buildings,
schools and hospitals), retail sites, commercial offices and manufacturing
facilities. The institutional construction segment is less cyclical than the
commercial and manufacturing segment because the funding sources for
institutional projects are somewhat independent of the general economy.
Moreover, we believe the effect of a future economic downturn on the commercial
sector has been mitigated to some extent as a result of the significant decline
in commercial vacancy rates.
Infrastructure Construction. This segment of the construction industry is
comprised of construction of highways, bridges, utilities, water and waste
treatment facilities and airport runways. Compared to other segments of the
construction industry, infrastructure construction is less dependent on general
economic conditions, as funding for infrastructure projects often comes from
federal, state and local taxes, user taxes, gasoline taxes and bond issues. In
certain instances, infrastructure spending has increased notwithstanding a soft
economy, as local and federal governments attempted to offset recessionary
trends. In addition, we believe that the May 1998 passage of The Transportation
Equity Act for the 21st Century, known as "TEA-21," the largest federal public
works legislation in U.S. history, will have a positive impact on the
infrastructure construction segment. TEA-21 authorizes $217 billion in spending
for surface transportation through the year 2003 and represents a 40% increase
over the 1991 Intermodal Surface Transportation Act, which was known as "ISTEA."
Approximately $174 billion of the $217 billion has been allocated to highway and
bridge programs.
ACQUISITIONS
We believe we have been successful at implementing our acquisition
strategy, having completed and integrated eleven acquisitions since the
beginning of 1994. Although the majority of these acquisitions were small add-on
acquisitions, two of them represented large stand-alone acquisitions that
provided us with access to new markets:
- Our 1995 acquisition of Dur-O-Wal, for which we paid $23.6 million,
established us as a leader in the masonry accessories market; and
- Our 1997 acquisition of Symons, for which we paid $85.0 million (subject
to adjustment), established us as a leader in the prefabricated concrete
forming equipment market.
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The following table summarizes the acquisitions that we have made since the
beginning of 1994 in chronological order:
<TABLE>
<CAPTION>
PURCHASE PRICE
YEAR BUSINESS ACQUIRED DIVISION (IN MILLIONS)
- ---- ------------------------------ ------------------------ --------------
<C> <S> <C> <C>
1994 Alpha Rebar Paving Products $ 0.1
1995 C&B Construction Supplies Concrete Accessories 0.2
1995 Dur-O-Wal Masonry Accessories 23.6
1996 Steel Structures Paving Products 5.6
1997 Ironco Paving Products 1.5
1997 Baron Steel Concrete Accessories 0.3
1997 Symons Corporation: 85.0*
Symons Division Concrete Forming Systems
Richmond Screw
Anchor Division Concrete Accessories
1998 Symons Concrete Forms
(formerly known as CAI) Concrete Forming Systems 6.7*
1998 Northwoods Concrete Forming Systems 0.8
1998 Secure Paving Products 0.6
1999 Cempro Concrete Accessories 5.5*
</TABLE>
- ---------------
*Subject to adjustment
PRODUCTS
Although almost all of our products are used in concrete or masonry
construction, the function and nature of the products differ widely. Most of our
products are consumable, providing us with a source of recurring revenue. In
addition, while our products represent a relatively small portion of a
construction project's total cost, our products assist in ensuring the on-time,
quality completion of those projects. We continually attempt to increase the
number of products we offer by using engineers and product development teams to
introduce new products and refine existing products.
Concrete Accessories. Our concrete accessories division manufactures and
sells concrete accessories primarily under the Dayton/Richmond(R) brand name.
Net sales of our concrete accessories division to external customers accounted
for $128.1 million, or approximately 45%, of our total 1998 net sales. Concrete
accessories include:
- Wall-forming products such as shaped metal ties and accessories that are
used with modular forms to hold concrete in place when walls are poured
at a construction site or are prefabricated off site. These products,
which generally are not reusable, are made of wire or plastic or a
combination of both materials. We generally manufacture these products on
customized high-speed automatic equipment.
- Bridge deck products are metal assemblies of varying designs used to
support the formwork used by contractors in the construction and
rehabilitation of bridges.
- Bar supports are non-structural metal or plastic supports used to
position rebar within a horizontal slab or form to be filled with
concrete. Bar supports are often plastic or epoxy coated, galvanized or
equipped with plastic tips to prevent creating a conduit for corrosion of
the embedded rebar.
- Precast and prestressed concrete construction products are metal
assemblies of varying designs used in the manufacture of precast concrete
panels and prestressed concrete beams and structural members. Precast
concrete panels and prestressed concrete beams are fabricated away from
the construction site and transported to the site. Precast concrete
panels are used in the construction of prisons, freeway sound barrier
walls, external building facades and other similar applications.
Prestressed concrete beams use multiple strands of steel under tension
embedded in concrete
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beams to provide rigidity and bearing strength, and often are used in the
construction of bridges, parking garages and other applications where
long, unsupported spans are required.
- Tilt-up construction products include a complete line of inserts, lifting
hardware and adjustable beams used in the tilt-up method of construction,
in which the concrete floor slab is used as part of a form for casting
the walls of a building. After the cast walls have hardened on the floor
slab, a crane is used to "tilt-up" the walls, which then are braced in
place until they are secured to the rest of the structure. Tilt-up
construction generally is considered to be a faster method of
constructing low-rise buildings than conventional poured-in-place
concrete construction. Some of our tilt-up construction products can be
rented as well as sold.
- Formliner products include plastic and elastomeric products that adhere
to the inside face of forms to provide shape to the surface of the
concrete.
- Our concrete accessories division also sells a broad spectrum of chemical
products used in concrete construction, including form release agents,
bond breakers, curing compounds, liquid hardeners, sealers, water
repellents, bonding agents, grouts and epoxies, and other chemicals used
in the pouring and placement of concrete.
Concrete Forming Systems. Our concrete forming systems division
manufactures, sells and rents reusable modular concrete forming systems
primarily under the Symons(R) name. These products include standard and
specialty concrete forming systems, shoring systems and accessory products. To
capitalize on the durability and relatively high unit cost of prefabricated
forming equipment, we also rent forming products. Net revenues of our concrete
forming systems division to external customers accounted for $99.5 million, or
approximately 35%, of our total 1998 net sales.
- Concrete forming systems are reusable, highly-engineered modular forms
which hold liquid concrete in place on concrete construction jobs while
it cures. Standard forming systems are made of steel and plywood and are
sold or rented for use in the creation of concrete walls and columns.
Specialty forming systems consist primarily of steel forms that are
designed to meet architects' specific needs for concrete placements.
- Shoring systems include aluminum beams and joists, post shores and
shoring frames used to support deck and other raised forms while concrete
is being poured.
- Construction chemicals sold by the concrete forming systems division
include form release agents, sealers, water repellents, grouts and
epoxies and other chemicals used in the pouring, stamping and placement
of concrete.
Paving Products. Our paving products division sells products, primarily
consisting of welded dowel assemblies and dowel baskets, used in the
construction and rehabilitation of roads, highways and airport runways to extend
the life of the pavement. The division sells paving products primarily under the
American Highway Technology(R) name, but we also offer some paving products
under the Dayton/ Richmond(R) name. We manufacture welded dowel assemblies
primarily using automated and semi-automated equipment. Net sales of paving
products accounted for $31.0 million, or approximately 11%, of our total 1998
net sales.
- Welded dowel assemblies and dowel baskets are used to transfer dynamic
loads between two adjacent slabs of concrete roadway. Metal dowels which
are part of a dowel basket design are imbedded in two adjacent slabs to
transfer the weight of vehicles as they move over a road.
- We provide corrosive-preventing epoxy coatings for infrastructure
construction products and a wide range of industrial and construction
uses.
- Our paving products division also sells construction chemicals specific
to concrete road construction, primarily curing compounds.
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Masonry Products. Our masonry products division manufactures and sells
masonry products under the Dur-O-Wal(R) name. Our masonry product line consists
primarily of masonry wall reinforcement products, masonry anchors, engineered
products and other accessories used in masonry construction and restoration to
reinforce brick and concrete walls, anchor inner to outer walls and provide
avenues for water to escape. Net sales of masonry products accounted for
approximately $24.3 million, or approximately 9%, of our total 1998 net sales.
- Masonry products are wire products that improve the performance and
longevity of masonry walls by providing crack control, greater elasticity
and higher strength to withstand seismic shocks and better resistance to
rain penetration.
- We have the in-house ability to produce hot-dipped zinc galvanized
finishes on masonry wall reinforcement products. Hot-dipped galvanized
finishes are considered to provide superior protection against corrosion
compared to alternative finishes. In recent years, model building codes
in a number of regions of the country in which masonry construction is
used have been amended to require use of hot-dipped galvanized masonry
wall reinforcement products.
- We also sell other masonry products which connect one form of masonry to
another or masonry to the building structure and that are used in the
restoration of existing masonry construction, for seismic retrofitting of
existing brick veneer surfaces to strengthen the surfaces against
earthquake damage and for moisture control applications.
DISTRIBUTION
We distribute our products through a network of 58 service/distribution
centers located in the United States and Canada. Ten of the service/distribution
centers are associated with our manufacturing plants. Of these 58 locations, 20
are dedicated principally to the distribution of concrete accessories, 31 are
dedicated principally to the distribution of forming systems, three are
dedicated primarily to the distribution of paving products, four are dedicated
principally to the distribution of masonry products and some locations carry
more than one of our product lines. We ship most of our products to our
service/distribution centers from our manufacturing plants; however, a majority
of our centers also are able to produce smaller batches of some products on an
as-needed basis to fill rush orders.
We have an on-line inventory tracking system for the concrete accessories,
paving products and construction chemicals businesses, which enables our
customer service representatives to identify, reserve and ship inventory quickly
from any of our locations in response to telephone orders. Our system provides
us with a competitive advantage since our service representatives are able to
answer customer questions about availability and shipping dates while still on
the telephone. We primarily use third-party common carriers to ship our
products.
We also use our distribution system to sell products which are manufactured
by others. These products usually are sold under our brand names, and often are
produced for us on an exclusive basis. Sales of these products allow us to
utilize our distribution network to increase sales without making significant
capital investments.
CUSTOMERS
We have over 4,000 customers, over 75% of which purchase our products for
resale. Our customer base is geographically diverse, with no customer accounting
for more than 5% of net sales in 1998 and with our ten largest customers
accounting for less than 17% of our net sales. Customers who purchase our
products for resale generally do not sell our products exclusively.
Concrete Accessories. Our concrete accessories division has approximately
2,350 customers, consisting of distributors, rebar fabricators and precast and
prestressed concrete manufacturers. We estimate that approximately 90% of the
customers of this division purchase our products for resale. The largest
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customer of the division accounted for approximately 3% of the division's 1998
net sales, and the division's top ten customers accounted for less than 20% of
its 1998 net sales.
Our concrete accessories division has instituted a certified dealer program
for those dealers who handle our tilt-up construction products. This program was
established to educate dealers in the proper use of our tilt-up products and to
assist them in providing engineering assistance to their customers. Certified
dealers are not permitted to carry other manufacturers' tilt-up products, which
we believe are incompatible with ours and, for that reason, could be unsafe if
used with our products. The division currently has 77 certified tilt-up
construction product dealers.
Concrete Forming Systems. Our concrete forming systems division has
approximately 2,500 customers, consisting of distributors, precast and
prestressed concrete manufacturers, general contractors and subcontractors. We
estimate that approximately 90% of the customers of this division are the
end-users of its products, while approximately 10% of those customers purchase
its products for resale or re-rent. This division's largest customer accounted
for approximately 6% of the division's 1998 net sales, and its ten largest
customers accounted for approximately 25% of its 1998 net sales.
Paving Products. Our paving products division has approximately 150
customers, consisting primarily of distributors of construction supplies, and,
to a lesser extent, general contractors and subcontractors. This division's
largest customer accounted for approximately 15% of the division's 1998 net
sales, and its ten largest customers accounted for approximately 80% of its 1998
net sales.
Masonry Products. Our masonry products division has approximately 1,600
customers consisting of distributors, brick and concrete block manufacturers,
general contractors and sub-contractors. We estimate that approximately 90% of
the division's customers purchase its products for resale. The masonry products
division's largest customer accounted for approximately 5% of its 1998 net
sales, and its ten largest customers accounted for approximately 23% of its 1998
net sales.
SALES AND MARKETING
We employ approximately 400 sales and marketing personnel, of whom
approximately one-half are salesmen and one-half are customer service
representatives. Sales and marketing personnel are located in all of our
locations. We produce product catalogs and promotional materials that illustrate
certain construction techniques in which our products can be used to solve
typical construction problems. We promote our products through seminars and
other customer education efforts and work directly with architects and engineers
to secure the use of our products whenever possible.
We consider our engineers to be an integral part of the sales and marketing
effort. Our engineers have developed proprietary software applications to
conduct extensive pre-testing on both new products and construction projects.
MANUFACTURING
We manufacture the majority of the products we sell. Most of our concrete
accessories, paving products, and masonry products are manufactured at eight
principal facilities in the United States, although a majority of our
service/distribution facilities also can produce smaller lots of some products.
Our production volumes enable us to design and build or custom modify much of
the equipment we use to manufacture these products, using a team of experienced
manufacturing engineers and tool and die makers.
By developing our own automatic high-speed manufacturing equipment, we
believe we generally have achieved significantly greater productivity, lower
capital equipment costs, lower scrap rates, higher product quality, faster
changeover times and lower inventory levels than most of our competitors. In
addition, our masonry products division's ability to "hot-dip" galvanize
products provides it with an advantage over many competitors manufacturing
masonry wall reinforcement products, who lack this
36
<PAGE> 41
internal capability. We also have a flexible manufacturing setup and can make
the same products at several locations using short and discrete manufacturing
lines.
We manufacture our concrete forming systems at two facilities in the United
States. These facilities incorporate semi-automated and automated production
lines, heavy metal presses, forging equipment, stamping equipment, robotic
welding machines, drills, punches, and other heavy machinery typical for this
type of manufacturing operation.
We generally operate our manufacturing facilities two shifts per day, five
days per week (six days per week during peak months and, in some instances,
three shifts), with the number of employees increasing or decreasing as
necessary to satisfy demand on a seasonal basis.
RAW MATERIALS
Our principal raw materials are steel wire rod, steel hot rolled bar, metal
stampings and flat steel, aluminum sheets and extrusions, plywood, cement and
cementitious ingredients, liquid chemicals, zinc and injection-molded plastic
parts. Steel, in its various forms, constitutes approximately 40-45% of our cost
of sales. We currently purchase materials from over 300 vendors and are not
dependent on any single vendor or small group of vendors for any significant
portion of our raw material purchases.
COMPETITION
Our industry is highly competitive in most product categories and
geographic regions. We compete with a relatively small number of full-line
national manufacturers of concrete accessories, concrete forming systems,
masonry products and paving products, and a much larger number of regional
manufacturers and manufacturers with limited product lines. We believe
competition in our industry is largely based on, among other things, price,
quality, breadth of product lines, distribution capabilities (including quick
delivery times) and customer service. Due primarily to factors such as freight
rates, quick delivery times and customer preference for local suppliers, some
local or regional manufacturers and suppliers may have a competitive advantage
over us in a given region. We believe the size, breadth and quality of our
product lines provide us with advantages of scale in both distribution and
production relative to our competitors.
PATENTS AND TRADEMARKS
We sell most products under the registered trade names Dayton Superior(R),
Dayton/Richmond(R), Symons(R), Dur-O-Wal(R) and American Highway Technology(R),
which we believe are widely recognized in the construction industry and,
therefore, are important to our business. Although some of our products (and
components of some products) are protected by patents, we do not believe these
patents are material to our business. We have approximately 120 trademarks and
90 patents.
EMPLOYEES
As of December 31, 1998, we employed approximately 750 salaried and 1,330
hourly personnel, of whom approximately 1,000 of the hourly personnel and six of
the salaried personnel are represented by labor unions. Employees at our
Miamisburg, Ohio; Parsons, Kansas; Des Plaines, Illinois; New Braunfels, Texas;
Tremont, Pennsylvania; St. Joseph, Missouri and Aurora, Illinois
manufacturing/distribution plants and our service/distribution centers in
Baltimore, Maryland; Atlanta, Georgia and Santa Fe Springs, California are
covered by collective bargaining agreements. In 1998, hourly employees at our
Kankakee, Illinois manufacturing/distribution plant voted to be represented by a
labor union, although a contract has not yet been negotiated. We believe we have
good employee and labor relations.
37
<PAGE> 42
SEASONALITY
Our operations are seasonal in nature, with approximately 60% of our sales
historically occurring in the second and third quarters. Working capital and
borrowings fluctuate with sales volume. Historically, more than 50% of our cash
flow from operations is generated in the fourth quarter.
BACKLOG
We typically ship most of our products, other than paving products and some
specialty forming systems, within one week and often within 24 hours after we
receive the order. Other product lines, including paving products and specialty
forming systems, may be shipped up to six months after we receive the order,
depending on our customer's needs. Accordingly, we do not maintain significant
backlog, and backlog as of any particular date is not representative of our
actual sales for any succeeding period.
PRINCIPAL PROPERTIES
Our corporate headquarters are located in leased facilities in Dayton,
Ohio. Our other principal facilities are located throughout North America, as
follows:
<TABLE>
<CAPTION>
LEASED/ SIZE
LOCATION USE PRINCIPAL DIVISION OWNED (# SQ. FT.)
- -------------------------- -------------------------- ------------------ ------- -----------
<S> <C> <C> <C> <C>
Des Plaines, Illinois Manufacturing/Distribution Concrete Forming Owned 171,650
and Symons Headquarters Systems
Miamisburg, Ohio Manufacturing/Distribution Concrete Accessories Owned 126,000
and Dayton/Richmond
Headquarters
Aurora, Illinois Manufacturing/Distribution Masonry Products Owned 109,000
and Dur-O-Wal Headquarters
Kankakee, Illinois Manufacturing/Distribution Paving Products Leased 107,900
and American Highway
Technology Headquarters
Tremont, Pennsylvania Manufacturing/Distribution Concrete Accessories Owned 102,650
Parsons, Kansas Manufacturing/Distribution Paving Products Owned 98,250
New Braunfels, Texas Manufacturing/Distribution Concrete Forming Owned 89,600
Systems
Atlanta, Georgia Service/Distribution Concrete Accessories Leased 74,090
Parker, Arizona Manufacturing/Distribution Concrete Accessories Leased 60,000
Birmingham, Alabama Service/Distribution Concrete Accessories Leased 55,000
Centralia, Illinois Service/Distribution Concrete Forming Owned 53,500
Systems
St. Joseph, Missouri Manufacturing/Distribution Concrete Accessories Owned 53,342
Grand Prairie, Texas Service/Distribution Concrete Accessories Leased 45,000
Seattle, Washington Service/Distribution Concrete Accessories Leased 42,825
Santa Fe Springs, Service/Distribution Concrete Accessories Leased 40,000
California
Toronto, Ontario Service/Distribution Concrete Accessories Leased 40,000
Oregon, Illinois Service/Distribution Concrete Accessories Owned 39,000
Helena, Alabama Manufacturing/Distribution Paving Products Leased 32,000
Folcroft, Pennsylvania Service/Distribution Concrete Accessories Owned 32,000
Baltimore, Maryland Service/Distribution Masonry Products Owned 30,000
</TABLE>
We believe our facilities provide adequate manufacturing and distribution
capacity for our needs. We also believe all of the leases were entered into on
market terms.
38
<PAGE> 43
LEGAL PROCEEDINGS
Our Symons subsidiary currently is a defendant involved in a civil suit
brought by EFCO Corp., a competitor of Symons in one portion of its business, in
1996 in the United States District Court for the Southern District of Iowa (Case
No. 4-96-CV-80552). EFCO Corp. alleged that Symons engaged in false advertising,
misappropriation of trade secrets, intentional interference with contractual
relations, and certain other activities. After a jury trial, preliminary damages
of approximately $14 million were awarded against Symons in January 1999. In
ruling on post-trial motions in April 1999, the district court judge dismissed
EFCO's claim of intentional interference with contractual relations but
increased the damages awarded to EFCO by $100,000.
We believe Symons has grounds for a successful appeal and we remain
committed to vigorously pursuing our appellate rights. A successful appeal could
overturn the judgment against Symons or result in a new trial. Symons'
liability, if any, cannot finally be determined until such time as all rights of
the parties have been exhausted or have expired by lapse of time. We consider
the outcome of this litigation to be not estimable and, accordingly, we have not
recorded any liability for the resolution of this suit. In the event Symons is
unsuccessful in its appeal, it could have a material adverse effect on us.
Our businesses are subject to regulation under various and changing
federal, state and local laws and regulations relating to the environment and to
employee safety and health. These environmental laws and regulations govern the
generation, storage, transportation, disposal and emission of various
substances. Permits are required for operation of our businesses (particularly
air emission permits), and these permits are subject to renewal, modification
and, in certain circumstances, revocation. We believe we are in substantial
compliance with these laws and permitting requirements. Our businesses also are
subject to regulation under various and changing federal, state and local laws
and regulations which allow regulatory authorities to compel (or seek
reimbursement for) cleanup of environmental contamination at a business' own
sites and at facilities where its waste is or has been disposed.
We expect to incur on-going capital and operating costs to maintain
compliance with currently applicable environmental laws and regulations;
however, we do not expect those costs, in the aggregate, to be material.
39
<PAGE> 44
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
Our directors and executive officers and their ages as of May 12, 1999,
positions and principal occupation during the past five years (unless otherwise
stated, their positions are with us) are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---------------------- --- --------------------------------------------------
<S> <C> <C>
John A. Ciccarelli 59 President, Chief Executive Officer and Director
Raymond E. Bartholomae 52 Vice President and General Manager, Symons
Michael C. Deis, Sr. 48 Vice President and General Manager,
Dayton/Richmond
James W. Fennessy 55 Vice President and General Manager, Dayton
Superior Canada Ltd.
Mark K. Kaler 41 Vice President and General Manager, American
Highway Technology
Alan F. McIlroy 48 Vice President and Chief Financial Officer
William C. Mongole 49 Vice President and General Manager, Dur-O-Wal
John R. Paine, Jr. 56 Vice President, Sales and Marketing,
Dayton/Richmond
Thomas W. Roehrig 33 Corporate Controller
John M. Rutherford 39 Treasurer and Assistant Secretary
James C. Stewart 51 Vice President, Corporate Development
William F. Andrews 67 Director
Timothy C. Collins 42 Director
Matthew O. Diggs, Jr. 66 Director and non-executive Chairman of the Board
Daniel W. Duval 62 Director
Matthew M. Guerreiro 42 Director
Robert B. Holmes 67 Director
</TABLE>
JOHN A. CICCARELLI has been President since 1989 and has been Chief
Executive Officer and a director since 1994.
RAYMOND E. BARTHOLOMAE has been Vice President and General Manager, Symons,
since February 1998, and was Executive Vice President and General Manager of
Symons from 1986 to February 1998.
MICHAEL C. DEIS, SR. has been Vice President and General Manager,
Dayton/Richmond since February 1998. From 1987 to February 1998, Mr. Deis was
Vice President, Eastern Division of Dayton/ Richmond (formerly, Concrete
Accessories).
JAMES W. FENNESSY has been Vice President and General Manager, Dayton
Superior Canada, Ltd. since 1988.
MARK K. KALER has been Vice President and General Manager, American Highway
Technology since April 1996. From 1990 to April 1996, Mr. Kaler was Vice
President, Engineering and Product Manager, Paving Division.
ALAN F. MCILROY has been Vice President and Chief Financial Officer since
July 1997. From January 1994 until July 1997, Mr. McIlroy was President of The
Greenock Group, a private operational investment company.
WILLIAM C. MONGOLE has been Vice President and General Manager, Dur-O-Wal
since May 1999. From 1987 until May 1999, he was a Vice President of our
Dur-O-Wal subsidiary.
JOHN R. PAINE, JR. has been Vice President, Sales and Marketing of
Dayton/Richmond (formerly, Concrete Accessories) since 1984.
40
<PAGE> 45
THOMAS W. ROEHRIG has been Corporate Controller since April 1998. From 1987
until March 1998, Mr. Roehrig was employed by Arthur Andersen LLP, an
international public accounting firm, most recently as an Experienced Manager in
the Assurance and Business Advisory division.
JOHN M. RUTHERFORD has been Treasurer and Assistant Secretary since
February 1998. From January 1993 until January 1998, Mr. Rutherford was Director
of Treasury and Risk Management for Gibson Greetings, Inc., a greeting card
manufacturer.
JAMES C. STEWART has been Vice President, Corporate Development since
February 1998. From 1984 to February 1998, Mr. Stewart was Vice President,
Western Division of Dayton/Richmond (formerly Concrete Accessories).
WILLIAM F. ANDREWS has been a director since February 1997. He has been
Chairman of the Board of Scovill Fasteners Inc., a manufacturer of apparel and
industrial fasteners, since 1995 and has been Chairman of the Board of
Northwestern Steel and Wire Company, a producer of structural steel products and
rod and wire products, since November 1998. Mr. Andrews was Chairman of the
Board of Schrader-Bridgeport International, Inc., a manufacturer of tire valves
and automotive accessories, from 1995 to 1998 and was Chairman, President and
Chief Executive Officer of Amdura Corporation (formerly American Hoist & Derrick
Co.), a specialty manufacturer, from 1993 until 1995. Mr. Andrews also is a
director of Black Box Corp., Johnson Controls, Inc., Katy Industries and
Navistar International Corporation.
TIMOTHY C. COLLINS has been a director since 1991 and was Chairman of the
Board of Directors from June 1994 until December 1995. Mr. Collins is Senior
Managing Director and Chief Executive Officer of Ripplewood Holdings L.L.C., a
private holding company he formed in October 1995. From February 1990 to October
1995, Mr. Collins was a Senior Managing Director of Onex Investment Corp. (New
York), a management company for the United States investments of Onex
Corporation, an Ontario corporation listed on the Toronto and Montreal Stock
Exchanges. Mr. Collins also is a director of Danielson Holding Corp. and several
privately-held companies.
MATTHEW O. DIGGS, JR. has been a director since October 1995 and
non-executive Chairman of the Board of Directors since December 1995. Mr. Diggs
has been Chief Executive Officer of The Diggs Group, a private investment firm,
since 1990. Mr. Diggs also has been the non-executive Chairman of Ripplewood
Holdings L.L.C. since its inception in October 1995. From 1991 to 1994, Mr.
Diggs was Chairman of The Delfield Company, a manufacturer of food service
equipment. Mr. Diggs also is a director of Helix Technologies Corporation and
Tower Automotive, Inc.
DANIEL W. DUVAL has been a director since May 1999. Mr. Duval is Vice
Chairman of the Board of Directors of Robbins & Myers, Inc., an international
manufacturer and marketer of fluids management products and systems, and was
President and Chief Executive Officer from 1986 until he retired in 1998. Mr.
Duval also serves on the Board of Directors of Arrow Electronics, Inc. and
several privately-held companies.
MATTHEW M. GUERREIRO has been a director since February 1994. Mr. Guerreiro
has been a private investor since June 1999. From September 1997 until June
1999, Mr. Guerreiro was a Managing Director of Salomon Smith Barney, Inc., an
investment banking firm. From October 1995 until September 1997, Mr. Guerreiro
was a principal of Ripplewood Holdings L.L.C., a private holding company, and
from August 1992 to October 1995, he was a principal in the New York office of
Onex Investment Corp. (New York).
ROBERT B. HOLMES has been a director since March 1996. Mr. Holmes is a
director of Mitsubishi International Corporation, an advisory director of
Ripplewood Holdings L.L.C., a private holding company, and a principal of the
Lens Fund, a private investment company.
41
<PAGE> 46
We currently have seven directors. Each director is elected to serve until
the next annual meeting of shareholders or until a successor is elected. Our
executive officers are elected by the directors to serve at the pleasure of the
directors. There are no family relationships between any of our directors or
executive officers.
Our Board of Directors has three committees:
- An Executive Committee (Messrs. Ciccarelli (Chair), Collins and Diggs),
which may exercise any of the Board's authority between meetings of the
Board
- An Audit Committee (Messrs. Andrews, Diggs, Duval and Holmes (Chair)),
which
- recommends the engagement of the independent public accountants;
- reviews the professional services provided by, and the fees charged
by, the independent public accountants;
- reviews the scope of the internal and external audit; and
- reviews the financial statements and matters relating to the audit.
- A Compensation and Benefits Committee (Messrs. Collins, Diggs (Chair) and
Guerreiro), which is responsible for assuring that officers and other key
management are effectively compensated and that compensation is
internally equitable and externally competitive.
We do not have a Nominating Committee.
DIRECTOR COMPENSATION
Directors who are not employees receive for their service an annual
retainer of $20,000 plus an additional $2,000 for each committee of which the
director serves as chairman (a total of $50,000, in the case of the Chairman of
the Board) payable in common shares and an annual grant of an option to purchase
2,000 common shares at an exercise price per share equal to the fair market
value of a common share on the grant date. The nonemployee directors also
receive a $500 cash fee for each meeting of the Board of Directors or committee
they attend. Directors who are employed by us receive no additional compensation
for serving as directors.
42
<PAGE> 47
EXECUTIVE COMPENSATION
The following table summarizes the 1998, 1997 and 1996 compensation of our
chief executive officer and each of our four other most highly compensated
executive officers who was serving as an executive officer on December 31, 1998:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
----------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------------- ---------- ---------
OTHER LONG
ANNUAL SHARES TERM ALL OTHER
COMPEN- UNDERLYING INCENTIVE COMPEN-
NAME AND PRINCIPAL SALARY BONUS SATION OPTIONS PAYOUTS SATION
POSITION YEAR ($) ($) ($) (#) ($) ($)(1)
- ------------------------------ ---- ------ ----- ------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
John A. Ciccarelli............ 1998 $293,077 $275,000 $ -- 15,000(2) $-- $12,800
President and Chief 1997 227,692 160,000 -- -- -- 3,000
Executive Officer 1996 194,454 120,000 -- -- -- 3,000
Alan F. McIlroy............... 1998 191,154 148,000 16,202(4) 6,000(2) -- 10,400
Vice President and 1997 65,856 37,000 39,617(4) 25,000(5) -- --
Chief Financial Officer(3)
Raymond E. Bartholomae........ 1998 173,000 126,000 -- 6,000(2) -- 9,515
Vice President and General
Manager, Symons(6)
Michael C. Deis, Sr........... 1998 146,154 129,000 -- 6,000(2) -- 10,400
Vice President and 1997 105,231 60,000 -- -- -- 3,166
General Manager, 1996 96,200 53,700 -- -- -- 2,016
Dayton/Richmond
James C. Stewart.............. 1998 146,231 110,000 -- 6,000(2) -- 10,400
Vice President, 1997 107,538 60,000 1,600(4) -- -- 3,166
Corporate Development 1996 100,115 55,400 -- -- -- 2,176
</TABLE>
- ---------------
(1) For 1998, consists of our retirement account contributions to the Savings
Plan in the amount of $9,600 for Mr. Ciccarelli and $7,200 for each of the
other named executive officers and our matching sec.401(k) contributions to
the Savings Plan in the amount of $2,315 for Mr. Bartholomae and $3,200 for
each of the other named executive officers. For years prior to 1998,
consists only of our matching sec.401(k) contributions to the Savings Plan.
(2) Options to purchase common shares were granted under the 1996 Stock Option
Plan and the 1997 Stock Option and Restricted Stock Plan at an exercise
price of $16.81 per share, the average of the high and low prices on the
date of the grant. The options have a term of ten years and become
exercisable in three equal annual installments, commencing on the first
anniversary of the date of grant.
(3) Mr. McIlroy was elected as an executive officer on July 17, 1997.
(4) Relocation expense paid by us.
(5) Options to purchase 25,000 Common Shares were granted to Mr. McIlroy in July
1997 under the 1996 Stock Option Plan in connection with his initial
employment. The options have an exercisable price of $12.5625 per share, the
average of the high and low prices on the date of the grant, and a term of
ten years. The options were exercisable on the date of grant with respect to
12,500 shares and became exercisable with respect to an additional 6,250
shares on the first and second anniversaries of the date of grant.
(6) Mr. Bartholomae was elected an executive officer on February 26, 1998
following our acquisition of Symons Corporation in September 1997.
43
<PAGE> 48
FISCAL 1998 STOCK OPTION GRANTS
The stock options granted in 1998 to each of the executive officers named
in the Summary Compensation Table are shown in the following table. This table
also shows the hypothetical gains that would exist for the options at the end of
their ten year terms, assuming compound rates of stock appreciation of 5% and
10%, respectively. The actual future value of the options will depend on the
market value of the common shares.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
----------------------------------------------------------------------
POTENTIAL
REALIZABLE VALUE
AT ASSUMED
NUMBER % OF ANNUAL RATES
OF TOTAL OF STOCK PRICE
SHARES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(3)
OPTIONS EMPLOYEES PRICE EXPIRATION -------------------
NAME GRANTED(#) IN 1998 ($/SH)(2) DATE 5%($) 10%($)
- ------------------------- ---------- ---------- --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
John A. Ciccarelli....... 15,000 20.1% $16.81 2/28/08 $158,576 $401,862
Alan F. McIlroy.......... 6,000 8.1 16.81 2/28/08 63,430 160,745
Raymond E. Bartholomae... 6,000 8.1 16.81 2/28/08 63,430 160,745
Michael C. Deis, Sr...... 6,000 8.1 16.81 2/28/08 63,430 160,745
James C. Stewart......... 6,000 8.1 16.81 2/28/08 63,430 160,745
</TABLE>
- ---------------
(1) The options become exercisable in three equal annual installments,
commencing on February 27, 1999. In the event of a change in control (as
defined in the option plans), the options will become exercisable in full.
(2) The average of the high and low sale prices on the date the option was
granted.
(3) These amounts are calculated in accordance with rules adopted by the SEC
assuming annual compounding at the specified rates over the term of the
options. These amounts are not intended to forecast future appreciation of
the price of the common shares.
FISCAL YEAR-END OPTION VALUES
The number and value of all unexercised options held by each of the
executive officers named in the Summary Compensation Table at December 31, 1998
are shown in the following table. No options were exercised by any of the named
executive officers in 1998.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT 12/31/98(#) AT 12/31/98($)(1)
------------------------- -------------------------
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---------------------------------- ------------------------- -------------------------
<S> <C> <C>
John A. Ciccarelli................ 144,000/15,000 $2,408,160/$36,600
Alan F. McIlroy................... 18,750/12,250 125,391/56,437
Raymond E. Bartholomae............ 0/6,000 0/14,640
Michael C. Deis, Sr............... 18,600/6,000 315,474/14,640
James C. Stewart.................. 18,600/6,000 315,474/14,640
</TABLE>
- ---------------
(1) Represents the excess of the aggregate closing price on December 31, 1998 of
the common shares subject to the options over the aggregate option exercise
price.
44
<PAGE> 49
OWNERSHIP OF COMMON SHARES
DIRECTORS AND EXECUTIVE OFFICERS
The following table shows the common shares beneficially owned by each
director, each executive officer named in the Summary Compensation Table and all
directors and executive officers as a group as of June 30, 1999:
<TABLE>
<CAPTION>
NUMBER OF
COMMON SHARES
BENEFICIALLY OWNED
AS OF % OF
INDIVIDUAL OR GROUP JUNE 30, 1999(1) COMMON SHARES(1)
- ----------------------------------------------- ------------------ ----------------
<S> <C> <C>
William F. Andrews(2).......................... 11,834 *
Raymond E. Bartholomae(3)...................... 4,800 *
John A. Ciccarelli(4).......................... 186,500 3.1%
Timothy C. Collins(5).......................... 51,827 *
Michael C. Deis, Sr.(6)........................ 26,950 *
Matthew O. Diggs, Jr.(7)....................... 139,260 2.3
Daniel W. Duval(8)............................. 5,013 *
Matthew M. Guerreiro(9)........................ 8,095 *
Robert B. Holmes(10)........................... 14,437 *
Alan F. McIlroy(11)............................ 22,150 *
James C. Stewart(12)........................... 26,950 *
Directors and Executive Officers As a Group (17
persons)(13)................................. 590,152 9.5
</TABLE>
- ---------------
* Signifies less than 1%.
(1) Beneficial ownership is determined in accordance with the rules of the SEC
and generally includes sole or shared voting or investment power with
respect to the shares. Includes the number of common shares subject to
outstanding options exercisable within 60 days as of June 30, 1999. Unless
otherwise indicated, voting and investment power are exercised solely by
each individual and/or a member of his household. Based on a total of
5,943,183 common shares outstanding on June 30, 1999.
(2) Includes 6,000 common shares which may be acquired upon the exercise of
stock options.
(3) Includes 2,000 common shares which may be acquired upon the exercise of
stock options.
(4) Includes 149,000 common shares which may be acquired upon the exercise of
stock options.
(5) Includes 48,781 common shares held by the Ripplewood Foundation and 2,000
common shares which may be acquired upon the exercise of stock options.
(6) Includes 20,600 common shares which may be acquired upon the exercise of
stock options.
(7) Includes 125,000 common shares owned by EJJM, an Ohio limited partnership,
a family limited partnership of which Mr. Diggs is a general partner. Also
includes 6,000 common shares which may be acquired upon the exercise of
stock options.
(8) Includes 2,000 common shares which may be acquired upon the exercise of
stock options.
(9) Includes 5,333 common shares which may be acquired upon the exercise of
stock options.
(10) Includes 6,000 common shares which may be acquired upon the exercise of
stock options.
(11) Includes 20,750 common shares which may be acquired upon the exercise of
stock options.
(12) Includes 20,600 common shares which may be acquired upon the exercise of
stock options.
(13) Includes 288,919 common shares which may be acquired by directors and
executive officers upon the exercise of stock options.
45
<PAGE> 50
PRINCIPAL SHAREHOLDERS
The following table shows information about the only shareholders known by
us to be the beneficial owner of more than 5% of the outstanding common shares:
<TABLE>
<CAPTION>
NUMBER OF COMMON
SHARES % OF COMMON
NAME AND ADDRESS BENEFICIALLY OWNED SHARES(1)
- -------------------------------------------- ----------------------- ---------------------
<S> <C> <C>
Skyline Asset Management, L.P.(2)........... 538,800 9.1%
31 South Wacker Drive Suite 450
Chicago, Illinois 60606
FMR Corp.(3)................................ 537,170 9.0
82 Devonshire Street
Boston, Massachusetts 02109
Brinson Partners, Inc.(4)................... 528,100 8.9
UBS AG
209 South LaSalle
Chicago, Illinois 60604-1295
</TABLE>
- ---------------
(1) Based on a total of 5,943,183 common shares outstanding on June 30, 1999.
(2) As reported in an Amendment to Schedule 13G dated February 16, 1999 filed
with the SEC by Skyline Asset Management, L.P., a registered investment
adviser, with respect to common shares held by its clients. Skyline Asset
Management, L.P. reported shared voting and dispositive power with respect
to 538,800 common shares.
(3) As reported in Amendment No. 2 to Schedule 13G dated April 10, 1999 filed
with the SEC jointly by FMR Corp., Edward C. Johnson 3d, Abigail P. Johnson,
Fidelity Management & Research Company and Fidelity Mid Cap Stock Fund with
respect to 325,270 common shares as to which Fidelity Management & Research
Company, a registered investment adviser and wholly-owned subsidiary of FMR
Corp., has sole dispositive power as a result of acting as investment
adviser to various registered investment companies (including Fidelity Mid
Cap Stock Fund, which reported holding 256,700 common shares) and with
respect to 211,900 common shares beneficially owned by Fidelity Management
Trust Company, a wholly-owned subsidiary of FMR Corp., as a result of acting
as investment manager of certain institutional accounts, as to which
Fidelity Management Trust Company, Edward C. Johnson 3d and FMR Corp.
reported sole dispositive power and, with respect to 98,600 of those shares,
sole voting power.
(4) As reported in Amendment No. 2 to Schedule 13G dated February 3, 1999 filed
with the SEC jointly by Brinson Partners, Inc. and UBS AG (Bahnhofstrasse
45, 8021, Zurich, Switzerland) with respect to 528,100 common shares held by
Brinson Partners, Inc., a registered investment advisor. Brinson Partners,
Inc. is an indirect wholly-owned subsidiary of UBS AG, a bank. They reported
shared voting and dispositive power with respect to all 528,100 common
shares.
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THE TRUST
The Dayton Superior Capital Trust is a statutory business trust that we
have formed under Delaware law by filing a certificate of trust with the
Delaware Secretary of State and executing a trust agreement. The trust will be
governed by an amended trust agreement to be signed by us as depositor, by
Firstar Bank, N.A., as property trustee, by Mark A. Ferrucci, as Delaware
trustee, and by three of our officers or employees as administrative trustees.
The trust agreement, indenture and guarantee will each be qualified under the
Trust Indenture Act. The trust has a term of 45 years, but may dissolve earlier
as provided in the trust agreement.
THE ISSUANCE AND SALE OF THE TRUST SECURITIES
We have created the trust solely to:
- issue and sell its preferred securities and common securities, which
represent proportionate beneficial ownership interests in the trust and
its assets;
- use the proceeds from the sale of the trust securities to buy junior
subordinated debentures from us; and
- engage in only those other activities necessary or convenient to
accomplish the other purposes.
Because the trust's only assets will be the junior subordinated debentures
that we issue to it, our payments on those debentures will be the only source of
funds to be paid to the owners of the trust securities.
We will acquire and own all of the common securities of the trust. The
common securities will have an aggregate liquidation amount of at least 3% of
the total capital of the trust. The remainder, representing up to 97% of the
ownership interests in the trust, will be preferred securities of the trust that
may be sold to the public. The common securities and the preferred securities
will have substantially the same terms, including the same priority of payment,
and will receive proportionate payments from the trust in respect of
distributions and payments upon liquidation, redemption or otherwise at the same
times, with one exception: if we default on the junior subordinated debentures
that we issue to the trust and do not cure the default within the time specified
in the indenture, our rights to receive payments as the holder of the common
securities of the trust will be subordinated to the rights of the holders of the
preferred securities. See "DESCRIPTION OF THE PREFERRED SECURITIES
-- Subordination of Common Securities."
The trust's business and affairs will be conducted by its trustees, whom
we, as holder of the common securities, will appoint. Under the trust agreement,
the trustees for the trust are:
- Firstar Bank, N.A., as the property trustee;
- Mark A. Ferrucci, as the Delaware trustee; and
- Three of our officers or employees, as individual administrative
trustees.
We refer to all of these trustees collectively as the "issuer trustees."
Firstar Bank, N.A., as property trustee, will act as sole indenture trustee
under the trust agreement for purposes of compliance with the Trust Indenture
Act. Firstar Bank, N.A. also will act as guarantee trustee under our guarantee
agreement relating to the preferred securities. See "DESCRIPTION OF THE
GUARANTEE" and "DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES."
The property trustee will hold title to the junior subordinated debentures
for the benefit of the trust and the holders of the preferred securities and
common securities, and will have the power to exercise all of the rights, powers
and privileges as the holder of the debentures. In addition, the property
trustee will maintain exclusive control of a segregated non-interest bearing
bank account to hold all payments made by us in respect of the debentures. The
property trustee will make all payments to the holders of the
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preferred securities and the common securities out of funds from this bank
account. The guarantee trustee will hold the guarantee for the benefit of the
holders of the preferred securities.
As the holder of the common securities of the trust, we ordinarily will
have the right to appoint, remove or replace the property trustee or the
Delaware trustee. However, if we are in default with respect to the junior
subordinated debentures issued to the trust and we haven't cured that default
within the time specified in the indenture, then the holders of a majority in
liquidation amount of the trust's outstanding preferred securities will be
entitled to appoint, remove or replace the property trustee and/or the Delaware
trustee. In no event will the holders of the preferred securities have the right
to vote to appoint, remove or replace the administrative trustees; we retain
that right exclusively as the holder of the common securities. The duties and
obligations of each issuer trustee are governed by the trust agreement.
Under the indenture and the trust agreement, we promise to pay all fees and
expenses related to the trust and the offering of the preferred securities. We
also will pay, directly or indirectly, all ongoing costs, expenses and
liabilities of the trust, except obligations under the preferred securities and
the common securities.
The trust has no separate financial statements. Separate financial
statements would not be material to holders of the preferred securities because
the trust has no independent operations. It exists solely for the limited
functions summarized above.
The principal executive office of the trust is c/o Dayton Superior
Corporation, 7777 Washington Village Drive, Suite 130, Dayton, Ohio 45459, and
its telephone number is (937) 428-6360.
DESCRIPTION OF THE PREFERRED SECURITIES
Under the terms of the trust agreement, the issuer trustees are authorized
to issue preferred securities and common securities on behalf of the trust. We
have summarized selected provisions of the preferred securities and the trust
agreement below. Because this is a summary, it does not contain all information
you should consider. The form of trust agreement has been filed as an exhibit to
the registration statement of which this prospectus forms a part. You should
read the form of trust agreement for provisions that may be important to you.
You should also consider applicable provisions of the Trust Indenture Act.
GENERAL
The preferred securities will represent undivided preferred beneficial
ownership interests in the assets of the trust. The common securities will
represent undivided common beneficial ownership interests in the assets of the
trust. The preferred securities of the trust will rank equally, and payments on
the preferred securities will be made pro rata, with the common securities of
the trust, except that the holders of the preferred securities will be entitled
to a preference over holders of the common securities of the trust in the
circumstances described below under "Subordination of Common Securities."
Holders of preferred securities also will have the other benefits described in
the trust agreement.
DISTRIBUTIONS
Distributions on each preferred security will be payable at the annual rate
of % of the liquidation preference of $25 per preferred security.
Distributions will be cumulative and will accumulate from the date of original
issuance. Except as set forth below, the property trustee will make payments
quarterly in arrears on September 30, December 31, March 31 and June 30 of each
year to holders of record on the applicable record date, commencing on
, 1999. The amount of distributions payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months.
The funds of the trust available for distribution to the holders of the
preferred securities are limited to payments made under the junior subordinated
debentures by us to the trust. The debentures will be the
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only assets of the trust. Therefore, if we do not make interest payments under
the debentures, the property trustee will not have funds available to pay
distributions on the preferred securities. We have guaranteed the payment of
distributions on the preferred securities on a limited basis, but only if and to
the extent the trust has funds legally available for the payment of
distributions. See "DESCRIPTION OF THE GUARANTEE."
If any date on which distributions are payable on the preferred securities
is not a business day, then the distributions will be payable on the next
succeeding business day. No additional distributions or other payments will
accrue because of the delay in the payment date. For this purpose, a business
day is any day that is not a Saturday, a Sunday, a day on which banking
institutions in New York City may legally close, or a day on which the corporate
trust office of the property trustee or debenture trustee is closed for
business.
The record date for each distribution will be 15 days prior to the
distribution date. Distributions on the preferred securities will be payable to
the holders as they appear on the register of the trust on the relevant record
dates. As long as the preferred securities remain in book entry form, subject to
any applicable laws and regulations and to the provisions of the trust
agreement, each distribution payment will be made as described under "BOOK-ENTRY
ISSUANCE."
DEFERRAL OF DISTRIBUTIONS
If we are not in default under the terms of the junior subordinated
debentures, we have the right to defer the payment of interest on the debentures
at any time or times for periods of up to 20 consecutive quarters each; however,
we may not defer the payment of interest beyond the stated maturity date of the
debentures. We may exercise this deferral right on multiple occasions during the
term of the debentures. If we defer the payment of interest on the junior
subordinated debentures, the quarterly distributions to the holders of the
preferred securities will be deferred by the trust for the same period.
Additional distributions will accumulate on any unpaid distributions to which
the holders of the preferred securities are entitled at the rate of % per
annum, compounded quarterly from the relevant payment date of the unpaid
distribution. References in this prospectus to distributions on preferred
securities include any additional distributions which may accumulate on any
unpaid distributions, unless otherwise stated in this prospectus.
During any period in which we elect not to pay interest on the junior
subordinated debentures, we may not, and our subsidiaries may not, take any of
the following actions:
- declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of our
capital shares, or
- make any payment of principal, interest or premium, if any, on, or repay,
repurchase or redeem any of our debt that ranks equal to or junior to the
junior subordinated debentures,
other than:
- any dividend, redemption, liquidation, interest, principal or guarantee
payment, if the payment is made by way of securities that rank equal to
or junior to the securities on which the payment is being made,
- redemptions or purchases of any rights pursuant to a stockholder rights
agreement and the declaration of a dividend of the rights or the issuance
of preferred shares under the stockholder rights agreement in the future,
- any payment under the guarantee relating to the preferred securities of
the trust,
- purchases of common shares related to the issuance of common shares under
any of our benefit plans for our directors, officers or employees,
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- reclassifications of our capital shares, or exchanges or conversions of
one series or class of our capital shares for another series or class of
our capital shares, and
- purchases of fractional interests in our capital shares pursuant to the
conversion or exchange provisions of the capital shares or the security
being converted or exchanged.
We have no current intention to exercise our right to defer payments of
interest under the junior subordinated debentures.
CONVERSION RIGHTS -- GENERALLY
The holders of the preferred securities may convert their securities into
our common shares at any time in the manner described below at the conversion
price of 0. common shares for each preferred security, subject to
adjustment as described under "Conversion Price Adjustments." This equates to an
initial conversion price of $ per common share. We will not issue fractional
common shares as a result of conversion, but rather will pay cash in lieu of any
fractional share interest.
A holder of preferred securities who desires to convert preferred
securities should contact the property trustee, as conversion agent, to obtain
the required form of conversion notice. If the book-entry system for the
preferred securities is no longer in effect, the holder will surrender the
certificates representing the preferred securities to the conversion agent,
along with an irrevocable conversion notice. The conversion agent will then
exchange the holder's preferred securities for a portion of the junior
subordinated debentures, and immediately convert those debentures into our
common shares.
When we deliver the fixed number of common shares into which the junior
subordinated debentures are convertible, together with any cash payment made in
lieu of payment of a fractional share, we will have no further obligation to pay
the principal amount at maturity of the debentures that were converted or to pay
any interest that had accrued on those debentures at the time of conversion.
The trust will not pay accrued distributions on preferred securities that
are converted, unless the conversion occurs during the period between the record
date for the payment of a distribution and the corresponding distribution
payment date. Each conversion will be effective as of the end of the day before
the day on which the conversion agent receives the notice of conversion.
Common shares issued upon conversion of the preferred securities will be
validly issued, fully paid and non-assessable.
CONVERSION PRICE ADJUSTMENTS
General
The conversion price of the preferred securities will be adjusted, without
duplication, upon the happening of the following events:
- the payment of dividends and other distributions payable exclusively in
common shares on common shares.
- the issuance to all holders of common shares of rights or warrants
entitling holders of those rights or warrants to subscribe for or
purchase common shares for a period not exceeding 45 days at less than
the then current market price of the common shares.
- subdivisions and combinations of common shares.
- the payment of dividends and other distributions to all holders of common
shares consisting of evidences of our indebtedness, securities or capital
stock, cash or assets, except for those rights or warrants referred to in
the second bullet clause above and dividends and distributions paid
exclusively in cash.
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- payment in respect of a tender or exchange offer, other than an odd-lot
offer, by us or any of our subsidiaries for common shares at a price per
share in excess of 110% of the current market price of a common share on
the trading day next succeeding the last date tenders or exchanges may be
made pursuant to the tender or exchange offer. In this case, the
adjustment is limited, in respect of the excess over current market
price, to the amount in excess of 110% of the current market price.
- the payment of dividends and other distributions on common shares paid
exclusively in cash, excluding:
- cash dividends that do not exceed the per share amount of the
immediately preceding regular cash dividend, as adjusted to reflect any
of the events described above; and
- cash dividends if the annualized per share amount of the dividends does
not exceed 12.5% of the last sale price of a common share, as reported
on the New York Stock Exchange consolidated transactions tape, on the
trading day immediately preceding the date of declaration of the
dividend. In this case, an adjustment will be made for the amount in
excess of 12.5% of the current market price of a common share.
We may reduce the conversion price of the debentures, and thus the
conversion price of the preferred securities, at any time by any amount we
select and for any period of at least 30 days. We may exercise this right by
giving at least 15 days' notice of the reduction. We may also, at our option,
make other reductions in the conversion price, if our Board of Directors deems
those reductions to be advisable to avoid or diminish any income tax to our
shareholders resulting from any dividend or distribution of shares, or rights to
acquire shares, or from any event treated similarly for federal income tax
purposes. See "UNITED STATES TAXATION -- Adjustment of Conversion Price."
The conversion price will not be adjusted in the case of the issuance of
any of our common shares, or securities convertible into common shares, except
as specifically described above. If any action would require adjustment of the
conversion price pursuant to more than one of the anti-dilution provisions
described in the bullet points above, only one adjustment will be made. It will
be the adjustment that has the highest absolute value to the holders of the
preferred securities. In addition, no adjustment in the conversion price will be
required unless the adjustment would require an increase or decrease of at least
1% of the conversion price. If the adjustment is not made because the adjustment
does not change the conversion price by more than 1%, then the adjustment that
is not made will be carried forward and taken into account in any future
adjustment.
As used above, "current market price" of a common share for any day means
the last reported sale price on that day, or if no sale takes place on that day,
the average of the reported closing bid and asked prices on that day, as
reported on the New York Stock Exchange consolidated transactions tape. If our
common shares are not listed or admitted to trading on the New York Stock
Exchange on that day, then the current market price will be determined based on
the alternative exchanges or systems set forth in the trust agreement.
Merger, Consolidation or Sale of Our Assets
If we are a party to a transaction which results in our common shares being
converted into the right to receive, or being exchanged for, securities, cash or
other property of a third party, the conversion price may be adjusted as
described below. Examples of a transactions which may result in an adjustment to
the conversion price include:
- a merger,
- a consolidation,
- a sale of all or substantially all of our assets,
- a recapitalization or reclassification of our common shares, except for
changes relating to par value or occurring as a result of a subdivision
or combination of common shares, or
- any compulsory share exchange,
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The holders of preferred securities will have no voting rights with respect
to any of these transactions.
Transactions Affecting All or Substantially All of Our Common Shares
-- Over 50% Consideration Paid in Stock
If all or substantially all of our common shares are exchanged for,
converted into or acquired for securities, cash or other property in a
transaction in which more than 50% of the value of the consideration received by
our shareholders consists of common stock of another corporation that has been
admitted for listing on a national securities exchange or quoted on the Nasdaq
National Market, then each preferred security will thereafter be convertible
into common stock of the kind received by our shareholders in the transaction.
For this to be applicable, the common stock received by our shareholders must
have been admitted for listing or admitted for listing subject to notice of
issuance on the exchange or Nasdaq for each of the ten consecutive trading days
prior to the record date for the determination of our shareholders entitled to
receive consideration in the transaction. In addition, one of the following also
must be true:
- we continue to exist after the transaction closes and the outstanding
preferred securities of the trust continue to exist as outstanding
preferred securities; or
- on or before the closing of the transaction, the outstanding preferred
securities are converted into or exchanged for shares of convertible
preferred stock of an entity succeeding to our business or the business
of one of our subsidiaries, and that convertible preferred stock has
powers, preferences and relative rights and limitations substantially
similar to those of the preferred securities.
If the transaction meets the requirements described above, the conversion
price of the preferred securities in effect immediately prior to the transaction
will be adjusted immediately after the closing of the transaction by multiplying
the current conversion price by a fraction. The numerator of the fraction will
be the average of the closing prices for the common stock received from the
third party in the transaction for the ten consecutive trading days prior to and
including the record date for the determination of our shareholders entitled to
receive consideration in the transaction, as adjusted by us in good faith to
appropriately reflect any of the events referred to in the six bullet points
appearing under "Conversion Price Adjustments -- General." The denominator will
be the average of the closing prices for our common shares during the ten
trading days prior to the record date for the determination of our shareholders
entitled to receive consideration in the transaction. The term "closing price"
means on any day the last reported sale price on that day or in case no sale
takes place on that day, the average of the reported closing bid and asked
prices, in each case on the New York Stock Exchange consolidated transactions
tape, or if the stock is not listed or admitted to trading on the New York Stock
Exchange, then on the alternative exchanges or systems set forth in the trust
agreement.
If the transaction meets the requirements described above, but:
- the consideration received by our shareholders was paid entirely in
common stock of the third party, except for any cash payment for
fractional share interests, and
- all of our outstanding common shares were exchanged for, converted into
or acquired in the transaction, except for cash payment for fractional
share interests,
then the conversion price of the preferred securities will be adjusted by
using a different fraction than the one set forth above. In this case, the
conversion price will be multiplied by a fraction in which the numerator is one,
and the denominator is the number of shares of common stock of the third party
received by our shareholders for each one of our shares that they owned.
Transactions Affecting All or Substantially All of Our Common Shares
-- Other Consideration
In all other transactions in which all or substantially all of our common
shares are exchanged for, converted into or acquired for securities, cash or
other property, then each preferred security will
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thereafter be convertible into the kind of consideration received by our
shareholders in the transaction. In this case, the conversion price of the
preferred securities will be adjusted immediately after the transaction, but
only if the calculation set forth below results in a lower conversion price than
the one in effect immediately prior to the closing of the transaction:
Step One: If the only consideration received by our shareholders in the
transaction was cash, determine which is greater:
- the amount of cash received by our shareholders for one common share, and
- $ , as this number may be adjusted from time to time.
Alternative Step One: If the consideration received by our shareholders in
the transaction was not entirely cash, determine which is greater:
- the average of the closing prices for our common shares during the ten
trading days prior to the record date for the determination of our
shareholders entitled to receive consideration in the transaction, and
- $ , as this number may be adjusted from time to time.
Step Two: If the closing date of the transaction was after ,
add the amount of (a) the redemption price for one preferred security,
assuming that the redemption date was on the closing date of the
transaction, plus (b) the then-accrued and unpaid distributions on one
preferred security.
Alternative Step Two: If the closing date of the transaction was during the
period commencing on the first date of issuance of the preferred securities
through , or in the 12-month period commencing
, or in the 12-month period commencing , then
multiply %, % or %, respectively, by $25. Then add (a) the
result of this multiplication, plus (b) the amount of any then-accrued and
unpaid distributions on one preferred security.
Step Three: Multiply the number determined in Step One or Alternative Step
One by a fraction. The numerator of the fraction is $25. The denominator of
the fraction is the amount determined in Step Two or Alternative Step Two.
The conversion price of the preferred securities following any transaction
described above will be the lower of:
- the conversion price in effect immediately prior to the closing of the
transaction, but after giving effect to any other prior adjustments, and
- the conversion price resulting from the three-step calculation set forth
above.
The number that is referenced as the second bullet point in each of Step
One and Alternative Step One above is an amount equal to 66 2/3% of the reported
last sales price of a common share on the New York Stock Exchange consolidated
transactions tape on , 1999. That number will be adjusted any time
the conversion price of the preferred securities is adjusted, unless the
conversion price adjustment occurs as a result of the above three-step
calculation, so that the ratio of this number to the conversion price, after
giving effect to the adjustment, will always be the same as the original ratio
of the initial number to the initial conversion price.
If, with respect to any adjustment to the conversion price, reference is
made to the record date for the determination of our shareholders entitled to
receive consideration in the transaction, and no record date exists, then the
relevant date will be the date upon which our shareholders became entitled to
receive the consideration.
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Transactions Affecting Less Than Substantially All of Our Common Shares
In all other transactions in which some, but not all or substantially all,
of our common shares are converted into the right to receive, or are exchanged
for, securities, cash or other property of a third party, then each preferred
security thereafter will be convertible into the kind and amount of securities,
cash or other property received by a shareholder of that number of common shares
into which a preferred security was convertible immediately prior to the closing
of the transaction.
TAX EVENT EXCHANGE OR REDEMPTION
If a tax event, as described below, occurs, we may:
- redeem the preferred securities;
- pay additional sums for distribution to the holders of preferred
securities; or
- take no action and thereby allow the preferred securities to be exchanged
for junior subordinated debentures.
If a tax event occurs and is continuing, we will have the right, upon not
less than 30 nor more than 60 days' notice, to redeem all or a portion of the
junior subordinated debentures for cash upon the later of (a) 90 days following
the occurrence of the tax event, or (b) . Following the
redemption, the trust will redeem preferred securities and common securities
with an aggregate liquidation preference equal to the aggregate principal amount
of the debentures that are being redeemed, at the liquidation preference of the
securities, plus accrued and unpaid distributions on those securities to the
redemption date. The common securities will be redeemed on a pro rata basis with
the preferred securities, except that if an event of default under the trust
agreement has occurred and is continuing, the preferred securities will have
priority over the common securities in the redemption.
If a tax event occurs and is continuing, we will also have the right to
elect to pay whatever additional amounts as are necessary in order that the
amount of distributions then due and payable by the trust to the holders of the
preferred securities and the common securities are not reduced as a result of
any additional taxes, duties and other governmental charges to which the trust
has become subject to as a result of a tax event. We may exercise this right
with respect to all or a portion of the outstanding preferred securities.
If we do not exercise our redemption right or our right to pay additional
sums as described above with respect to any or all of the preferred securities,
the property trustee will direct the conversion agent to exchange those
outstanding preferred securities to which we have not exercised either of our
rights for junior subordinated debentures.
A "tax event" occurs if the property trustee, on behalf of the trust,
receives an opinion of counsel stating that there is more than an insubstantial
risk that after the date of the opinion one of the following will occur:
- the trust is, or will be within 90 days after the date of the opinion,
subject to United States federal income tax with respect to income
received or accrued on the junior subordinated debentures;
- interest payable by us on the junior subordinated debentures is not, or
within 90 days after the date of the opinion will not be, deductible by
us, in whole or in part, for federal income tax purposes; or
- the trust is, or will be within 90 days after the date of the opinion,
subject to more than a de minimis amount of other taxes, duties or other
governmental charges.
Additionally, in order for any of the above to constitute a tax event, the
event must have occurred as a result of any amendment or change in the tax laws
or regulations of the United States, tax laws or regulations of any political
subdivision or taxing authority in the United States, or any official
administrative pronouncement or judicial decision interpreting or applying those
laws or regulations, which does
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not pertain to the use of the proceeds from the issuance of the junior
subordinated debentures. The change or amendment also must be effective, or the
pronouncement or decision must be announced, on or after the date that the
preferred securities are originally issued. Finally, in order for any of the
above to constitute a tax event, the opinion of counsel must be given by a firm
having a national tax and securities practice, who has not rescinded its
opinion.
INVESTMENT COMPANY EVENT EXCHANGE
If an investment company event occurs, as described below, the property
trustee will direct the conversion agent to exchange all outstanding preferred
securities for junior subordinated debentures. An "investment company event"
occurs if the property trustee, on behalf of the trust, receives an opinion of
counsel to the effect that, as a result of a change in law or regulation or a
change in interpretation or application of law or regulation by any legislative
body, court, governmental agency or regulatory authority, there is more than an
insubstantial risk that the trust is or will be considered an "investment
company" that is required to be registered under the Investment Company Act of
1940, as amended. In order to be an investment company event, the change must be
effective on or after the date of original issuance of the preferred securities,
and the opinion of counsel must be given by a firm having a national tax and
securities practice.
The trust agreement provides that the holders of preferred securities, by
purchasing the securities, will be deemed to have agreed to be bound by these
provisions and those described in "Tax Event Exchange or Redemption" regarding
the exchange of preferred securities for junior subordinated debentures.
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES
We will have the right to terminate the trust at any time and, after
satisfaction of the liabilities of creditors of the trust as provided by
applicable law, cause the junior subordinated debentures to be distributed to
the holders of the preferred securities in liquidation of the trust. Under
current United States federal income tax law and its interpretations and
assuming, as expected, that the trust is not treated as an association taxable
as a corporation for United States federal income tax purposes, a distribution
of the debentures will not be a taxable event to the trust and holders of the
preferred securities. Should there be a change in law, a change in legal
interpretation, a tax event or an investment company event or other
circumstances, however, the distribution could be a taxable event to holders of
the preferred securities. See "UNITED STATES TAXATION -- Redemption of Preferred
Securities for Junior Subordinated Debentures or Cash."
After the liquidation date fixed for any distribution of junior
subordinated debentures for preferred securities:
- the preferred securities will no longer be deemed to be outstanding,
- DTC or its nominee, as the record holder of the preferred securities,
will receive a registered global certificate or certificates representing
the junior subordinated debentures to be delivered upon the distribution,
and
- any certificates representing the preferred securities not held by DTC or
its nominee will be deemed to represent the junior subordinated
debentures having a principal amount equal to the liquidation preference
of those preferred securities, and bearing accrued and unpaid interest in
an amount equal to the accrued and unpaid distributions on those
preferred securities until the certificates are presented to the property
trustee for transfer or reissuance.
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OPTIONAL REDEMPTION
The preferred securities may not be redeemed by the trust prior to
, 2002, except as described below and as provided under "Tax
Event Exchange or Redemption" above and under "Mandatory Redemption" below.
On and after , 2002, the preferred securities are subject to
redemption, in whole or in part, at a fixed percentage of the liquidation
preference of the preferred securities, plus accrued and unpaid distributions,
if any, to the date fixed for redemption. If the preferred securities are
redeemed during the 12-month period commencing in each of the
following years indicated, the fixed percentage of the liquidation preference
will be as set forth below in the "Redemption Price" column:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
- ------------------------ ----------------
<S> <C>
2002.................... %
2003....................
2004....................
2005....................
2006....................
2007....................
2008....................
2009 and thereafter..... 100.000
</TABLE>
The trust also may redeem the preferred securities, in whole or in part, on
or after , 2001 and prior to 2002, at a redemption price of
, plus accrued and unpaid distributions, if any, to the date fixed for
redemption if the closing price of our common shares has exceeded 150% of the
conversion price then in effect for at least 20 trading days within a period of
30 consecutive trading days ending not more than five trading days prior to the
date of mailing of the notice of redemption.
The trust may not redeem less than all of the outstanding preferred
securities unless all accrued and unpaid distributions have been paid in full on
all outstanding preferred securities for all quarterly distribution periods
terminating on or prior to the redemption date.
MANDATORY REDEMPTION
The junior subordinated debentures will be redeemed by us in their entirety
upon repayment of the indebtedness represented by the debentures at maturity or
as a result of the acceleration of the debentures. The proceeds from our
repayment will be applied to redeem preferred securities and common securities
having an aggregate liquidation preference equal to the aggregate principal
amount of debentures so repaid or redeemed at a redemption price equal to the
respective liquidation preference of the preferred securities and common
securities or, in the case of a redemption of the debentures, at the redemption
price paid with respect to the debentures, as described below, together with
accrued and unpaid distributions on the preferred securities and common
securities to the date of redemption. If the indebtedness under the junior
subordinated debentures is accelerated, the preferred securities will be
redeemed only when repayment of the junior subordinated debentures actually has
been received by the trust.
REDEMPTION PROCEDURES
Any preferred securities that are redeemed will receive the redemption
price from the contemporaneous redemption of the junior subordinated debentures.
Redemptions of the preferred securities will be made and the redemption price
will be payable on the redemption date only to the extent that the trust has
funds on hand available for the payment of the redemption price. See
"Distributions."
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The property trustee will mail to each record holder of preferred
securities that are being redeemed an irrevocable notice of any optional or
mandatory redemption at least 30 but not more than 60 days prior to the
redemption date. If the property trustee gives a notice of redemption, then, by
12:00 noon New York City time on the redemption date, to the extent funds are
available, the property trustee will deposit irrevocably with DTC or the
conversion agent, as the case may be, funds sufficient to pay the applicable
redemption price and will give DTC or the conversion agent, as the case may be,
irrevocable instructions and authority to pay the redemption price to the
holders of the preferred securities being redeemed. See "BOOK-ENTRY ISSUANCE."
If the preferred securities are no longer in book-entry form, the property
trustee, to the extent funds are available, will irrevocably deposit with the
paying agent for the preferred securities funds sufficient to pay the applicable
redemption price and will give the paying agent irrevocable instructions and
authority to pay the redemption price to the holders upon surrender of their
certificates evidencing the preferred securities.
Distributions payable on or prior to the redemption date for any preferred
securities called for redemption will be paid to the holders of the preferred
securities as of the relevant record dates for the related distribution dates.
If a notice of redemption has been given and funds deposited as required, all
rights of the holders of the preferred securities called for redemption will
cease, except the right to receive the redemption price, but without interest on
the redemption price, and those preferred securities will cease to be
outstanding.
In the event that any redemption date is not a business day, then payment
of the redemption price will be made on the next succeeding day that is a
business day (and without any interest or other payment in respect of any such
delay). However, if the next business day falls in the next calendar year, the
redemption price will be payable on the immediately preceding business day. In
the event that payment of the redemption price is improperly withheld or refused
and not paid either by the trust or by us pursuant to our guarantee as described
under "DESCRIPTION OF THE GUARANTEE," then:
- distributions on the preferred securities will continue to accrue at the
then applicable rate, from the redemption date originally established by
the trust for those preferred securities to the date the redemption price
is actually paid, and
- the actual payment date will be the date fixed for redemption for
purposes of calculating the redemption price.
Subject to applicable law, which includes United States federal securities
law, we or our subsidiaries may at any time and from time to time purchase
outstanding preferred securities by tender, in the open market or by private
agreement.
Payment of the redemption price and any distribution or exchange of junior
subordinated debentures will be made to the record holders as they appear on the
register for the preferred securities on the relevant record date. The record
date will be the 15th day prior to the redemption date or liquidation date, as
applicable.
If less than all of the outstanding preferred securities and common
securities are to be redeemed on a redemption date, then the aggregate
liquidation preference of the preferred securities and common securities to be
redeemed shall be allocated pro rata among the preferred securities and the
common securities based on the relative liquidation amounts of the two classes.
The property trustee will select the particular preferred securities to be
redeemed not more than 60 days prior to the redemption date from the outstanding
preferred securities not previously called for redemption, by lot or by another
method that the property trustee determines is fair and appropriate and which
may provide for the selection for redemption of portions (equal to $25 or an
integral multiple of $25 in excess thereof) of the liquidation preference of the
preferred securities. The property trustee will promptly notify the conversion
agent in writing of the preferred securities selected for redemption and, in the
case of any preferred securities selected for partial redemption, the
liquidation preference of those securities to be redeemed. In the case of
preferred securities held by DTC (or any successor) or its nominee, the
preferred securities to be
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released and the distribution of the proceeds of any redemption will be made in
accordance with the procedures of DTC or its nominee. See "BOOK-ENTRY ISSUANCE."
Unless we default in paying the redemption price, interest will cease to
accrue on the junior subordinated debentures being redeemed on and after the
redemption date.
SUBORDINATION OF COMMON SECURITIES
Payment of distributions on, and the redemption price of, the trust's
preferred securities and common securities generally shall be made pro rata
based on the liquidation amount of the preferred securities and the common
securities. If on any distribution date or redemption date an event of default
exists under the trust agreement, then:
- the trust will not pay any distribution on, or redemption price of, any
of the trust's common securities, and the trust will not make any other
payment on account of the redemption, liquidation or other acquisition of
its common securities, unless
- all accumulated and unpaid distributions on all of the trust's
outstanding preferred securities are paid in cash for all distribution
periods ending on or prior to any payment on the common securities, or
- in the case of a payment of the redemption price, the full amount of
the redemption price on all of the trust's outstanding preferred
securities then called for redemption shall have been paid or provided
for; and
- all funds available to the property trustee shall first be applied to the
payment in full in cash of all distributions on, or redemption price of,
the preferred securities then due and payable.
If an event of default occurs under the trust agreement, we (as holder of
the trust's common securities) will be deemed to have waived any right to act
with respect to the event of default until the effect of all events of default
with respect to the preferred securities has been cured, waived or otherwise
eliminated. Until any events of default under the trust agreement have been
cured, waived or otherwise eliminated, the property trustee is required to act
solely on behalf of the holders of the preferred securities and not on our
behalf as holder of the common securities, and only the holders of the preferred
securities will have the right to direct the property trustee to act on their
behalf.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
Upon any voluntary or involuntary liquidation, termination, dissolution or
winding up of the trust, the holders of the preferred securities will be
entitled to receive out of the assets of the trust, after all liabilities of the
trust to its creditors are satisfied:
- distributions in an amount equal to the aggregate of the stated
liquidation preference of $25 per preferred security, plus accrued and
unpaid distributions on the preferred securities to the date of payment,
or
- distributions of junior subordinated debentures on a pro rata basis in
exchange for the preferred securities, together with accrued and unpaid
interest equal to accrued and unpaid distributions on the preferred
securities. The debentures distributed will be in an aggregate principal
amount equal to the aggregate stated liquidation preference of, and with
an interest rate identical to the distribution rate of, the preferred
securities.
If the liquidation distribution can be paid only in part because the trust
has insufficient assets available to pay in full the aggregate liquidation
distribution, then the amounts payable directly by the trust on its preferred
securities will be paid on a pro rata basis.
As the holder of the trust's common securities, we will be entitled to
receive distributions upon any liquidation pro rata with the holders of the
preferred securities. However, if an event of default relating to
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<PAGE> 63
the junior subordinated debentures has occurred and is continuing, the preferred
securities will have a priority over the common securities.
The trust automatically will dissolve upon expiration of its term and will
dissolve on the first to occur of:
- specified events relating to our bankruptcy, dissolution or liquidation;
- our discretionary, written direction to the property trustee to dissolve
the trust and distribute the junior subordinated debentures to the
holders of the preferred securities and common securities;
- the redemption, conversion or exchange of all of the trust's preferred
securities and common securities;
- the entry of an order for the dissolution of the trust by a court of
competent jurisdiction; and
- the occurrence of a tax event or investment company event, except in the
case of a tax event after which we elect to pay additional amounts to the
holders of the preferred securities, as described in "Tax Event Exchange
or Redemption," and we have not revoked the election or failed to make
the required payments.
EVENTS OF DEFAULT; NOTICE
An event of default under the indenture for the junior subordinated
debentures also is an event of default under the trust agreement. This is true
regardless of the type of default under the indenture. A waiver of an event of
default under the indenture by the property trustee at the direction of the
holders of the preferred securities also is valid as a waiver of the
corresponding event of default under the trust agreement.
Within 60 days after the property trustee learns of a trust agreement event
of default, the property trustee must give notice of that event of default to
the holders of the preferred securities, to the administrative trustees and to
us, unless the event of default has been cured or waived. We and the
administrative trustees are required to file annually with the property trustee
a certificate as to whether or not we each are in compliance with all the
conditions and covenants applicable to us under the trust agreement.
If an event of default exists with respect to the junior subordinated
debentures, the preferred securities will have a preference over the common
securities on termination of the trust as described under "Liquidation
Distribution upon Dissolution" above. The existence of a trust agreement event
of default does not entitle the holders of preferred securities to have their
preferred securities redeemed.
ENFORCEMENT OF RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If a trust agreement event of default exists, the holders of preferred
securities may rely on the property trustee, as holder of the junior
subordinated debentures, to enforce its rights against us. The property trustee
is required to notify each holder of preferred securities whenever the property
trustee receives notice of default with respect to the junior subordinated
debentures, unless the property trustee determines in good faith that
withholding notice is in the best interests of the holders of the preferred
securities or the default has been cured or waived. The holders of a majority in
aggregate liquidation preference of the preferred securities have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the property trustee or to direct the exercise of any trust or
power conferred upon the property trustee under the trust agreement, including
the right to direct the property trustee to exercise the remedies available to
it as a holder of the junior subordinated debentures, unless the property
trustee determines in good faith that withholding notice is in the best
interests of the holders of the preferred securities or the default has been
cured or waived. If the property trustee fails to enforce its rights as holder
of the junior subordinated debentures after it is requested to do so by a holder
of preferred securities, the holder may proceed to enforce his rights directly
against us.
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However, if the trust agreement event of default is attributable to our
failure to pay interest or principal on the junior subordinated debentures on
the date the interest or principal otherwise is payable, or on the redemption
date in the case of redemption, then a holder of preferred securities may
institute action directly against us for enforcement of payment to him of the
principal of or interest on junior subordinated debentures having a principal
amount equal to the aggregate liquidation preference of the holder's preferred
securities on or after the respective due date specified in the debentures. In
connection with this direct action by a holder, we will be subrogated to the
rights of the holder under the trust agreement to the extent of any payment made
by us to the holder in the direct action. The holders of preferred securities
will not be able to exercise directly against us any other remedy available to
the property trustee unless the property trustee first fails to do so.
MERGER OR CONSOLIDATION OF ISSUER TRUSTEES
Any successor to the property trustee, the Delaware trustee or any
administrative trustee by merger, conversion or consolidation or which otherwise
succeeds to that trustee's corporate trust business will take the place of that
trustee under the trust agreement if the successor otherwise is qualified and
eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE TRUST
The trust may not merge, consolidate, amalgamate or be replaced by
transferring or leasing its assets substantially as an entirety except as
described below. The trust may, at our request, with the consent of the
administrative trustees and without the consent of the property trustee, the
Delaware trustee or the holders of the preferred securities, merge with or into,
consolidate, amalgamate, or be replaced by or convey, transfer or lease its
properties and assets substantially as an entirety to a trust organized as such
under the laws of any state if:
- the successor entity either (a) expressly assumes all of the obligations
of the trust with respect to the preferred securities, or (b) substitutes
for the preferred securities other successor securities having
substantially the same terms as the preferred securities so long as the
successor securities rank the same as the preferred securities rank in
priority with respect to distributions and payments upon liquidation,
redemption and otherwise;
- we expressly appoint a trustee of the successor entity possessing the
same powers and duties that the property trustee has as the holder of the
junior subordinated debentures;
- the successor securities are listed on the same national securities
exchange or other organization on which the preferred securities are then
listed, if any;
- the transaction does not adversely affect the rights, preferences and
privileges of the holders of the preferred securities, including any
successor securities, in any material respect;
- the successor entity has a purpose substantially identical to that of the
trust;
- prior to the transaction we receive an opinion from independent counsel
to the trust experienced in such matters to the effect that:
- the transaction does not adversely affect the rights, preferences and
privileges of the holders of the preferred securities, including any
successor securities, in any material respect, other than with respect
to any dilution of the holders' interest in the new entity, and
- following the transaction, neither the trust nor the successor entity
will be required to register as an investment company under the
Investment Company Act;
- following the transaction, the successor entity will be treated as a
grantor trust for United States federal income tax purposes; and
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- we or any permitted successor or assignee owns all of the common
securities of the successor entity and guarantees the obligations of the
successor entity under the successor securities at least to the extent
provided by the guarantee relating to the preferred securities of the
trust.
Notwithstanding the general provisions described above, the trust may not,
except with the consent of holders of 100% in aggregate liquidation amount of
the preferred securities, merge with or into, consolidate, amalgamate, or be
replaced by or convey, transfer or lease its properties and assets substantially
as an entirety to any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it if the transaction would cause the
trust or the successor entity to be classified as other than a grantor trust for
United States federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF THE TRUST AGREEMENT
The holders of the preferred securities have only the voting rights
described below and under "DESCRIPTION OF THE GUARANTEE -- Amendments and
Assignment," plus any voting rights required by law.
We and the issuer trustees may amend the trust agreement from time to time
without the consent of any of the holders of the preferred securities:
- to cure any ambiguity, correct or supplement any provisions in the trust
agreement that may be inconsistent with any other provision, or to
address matters or questions arising under the trust agreement in a way
that is consistent with the other provisions of the trust agreement, in
each case so long as the amendment does not materially adversely affect
the interests of the holders of the trust's securities; or
- to modify, eliminate or add to any provision of the trust agreement if
necessary to ensure that the trust will be classified for United States
federal income tax purposes as a grantor trust at all times that any
preferred securities and common securities are outstanding or to ensure
that the trust will not be required to register as an "investment
company" under the Investment Company Act; or
- to maintain the qualification of the trust agreement under the Trust
Indenture Act.
We and the issuer trustees may amend the trust agreement in other respects
with the consent of holders representing not less than a majority of the
liquidation amounts of the outstanding preferred securities and common
securities acting as a single class. In order to make these amendments, the
issuer trustees must first receive an opinion of counsel experienced in these
matters to the effect that the amendment or the exercise of any power granted to
the issuer trustees in accordance with the amendment will not affect the trust's
status as a grantor trust for United States federal income tax purposes or the
trust's exemption from status as an "investment company" under the Investment
Company Act.
Additionally, without the consent of each holder of preferred securities
and common securities, no amendment may:
- change the amount or timing of any distribution on the preferred
securities and common securities or otherwise adversely affect the amount
of any distribution required to be made in respect of the preferred
securities and common securities as of a specified date; or
- restrict the right of a holder of preferred securities or common
securities to sue for the enforcement of any distribution payment.
If any proposed amendment to the trust agreement provides for, or the
issuer trustees otherwise propose to effect, the dissolution, winding-up or
termination of the trust in a manner that is not permitted by the trust
agreement, then the holders of the then outstanding preferred securities are
entitled to vote as a class on the proposed amendment or proposal. The amendment
or proposal will not be effective except with the approval of the holders of the
majority in aggregate liquidation preference of the preferred securities.
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Any amendment of the trust agreement becomes effective when we give notice
of the amendment to the holders of the preferred securities and common
securities.
The property trustee is required to notify each holder of preferred
securities whenever the property trustee receives notice of a default with
respect to the junior subordinated debentures, unless the property trustee
determines in good faith that withholding notice is in the best interests of the
holders of the preferred securities. The holders of a majority in aggregate
liquidation preference of preferred securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the property trustee or to direct the exercise of any trust or power conferred
upon the property trustee under the trust agreement. This includes the right to
direct the property trustee to exercise the remedies available to it as a holder
of the junior subordinated debentures. If a default occurs while the junior
subordinated debentures are held by the property trustee, the issuer trustees
are not permitted to:
- direct the time, method and place of conducting any proceeding for any
remedy available to the debenture trustee, or execute any trust or power
conferred on the debenture trustee with respect to the junior
subordinated debentures;
- waive any past default that is waivable under the indenture governing the
junior subordinated debentures;
- exercise any right to rescind or annul a declaration that the principal
of all the junior subordinated debentures shall be due and payable; or
- give a required consent to any amendment, modification or termination of
the indenture or the junior subordinated debentures,
unless, in each case, they first obtain the approval of the holders of a
majority in aggregate liquidation amount of all outstanding preferred
securities. In the case of the fourth bullet clause above, when no trust
agreement event of default exists, the holders of the preferred securities and
the common securities, voting together as a single class, must approve. When the
indenture requires the consent of the holders of the junior subordinated
debentures, the property trustee cannot give the consent without first obtaining
the consent of each holder of the preferred securities. The issuer trustees
cannot revoke any action previously authorized or approved by a vote of the
holders of the preferred securities except by subsequent vote of the holders of
the preferred securities.
Any required approval of holders of preferred securities may be given
either at a properly convened meeting of holders of preferred securities or by a
written consent. The property trustee must notify record holders of preferred
securities of any meeting or of any matter upon which written action is
requested.
No vote or consent of the holders of preferred securities is required for
the trust to redeem the preferred securities in accordance with the trust
agreement. Holders of preferred securities have no right to appoint or remove
the issuer trustees.
Whenever holders of preferred securities are entitled to vote or consent
under any of the circumstances described above, neither we nor the issuer
trustees are permitted to vote, and any preferred securities that we or any of
the issuer trustees or any of our affiliates own will be treated as if they were
not outstanding for that purpose.
PAYMENT AND PAYING AGENCY
DTC will make payments on the preferred securities by crediting the
relevant accounts at DTC on the distribution dates. If any preferred securities
are not held by DTC, then the paying agent will mail checks to the registered
holders at their addresses as shown on its register, and the redemption price or
liquidation amount will be paid in immediately available funds when the holder
surrenders the preferred security. The paying agent will initially be the
property trustee and any co-paying agent chosen by the
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property trustee and acceptable to the administrative trustees and to us. The
paying agent can resign upon 30 days' written notice to the property trustee and
to us. If the property trustee resigns as paying agent, the administrative
trustees will appoint a bank or trust company acceptable to the administrative
trustees and to us to act as paying agent.
TRANSFER AGENT, REGISTRAR AND PAYING, CONVERSION AND EXCHANGE AGENT
The property trustee will act as transfer agent, registrar and paying,
conversion and exchange agent for the preferred securities. If the trust issues
certificated preferred securities, they will be registered in the name of the
security holder. The preferred securities may be transferred or exchanged, based
on administrative procedures described in the trust agreement, without the
payment of any service charge (other than any tax or other governmental charge)
by contacting the registrar and transfer agent, Firstar Bank, N.A., Corporate
Trust, 425 Walnut Street, Cincinnati, Ohio 45202. The trust will not register
transfers of the preferred securities after they are called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The property trustee is required to perform only the duties that are
specifically set forth in the trust agreement, other than during the continuance
of a trust agreement event of default. After a trust agreement event of default,
the property trustee is required to exercise the same degree of care and skill
as a prudent person would exercise or use in the conduct of his or her own
affairs. Subject to this provision, the property trustee has no obligation to
exercise any of its powers under the trust agreement at the request of any
holder of preferred securities unless it is offered reasonable indemnity against
the costs, expenses and liabilities that it might incur by doing so. If no trust
agreement event of default exists and the property trustee is required to decide
between alternative courses of action, construe ambiguous provisions in the
trust agreement or is unsure of the application of any provision of the trust
agreement, then we will have the right to tell the property trustee which action
to take unless the matter is one on which holders of preferred securities are
entitled to vote. If we don't give any directions, the property trustee will
take whatever action it deems advisable and in the best interests of the holders
of the preferred securities and common securities. The property trustee will
have no liability except for its own bad faith, negligence or willful
misconduct. We and our subsidiaries may maintain deposit accounts and conduct
other banking and securities transactions and relationships with the property
trustee in the ordinary course of business.
EXPENSES OF THE TRUST
We will pay all of the costs, expenses or liabilities of the trust, other
than obligations of the trust to pay to the holders of any preferred securities
or common securities the amounts due to the holders under the terms of those
securities.
MISCELLANEOUS
The administrative trustees are to operate the trust in such a way that:
- the trust will not be:
- deemed to be an "investment company" required to be registered under
the Investment Company Act; or
- classified as an association taxable as a corporation or partnership
for United States federal income tax purposes; and
- the junior subordinated debentures will be treated as our indebtedness
for United States federal income tax purposes.
We and the administrative trustees are authorized to take any lawful action
consistent with the certificate of trust and the trust agreement that we and the
administrative trustees determine in our discretion to be
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necessary or desirable for these purposes, as long as the action does not
materially and adversely affect the interests of the holders of the preferred
securities.
Holders of the preferred securities have no preemptive or similar rights.
The trust may not borrow money or issue debt or mortgage or pledge any of
its assets.
GOVERNING LAW
The trust agreement and the preferred securities are governed by Delaware
law, excluding Sections 3540 and 3561 of Title 12 of the Delaware Code.
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DESCRIPTION OF THE GUARANTEE
When the trust securities are issued, we will execute and deliver a
guarantee agreement for the benefit of the holders of the preferred securities.
The guarantee agreement will be qualified as an indenture under the Trust
Indenture Act. Firstar Bank, N.A. will act as guarantee trustee under the
guarantee for the purposes of compliance with the Trust Indenture Act, and will
hold the guarantee for the benefit of the holders of the preferred securities.
We have summarized certain provisions of the guarantee below. Because this
is a summary, it does not contain all information you should consider. The form
of the guarantee agreement has been filed as an exhibit to the registration
statement of which this prospectus is a part, and you should read the guarantee
agreement for provisions that may be important to you.
GENERAL
We will promise to make the guarantee payments to the holders of the
preferred securities, as and when due, regardless of any defense, right of
set-off or counterclaim that the trust may have or assert, other than the
defense of payment. The guarantee covers the following payments, to the extent
not paid by or on behalf of the trust:
- any accumulated and unpaid distributions required to be paid on the
preferred securities, but only if and to the extent that the trust has
funds on hand available for the distributions at that time;
- the redemption price of any preferred securities called for redemption,
if and to the extent that the trust has funds on hand available to pay
the redemption price at that time; or
- upon a voluntary or involuntary dissolution, winding up or liquidation of
the trust, unless the junior subordinated debentures are distributed to
the holders of the preferred securities, the lesser of
- the liquidation distribution to the extent that the trust has funds on
hand available to make the distribution; or
- the amount of assets of the trust remaining available for distribution
to holders of preferred securities.
Our obligation to make a guarantee payment may be satisfied either by our
direct payment of the required amounts to the holders of the preferred
securities or by causing the trust to pay them.
The guarantee is an irrevocable guarantee on a subordinated basis of the
trust's obligations under the preferred securities, but applies only to the
extent that the trust has funds sufficient to make the required payments. If we
do not make interest payments on the junior subordinated debentures held by the
trust, the trust will not be able to pay distributions on the preferred
securities. The guarantee is a guarantee of payment, not a guarantee of
collection. This means that the guaranteed party may institute legal proceedings
against us as the guarantor to enforce its rights under the guarantee without
first suing anyone else.
We also have agreed to guarantee the obligations of the trust with respect
to the common securities to the same extent as our guarantee to holders of the
preferred securities. If there is a trust agreement event of default, however,
the holders of preferred securities will have priority over the holders of
common securities as to distributions and payments on liquidation, redemption or
otherwise during the continuance of the default.
Our obligations described in this prospectus under the guarantee agreement,
the trust agreement, the junior subordinated debentures, and the securities
resolution under the indenture, taken together, constitute our full, irrevocable
and unconditional guarantee of payments due on the preferred securities. No
single document standing alone or operating in conjunction with fewer than all
of the other documents constitutes the guarantee. It is only the combined
operation of these documents that has the
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effect of providing a full, irrevocable and unconditional guarantee of the
trust's obligations under the preferred securities. See "THE TRUST,"
"DESCRIPTION OF THE PREFERRED SECURITIES" and "DESCRIPTION OF THE JUNIOR
SUBORDINATED DEBENTURES."
SUBORDINATION OF THE GUARANTEE
The guarantee is an unsecured obligation and will rank subordinate and
junior in right of payment to all of our other liabilities. The guarantee will
rank equal in right of payment with most senior preferred shares, if any, which
we may issue and with any guarantee of any preferred shares of any of our
affiliates that we may enter into.
The guarantee will be held for the benefit of the holders of the preferred
securities, and can be discharged only by payment of the guaranteed payments in
full (to the extent not paid by the trust) or by distribution of the junior
subordinated debentures to the holders of the preferred securities. The
guarantee does not limit the additional debt that we may incur.
AMENDMENTS AND ASSIGNMENT
The guarantee may not be amended without the prior approval of the holders
of not less than a majority of the aggregate liquidation amount of the
outstanding preferred securities, except that no approval is required for
changes that do not adversely affect the rights of the holders of the preferred
securities. The manner of obtaining approval is the same as described under
"DESCRIPTION OF THE PREFERRED SECURITIES -- Voting Rights; Amendment of the
Trust Agreement." All guarantees and agreements contained in the guarantee
agreement will bind our successors, assigns, receivers, trustees and
representatives.
OUR PROMISES
We promise in the guarantee that we will pay all required additional sums
to the trust, if the trust holds all of the junior subordinated debentures, a
tax event exists and we elect to pay additional amounts with respect to the
preferred securities and common securities. This promise is subject to the
subordination provisions described above. For a description of a tax event and
our right to elect to pay additional amounts, see "DESCRIPTION OF THE PREFERRED
SECURITIES -- Tax Event Exchange or Redemption."
We also promise to be bound by a number of restrictions if:
- we actually know of a debenture event of default or an event that, with
notice or time will be a debenture event of default, and we have not
taken reasonable steps to cure that default;
- we are in default in paying any of our obligations under the guarantee;
or
- we have given notice of our election to defer interest payments on the
junior subordinated debentures and we have not rescinded that notice.
The restrictions that will be in effect in the above instances are the same
ones that are described in "DESCRIPTION OF THE PREFERRED
SECURITIES -- Distributions" that will be in effect if we elect to defer
interest payments.
We also promise in the guarantee agreement:
- for so long as preferred securities are outstanding, we will not convert
junior subordinated debentures except pursuant to a notice of conversion
delivered to the conversion agent by a holder of preferred securities;
- to maintain, directly or indirectly, 100% ownership of the common
securities, except that successors described in the indenture are
permitted to succeed to our ownership of the common securities;
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- not to voluntarily terminate, wind-up or liquidate the trust except in
connection with a distribution of the junior subordinated debentures to
the holders of the preferred securities in liquidation of the trust or in
connection with the mergers, consolidations or amalgamations permitted by
the trust agreement;
- to reserve for issuance the number of common shares that would be
required from time to time to be issued upon the conversion of all the
junior subordinated debentures then outstanding;
- to use our reasonable efforts, consistent with the terms of the trust
agreement, to cause the trust to remain classified as a grantor trust and
not as an association taxable as a corporation or a partnership for
United States federal income tax purposes; and
- to deliver common shares upon the conversion of preferred securities by
the holders.
We also promise to honor all obligations described in the guarantee
relating to the conversion or exchange of the preferred securities into or for
common shares or junior subordinated debentures.
EVENTS OF DEFAULT
We will be in default under the guarantee agreement if we don't make
required payments when due or if we fail to perform some other obligation and we
do not cure our failure to perform within 60 days after we receive notice of
that failure. The holders of a majority in aggregate liquidation amount of the
preferred securities have the right:
- to direct the time, method and place of conducting any proceeding for any
remedy available to the guarantee trustee under the guarantee agreement;
- to direct the exercise of any power conferred upon the guarantee trustee
under the guarantee agreement; and
- waive any event of default and its consequences.
If the guarantee trustee fails to enforce the guarantee, any holder of
preferred securities may institute a legal proceeding directly against us to
enforce that holder's rights under the guarantee agreement without first
instituting a legal proceeding against the trust, the guarantee trustee or
anyone else. In addition, any record holder of preferred securities may proceed
directly against us to obtain payment of the guaranteed amounts described under
"General" above without first waiting for the guarantee trustee to enforce the
guarantee and without instituting any legal proceedings against the trust, the
guarantee trustee or anyone else.
As guarantor, we are required to file annually with the guarantee trustee a
certificate stating whether or not we are in compliance with all the conditions
and covenants applicable to us under the guarantee agreement.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The guarantee trustee promises to perform only the duties that are
specifically set forth in the guarantee agreement, unless we are in default in
performing the guarantee. When we are in default under the guarantee, the
guarantee trustee must exercise the same degree of care and skill as a prudent
person would exercise or use in the conduct of his or her own affairs. Subject
to this provision, the guarantee trustee is under no obligation to exercise any
of the powers vested in it by the guarantee agreement at the request of any
holder of preferred securities unless it is offered reasonable indemnity against
the costs, expenses and liabilities that it might incur by doing so.
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TERMINATION OF THE GUARANTEE
The guarantee will terminate upon:
- full payment of the redemption price of the preferred securities,
- full payment of the amounts payable upon liquidation of the trust,
- a distribution of common shares to the holders of preferred securities
upon conversion of their preferred securities, or
- the distribution of junior subordinated debentures to the holders of the
preferred securities in exchange for all of the preferred securities.
The guarantee will continue to be effective or will be reinstated, as the
case may be, if any holder of the preferred securities must ever restore payment
of any sums paid under the preferred securities or the guarantee.
GOVERNING LAW
The guarantee agreement is governed by the laws of Ohio.
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DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES
We will issue the junior subordinated debentures under a Junior Convertible
Subordinated Indenture between us and Firstar Bank, N.A., as debenture trustee.
We have summarized selected provisions of the junior subordinated debentures and
the indenture below. Because this is a summary, it does not contain all
information you should consider. The form of indenture has been filed as an
exhibit to the registration statement of which this prospectus is a part. You
should read the form of indenture for provisions that may be important to you.
GENERAL
The junior subordinated debentures are unsecured and rank junior and
subordinate in right of payment to all of our senior debt, as described below.
The debentures are limited in aggregate principal amount to approximately
$ million, which equals the sum of the aggregate stated liquidation
preference of the preferred securities and the capital contributed by us in
exchange for the common securities; however, we also have granted the
underwriters an option to buy additional preferred securities with an aggregate
stated liquidation preference of up to $ ,000. If the underwriters
exercise any portion of this option, we will issue additional junior
subordinated debentures in a like principal amount. The indenture does not limit
us from incurring or issuing additional debt. See "Subordination." Concurrently
with the issuance of the preferred securities, the trust will invest the
proceeds of the sale of those securities and the consideration paid by us for
the common securities in the junior subordinated debentures.
The junior subordinated debentures are not subject to any sinking fund
provision. The entire principal amount of the debentures matures, and becomes
due and payable, together with any accrued and unpaid interest on the
debentures, on , 2029.
DEFINITION OF SENIOR DEBT
For purposes of the junior subordinated debentures, "senior debt" means the
principal of, and premium, if any, and interest, if any, on the following types
of our debt:
- all of our obligations for borrowed money;
- all of our obligations evidenced by bonds, debentures, notes or other
similar instruments, including obligations incurred in connection with
the acquisition of property, assets or businesses;
- all of our reimbursement obligations with respect to letters of credit,
bankers' acceptances or similar facilities issued for our account;
- all of our obligations issued or assumed as the deferred purchase price
of property or services, except trade accounts payable or accrued
liabilities arising in the ordinary course of business;
- all of our capital lease obligations; and
- all obligations of another person or entity of the nature set forth above
that we have guaranteed or for which we are responsible or liable,
directly or indirectly, as obligor or in any other capacity.
Nevertheless, if the documents that create or evidence any of the foregoing
kinds of debt specifically state that the particular obligation is not superior
in right of payment to the junior subordinated debentures or to other of our
debt that ranks equally with or subordinate to the debentures, then that debt
will not be senior debt. Senior debt can be contingent indebtedness, and it
includes both existing indebtedness and indebtedness that we may incur in the
future.
However, in no event will the following types of debt ever be considered to
be senior debt:
- any of our debt which is without recourse to us when it is incurred and
without respect to any election under Section 1111(b) of the United
States Bankruptcy Code;
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- any debt we owe to our subsidiaries;
- any debt we owe to any of our employees;
- any liability for taxes;
- any debt or other monetary obligations to trade creditors or assumed by
us or any of our subsidiaries in the ordinary course of business in
connection with obtaining goods, materials or services; and
- the junior subordinated debentures issued to the trust.
INTEREST
The junior subordinated debentures bear interest at the annual rate of
% per annum, payable quarterly in arrears on September 30, December 31,
March 31 and June 30 of each year, commencing on , 1999, to the
holders of record at the close of business on the last business day before the
interest payment date. We anticipate that each debenture will be held in the
name of the property trustee in trust for the benefit of the holders of the
preferred securities and the common securities, unless and until the trust is
liquidated. The amount of interest payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months.
If any date on which interest is payable is not a business day, then
payment of the interest payable on that date will be made on the next succeeding
day that is a business day. No additional interest or other payment will accrue
because of this delay in the payment date. Accrued interest that is not paid on
the applicable interest payment date will bear additional interest, to the
extent permitted by law, at the stated rate per annum, compounded quarterly. The
term "interest" includes quarterly interest payments, interest on quarterly
interest payments not paid on the applicable interest payment date, and
additional sums described in "DESCRIPTION OF THE PREFERRED SECURITIES -- Tax
Event Exchange or Redemption," as applicable.
PAYMENT AND PAYING AGENTS
Payments on junior subordinated debentures represented by a global security
will be made to DTC, as the depositary for the debentures. See "BOOK-ENTRY
ISSUANCE." In the event junior subordinated debentures are issued in definitive
form rather than as a global security, principal of and premium, if any, and any
interest on debentures will be payable, the transfer of the debentures will be
registerable, and the debentures will be exchangeable for debentures of other
denominations of a like aggregate principal amount at the corporate office of
the debenture trustee or at the office of any paying agent or paying agents as
we may designate. However, at our option, payment of any interest may be made:
- by check mailed to the holder at the address appearing in the securities
register, or
- by wire transfer to an account maintained by the holder as specified in
the securities register, provided that proper transfer instructions have
been received by the record date.
Payment of any interest on junior subordinated debentures will be made to
the registered holder of the debentures at the close of business on the record
date for such interest, except in the case of defaulted interest. The record
date for the interest payable on any interest payment date will be 15 days prior
to the relevant interest payment date. We may at any time designate additional
paying agents or rescind the designation of any paying agent.
If we have deposited any monies with the debenture trustee or any paying
agent, or if we hold any monies in trust, for payments due and payable on the
junior subordinated debentures and those funds remain unclaimed after two years,
then we may request that those funds be returned to us or we may cease holding
them in trust. In that case, the holder of the debenture may seek payment of the
unpaid amount only from us in the capacity of a general unsecured creditor.
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OPTION TO DEFER PAYMENT OF INTEREST
If we are not in default under the indenture, we have the right to defer
the payment of interest, including any liquidated damages, on the junior
subordinated debentures at any time or times for periods of up to 20 consecutive
quarters each. We may not, however, defer the payment of interest beyond the
stated maturity date of the debentures. We may exercise this deferral right on
multiple occasions during the term of the junior subordinated debentures. To the
extent permitted by law, additional interest will accumulate on any unpaid
interest to which the holder of the debentures is entitled at the stated annual
rate, compounded quarterly from the relevant payment date of the unpaid
interest. At the end of any interest deferral period, we must pay all interest
then accrued and unpaid. During an interest deferral period, the holders of the
debentures, or the holders of preferred securities while the preferred
securities are outstanding, will continue to be required to accrue interest
income for United States federal income tax purposes. See "UNITED STATES
TAXATION -- Interest Income and Original Issue Discount."
We are restricted during any interest deferral period from taking certain
actions. These restrictions are described in "DESCRIPTION OF THE PREFERRED
SECURITIES -- Distributions."
If we intend to defer interest as described above, we will give the
property trustee, the administrative trustees and the debenture trustee notice
of our election to defer interest at least one business day before the earlier
of:
- the record date for distributions on the preferred securities, or if no
preferred securities are outstanding, the record date for the date
interest on the junior subordinated debentures would have been payable
except for the election to defer interest; and
- the date the property trustee is required to give notice of the record
date to the New York Stock Exchange or other applicable self-regulatory
organization or to holders of the preferred securities, or if no
preferred securities are outstanding, the date the debenture trustee is
required to give notice of the record date to the New York Stock Exchange
or other applicable self-regulatory organization or to holders of the
junior subordinated debentures.
The debenture trustee and the property trustee will notify the holders of
the junior subordinated debentures and the preferred securities, respectively,
of our election to defer interest payments.
MANDATORY REDEMPTION
We will redeem the junior subordinated debentures in their entirety upon
repayment of the indebtedness represented by the debentures at maturity or as a
result of acceleration upon the occurrence of an indenture event of default. The
redemption price will equal 100% of the principal amount of the debentures,
together with any accrued and unpaid interest on the debentures. The redemption
payment will be made prior to 12:00 noon, New York City time, on the date of the
repayment or acceleration or at any other time on any earlier date that we and
the holders of the debentures may agree. The debentures are not entitled to the
benefit of any sinking fund or, except as set forth above or as a result of
acceleration, any other provision for mandatory prepayment.
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OPTIONAL REDEMPTION
On and after , 2002, we will have the right, at any time and
from time to time, to redeem all or any part of the junior subordinated
debentures, upon notice given as provided below. If the debentures are redeemed
during the 12-month period commencing in each of the following
years, the redemption price will be as set forth below expressed as a percentage
of the principal amount of the debentures being redeemed, together with any
accrued but unpaid interest on the portion being redeemed:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
- ----------------------------------- -----------------------
<S> <C>
2002............................... %
2003...............................
2004...............................
2005...............................
2006...............................
2007...............................
2008...............................
2009 and thereafter................ 100.000
</TABLE>
We also may redeem the junior subordinated debentures, in whole or in part,
on or after 2001 and prior to 2002, at a
redemption price of , plus accrued and unpaid interest, if any,
to the date fixed for redemption if the closing price of our common shares has
exceeded 150% of the conversion price then in effect for at least 20 trading
days within a period of 30 consecutive trading days ending not more than five
trading days prior to the date of mailing of the notice of redemption.
For so long as the trust holds all the outstanding junior subordinated
debentures, the proceeds of any redemption will be used by the trust to redeem
preferred securities and common securities in accordance with their terms. We
may not redeem the debentures in part unless all accrued and unpaid interest has
been paid in full on all outstanding debentures. We may not, in any case, redeem
the junior subordinated debentures unless all accrued and unpaid interest has
been paid in full on all outstanding debentures through the last interest
payment date prior to and including the date of redemption.
We also will have the right to redeem the junior subordinated debentures
following the occurrence of a tax event, as described in "DESCRIPTION OF THE
PREFERRED SECURITIES -- Tax Event Exchange or Redemption," at a redemption price
equal to the principal amount of the debentures, plus any accrued and unpaid
interest.
REDEMPTION PROCEDURES
Notice of a redemption of the junior subordinated debentures and the
procedures for the redemption will be as provided with respect to the preferred
securities under "DESCRIPTION OF THE PREFERRED SECURITIES -- Redemption
Procedures." We will mail notice of a redemption at least 30 days but not more
than 60 days before the redemption date to each holder of junior subordinated
debentures to be redeemed at its registered address. Unless we fail to pay the
redemption price, interest will cease to accrue on the debentures called for
redemption on and after the redemption date.
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES
We have the right to terminate the trust at any time and cause the junior
subordinated debentures to be distributed to the holders of the preferred
securities after all liabilities to creditors of the trust are satisfied as
provided by applicable law. If the junior subordinated debentures are
distributed to the holders of preferred securities in liquidation of the trust,
including a dissolution and liquidation following a tax event or investment
company event, the debentures will be issued in the form of one or more
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global securities and DTC, or the successor depositary for the preferred
securities, will act as depository for the debentures. We anticipate that the
depositary arrangements for the debentures will be substantially the same as
those for the preferred securities. For a description of DTC and the terms of
the depositary matters, see "BOOK-ENTRY ISSUANCE."
CONVERSION OF THE JUNIOR SUBORDINATED DEBENTURES
The junior subordinated debentures are convertible at the option of the
holders into our common shares at any time prior to redemption or maturity at
the rate of 0. common shares for each $25 in principal amount of
the debentures, subject to the conversion price adjustments described under
"DESCRIPTION OF THE PREFERRED SECURITIES -- Conversion Price Adjustments." This
equates to an initial conversion price of $ per common share. For so long as
the preferred securities are outstanding, the trust is prevented from converting
the junior subordinated debentures except pursuant to a notice of conversion
delivered to the conversion agent by a holder of preferred securities. Upon
surrender of preferred securities to the conversion agent for conversion, the
trust will distribute the commensurate principal amount of the debentures to the
conversion agent on behalf of the holder of the preferred security converted.
The conversion agent will convert those debentures into common shares on behalf
of the holder. Our delivery through the conversion agent to the holders of the
debentures of the fixed number of common shares into which the debentures are
convertible (together with the cash payment, if any, in lieu of fractional
shares) will satisfy our obligation to pay the principal amount of the
debentures, and the accrued and unpaid interest attributable to the period from
the last date to which interest has been paid or provided for.
MODIFICATION OF INDENTURE
We and the debenture trustee may amend the indenture from time to time
without the consent of any of the holders of the junior subordinated debentures:
- to cure ambiguities, defects or inconsistencies, if such action does not
materially adversely affect the interest of the holders of the junior
subordinated debentures or the holders of the preferred securities as
long as they remain outstanding; or
- to qualify or maintain the qualification of the indenture under the Trust
Indenture Act.
We and the debenture trustee may amend the indenture in other respects with
the consent of holders representing not less than a majority in principal amount
of the outstanding junior subordinated debentures. However, without the consent
of each holder of the junior subordinated debentures so affected, no amendment
may:
- change the stated maturity of the junior subordinated debentures;
- reduce the principal amount of the junior subordinated debentures;
- reduce the rate or extend the time of payment of interest on the junior
subordinated debentures, other than deferrals of the payments of interest
as described above under "Option to Defer Payment of Interest;"
- reduce the premiums payable upon the redemption of the junior
subordinated debentures;
- impair any right to institute suit for the enforcement of any payment on
the junior subordinated debentures;
- change the subordination provisions of the indenture;
- change any right to convert any junior subordinated debentures in a
manner adverse to the holders; or
- reduce the percentage of principal amount of the junior subordinated
debentures that is required to consent to any modification of the
indenture.
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In addition, for so long as any of the preferred securities remain
outstanding and any indebtedness remains outstanding under the junior
subordinated debentures, none of the following actions may occur without the
prior consent of the holders of at least a majority in aggregate liquidation
preference of the preferred securities then outstanding:
- no modification of the indenture may be made that adversely effects the
holders of the preferred securities in any material respect;
- no termination of the indenture may occur; or
- no waiver of any debenture event of default or waiver of any covenant
under the indenture may be effective.
Finally, where a consent under the indenture would require the consent of
each holder of junior subordinated debentures, the property trustee will not
give this consent without the prior consent of each holder of the preferred
securities.
DEBENTURE EVENTS OF DEFAULT
Each of the following is an event of default with respect to the junior
subordinated debentures:
- our failure for 30 days to pay any interest on the junior subordinated
debentures when due, except in the case of permitted deferrals of
interest as described under "Option to Defer Payment of Interest;"
- our failure to pay any principal of or premium, if any, on the junior
subordinated debentures when due, whether at maturity, upon redemption by
declaration, or at any other time;
- our failure to deliver common shares upon an election by a holder of
junior subordinated debentures to convert the debentures;
- our continued failure for 90 days to observe or perform any other promise
we made in the indenture after written notice of the default is given as
provided in the indenture; or
- certain events of bankruptcy, insolvency or reorganization relating to
us.
The holders of a majority in aggregate outstanding principal amount of the
junior subordinated debentures have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the debenture
trustee or exercising any trust or power conferred on the trustee consistent
with the indenture. The debenture trustee or the holders of not less than 25% in
aggregate principal amount of the junior subordinated debentures then
outstanding may declare the principal due and payable immediately upon an event
of default described above. If the debenture trustee or the holders of the
junior subordinated debentures fail to make the declaration, the holders of at
least 25% in aggregate liquidation preference of the preferred securities then
outstanding will have that right. The holders of a majority in aggregate
outstanding principal amount of the debentures may annul and rescind this
declaration if the default (other than the non-payment of the principal of the
debentures that has become due solely by acceleration) has been cured or waived
and a sum sufficient to pay all matured installments of interest and principal
due otherwise than by acceleration has been deposited with the debenture
trustee. If the holders of the debentures fail to annul and rescind the
declaration, the holders of a majority in aggregate liquidation preference of
the preferred securities then outstanding will have that right.
The holders of a majority in aggregate outstanding principal amount of the
junior subordinated debentures affected may, on behalf of the holders of all the
debentures, waive any past default, except:
- a default in the payment of principal or interest, unless we have cured
the default and deposited with the debenture trustee an amount sufficient
to pay all matured installments of interest and principal due otherwise
than by acceleration; or
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- a default under a provision which under the indenture cannot be modified
or amended without the consent of the holder of each outstanding
debenture.
If the holders of the junior subordinated debentures fail to waive the
default, the holders of a majority in aggregate liquidation preference of the
preferred securities will have that right. We are required to file annually with
the debenture trustee a certificate as to whether or not we are in compliance
with all the conditions and covenants applicable to us under the indenture.
If a debenture event of default exists, the property trustee has the right
to declare the principal of and the interest on the debentures and any other
amounts payable under the indenture to be immediately due and payable and to
enforce its other rights as a creditor with respect to the junior subordinated
debentures.
ENFORCEMENT OF RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If a debenture event of default exists and the event is attributable to our
failure to pay interest or principal on the junior subordinated debentures on
the date interest or principal is due, a holder of preferred securities may
institute a direct action for payment after the due date. We may not amend the
indenture to remove the foregoing right to bring a direct action unless we have
received the prior written consent of the holders of all of the preferred
securities. Our payment to a holder of preferred securities in connection with a
direct action will not affect our obligation to pay the principal of or interest
on the junior subordinated debentures held by the trust or the property trustee.
We will be subrogated to the rights of the holder of the preferred securities
with respect to payments on the preferred securities to the extent of any
payments made by us to the holder in any direct action.
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
We may not merge, consolidate, transfer or lease our assets substantially
as an entirety to any entity, and no entity may merge, consolidate or transfer
or lease its assets substantially as an entirety to us, unless:
- in case we consolidate with or merge into another entity or transfer our
assets substantially as an entirety to any entity, the successor entity
is organized under the laws of the United States or any state or the
District of Columbia and the successor expressly assumes our obligations
under the junior subordinated debentures;
- immediately after giving effect to the transaction, no debenture event of
default, and no event that with notice or time would be a debenture event
of default, will exist;
- in the case of the junior subordinated debentures, the transaction is
permitted under the trust agreement and guarantee relating to the
preferred securities, and does not give rise to any breach or violation
of the trust agreement or the guarantee; and
- other conditions as prescribed in the indenture are met.
The general provisions of the indenture do not afford holders of the junior
subordinated debentures protection in the event of a highly leveraged or other
transaction involving us that may adversely affect those holders.
SATISFACTION AND DISCHARGE
The indenture will cease to be effective, with limited exceptions, and we
will have satisfied and discharged the indenture, if sufficient funds are
deposited in trust to pay all junior subordinated debentures not previously
delivered to the debenture trustee for cancellation. We may make this deposit
with respect to the debentures when they are due and payable, when they will
become due and payable at their stated maturity within one year, or when they
are to be properly called for redemption within one year.
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SUBORDINATION
All junior subordinated debentures issued under the indenture will be
subordinate and junior in right of payment to all our senior debt. Upon any
payment or distribution of our assets to creditors upon any liquidation,
dissolution, winding-up, reorganization, assignment for the benefit of
creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding, the holders of our senior debt first will be entitled to
receive payment of the senior debt in full before the property trustee, on
behalf of the holders of the junior subordinated debentures, will be entitled to
receive or retain any payment on the debentures.
If the maturity of the junior subordinated debentures is accelerated, the
holders of all senior debt outstanding at the time of the acceleration first
will be entitled to receive payment of all amounts due on the senior debt,
including any amounts due upon its acceleration, in full before the holders of
debentures will be entitled to receive or retain any payment on the debentures.
No payments may be made on account of the junior subordinated debentures if
a default in paying any senior debt exists or if an event of default with
respect to any senior debt resulting in the acceleration of the maturity of the
senior debt exists or if any judicial proceeding is pending with respect to any
default.
GOVERNING LAW
The indenture and the junior subordinated debentures are governed by the
laws of Ohio.
INFORMATION CONCERNING THE JUNIOR SUBORDINATED DEBENTURE TRUSTEE
The debenture trustee is under no obligation to exercise any of the powers
vested in it by the indenture at the request of any holder of the debentures,
unless offered reasonable indemnity against the costs, expenses and liabilities
that it might incur by doing so. The debenture trustee is not required to expend
or risk its own funds or otherwise incur personal financial liability in the
performance of its duties if the debenture trustee reasonably believes that
repayment or adequate indemnity is not reasonably assured to it.
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RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
We irrevocably guarantee payment of distributions and other amounts due on
the preferred securities to the extent that the trust has funds available for
the payment of the distributions and as set forth under "DESCRIPTION OF THE
GUARANTEE." Taken together, our obligations under the junior subordinated
debentures, the securities resolution, the indenture, the trust agreement and
the guarantee agreement provide, in the aggregate, a full, irrevocable and
unconditional guarantee of payments of distributions and other amounts due on
the preferred securities. No single document standing alone or operating in
conjunction with fewer than all of the other documents constitutes the full
guarantee. It is only the combined operation of these documents that has the
effect of providing a full, irrevocable and unconditional guarantee of the
trust's obligations under the preferred securities.
If and to the extent that we do not make payments on the junior
subordinated debentures, the trust will not make distributions or pay other
amounts due on the preferred securities. The guarantee does not cover payment of
distributions when the trust does not have sufficient funds to pay the
distributions. In that event, the remedy for a holder of preferred securities is
to institute a legal proceeding directly against us for enforcement of payment
of the distributions to the holder. Our obligations under the guarantee are
subordinate and junior in right of payment to all of our other liabilities and
rank pari passu with most senior preferred shares, if any, we may issue and with
any guarantee we may enter into within respect of any preferred shares of any of
our affiliates.
SUFFICIENCY OF PAYMENTS
As long as all payments are made when due on the junior subordinated
debentures, those payments will be sufficient to cover distributions and other
payments due on the preferred securities. This is primarily because:
- the aggregate principal amount of the junior subordinated debentures will
be equal to the sum of the aggregate stated liquidation amount of the
preferred securities and related common securities;
- the interest rate and interest and other payment dates on the junior
subordinated debentures will match the distribution rate and distribution
and other payment dates for the preferred securities;
- we have promised to pay any and all costs, expenses and liabilities of
the trust other than the trust's obligations under its preferred and
common securities; and
- the trust agreement provides that the trust will not engage in any
activity that is not consistent with the limited purposes of the trust.
We have the right to set-off any payment we are otherwise required to make
under the indenture if and to the extent we have already made, or are
concurrently making, a payment under the guarantee agreement.
ENFORCEMENT OF RIGHTS OF HOLDERS OF PREFERRED SECURITIES
A holder of a preferred security may institute a legal proceeding directly
against us to enforce the holder's rights under the guarantee agreement without
first instituting a legal proceeding against the guarantee trustee, the trust or
anyone else.
A default by us under our senior debt would not necessarily constitute a
trust agreement event of default. In the event of a payment default under, or
acceleration of, our senior debt, the subordination provisions of the indenture
provide that no payments may be made with respect to the junior subordinated
debentures until the senior debt has been paid in full or the payment default
under the senior debt has been cured or waived. For a description of our senior
debt, see "DESCRIPTION OF THE JUNIOR
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SUBORDINATED DEBENTURES -- General." Our failure to make required payments on
the junior subordinated debentures would constitute a trust agreement event of
default.
LIMITED PURPOSE OF THE TRUST
The trust's preferred securities evidence undivided beneficial ownership
interests in the assets of the trust, and the trust exists for the sole purpose
of issuing its preferred securities and common securities, investing the
proceeds in junior subordinated debentures and engaging in only those other
activities necessary, convenient or incidental to those purposes. A principal
difference between the rights of a holder of a preferred security and a holder
of a debenture is that a holder of a debenture is entitled to receive from us
the principal amount of and interest accrued on junior subordinated debentures
held, while a holder of preferred securities is entitled to receive
distributions from the trust, or from us under the guarantee agreement, if and
to the extent the trust has funds available for the payment of the
distributions.
RIGHTS UPON LIQUIDATION
Upon any voluntary or involuntary termination, winding-up or liquidation of
the trust involving the liquidation of the junior subordinated debentures, the
holders of the preferred securities will be entitled to receive the liquidation
distribution in cash, out of the assets of the trust. See "DESCRIPTION OF THE
PREFERRED SECURITIES -- Liquidation Distribution upon Dissolution." If we become
subject to any voluntary or involuntary liquidation or bankruptcy, the property
trustee, as holder of the junior subordinated debentures, would be one of our
subordinated creditors. The property trustee would be subordinated in right of
payment to all of our senior debt, but it would be entitled to receive payment
in full of principal and interest before our shareholders receive payments or
distributions. We are the guarantor under the guarantee agreement and pursuant
to the indenture have agreed to pay all costs, expenses and liabilities of the
trust, other than the trust's obligations to the holders of its preferred and
common securities. Accordingly, in the event of our liquidation or bankruptcy,
the positions of a holder of preferred securities and of a holder of junior
subordinated debentures are expected to be substantially the same relative to
our other creditors and to our shareholders.
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DESCRIPTION OF OUR CAPITAL SHARES
Our articles of incorporation provide that we may issue up to 22,005,850
common shares and 5,000,000 preferred shares. As of June 30, 1999, we had a
total of 5,943,183 common shares outstanding, we held 19,017 common shares in
our treasury and options to purchase 446,783 additional common shares were
outstanding. None of our preferred shares are outstanding. The following
description of our capital shares is intended to be a summary and does not
describe all of the provisions of our articles of incorporation or regulations.
For a more thorough understanding of the terms of our capital shares, you should
refer to our articles of incorporation and regulations, which are filed with the
SEC and included as exhibits to the registration statement of which this
prospectus is a part. See "WHERE YOU CAN FIND MORE INFORMATION" below.
COMMON SHARES
Our outstanding common shares are listed on the New York Stock Exchange.
The holders of the common shares are entitled to one vote per share on each
matter on which the shareholders vote. Subject to the preferences of any
outstanding preferred shares, the holders of the common shares are entitled to
receive ratably any dividends declared by the Board of Directors. If we
liquidate, are dissolved or our business is wound up, the holders of the common
shares are entitled to share ratably in all assets remaining after payment of
all liabilities and any liquidation preference of any outstanding preferred
shares. All outstanding common shares are fully paid and non-assessable, and all
common shares issued upon conversion of junior subordinated debentures will be
fully paid and non-assessable when issued.
The transfer agent and registrar for our common shares is American Stock
Transfer & Trust Company in New York, New York.
PREFERRED SHARES
Our Board of Directors has the authority, without further action by the
shareholders, to issue up to 5,000,000 preferred shares in one or more series
and may designate the dividend rates, dividend payment dates, redemption rates,
redemption prices, liquidation prices, sinking fund requirements, conversion
rights, restrictions on the issuance of shares of the same series or of any
other class or series and the like. The Board of Directors also has the
authority to amend the terms of the preferred shares to fix the voting rights of
the entire class at any time that there are no preferred shares outstanding.
Accordingly, without shareholder approval, we can issue preferred shares with
conversion, voting and other rights which might discourage or prevent a takeover
or other change in control. We have no current plans to issue any of our
preferred shares.
OHIO MERGER MORATORIUM ACT
We are subject to Ohio's Merger Moratorium Act. This act prohibits us from
engaging in specified business transactions, including mergers, asset sales,
loans, liquidation and the like, with a beneficial owner of 10% or more of our
outstanding common shares during the three-year period following the date the
person became the owner of the 10% interest unless, prior to that date, the
specified transaction or the person's acquisition of shares was approved by our
directors. After the three-year moratorium, we can engage in a transaction with
the beneficial owner of the 10% or greater interest only if:
- the transaction is approved by the holders of two-thirds of all of our
outstanding voting shares and by the holders of a majority of our voting
shares held by persons other that the owner of the 10% or greater
interest; or
- the shareholders receive in the transaction an amount for their shares
equal to the higher of the highest amount paid in the past by the owner
of the 10% or greater interest or the amount that would be due to them if
we were to dissolve.
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UNITED STATES TAXATION
The following discussion summarizes certain of the material United States
Federal income tax consequences of the purchase, ownership, disposition and
conversion of the preferred securities and junior subordinated debentures.
Unless otherwise stated, this summary deals with only preferred securities held
as capital assets by holders who purchase the preferred securities upon original
issuance. This summary does not deal with special classes of holders such as
banks, thrifts, real estate investment trusts, regulated investment companies,
insurance companies, dealers in securities or currencies, tax-exempt investors,
foreign taxpayers (except to the extent discussed under the heading "United
States Alien Holders") or persons that will hold the preferred securities as a
position in a straddle, as part of a synthetic security or hedge, as part of a
conversion transaction or other integrated investment or as other than a capital
asset. This summary also does not address the tax consequences to persons that
have a functional currency other than the United States dollar. Further, it does
not include any description of any alternative minimum tax consequences or the
tax laws of any state or local government or of any foreign government that may
be applicable to the preferred securities. The following discussion constitutes
the opinion of Thompson Hine & Flory LLP, tax counsel for us and the trust. This
summary is based on the Internal Revenue Code of 1986, legislative history,
Treasury regulations, and administrative and judicial interpretations thereof,
as of the date of this prospectus, all of which are subject to change, possibly
on a retroactive basis. The authorities on which this discussion is based are
subject to various interpretations, and it is therefore possible that the United
States federal income tax treatment of the purchase, ownership and disposition
of the preferred securities may differ from the treatment described below.
We cannot assure you that the IRS will not challenge the positions
discussed below with respect to the tax consequences associated with the
preferred securities.
YOU SHOULD CONSULT YOUR TAX ADVISORS AS TO THE UNITED STATES FEDERAL INCOME
TAX CONSEQUENCES OF THE OWNERSHIP AND DISPOSITION OF PREFERRED SECURITIES IN
LIGHT OF YOUR PARTICULAR CIRCUMSTANCES, AS WELL AS THE EFFECT OF ANY STATE,
LOCAL, FOREIGN OR OTHER TAX LAWS AND OF POTENTIAL CHANGES IN APPLICABLE TAX
LAWS.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES
Based in part upon certain factual assumptions and upon certain factual
representations made by us, which Thompson Hine & Flory LLP has relied upon and
assumed to be true, correct and complete, the junior subordinated debentures
will be classified for United States Federal income tax purposes as our
indebtedness under current law. By accepting the preferred securities, each
holder agrees to treat the junior subordinated debentures as indebtedness and
the preferred securities as evidence of the holder's indirect beneficial
ownership interest in the corresponding debentures. Because the junior
subordinated debentures are treated as indebtedness and the preferred securities
are treated as an indirect interest in the debentures, corporate holders of
preferred securities will not be entitled to a dividends-received deduction with
respect to any income recognized with respect to the debentures.
We are aware of several recent actions by the IRS concerning obligations
that are similar to the junior subordinated debentures. First, in a case
involving Enron Corporation now pending before the United States Tax Court, the
IRS initially sought to disallow the deduction for interest expense on
obligations that are similar to, although different in a number of respects
from, the junior subordinated debentures. Those obligations were issued in 1993
and 1994 to partnerships which, in turn, issued "monthly income preferred
securities" to investors. In a stipulation filed on December 28, 1998 in the
United States Tax Court, the IRS conceded that Enron was entitled to deduct its
interest expense on the obligations. Although the IRS apparently has conceded
the interest deductibility issue in the Enron case, we cannot assure you that
the IRS will not challenge the interest deductions of other taxpayers (such as
us) that engage in similar arrangements.
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The IRS also recently issued a technical advice memorandum (PLR
1999-10-046) that addresses whether obligations that are similar to, although
different in a number of respects from, the junior subordinated debentures
constituted debt or equity for federal income tax purposes. The IRS concluded
that the instruments constituted debt. A technical advice memorandum is not
binding on the IRS, but it does provide some indication of the views of the IRS
National Office on the issues addressed in the memorandum.
A successful IRS challenge to the classification of the junior subordinated
debentures as debt would prevent us from deducting the interest paid or accrued
on the debentures for United States Federal income tax purposes and would be a
"tax event" that results in the exchange of the debentures for preferred
securities or, in certain limited circumstances, the redemption of the
debentures by us and the distribution of the resulting cash in redemption of the
preferred securities (see "Redemption of Preferred Securities for Junior
Subordinated Debentures or Cash" below), or a payment of additional amounts to
holders of the preferred securities. Additionally, if the interest on the junior
subordinated debentures is not deductible, it could adversely affect our ability
to make payments on the junior subordinated debentures. The remainder of this
discussion assumes that the junior subordinated debentures will be classified as
our indebtedness for United States Federal income tax purposes.
CLASSIFICATION OF THE TRUST
The trust will be classified as a grantor trust and will not be classified
as an association taxable as a corporation or partnership for United States
Federal income tax purposes. Accordingly, for United States Federal income tax
purposes, each holder of preferred securities generally will be considered the
owner of an undivided interest in the junior subordinated debentures held by the
trust, and each holder of preferred securities will be required to include in
the holder's gross income any interest with respect to the holder's allocable
share of those junior subordinated debentures. In effect, the preferred
securities are ignored for Federal income tax purposes, and each holder is
treated as owning an allocable share of the junior subordinated debentures held
by the trust.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under the indenture, we have the option to defer the payment of interest on
the junior subordinated debentures at any time or from time to time for a period
not exceeding 20 consecutive quarters with respect to each deferral so long as
the deferral does not extend beyond the stated maturity of the debentures. Our
option to defer the payment of interest on the junior subordinated debentures
will cause the debentures to have original issue discount. Under Treasury
regulations that apply to debt instruments issued on or after August 13, 1996, a
debt instrument that provides terms and conditions that make the likelihood of
late payment a remote contingency does not give rise to "original issue
discount." If we exercise our option to defer interest, then we are not
permitted to make certain distributions to our shareholders or make payments on
any debt that has the same priority as, or is subordinated to, the junior
subordinated debentures. The terms and conditions imposed on the junior
subordinated debentures are not significant enough to prevent us from electing
to defer interest payments because we do not have a history of paying dividends
and we have little or no debt on a priority with or subordinated to the junior
subordinated debentures.
Regardless of a holder's regular method of accounting, a holder will
recognize interest income (in the form of original issue discount) as it accrues
daily on an economic accrual basis instead of on the dates the holder actually
received the cash payments. The amount of original issue discount that will be
recognized in any quarter (other than during a period in which we exercise our
option to defer interest payments on the junior subordinated debentures) will
equal approximately the amount of income that accrues on the junior subordinated
debentures in that quarter at the stated interest rate. A holder will include
interest (in the form of original issue discount) in the holder's gross income
regardless of whether the holder receives cash with respect to the period to
which the income is attributable. Thus, if we exercise the option to extend any
interest payment period, each holder will be required to include
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original issue discount in gross income even though the holder will not receive
any cash payments from the trust during that period.
The application of the original issue discount rules also may cause certain
United States federal income tax consequences when the holder sells the
preferred securities. These tax consequences are discussed below under "Sale of
Preferred Securities."
DEDUCTIBILITY OF INTEREST BY US
Interest accrued on the junior subordinated debentures will be deductible
by us for United States Federal income tax purposes.
We have reviewed the following Federal income tax provisions in determining
whether all or a portion of the interest or original issue discount deductions
on the junior subordinated debentures is deductible:
- Section 163(l) of the Internal Revenue Code disallows interest deductions
on certain convertible debt instruments. According to its legislative
history, this section does not apply where the conversion price of the
debt instrument is significantly higher than the market price of the
stock on the date of the debt issuance. The junior subordinated
debentures are issued with a conversion price that is significantly
higher than the market price of our common shares on the date the junior
subordinated debentures are issued. Thus, Section 163(l) should not
adversely affect our interest or original issue discount deduction with
respect to the junior subordinated debentures.
- Section 279 of the Internal Revenue Code disallows interest deductions on
certain subordinated convertible debt. This section does not apply to the
junior subordinated debentures because:
- we will use the proceeds from the junior subordinated debentures to
repay bank revolving credit debt and other obligations that are not
subject to Section 279,
- we incurred the revolving credit debt and other obligations to achieve
certain business objectives (rather than the avoidance of taxes), and
- at the time the we incurred the revolving credit debt and other
obligations, we did not contemplate that we would refinance the debt
and other obligations with the proceeds from the junior subordinated
debentures.
A successful IRS challenge to the deductibility of interest paid or accrued
on the junior subordinated debentures could be a "tax event" that results in the
exchange of the junior subordinated debentures for preferred securities or, in
certain limited circumstances, the redemption of the junior subordinated
debentures by us and the distribution of the resulting cash in redemption of the
preferred securities (see "Redemption of Preferred Securities for Junior
Subordinated Debentures or Cash" below), or a payment of additional amounts to
holders of the preferred securities. Additionally, if the interest on the junior
subordinated debentures is not deductible, it could adversely affect our ability
to make payments on the junior subordinated debentures.
REDEMPTION OF PREFERRED SECURITIES FOR JUNIOR SUBORDINATED DEBENTURES OR CASH
Under some circumstances, the junior subordinated debentures may be
distributed to the holders of the preferred securities in exchange for their
preferred securities. Upon the distribution, a holder will receive directly a
proportional share of the junior subordinated debentures previously held
indirectly through the trust. Assuming the treatment of the trust as a grantor
trust is respected, a holder will not be taxed on the distribution of the junior
subordinated debentures. In that case, a holder's holding period and aggregate
tax basis in its junior subordinated debentures will be equal to the holding
period and aggregate tax basis in the preferred securities before the
distribution. If, however, the trust is treated as an association taxable as a
corporation, the distribution likely would constitute a taxable event to the
trust and holders of the preferred securities.
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Under certain circumstances, the junior subordinated debentures may be
redeemed by us for cash and the proceeds of such redemption distributed to
holders in redemption of their preferred securities (see "DESCRIPTION OF THE
PREFERRED SECURITIES -- Tax Event Exchange or Redemption"). Under current law,
such a redemption would constitute a taxable disposition of the redeemed
preferred securities, and a holder would recognize gain or loss in the same
manner as if it sold such redeemed preferred securities for cash (see "Sale of
Preferred Securities" immediately below).
SALE OF PREFERRED SECURITIES
A holder of preferred securities that sells preferred securities will
recognize gain or loss equal to the difference between the amount realized on
the sale of the preferred securities and the holder's adjusted tax basis in the
preferred securities sold. The tax basis of a preferred security will be
increased by the amount of any interest (in the form of original issue discount)
that is included in income, and will be decreased by the amount of any payment
we made on the junior subordinated debentures. In general, the gain or loss will
be a capital gain or loss and will be a long-term capital gain or loss if the
preferred securities have been held for more than one year at the time of sale.
Long-term capital gain of an individual U.S. Holder is subject to a maximum
United States Federal income tax rate of 20% for capital assets held for more
than one year. Capital gain on the disposition of assets held for not more than
one year is taxed at the rates applicable for ordinary income (i.e., up to 39.6%
for individuals for United States Federal income tax purposes).
The preferred securities may trade at a price that does not accurately
reflect the value of accrued but unpaid interest with respect to the underlying
junior subordinated debentures (for example, if we exercise our option to defer
interest payments on the debentures). A holder that disposes of its preferred
securities before the record date for the payment of distributions will not
receive payment of distributions for the period before the sale. The holder,
however, will be required to include accrued original issue discount on the
junior subordinated debentures through the date of the sale as ordinary income
for U.S. federal income tax purposes. This accrued but unpaid original issue
discount will increase the holder's adjusted tax basis in the preferred
securities. This increase in the adjusted tax basis in the preferred securities
will increase the amount of any capital loss or reduce the amount of any capital
gain that the holder may have otherwise realized on the sale. In general, an
individual U.S. taxpayer may use capital losses to offset capital gains plus up
to $3,000 ($1,500 for married individuals filing separate returns) of ordinary
income for United States Federal income tax purposes.
CONVERSION OF PREFERRED SECURITIES INTO COMMON SHARES
A holder of preferred securities may at any time elect to convert the
preferred securities into our common shares. Upon exercising this election, the
holder will exchange the preferred securities that are converted for a portion
of the corresponding junior subordinated debentures held by the trust, and the
junior subordinated debentures will be converted into common shares. Assuming
the treatment of the trust as a grantor trust is respected, a holder of
preferred securities will not recognize income, gain or loss upon the exchange
of the preferred securities for the corresponding amount of junior subordinated
debentures, and then converted into common shares. A holder of preferred
securities will recognize gain, however, upon the receipt of cash in lieu of a
fractional common share equal to the small amount of cash received less the
holder's tax basis in the fractional share. The holder's tax basis in the common
shares received upon conversion will be equal to such holder's tax basis in the
preferred securities delivered to the conversion agent for exchange, which will
include any accrued but unpaid original issue discount, less the basis allocated
to any fractional share for which cash is received. The holder's holding period
in the common shares received upon conversion begins on the date the holder
acquired the preferred securities.
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ADJUSTMENT OF CONVERSION PRICE
A holder of preferred securities may at any time elect to convert the
preferred securities into our common shares at an established conversion ratio.
This conversion ratio is subject to an adjustment in certain events (see
"DESCRIPTION OF THE PREFERRED SECURITIES -- Conversion Price Adjustments").
Under some circumstances, an increase in the conversion ratio (i.e., a reduction
in the conversion price) for the junior subordinated debentures will be treated
as a deemed distribution from us. The deemed distribution would be treated as
dividend income to holders of the preferred securities to the extent of our
current or accumulated earnings and profits. The holders of the preferred
securities would be required to include this deemed distribution in gross income
but would not receive any cash. Dividend income is taxed at the rates applicable
for ordinary income (i.e., up to 39.6% for an individual for United States
Federal income tax purposes). A holder's tax basis in the preferred securities
will be increased by the amount of the deemed dividend.
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
corporation, individual, partnership, estate or trust that is, as to the United
States, a foreign corporation, a non-resident alien individual, a foreign
partnership, or a foreign estate or trust.
Payments by the trust or any of its paying agents to any holder of a
preferred security who or which is a United States Alien Holder will not be
subject to United States Federal withholding tax; provided, that:
- the beneficial owner of the preferred security does not actually or
constructively own 10% or more of the total combined voting power of all
classes of our shares entitled to vote,
- the beneficial owner of the preferred security is not a controlled
foreign corporation that is related to us through stock ownership or a
bank receiving interest described in Section 881(c)(3)(A) of the Internal
Revenue Code, and either
- the beneficial owner of the preferred security certifies its status
as a United States Alien Holder to the trust or its agent, under
penalties of perjury, and provides its name and address; or
- a securities clearing organization, bank or other financial
institution that holds customers' securities in the ordinary course
of its trade or business, and holds the preferred security in this
capacity on behalf of the beneficial owner, certifies to the trust
or its agent, under penalties of perjury, that the statement
described above has been received from the beneficial owner by it or
by the financial institution holding the preferred security for the
beneficial owner and furnishes the trust or its agent with a copy;
or
- with respect to payments after December 31, 2000, a "qualified
intermediary," which includes certain foreign financial
institutions, foreign clearing organizations or foreign branches of
United States financial institutions or clearing organizations which
have entered into withholding agreements with the Internal Revenue
Service and have received appropriate certification from the
beneficial owner, provides the trust or any of its paying agents
with an intermediary withholding certificate.
Dividends paid on our common shares to a United States Alien Holder
generally will be subject to withholding of United States Federal income tax at
a 30% rate, or a lower rate that is specified by an applicable income tax
treaty, unless the dividend is effectively connected with the conduct of a trade
or business of the United States Alien Holder within the United States and other
certification requirements are satisfied, or if an income tax treaty applies, is
attributable to a United States permanent establishment of the United States
Alien Holder.
Except to the extent that an applicable treaty otherwise provides, a United
States Alien Holder generally will be taxed in the same manner as other holders
with respect to interest, in the form of original
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issue discount, or dividends if the income is effectively connected with a
United States trade or business of the United States Alien Holder. Effectively
connected interest, in the form of original issue discount, or dividends
received by a corporate United States Alien Holder, under certain circumstances,
also may be subject to an additional "branch profits tax" at a 30% rate or such
lower rate as may be specified by an applicable income tax treaty.
A United States Alien Holder of a preferred security or our common shares
generally will not be subject to United States federal income or withholding tax
on any gain (other than that attributable to accrued but unpaid interest (in the
form of original issue discount), which is taxable in the manner described
above) realized upon the sale or other disposition of a preferred security or
common shares (including the receipt of cash in lieu of fractional shares upon
conversion of preferred securities into common shares), unless:
- the gain is effectively connected with the conduct of a trade or business
of the United States Alien Holder in the United States or if a tax treaty
applies, the gain is attributable to a United States permanent
establishment of the United States Alien Holder;
- in the case of a United States Alien Holder who is an individual and
holds the preferred securities or common shares as a capital asset, the
holder is present in the United States for 183 or more days in the
taxable year of the disposition and certain other conditions are met;
- the United States Alien Holder is subject to tax pursuant to the
provisions of United States Federal income tax laws applicable to some
United States expatriates; or
- we are or have been a "U.S. real property holding corporation" for United
States federal income tax purposes at any time during the five-year
period ending on the date of disposition, or, if shorter, the period
during which the United States Alien Holder held the preferred securities
or common shares and the interest sold is not considered stock that is
"regularly traded on an established securities market" at any time during
the year of disposition or the United States Alien Holder meets certain
minimum ownership requirements.
Except to the extent that an applicable treaty otherwise provides, a United
States Alien Holder generally will be taxed in the same manner as other holders
with respect to gain on the sale or disposition of preferred securities or
common shares if the gain is effectively connected with a United States trade or
business of the United States Alien Holder. Effectively connected gain realized
by a corporate United States Alien holder, under certain circumstances, also may
be subject to an additional "branch profits tax" at a 30% rate or such lower
rate as may be specified by an applicable income tax treaty.
A United States Alien Holder who sells or otherwise disposes of preferred
securities or common shares generally will recognize gain or loss that is
subject to United States Federal income tax if:
- we are or have been a "U.S. real property holding corporation" during the
period described above, and
- the interest sold is not considered stock that is "regularly traded on an
established securities market" at any time during the calendar year of
disposition or the United States Alien Holder meets certain minimum
ownership requirements.
We do not believe that we are a U.S. real property holding corporation as
of the date of this prospectus, although we have not determined or established
whether we will be a U.S. real property holding corporation in the future. A
United States Alien Holder that sells or otherwise disposes of preferred
securities or common shares may request a statement from us that we have not
been a "U.S. real property holding corporation" during the period described
above as of the date of the sale or disposition of his preferred securities or
common shares. We will provide the requested statement if it would be accurate
at the time given.
Under current United States Treasury regulations, dividends paid to an
address in a foreign country are presumed to be paid to a resident of that
country (unless the payor has knowledge to the contrary) for purposes of the
withholding discussed above and, under the current interpretation of such
regula-
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tions, for purposes of determining the applicability of an income tax treaty
rate. Recently published final Treasury Regulations (the "1997 Withholding
Regulations"), generally effective for payments after December 31, 2000, provide
certain presumptions which differ from the presumption described above. Under
the 1997 Withholding Regulations, a United States Alien Holder of our common
shares that wishes to claim the benefit of a treaty rate is required to satisfy
applicable certification requirements. In addition, the 1997 Withholding
Regulations provide that dividend payments are generally subject to information
reporting and backup withholding unless applicable certification requirements
are satisfied. The 1997 Withholding Regulations also require, in the case of
interest or dividends with respect to preferred securities or our common shares
held by a foreign partnership, that the certification requirements described
above be provided by the partners rather than by the foreign partnership and the
partnership provide certain information, which in some circumstances may include
a United States taxpayer identification number. A "look-through" rule would
apply in the case of tiered partnerships.
INFORMATION REPORTING TO HOLDERS
Income on the preferred securities will be reported to non-corporate
holders on Form 1099-OID. These forms will be mailed to holders of record of the
preferred securities prior to January 31 following each calendar year.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, preferred securities may
be subject to a backup withholding tax of 31% if the holder:
- failed to provide its social security or taxpayer identification number
to its broker;
- provided its broker with an incorrect social security or tax
identification number;
- failed to provide its broker with a certified statement that its social
security or tax identification number is correct and that it is not
subject to backup withholding; or
- improperly reported interest and dividends on its tax return.
Any withheld amounts will generally be allowed as a credit against the
holder's United States Federal income tax, provided the required information is
timely filed with the Internal Revenue Service.
POSSIBLE TAX LEGISLATION
Legislation has been introduced in the United States Congress in the past
that would, if enacted, deny an interest deduction to issuers of instruments
such as the junior subordinated debentures. The proposed legislation has not
been enacted as of the date of this prospectus. There can be no assurance,
however, that similar legislation will not ultimately be enacted into law, or
that other developments will not occur after the date hereof that would
adversely affect the tax treatment of the junior subordinated debentures and
could be a "tax event" and result in the exchange of the junior subordinated
debentures for preferred securities or, in certain circumstances, the redemption
of the junior subordinated debentures by us and the distribution of the
resulting cash in redemption of the preferred securities, or a payment of
additional amounts to holders of the preferred securities. See "DESCRIPTION OF
THE PREFERRED SECURITIES -- Tax Event Exchange or Redemption."
The Clinton Administration has recommended legislative changes this year
that would defer the deduction for accrued stated interest and original issue
discount on convertible debt (such as the junior subordinated debentures) until
actual payment. This proposal, if enacted, could apply to the junior
subordinated debentures. This could be a "tax event" and result in the exchange
of the junior subordinated debentures for preferred securities or the redemption
of the junior subordinated debentures by us and the distribution of the
resulting cash in redemption of the preferred securities (see "Redemption of
Preferred Securities For Junior Subordinated Debentures or Cash" above), or a
payment of additional amounts to holders of the preferred securities.
86
<PAGE> 91
BOOK-ENTRY ISSUANCE
The preferred securities will be issued in the form of a global security
that will be deposited with DTC. Unless and until it is exchanged for the
individual securities that it represents, a book-entry security may not be
transferred except as a whole to a nominee of the depositary or to a successor
depositary or any nominee of the successor.
DTC has advised us that DTC is
- a limited purpose trust company organized under the New York banking law,
- a "banking organization" within the meaning of the New York banking law,
- a member of the Federal Reserve System,
- a "clearing corporation" within the meaning of the New York Uniform
Commercial Code, and
- a "clearing agency" registered pursuant to the provisions of Section 17A
of the Exchange Act.
DTC holds securities that its participants deposit with DTC. It also
facilitates the settlement among participants of securities transactions, such
as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations. DTC is owned by a number of its
direct participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to others such as securities brokers and
dealers, banks and trust companies that clear through or maintain custodial
relationships with participants, either directly or indirectly. The rules
applicable to DTC and its participants are on file with the SEC.
Purchases of book-entry securities within the DTC system must be made by or
through direct participants, which will receive a credit for the book-entry
securities on DTC's records. The ownership interest of each actual purchaser of
each book-entry security (Beneficial Owner) is in turn to be recorded on the
direct and indirect participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchases, but Beneficial Owners are
expected to receive written confirmations providing details of the transactions,
as well as periodic statements of their holdings, from the direct or indirect
participants through which the Beneficial Owners purchased book-entry
securities. Transfers of ownership interests in the book-entry securities are to
be accomplished by entries made on the books of participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates representing
their ownership interests in book-entry securities, except in the event that use
of the book-entry system is discontinued.
To facilitate subsequent transfers, all book-entry securities deposited by
participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of book-entry securities with DTC and their registration
in the name of Cede & Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual Beneficial Owners of the book-entry securities; DTC's
records reflect only the identity of the direct participants to whose accounts
such book-entry securities are credited, which may or may not be the Beneficial
Owners. The participants will remain responsible for keeping account of their
holdings on behalf of their customers.
Because DTC can act only on behalf of its participants, which in turn act
on behalf of indirect participants and certain banks, the ability of a person
having beneficial interests in a global certificate to pledge the interest to
persons or entities that do not participate in the DTC system, or otherwise take
actions in respect of the interests, may be affected by the lack of a physical
certificate evidencing the interests.
Delivery of notices and other communications by DTC to direct participants,
by direct participants to indirect participants, and by direct participants and
indirect participants to Beneficial Owners, and the
87
<PAGE> 92
voting rights of direct participants, indirect participants and Beneficial
Owners will be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.
Redemption and conversion notices will be sent to DTC. If less than all of
the book-entry securities are being redeemed, DTC's current practice is to
determine by lot the amount of the interest of each direct participant to be
redeemed. DTC will process all notices of conversion through its "conversions"
program.
Although voting with respect to the book-entry securities is limited to the
holders of record of the book-entry securities, in those instances in which a
vote is required, neither DTC nor Cede & Co. will itself consent or vote with
respect to book-entry securities. Under its usual procedures, DTC would mail an
omnibus proxy to the property trustee as soon as possible after the record date.
The omnibus proxy assigns Cede & Co's consenting or voting rights to those
direct participants to whose accounts the book-entry securities are credited on
the record date (identified in a listing attached to the omnibus proxy).
As long as the book-entry securities are held by Cede & Co., as nominee of
DTC, and DTC continues to make its same-day funds settlement system available to
us, all payments on the book-entry securities (other than distribution payments
on the preferred securities) will be made by us in immediately available funds
to Cede & Co. Distribution payments on the preferred securities will be made by
the property trustee to Cede & Co. We and the trust have been advised that DTC's
practice is to credit direct participants' accounts on the relevant payment date
in accordance with their respective holdings shown on DTC's records. Payments by
participants to Beneficial Owners will be governed by standing instructions and
customary practices, as is the case with securities held for the accounts of
customers in bearer form or registered in "street name," and will be the
responsibility of such participant and not of DTC, the property trustee, the
trust or us, subject to any statutory or regulatory requirements as may be in
effect from time to time. Disbursement of payments to direct participants is the
responsibility of Cede & Co., and disbursements of those payments to the
Beneficial Owners is the responsibility of direct or indirect participants.
DTC may discontinue providing its services as securities depository with
respect to the book-entry securities at any time by giving reasonable notice to
us and the property trustee. If a successor depository is not obtained, the
trust will issue individual definitive preferred securities in exchange for the
global security representing the preferred securities. In addition, the trust
and we may at any time determine not to have the preferred securities
represented by global securities and, in that event, the trust will issue
individual definitive securities in exchange for the global securities. Finally,
if an event of default has occurred under the indenture governing the junior
subordinated debentures, the trust will issue individual definitive securities
in exchange for the global securities.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that we and the trust believe to be accurate, but
we and the trust assume no responsibility for the accuracy of the information.
Neither we nor the trust have any responsibility for the performance by DTC or
its participants of their respective obligations as described in this prospectus
or under the rules and procedures governing their respective operations.
88
<PAGE> 93
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting
agreement, we and the trust have agreed to sell to each of the underwriters
named below the indicated number of preferred securities.
<TABLE>
<CAPTION>
NUMBER OF
PREFERRED
UNDERWRITERS SECURITIES
- ------------------------------------------------------------ -----------
<S> <C>
Robert W. Baird & Co. Incorporated.......................... ,000,000
Legg Mason Wood Walker Incorporated......................... ,000,000
McDonald Investments Inc.................................... ,000,000
-----------
Total............................................. ,000,000
===========
</TABLE>
The underwriters are obligated to take and pay for the total number of
preferred securities that are being offered by this prospectus if any are
purchased. The underwriting agreement provides that, if an underwriter defaults,
in some instances the purchase commitments of the non-defaulting underwriters
may be increased or the underwriting agreement may be terminated.
The underwriting agreement provides that we and the trust will indemnify
the several underwriters against certain liabilities, including liabilities
under the Securities Act of 1933, as amended.
Since the proceeds of the sale of the preferred securities will be used by
the trust to purchase our junior subordinated debentures, the underwriting
agreement provides that we will compensate the underwriters $ per preferred
security for the accounts of the several underwriters ($ in the
aggregate).
The underwriters propose to offer the preferred securities, in part,
directly to the public at the initial public offering price set forth on the
cover page of this prospectus and to certain dealers at that price less a
concession of $ per preferred security. The underwriters may allow, and
those dealers may reallow, a concession of not more than $ per preferred
security to certain brokers and dealers. After the preferred securities are
released for sale to the public, the offering price and other selling terms from
time to time may be varied by the representatives of the underwriters.
Application will be made to list the preferred securities on the New York
Stock Exchange. Prior to this offering, there has been no public market for the
preferred securities. In order to meet one of the requirements for listing the
preferred securities on the New York Stock Exchange, the underwriters will
undertake to sell lots of 100 or more preferred securities to a minimum of 400
beneficial holders.
We and the trust have agreed, during the period of days from the date of
the underwriting agreement, not to sell, offer to sell, grant any option for the
sale of, or otherwise dispose of any preferred securities, any security
convertible into or exchangeable into or exercisable for preferred securities or
the junior subordinated debentures or any debt securities substantially similar
to the junior subordinated debentures or equity securities substantially similar
to the preferred securities (except for the junior subordinated debentures and
the preferred securities issued pursuant to the underwriting agreement), without
the prior written consent of the representatives.
In order to facilitate the offering of the preferred securities, the
underwriters may engage in transactions that stabilize, maintain or otherwise
affect the price of the preferred securities. Specifically, the underwriters may
overallot in connection with the offering, creating a short position in the
preferred securities, and the underwriters may bid for and purchase the
preferred securities in the open market. Finally, the underwriting syndicate may
reclaim selling concessions allowed to an underwriter or a dealer for
distributing the preferred securities in the offering, if the syndicate
repurchases previously distributed preferred securities in transactions to cover
syndicate short positions, in stabilization transactions or otherwise. Any of
these activities may stabilize or maintain the market price of the preferred
securities above an independent market level. The underwriters are not required
to engage in these activities, and if commenced, may end any of these activities
at any time.
89
<PAGE> 94
Certain of the underwriters and their affiliates have in the past provided,
and may in the future provide, investment and/or commercial banking services to
us and our affiliates in the ordinary course of business.
LEGAL MATTERS
Legal matters in connection with the preferred securities, the junior
subordinated debentures, the guarantee and our common shares and federal income
tax matters will be passed upon for us by Thompson Hine & Flory LLP, Dayton,
Ohio, our legal counsel. Legal matters in connection with the validity of the
preferred securities under Delaware law will be passed upon for the trust by
Young Conaway Stargett and Taylor, LLP, special Delaware counsel to us and the
trust. Legal matters relating to this offering will be passed upon for the
Underwriters by Reinhart, Boerner, Van Deuren, Norris & Rieselbach, S.C.,
Milwaukee, Wisconsin.
EXPERTS
The audited financial statements included in this prospectus have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their audit report and are included in this prospectus in reliance upon the
authority of that firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and copy
any document we file at the SEC's public reference rooms in Washington, D.C.,
New York, and Chicago, as well as at the offices of the New York Stock Exchange,
20 Broad Street, New York, New York, 10005, where our common shares are listed
under the symbol "DSD." You can call the SEC at 1-800-732-0330 for further
information about the public reference rooms.
The SEC allows us to "incorporate by reference" the information we file
with them, which means we are assumed to have disclosed important information to
you when we refer you to documents that are on file with the SEC. The
information we have incorporated by reference is an important part of this
prospectus, and information that we file later with the SEC automatically will
update and supersede this information. We incorporate by reference the documents
listed below and any future documents we file with the SEC under Sections 13(a),
13(c) or 15(d) of the Securities Exchange Act of 1934 until we sell all of the
preferred securities covered by this prospectus.
- Annual Report on Form 10-K for the fiscal year ended December 31, 1998.
- Quarterly Report on Form 10-Q for the quarter ended April 2, 1999.
You may request a copy of these documents at no cost by writing to us at
the following address:
DAYTON SUPERIOR CORPORATION
7777 WASHINGTON VILLAGE DRIVE
SUITE 130
DAYTON, OHIO 45459
ATTN: TREASURER
TELEPHONE: (937) 428-6360
You should rely only on the information provided in or incorporated by
reference (and not later changed) in this prospectus or any prospectus
supplement. We have not authorized anyone else to provide you with additional or
different information. We are not making an offer of any securities in any state
where the offer is not permitted. You should not assume that the information in
this prospectus or any prospectus supplement is accurate as of any date other
than the date on the front of those documents.
90
<PAGE> 95
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Public
Accountants.................. F-2
Consolidated Balance Sheets as
of December 31, 1998 and
1997......................... F-3
Consolidated Statements of
Income for the years ended
December 31, 1998, 1997 and
1996......................... F-5
Consolidated Statements of
Shareholders' Equity for the
years ended December 31,
1998, 1997 and 1996.......... F-6
Consolidated Statements of Cash
Flows for the years ended
December 31, 1998, 1997 and
1996......................... F-7
Consolidated Statements of
Comprehensive Income for the
years ended December 31,
1998, 1997 and 1996.......... F-8
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Notes to Consolidated Financial
Statements................... F-9
Consolidated Balance Sheets as
of April 2, 1999 and December
31, 1998 (unaudited)......... F-25
Consolidated Statements of
Operations for the three
fiscal months ended April 2,
1999 and April 3, 1998
(unaudited).................. F-26
Consolidated Statements of Cash
Flows for the three fiscal
months ended April 2, 1999
and April 3, 1998
(unaudited).................. F-27
Consolidated Statements of
Comprehensive Income for the
three fiscal months ended
April 2, 1999 and April 3,
1998 (unaudited)............. F-28
Notes to Consolidated Financial
Statements................... F-29
</TABLE>
F-1
<PAGE> 96
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Dayton Superior Corporation:
We have audited the accompanying consolidated balance sheets of Dayton
Superior Corporation (an Ohio corporation) and Subsidiaries as of December 31,
1998 and 1997, and the related consolidated statements of income, shareholders'
equity, cash flows, and comprehensive income for each of the three years in the
period ended December 31, 1998. These financial statements and the schedule
referred to below are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Dayton Superior Corporation
and Subsidiaries as of December 31, 1998 and 1997, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1998, in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed under Part IV, Item
14(a)(2) is the responsibility of the Company's management and is presented for
purposes of complying with the Securities and Exchange Commission's rules and is
not part of the basic financial statements. This schedule has been subjected to
the auditing procedures applied in the audit of the basic financial statements
and, in our opinion, fairly states, in all material respects, the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
ARTHUR ANDERSEN LLP
Dayton, Ohio
January 26, 1999 (except with respect to the matter discussed in Note 12, as to
which the date is February 17, 1999)
F-2
<PAGE> 97
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
ASSETS (Note 5)
Current assets
Cash...................................................... $ 560 $ --
Accounts receivable, net of allowances for doubtful
accounts and sales returns and allowances of $4,432 and
$5,015................................................. 42,996 35,054
Inventories (Note 3)...................................... 36,058 32,873
Prepaid expenses and other current assets................. 4,396 3,047
Prepaid income taxes...................................... 828 2,087
Future income tax benefits (Notes 3 and 8)................ 3,521 3,657
-------- --------
Total current assets................................... 88,359 76,718
-------- --------
Rental equipment, net (Note 3).............................. 52,586 38,327
-------- --------
Property, plant and equipment (Note 3)
Land and improvements..................................... 5,481 5,577
Building and improvements................................. 20,030 19,330
Machinery and equipment................................... 38,339 33,156
-------- --------
63,850 58,063
Less accumulated depreciation............................. (22,069) (16,711)
-------- --------
Net property, plant and equipment...................... 41,781 41,352
-------- --------
Goodwill and intangible assets, net of accumulated
amortization (Note 3)..................................... 70,130 68,590
Other assets................................................ 764 1,943
-------- --------
Total assets......................................... $253,620 $226,930
======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these consolidated balance sheets.
F-3
<PAGE> 98
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt (Note 5)................ $ 32 $ 32
Accounts payable.......................................... 20,749 15,753
Accrued compensation and benefits......................... 12,443 7,480
Other accrued liabilities................................. 10,408 8,088
-------- --------
Total current liabilities.............................. 43,632 31,353
Long-term debt (Note 5)..................................... 118,173 120,204
Deferred income taxes (Notes 3 and 8)....................... 11,544 8,079
Other long-term liabilities (Note 7)........................ 5,683 6,765
-------- --------
Total liabilities...................................... 179,032 166,401
-------- --------
Shareholders' equity (Note 6)
Class A common shares; no par value; 20,539,500 shares
authorized; 5,200,472 and 4,261,806 shares issued and
5,193,174 and 4,261,806 shares outstanding; 1 vote per
share.................................................. 42,316 33,386
Class B common shares; no par value; 757,569 and 1,466,350
shares authorized, issued, and outstanding; 10 votes
per share.............................................. 5,037 9,749
Class A treasury shares, at cost, 7,298 and 0 shares...... (145) --
Cumulative other comprehensive income..................... (281) (191)
Retained earnings......................................... 27,661 17,585
-------- --------
Total shareholders' equity............................. 74,588 60,529
-------- --------
Total liabilities and shareholders' equity........... $253,620 $226,930
======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these consolidated balance sheets.
F-4
<PAGE> 99
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Net sales (Note 3)................................... $ 282,849 $ 167,412 $ 124,486
Cost of sales........................................ 177,094 111,044 86,021
---------- ---------- ----------
Gross profit....................................... 105,755 56,368 38,465
Selling, general and administrative expenses......... 73,721 36,761 23,637
Amortization of goodwill and intangibles............. 2,213 1,885 1,749
---------- ---------- ----------
Income from operations............................. 29,821 17,722 13,079
Other expenses
Interest expense, net.............................. 11,703 5,556 4,829
Other expense (income), net........................ (202) (64) 96
---------- ---------- ----------
Income before income taxes and extraordinary
item............................................ 18,320 12,230 8,154
Provision for income taxes (Note 8).................. 8,244 5,277 3,538
---------- ---------- ----------
Income before extraordinary item................... 10,076 6,953 4,616
Extraordinary item (Note 4)
Loss on extinguishment of debt,
net of income tax effect of $1,419................. -- -- (2,314)
---------- ---------- ----------
Net income........................................... $ 10,076 $ 6,953 $ 2,302
========== ========== ==========
Basic income per share before extraordinary item..... $ 1.72 $ 1.22 $ 1.02
Basic extraordinary item per share................... -- -- (0.51)
---------- ---------- ----------
Basic net income per share........................... $ 1.72 $ 1.22 $ 0.51
========== ========== ==========
Weighted average common shares outstanding........... 5,867,338 5,703,601 4,547,527
========== ========== ==========
Diluted income per share before extraordinary item... $ 1.65 $ 1.17 $ 0.94
Diluted extraordinary item per share................. -- -- (0.47)
---------- ---------- ----------
Diluted net income per share......................... $ 1.65 $ 1.17 $ 0.47
========== ========== ==========
Weighted average common and common share equivalents
outstanding........................................ 6,098,205 5,933,244 4,925,464
========== ========== ==========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these consolidated balance sheets.
F-5
<PAGE> 100
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
CUMULATIVE
CLASS A CLASS B CLASS A FOREIGN
COMMON SHARES COMMON SHARES TREASURY SHARES CURRENCY
-------------------- ------------------ --------------- TRANSLATION
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT ADJUSTMENT
---------- ------- --------- ------ ------ ------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at December 31, 1995................. 2,804,500 $17,483 485,500 $1,942 2,000 $ (81) $(139)
Net income....................................
Foreign currency translation adjustment....... (6)
Excess pension liability adjustment...........
Exercise of warrants.......................... 346,600 --
Conversion of Class B common shares into Class
A common shares............................. 541,700 2,316 (541,700) (2,316)
Conversion of Class A common shares into Class
B common shares............................. (1,522,550) (10,123) 1,522,550 10,123
Retirement of Class A treasury shares......... (2,000) (81) (2,000) 81
Issuance of common shares for cash, net of
issuance costs (Note 6(b)).................. 2,030,950 23,041
---------- ------- --------- ------ ------ ----- -----
Balances at December 31, 1996................. 4,199,200 32,636 1,466,350 9,749 -- -- (145)
Net income....................................
Foreign currency translation adjustment....... (46)
Issuance of common stock in lieu of directors'
fees........................................ 8,258 104
Issuance of common shares in conjunction with
acquisition (Note 2)........................ 26,254 346
Exercise of stock options, net................ 28,094 300
---------- ------- --------- ------ ------ ----- -----
Balances at December 31, 1997................. 4,261,806 33,386 1,466,350 9,749 -- -- (191)
Net income....................................
Foreign currency translation adjustment....... (75)
Excess pension liability adjustment...........
Issuance of common stock in lieu of directors'
fees........................................ 6,363 124
Issuance of common shares in conjunction with
acquisition (Note 2)........................ 222,496 4,078
Exercise of stock options, net................ 1,026 16
Conversion of Class B common shares into Class
A common shares............................. 708,781 4,712 (708,781) (4,712)
Purchase of Class A treasury shares........... 7,298 (145)
---------- ------- --------- ------ ------ ----- -----
Balances at December 31, 1998................. 5,200,472 $42,316 757,569 $5,037 7,298 $(145) $(266)
========== ======= ========= ====== ====== ===== =====
<CAPTION>
EXCESS
PENSION RETAINED
LIABILITY EARNINGS TOTAL
--------- -------- -------
<S> <C> <C> <C>
Balances at December 31, 1995................. $(50) $ 8,330 $27,485
Net income.................................... 2,302 2,302
Foreign currency translation adjustment....... (6)
Excess pension liability adjustment........... 50 50
Exercise of warrants.......................... --
Conversion of Class B common shares into Class
A common shares............................. --
Conversion of Class A common shares into Class
B common shares............................. --
Retirement of Class A treasury shares......... --
Issuance of common shares for cash, net of
issuance costs (Note 6(b)).................. 23,041
---- ------- -------
Balances at December 31, 1996................. -- 10,632 52,872
Net income.................................... 6,953 6,953
Foreign currency translation adjustment....... (46)
Issuance of common stock in lieu of directors'
fees........................................ 104
Issuance of common shares in conjunction with
acquisition (Note 2)........................ 346
Exercise of stock options, net................ 300
---- ------- -------
Balances at December 31, 1997................. -- 17,585 60,529
Net income.................................... 10,076 10,076
Foreign currency translation adjustment....... (75)
Excess pension liability adjustment........... (15) (15)
Issuance of common stock in lieu of directors'
fees........................................ 124
Issuance of common shares in conjunction with
acquisition (Note 2)........................ 4,078
Exercise of stock options, net................ 16
Conversion of Class B common shares into Class
A common shares............................. --
Purchase of Class A treasury shares........... (145)
---- ------- -------
Balances at December 31, 1998................. $(15) $27,661 $74,588
==== ======= =======
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these consolidated statements.
F-6
<PAGE> 101
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net income................................................ $10,076 $ 6,953 $ 2,302
Adjustments to reconcile net income to net cash provided
by operating activities:
Extraordinary loss..................................... -- -- 2,314
Depreciation........................................... 10,076 5,131 4,304
Amortization of goodwill and intangibles............... 2,213 1,885 1,749
Deferred income taxes.................................. 1,792 1,017 320
Amortization of debt discount and deferred financing
costs................................................ 821 565 235
Gain on sales of rental equipment and property, plant
and equipment........................................ (8,236) (2,871) (1,095)
Change in assets and liabilities, net of effects of
acquisitions:
Accounts receivable.................................... (4,830) 3,111 1,610
Inventories............................................ (2,110) 527 (884)
Prepaid income taxes................................... 1,259 (865) 633
Accounts payable....................................... 3,991 (2,136) (740)
Accrued liabilities and other long-term liabilities.... 5,487 (2,690) (2,368)
Other, net............................................. (938) (260) (614)
------- ------- -------
Net cash provided by operating activities............ 19,601 10,367 7,766
------- ------- -------
Cash Flows From Investing Activities:
Property, plant and equipment additions................... (7,215) (4,410) (3,198)
Proceeds from sale of fixed assets........................ 1,097 -- --
Rental equipment additions................................ (18,081) (4,875) (1,632)
Proceeds from sales of rental equipment................... 11,298 3,628 1,098
Acquisitions, net of cash acquired (Note 2)............... (1,784) (33,467) (4,845)
Other investing activities................................ -- (15) (69)
------- ------- -------
Net cash used in investing activities................ (14,685) (39,139) (8,646)
------- ------- -------
</TABLE>
<TABLE>
<S> <C> <C> <C>
Cash Flows From Financing Activities:
Repayments of long-term debt.............................. (4,276) (67,203) (41,656)
Issuance of long-term debt................................ -- 100,000 22,819
Prepayment premium on extinguishment of long-term debt.... -- -- (2,400)
Issuance of common shares................................. 140 404 23,041
Financing costs and fees.................................. -- (4,586) (358)
Purchase of treasury shares............................... (145) -- --
Payments to former shareholder for acquisition of common
shares................................................. -- -- (1,000)
------- ------- -------
Net cash provided by (used in) financing
activities........................................ (4,281) 28,615 446
------- ------- -------
Effect of Exchange Rate Changes on Cash..................... (75) (46) (6)
------- ------- -------
Net increase (decrease) in cash...................... 560 (203) (440)
Cash, beginning of year..................................... -- 203 643
------- ------- -------
Cash, end of year........................................... $ 560 $ -- $ 203
======= ======= =======
Supplemental Disclosures:
Cash paid for income taxes................................ $ 5,055 $ 4,919 $ 2,345
Cash paid for interest.................................... 10,763 4,736 6,582
Issuance of long-term debt to seller in conjunction with
acquisition............................................ -- 5,000 --
Issuance of Class A common shares in conjunction with
acquisition............................................ 4,078 346 --
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these consolidated statements.
F-7
<PAGE> 102
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
1998 1997 1996
------- ------ ------
<S> <C> <C> <C>
Net income.................................................. $10,076 $6,953 $2,302
Other comprehensive income
Foreign currency translation adjustment................... (75) (46) (6)
Excess pension liability adjustment....................... (15) -- 50
------- ------ ------
Comprehensive income........................................ $ 9,986 $6,907 $2,346
======= ====== ======
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these consolidated statements.
F-8
<PAGE> 103
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(1) THE COMPANY
The accompanying consolidated financial statements include the accounts of
Dayton Superior Corporation and its wholly owned subsidiaries, Dayton Superior
Canada Ltd., Dur-O-Wal, Inc., Dur-O-Wal, Ltd., and commencing September 29,
1997, Symons Corporation ("Symons") (collectively referred to as the "Company").
All significant intercompany transactions have been eliminated.
The Company is the largest North American manufacturer and distributor of
metal accessories and forms used in concrete construction and of metal
accessories used in masonry construction. As of December 31, 1998, the Company
has a distribution system consisting of a network of 10
manufacturing/distribution plants and 47 service/distribution centers in the
United States and Canada and over 4,000 dealers. The Company employs 749
salaried and 1,326 hourly personnel, of whom approximately 1,000 of the hourly
personnel and six of the salaried personnel are represented by labor unions. One
collective bargaining agreement expiring in 1999 covers 25 hourly employees at
the Company's Des Plaines, IL facility. In 1998, hourly employees (45 as of
December 31, 1998) at the Company's Kankakee, IL facility voted to be
represented by a labor union. As of December 31, 1998, no collective bargaining
agreement was in place.
The only significant difference between the Company's Class A Common Shares
(1 vote per share) and its Class B Common Shares (10 votes per share) are the
number of votes per share. The Company's Class B Common Shares are owned by
Ripplewood Holdings L.L.C. ("Ripplewood"). Ripplewood holds 13% of the Common
Shares of the Company, which represents 59% of the voting rights as of December
31, 1998. See Note 12 for subsequent event.
(2) ACQUISITIONS
(a) Symons Corporation- On September 29, 1997, the Company purchased the
stock of Symons. Symons was a private company, which owned two
businesses. The first business, the Symons division, is a leading
manufacturer of prefabricated concrete forming systems. The second
business, Richmond Screw Anchor, manufactures and sells concrete
accessories. The addition of these two businesses provides the Company
with both a complementary fourth business platform, concrete forming
systems, and expansion in the concrete accessories market. The Symons
division is being operated on a stand alone basis while the Richmond
Screw Anchor business has been blended with the Company's existing
concrete accessories division. The Company paid $34,000 (plus
acquisition costs of $3,349) for the Common Stock of Symons, of which
$32,349 was paid in cash and $5,000 was paid by delivery of a seven
year unsecured note. The Company also assumed $47,670 of long-term
debt. The purchase agreement between the Company and the former
stockholders of Symons (the "Former Stockholders") relating to the
Acquisition (the "Purchase Agreement") provides for an adjustment to
the purchase price under certain circumstances. The Company has advised
the Former Stockholders that it believes it is entitled to a purchase
price adjustment in its favor, and the Former Stockholders similarly
advised the Company that they believe they are entitled to a purchase
price adjustment in their favor. If the Company and the Former
Stockholders are unable to resolve these differences, the dispute will
be referred to a mutually satisfactory accounting firm, which is
expected to resolve such differences, in accordance with the terms of
the Purchase Agreement. On June 12, 1998, the Former Stockholders filed
a lawsuit in Delaware Chancery Court seeking a determination with
respect to a limited number of issues involved in the dispute, which
the Company believes can be resolved only through arbitration. On
October 28, 1998, the Court granted the Company's
F-9
<PAGE> 104
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
motion to dismiss with respect to certain of these issues. On December
28, 1998, the Court stayed the proceeding with respect to the issues as
to which it had retained jurisdiction, pending the outcome of
arbitration commenced by the parties with respect to the purchase price
adjustment. Either party may seek to reopen the proceedings following
the arbitration. The Company intends to vigorously pursue its rights
under the Purchase Agreement.
The cash portion of the purchase price was paid from the proceeds of the
Company's credit agreement (Note 5). The allocation of the purchase price to the
net assets acquired is as follows:
<TABLE>
<S> <C>
Current assets.............................................. $49,758
Rental equipment and property, plant and equipment.......... 55,283
Goodwill and intangible assets.............................. 8,607
Other non-current assets.................................... 1,597
Current liabilities......................................... (26,548)
Long-term debt.............................................. (47,670)
Other long-term liabilities................................. (3,678)
-------
$37,349
=======
</TABLE>
The unaudited pro forma statements of income as though Symons had been
acquired as of the beginning of 1996 are as follows:
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Net sales................................................... $252,326 $228,974
Gross profit................................................ 89,109 74,535
Income before extraordinary item............................ 6,867 5,406
Basic income per share before extraordinary item............ 1.20 0.95
Diluted income per share before extraordinary item.......... 1.16 0.92
</TABLE>
The pro forma financial information is presented for informational purposes
only and is not necessarily indicative of the operating results that would have
occurred had the Symons acquisition been consummated as of the above date, nor
are they necessarily indicative of future operating results.
(b) Cempro, Inc.- Effective January 1, 1999, the Company acquired
substantially all of the assets and assumed certain of the liabilities
of Cempro, Inc. for $5,400 in cash. The business is being operated as a
part of the Company's construction chemicals business, which was
established in early 1999.
(c) Secure, Inc.- In June 1998, the Company purchased substantially all of
the assets of Secure, Inc., a subsidiary of The Lofland Company, for
$654 in cash, including acquisition costs of $50. This business is
being operated as a part of the Company's paving products division.
The acquisition has been accounted for as a purchase, and the results
of Secure have been included in the accompanying consolidated financial
statements since the date of acquisition. The purchase price has been
allocated based on the estimated fair values of the assets including
goodwill of $50. Certain appraisals and evaluations are preliminary and
may change. Pro forma financial information is not required.
(d) Symons Concrete Forms, Inc.- In May 1998, the Company purchased all of
the stock of Symons Concrete Forms, Inc. (formerly known as CAI). The
purchase price was $6,744, including acquisition costs of $240, and was
paid in cash of $421, assumption of long-term debt of $2,245,
F-10
<PAGE> 105
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
and delivery of 222,496 Class A Common Shares valued at $4,078. CAI is
being operated as a part of the Company's concrete forming systems
division.
The acquisition has been accounted for as a purchase, and the results
of CAI have been included in the accompanying consolidated financial
statements since the date of acquisition. The purchase price has been
allocated based on the estimated fair values of the assets acquired of
$8,080, including goodwill of $2,155, and assumed liabilities other
than long-term debt of $1,336. Certain appraisals and evaluations are
preliminary and may change. Pro forma financial information is not
required.
(e) Northwoods- In May 1998, the Company purchased the assets of the
Northwoods branches of Concrete Forming, Inc. for $750 in cash. The
Northwoods branches are being operated as a part of the Company's
concrete forming systems division.
The acquisition has been accounted for as a purchase, and the results
of the Northwoods branches have been included in the accompanying
consolidated financial statements since the date of acquisition. The
purchase price has been allocated based on the estimated fair values of
the assets acquired including goodwill of $450. Certain appraisals and
evaluations are preliminary and may change. Pro forma financial
information is not required.
(f) Ironco Manufacturing Co., Inc.- In February 1997, the Company acquired
certain of the assets and assumed certain of the liabilities of Ironco
Manufacturing Co., Inc. and Birmingham Bar Coating, Inc. The purchase
price, including acquisition costs, was $1,493 and was paid in cash of
$1,147 and 26,254 Class A Common Shares.
The acquisition was accounted for as a purchase and the results of the
companies have been included in the accompanying consolidated financial
statements since the date of acquisition. This purchase price has been
allocated based on the fair value of the assets acquired of $1,705,
including goodwill of $504, and liabilities assumed of $212. Pro forma
financial information is not required.
(g) Steel Structures, Inc.- In April 1996, the Company purchased certain of
the assets and assumed certain of the liabilities of Steel Structures,
Inc., for $5,601 in cash. The business is being operated as a part of
the Company's paving products business.
The acquisition was accounted for as a purchase and the results have
been included in the accompanying consolidated financial statements
since the date of acquisition. This purchase price has been allocated
on the basis of the appraised fair value of the assets acquired of
$6,113, including goodwill of $1,374, and liabilities assumed of $512.
Pro forma financial information is not required.
(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Inventories- Substantially all inventories of the domestic concrete
accessories, paving products and masonry products operations are stated
at the lower of last-in, first-out ("LIFO") cost (which approximates
current cost) or market. All other inventories of the Company are
stated at the lower of first-in, first-out ("FIFO") cost or market. The
Company provides net realizable value reserves which reflect the
Company's best estimate of the excess of the cost of potential obsolete
and slow moving inventory over the expected net realizable value. The
Company's inventories consist of raw materials of $7,659 and $6,957,
and finished goods of $30,022 and $26,792 as of December 31, 1998 and
1997, net of net realizable value reserves of $1,623 and $876,
respectively. The Company has no LIFO reserve as of December 31, 1998
and 1997.
F-11
<PAGE> 106
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(b) Rental Equipment- Rental equipment is manufactured by the Company for
resale and for rent to others on a short-term basis. Rental equipment
is recorded at the lower of FIFO cost or market and is depreciated over
the estimated useful life of the equipment, twelve to fifteen years, on
a straight-line method. The balances as of December 31, 1998 and 1997
are net of accumulated depreciation of $6,796 and $2,496, respectively.
Rental revenues were $44,242, $11,336 and $3,095 for the years ended
December 31, 1998, 1997, and 1996, respectively. Cost of sales
associated with rental revenues were $4,443, $1,475 and $1,175 for
1998, 1997 and 1996, respectively.
(c) Property, Plant and Equipment- Property, plant and equipment are valued
at cost and depreciated using straight-line and accelerated methods
over their estimated useful lives of 10-30 years for buildings and
improvements and 3-10 years for machinery and equipment.
Leasehold improvements are amortized over the lesser of the term of the
lease or the estimated useful life of the improvement. Improvements and
replacements are capitalized, while expenditures for maintenance and
repairs are charged to expense as incurred.
(d) Goodwill and Intangible Assets- Goodwill and intangible assets are
recorded at the date of acquisition at their allocated cost.
Amortization is provided over the estimated useful lives of 40 years
for goodwill, the term of the loan (5 to 8 years) for deferred
financing costs and the term of the agreement (1 to 5 years) for
license agreements. Accumulated amortization as of December 31, 1998
and 1997 was $16,867 and $14,087, respectively.
In accordance with Statement of Financial Accounting Standard No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of" ("SFAS 121"), the carrying value of goodwill
and other long-lived assets is assessed for recoverability by
management when changes in circumstances indicate that the carrying
amount may not be recoverable, based on an analysis of undiscounted
future expected cash flows from the use and ultimate disposition of the
asset.
(e) Income Taxes- Deferred income taxes are determined by applying current
statutory tax rates to the cumulative temporary differences between the
carrying value of assets and liabilities for financial reporting and
tax purposes.
(f) Environmental Remediation Liabilities- Effective January 1, 1997, the
Company accounts for environmental remediation liabilities in
accordance with the American Institute of Certified Public Accountants
issued Statement of Position 96-1, "Environmental Remediation
Liabilities," ("SOP 96-1"). Adoption of SOP 96-1 did not have a
material impact on the Company's consolidated financial statements.
(g) Foreign Currency Translation Adjustment- The financial statements of
foreign subsidiaries and branches are maintained in their functional
currency (Canadian dollars) and are then translated into U.S. dollars.
The balance sheets are translated at end of year rates while revenues,
expenses and cash flows are translated at weighted average rates
throughout the year. Translation adjustments, which result from changes
in exchange rates from period to period, are accumulated in a separate
component of shareholders' equity. Transactions in foreign currencies
are translated into U.S. dollars at the rate in effect on the date of
the transaction. Changes in foreign exchange rates from the date of the
transaction to the date of the settlement of the asset or liability is
recorded as income or expense.
F-12
<PAGE> 107
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(h) Net Income Per Share- Basic net income per share is computed by
dividing net income available to common shareholders by the weighted
average number of common shares outstanding (adjusted for the stock
split discussed in Note 6a) during the year.
Diluted net income per share is computed by dividing net income
available to common shareholders by the weighted average number of
common and common share equivalents outstanding (adjusted for the stock
split discussed in Note 6a) during the year. Common share equivalents
include the number of shares issuable upon the exercise of outstanding
options and warrants, less the shares that could be purchased with the
proceeds from the exercise of the options and warrants, based on the
Company's average trading price.
<TABLE>
<CAPTION>
1998
---------------------------------
INCOME SHARES PER SHARE
------- --------- ---------
<S> <C> <C> <C>
Basic net income per share...................... $10,076 5,867,338 $1.72
=====
Effect of stock options (Note 6(c))............. -- 230,867
------- ---------
Diluted net income per share.................... $10,076 6,098,205 $1.65
======= ========= =====
</TABLE>
<TABLE>
<CAPTION>
1997
--------------------------------
INCOME SHARES PER SHARE
------ --------- ---------
<S> <C> <C> <C>
Basic net income per share...................... $6,953 5,703,601 $1.22
=====
Effect of stock options (Note 6(c))............. -- 229,643
------ ---------
Diluted net income per share.................... $6,953 5,933,244 $1.17
====== ========= =====
</TABLE>
<TABLE>
<CAPTION>
1996
--------------------------------
INCOME SHARES PER SHARE
------ --------- ---------
<S> <C> <C> <C>
Basic net income per share...................... $2,302 4,547,527 $0.51
=====
Effect of stock options and warrants (Notes 6(b)
and 6(c))..................................... -- 377,937
------ ---------
Diluted net income per share.................... $2,302 4,925,464 $0.47
====== ========= =====
</TABLE>
(i) Financial Instruments- The Company uses interest rate swaps to manage
interest rate risk associated with its floating rate borrowings. The
swap agreements are contracts to exchange floating rate for fixed rate
interest payments periodically over the life of the agreements without
the exchange of the underlying amounts. The differential paid or
received on the interest rate swap agreements is recognized as an
adjustment to interest expense.
(j) Revenue Recognition- The Company recognizes revenue on product and
rental equipment sales on the date of shipment. Rental revenues are
recognized ratably over the terms of the rental agreements.
(k) Use of Estimates- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities at the balance sheet date and the reported
amounts of revenues and expenses during the year. Actual results could
differ from those estimates. Examples of accounts in which estimates
are used include the reserve for excess and obsolete inventory, the
allowance for doubtful accounts and sales returns and allowances, the
accrual for self-insured employee medical claims, the self-insured
product and general liability accrual, the
F-13
<PAGE> 108
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
self-insured workers' compensation accrual, accruals for litigation
losses, the valuation allowance for deferred tax assets, actuarial
assumptions used in determining pension benefits, and actuarial
assumptions used in determining other post-retirement benefits.
(l) Reclassifications- Certain reclassifications have been made to prior
years' amounts to conform to their 1998 classification.
(4) EXTRAORDINARY ITEM
During June 1996, the Company prepaid its $40,000 unsecured senior
promissory notes. In conjunction therewith, the Company paid a prepayment
premium of $2,400 and expensed unamortized financing costs and debt discount of
$795 and $538, respectively. The Company recorded an extraordinary loss of
$2,314, net of an income tax effect of $1,419. The Company funded this repayment
with $22,358 in proceeds from its public stock offering (Note 6(b)) and $20,042
from its 1996 credit facility.
(5) CREDIT ARRANGEMENTS
The Company has a Credit Agreement to provide for a term loan and revolving
credit facility, each of which is secured by substantially all of the assets of
the Company. The Company used the proceeds of the Credit Agreement to fund the
acquisition of all outstanding shares of Symons and to repay all amounts
outstanding on the existing term and revolving loans of both the Company and
Symons. As a result, deferred financing costs of $255 related to the Company's
term and revolving loans were expensed and reflected as interest expense in the
accompanying 1997 statement of income.
The $100,000 Term Loan requires quarterly interest payments, with principal
amount due in 2005. The Term Loan permits the Company to choose from various
interest rate options and has a weighted average interest rate of 8.15% at
December 31, 1998.
Amounts available under the Revolving Credit Facility are equal to the
lesser of (i) $40,000 or (ii) the sum of (x) 85% of eligible accounts
receivable, and (y) 60% of eligible inventories. The amount available under the
Revolving Credit Facility was $40,000 at December 31, 1998. The Revolving Credit
Facility will terminate in 2002, and has interest options based on (a) Bank One,
Dayton, NA's prime rate (7.75% at December 31, 1998) plus an amount between 0%
and 1% depending on the level of certain financial ratios (0.5% at December 31,
1998), or (b) LIBOR plus an amount between 0.75% and 2.00% depending on the
level of certain financial ratios (1.50% at December 31, 1998). The weighted
average interest rate at December 31, 1998 was 7.3%. A commitment fee of between
0.125% and 0.400% per annum will be payable on the average unused amount
depending on the level of certain financial ratios (0.25% at December 31, 1998).
Average borrowings under the Revolving Credit Facility and its predecessors
were $19,679, $25,266 and $21,400, during 1998, 1997 and 1996, respectively, at
an approximate weighted average interest rate of 7.7%, 7.6% and 8.2%,
respectively. The maximum borrowings outstanding during 1998, 1997 and 1996 were
$26,620, $32,403 and $28,180, respectively.
To manage its interest rate risk, the Company entered into two interest
rate swap agreements on a total of $50,000 of long-term debt that fixed the
LIBOR-based component of the interest rate formula. The swaps have a fixed
ninety-day LIBOR component of 6.30% and 6.33%, and expire on November 1, 2000.
The ninety-day LIBOR as of December 31, 1998 was 5.07%. All fluctuations in rate
resulting from the swaps are accounted for as interest expense. These swaps are
required by the Company's Credit Agreement and are contracts to exchange
floating rate for fixed rate interest payments without the exchange of
underlying amounts.
F-14
<PAGE> 109
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Credit Agreement contains certain restrictive covenants, which require
that, among other things, the Company maintain a minimum leverage ratio, a
minimum fixed charge coverage ratio and limit its ability to pay dividends on
Common Shares. The Company was in compliance with its loan covenants as of
December 31, 1998.
In conjunction with the acquisition of Symons, the Company issued a $5,000,
seven-year unsecured note to one of the Former Stockholders. The note requires
monthly interest payments, with principal due in September 2004. The note bears
interest at a fixed rate of 10.5%.
The Company has an Economic Development Loan from the city of Parsons,
Kansas. The loan bears interest at 7.0% and is payable in quarterly installments
of $8 through July 2005. The loan is secured by real estate in Parsons.
Following is a summary of the Company's long-term debt as of December 31,
1998 and 1997:
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Revolving lines of credit................................... $ 13,000 $ 15,000
1997 Term Loan.............................................. 100,000 100,000
Note payable to one of the Former Shareholders.............. 5,000 5,000
City of Parsons, Kansas Economic Development Loan........... 205 236
-------- --------
Total long-term debt........................................ 118,205 120,236
Less current portion........................................ (32) (32)
-------- --------
Long-term portion........................................... $118,173 $120,204
======== ========
</TABLE>
Scheduled maturities of long-term debt are $32, $32, $32, $13,032, $32 and
$105,045 for 1999, 2000, 2001, 2002, 2003 and thereafter, respectively.
The fair market value of the Company's fixed rate long-term debt is
estimated using discounted cash flow analyses based on current incremental
borrowing rates for similar types of borrowing arrangements. At December 31,
1998, the estimated fair value of the Note payable to Former Shareholder of
Symons is $5,782. The estimated fair value of the City of Parsons, Kansas
Economic Development Loan is $203. The estimated fair values of the Term Loan
and Revolving Credit Facility approximate their face values, as these facilities
have variable interest rates tied to market rates. The estimated fair value of
the interest rate swap agreements is a liability of $1,242.
(6) COMMON AND REDEEMABLE PREFERRED SHARES
(a) Stock Split- In June 1996, the Company authorized a 50-for-1 stock
split for Class A and B Common Shares. All references in the financial
statements to number of shares or share prices have been restated to
reflect the split.
(b) Public Offering of Company Shares- In June 1996, the Company completed
an initial public offering of 1,974,750 shares of Class A Common Shares
and received proceeds of $22,358, net of expenses. The proceeds from
the offering were used to prepay long-term debt.
In July 1996, the underwriters of the Company's initial public offering
of Class A Common Shares exercised a portion of their over-allotment
option pursuant to which the Company issued 56,200 shares of Class A
Common Shares and Ripplewood Holdings L.L.C. converted 56,200 shares of
its Class B Common Shares into Class A Common Shares and sold those
shares. The Company's proceeds of $683 from the issuance of those
shares were used to reduce the outstanding balance of the existing
revolving line of credit.
F-15
<PAGE> 110
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
If the offering, the amendment of the Company's credit facility and the
prepayment of the long-term debt had occurred on January 1, 1996,
income before extraordinary item for the year ended December 31, 1996,
would have been $5,561 and income per share before extraordinary item
would have been $0.94.
(c) Stock Option Plans- The Company has five stock option plans, the 1994
Stock Option Plan ("the 1994 Plan"), the 1995 Stock Option Plan ("the
1995 Plan"), the 1996 Stock Option Plan ("the 1996 Plan"), the 1997
Stock Option and Restricted Stock Plan ("the 1997 Restricted Plan") and
the 1997 Non-employee Director Stock Option Plan ("the 1997 Director
Plan"). Under all Plans, the option exercise price equals the stock's
market price on date of grant. The Company accounts for these plans
under APB Opinion No. 25, under which no compensation costs have been
recognized. Had compensation cost for these plans been determined
consistent with Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("SFAS 123"), the Company's
net income and earnings per share would have been reduced to the
following pro forma amounts:
<TABLE>
<CAPTION>
1998 1997 1996
------- ------ ------
<S> <C> <C> <C> <C>
Income before extraordinary item
available to common
shareholders:................... As Reported $10,076 $6,953 $4,616
Pro Forma 9,835 6,857 4,561
Basic income per share before
extraordinary item:............. As Reported 1.72 1.22 1.02
Pro Forma 1.68 1.20 1.00
Diluted income per share before
extraordinary item:............. As Reported 1.65 1.17 0.94
Pro Forma 1.62 1.16 0.92
</TABLE>
Because the SFAS 123 method of accounting has not been applied to
options granted prior to January 1, 1995, the resulting pro forma
compensation cost may not be representative of that to be expected in
future years.
As of December 31, 1998, the Company may grant options for up to
228,000 and 24,667 shares under the 1997 Restricted Plan and the 1997
Director Plan, respectively. No further options may be granted under
the 1994, 1995 and 1996 Plans. The Company granted 83,833 options
during 1998, of which, 9,333 vested immediately, and the other 74,500
vest ratably over three years. All options expire ten years after the
date of grant.
F-16
<PAGE> 111
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
A summary of the status of the Company's stock option plans at December
31, 1998, 1997 and 1996 and changes during the years then ended is
presented in the table and narrative below:
<TABLE>
<CAPTION>
NUMBER OF WEIGHTED AVERAGE
SHARES EXERCISE PRICE PER SHARE
--------- ------------------------
<S> <C> <C>
Outstanding at December 31,
1995........................... 272,750 $2.44
Granted at a fair value of
$4.26.......................... 25,000 10.38
------- -----
Outstanding at December 31,
1996........................... 297,750 3.11
Granted at a weighted average
fair value of $5.25............ 31,000 12.52
Exercised........................ (40,000) 4.17
Canceled......................... (12,500) 10.38
------- -----
Outstanding at December 31,
1997........................... 276,250 3.57
Granted at a weighted average
fair value of $6.83............ 83,833 17.11
Exercised........................ (2,050) 2.46
------- -----
Outstanding at December 31,
1998........................... 358,033 $6.75
======= =====
</TABLE>
Price ranges and other information for stock options outstanding at
December 31, 1998 are as follows:
<TABLE>
<CAPTION>
OUTSTANDING EXERCISABLE
-------------------------------- -------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
RANGE OF EXERCISE REMAINING EXERCISE
EXERCISE PRICES SHARES PRICE LIFE SHARES PRICE
- --------------------- ------- -------- --------- ------- --------
<S> <C> <C> <C> <C> <C>
$ 1.96 - $ 4.00...... 243,200 $2.44 5.6 years 243,200 $2.44
$12.50 - $12.63...... 31,000 12.52 8.5 24,750 12.53
$16.81 - $19.91...... 83,833 17.11 9.2 9,333 19.46
------- ----- --------- ------- -----
6.7
358,033 $6.75 years 277,283 $3.92
======= ===== ========= ======= =====
</TABLE>
The fair value of each option grant is estimated on the date of grant
using the Black Scholes options pricing model with the following
weighted average assumptions used for grants in 1998, 1997 and 1996,
respectively: risk-free interest rates of 5.67% to 5.70%, 6.17% to
6.56% and 6.11%; expected dividend yield of 0%; expected lives of 6
years; and expected volatility of 27.87%, 28.50% and 27.96%.
(d) Treasury Shares- The Company has agreed to repurchase Class A Common
Shares issued to the former shareholders of CAI. Under certain
circumstances, the former shareholders may require the Company to
purchase Class A Common Shares at the previous day's closing price per
share. The aggregate value of the purchases is limited to $250 during
each three-month period beginning December 1, 1998 and ending May 22,
1999. As of December 31, 1998, 7,298 Class A Common Shares had been
repurchased for $145 under such agreement.
F-17
<PAGE> 112
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(7) RETIREMENT PLANS
(a) Company-Sponsored Pension Plans- The pension plans cover virtually all
salaried and hourly employees not covered by multi-employer pension
plans and provide benefits of stated amounts for each year of credited
service. The Company funds such plans at a rate that meets or exceeds
the minimum amounts required by applicable regulations. The plans'
assets are primarily invested in mutual funds comprised primarily of
common stocks and corporate and U.S. government obligations.
Postretirement Benefits- The Company provides postretirement health
care benefits on a contributory basis and life insurance benefits for
Symons salaried and hourly employees that retired prior to May 1, 1995.
<TABLE>
<CAPTION>
PENSION PENSION OTHER OTHER
BENEFITS BENEFITS BENEFITS BENEFITS
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning
of year...................... $29,169 $ 6,796 $ 681 $ --
Service cost................... 619 794 -- --
Interest cost.................. 1,630 845 71 --
Acquisition.................... -- 21,194 -- 694
Amendments..................... (360) -- 312 --
Actuarial loss (gain).......... 135 (1) (128) --
Benefits paid.................. (712) (459) (61) (13)
------- ------- ----- -----
Benefit obligation at end of
year......................... $30,481 $29,169 $ 875 $ 681
======= ======= ===== =====
CHANGE IN PLAN ASSETS
Fair value of plan assets at
beginning of year............ $27,249 $ 6,219 $ -- $ --
Actual return on plan assets... 2,402 1,085 -- --
Acquisition.................... -- 19,707 -- --
Employer contribution.......... 216 697 61 13
Benefits paid.................. (712) (459) (61) (13)
------- ------- ----- -----
Fair value of plan assets at
end of year.................. $29,155 $27,249 $ -- $ --
======= ======= ===== =====
FUNDED STATUS.................. $(1,326) $(1,920) $(875) $(681)
Unrecognized prior service
cost......................... (155) 202 288 --
Unrecognized net gain.......... (759) (150) (125) --
------- ------- ----- -----
Net amount recognized.......... $(2,240) $(1,868) $(712) $(681)
======= ======= ===== =====
</TABLE>
F-18
<PAGE> 113
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
PENSION PENSION OTHER OTHER
BENEFITS BENEFITS BENEFITS BENEFITS
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
AMOUNTS RECOGNIZED IN THE
STATEMENT OF FINANCIAL
POSITION CONSIST OF:
Accrued benefit liability.... $(2,440) $(1,868) $(875) $(681)
Intangible asset............. 185 -- 163 --
Accumulated other
comprehensive income...... 15 -- -- --
------- ------- ----- -----
Net amount recognized.......... $(2,240) $(1,868) $(712) $(681)
======= ======= ===== =====
ASSUMPTIONS AS OF DECEMBER 31
Discount rate.................. 6.75% 7% 6.75% 8.25%
Expected return on plan
assets....................... 8% 8% N/A N/A
Rate of compensation
increase..................... 4% 4% N/A N/A
COMPONENTS OF NET PERIODIC
BENEFIT COST
Service cost................... $ 619 $ 794 $ -- $ --
Interest cost.................. 1,630 845 70 --
Expected return on plan
assets....................... (1,655) (898) (4) --
Amortization of prior service
cost......................... (3) 17 24 --
Recognized actuarial gain...... (3) -- -- --
------- ------- ----- -----
Net periodic cost.............. $ 588 $ 758 $ 90 $ --
======= ======= ===== =====
</TABLE>
The projected benefit obligation, accumulated benefit obligation, and
fair value of plan assets for the pension plans with accumulated
benefit obligations in excess of plan assets were $2,893, $2,855 and
$2,692, respectively, as of December 31, 1998 and $1,200, $1,200 and
$1,060, respectively as of December 31, 1997.
Assumed health care cost trend rates have a significant effect on the
amounts reported for the health care plan. A one percentage point
change in assumed health care cost trend rates would have the following
effects:
<TABLE>
<CAPTION>
1 PERCENTAGE 1 PERCENTAGE
POINT DECREASE POINT INCREASE
-------------- --------------
<S> <C> <C>
Effect on total of service and interest
cost components......................... $3 $(3)
Effect on the postretirement benefit
obligation.............................. 46 (43)
</TABLE>
(b) Multi-Employer Pension Plan- Approximately 12% of the Company's
employees are currently covered by collectively bargained,
multi-employer pension plans. Contributions are determined in
accordance with the provisions of negotiated union contracts and
generally are based on the number of hours worked. The Company does not
have the information available to determine its share of the
accumulated plan benefits or net assets available for benefits under
the multi-employer pension plans. The aggregate amount charged to
expense under these plans was $287, $157 and $89, for the years ended
December 31, 1998, 1997 and 1996, respectively.
(c) 401(k) Savings Plan- Most employees are eligible to participate in
Company sponsored 401(k) savings plans. Company matching contributions
vary from 0% to 50% (on the first 2%) according
F-19
<PAGE> 114
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
to terms of the individual plans and collective bargaining agreements.
The aggregate amount charged to expense under these plans was $531,
$345 and $295, for the years ended December 31, 1998, 1997 and 1996,
respectively.
(d) Retirement Contribution Account- During 1998, the Company implemented a
defined contribution plan for substantially all salaried employees. No
contributions are permitted by the employees, and the Company
contributes 1.5% to 6.0% of eligible compensation, depending on the age
of the employee. The amount expensed for the year ended December 31,
1998 was $1,167.
(8) INCOME TAXES
The following is a summary of the components of the Company's income tax
provision for the years ended December 31, 1998, 1997 and 1996:
<TABLE>
<CAPTION>
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Currently payable:
Federal............................................... $5,312 $3,521 $2,201
State and local....................................... 1,398 704 420
Deferred................................................ 1,534 1,052 917
------ ------ ------
Total provision......................................... $8,244 $5,277 $3,538
====== ====== ======
</TABLE>
The effective income tax rate differs from the statutory federal income tax
rate for the years ended December 31, 1998, 1997 and 1996 for the following
reasons:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Statutory income tax rate.................................. 35.0% 34.0% 34.0%
State income taxes (net of federal tax benefit)............ 4.8 4.0 2.6
Nondeductible goodwill amortization and other permanent
differences.............................................. 5.2 5.1 7.0
Other, net................................................. -- -- (0.2)
---- ---- ----
Effective income tax rate.................................. 45.0% 43.1% 43.4%
==== ==== ====
</TABLE>
The components of the Company's future income tax benefits and deferred tax
liabilities as of December 31, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
1998 1997
-------- -------
<S> <C> <C>
Current deferred taxes:
Inventory reserves........................................ $ 50 $ (657)
Accounts receivable reserves.............................. 1,712 1,623
Alternative minimum tax credit carryforwards.............. -- 549
Accrued liabilities....................................... 2,280 2,218
Other..................................................... (521) (76)
-------- -------
Total.................................................. 3,521 3,657
-------- -------
Long-term deferred taxes:
Accelerated depreciation.................................. (13,034) (10,922)
Other long-term liabilities............................... 2,428 2,855
Other..................................................... (938) (12)
-------- -------
Total.................................................. (11,544) (8,079)
-------- -------
Net deferred taxes..................................... $ (8,023) $(4,422)
======== =======
</TABLE>
F-20
<PAGE> 115
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(9) SEGMENT REPORTING
The Company operates in four segments, each with a general manager:
concrete accessories (Dayton/Richmond(R)), concrete forming systems (Symons(R)),
paving products (American Highway Technology(R)) and masonry products
(Dur-O-Wal(R)). The segments are differentiated by their products and services,
all of which serve the construction industry.
Sales between segments for the year ended December 31, 1998 are recorded at
normal selling price by the selling division and at cost for the buying
division, with the profit recorded as an intersegment elimination. For the years
ended December 31, 1997 and 1996, intersegment sales were not significant.
Segment assets include accounts receivable; inventories; property, plant, and
equipment; rental equipment; and an allocation of goodwill. Corporate and
unallocated assets include cash, prepaid income taxes, future tax benefits, and
financing costs. Export sales and sales by non-U.S. affiliates are not
significant. Information about the profit (loss) of each segment and the
reconciliations to the consolidated amounts for the years ended December 31,
1998, 1997 and 1996 is as follows:
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Concrete Accessories.............................. $128,119 $ 92,251 $ 76,637
Concrete Forming Systems.......................... 99,471 21,066 --
Paving Products................................... 30,967 29,177 21,930
Masonry Products.................................. 24,292 24,918 25,919
-------- -------- --------
Net sales to external customers................... $282,849 $167,412 $124,486
======== ======== ========
Concrete Accessories.............................. $ 3,348 $ -- $ --
Concrete Forming Systems.......................... 5,240 -- --
-------- -------- --------
Net sales to other segments....................... $ 8,588 $ -- $ --
======== ======== ========
Concrete Accessories.............................. $ 4,053 $ 2,744 $ 3,735
Concrete Forming Systems.......................... 6,543 1,903 --
Paving Products................................... 567 466 415
Masonry Products.................................. 540 443 679
-------- -------- --------
Interest expense.................................. $ 11,703 $ 5,556 $ 4,829
======== ======== ========
Concrete Accessories.............................. $ 19,387 $ 13,723 $ 9,477
Concrete Forming Systems.......................... 6,133 364 --
Paving Products................................... 1,677 1,377 906
Masonry Products.................................. 487 5 601
Intersegment Eliminations......................... (4,153) -- --
Corporate......................................... (5,211) (3,239) (2,830)
-------- -------- --------
Income before income taxes........................ $ 18,320 $ 12,230 $ 8,154
======== ======== ========
Concrete Accessories.............................. $ 3,028 $ 2,283 $ 2,522
Concrete Forming Systems.......................... 4,992 891 --
Paving Products................................... 734 646 512
Masonry Products.................................. 1,279 1,264 1,216
Corporate......................................... 43 47 54
-------- -------- --------
Depreciation...................................... $ 10,076 $ 5,131 $ 4,304
======== ======== ========
Concrete Accessories.............................. $ 1,265 $ 1,225 $ 1,188
Concrete Forming Systems.......................... 341 24 --
Paving Products................................... 177 206 131
Masonry Products.................................. 430 430 430
-------- -------- --------
Amortization of goodwill and intangibles.......... $ 2,213 $ 1,885 $ 1,749
======== ======== ========
</TABLE>
F-21
<PAGE> 116
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Information regarding each segment's assets and the reconciliation to the
consolidated amounts as of December 31, 1998 and 1997 is as follows:
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Concrete Accessories........................................ $ 93,898 $ 91,952
Concrete Forming Systems.................................... 116,064 90,796
Paving Products............................................. 9,445 9,134
Masonry Products............................................ 26,115 25,316
Corporate and Unallocated................................... 8,098 9,732
-------- --------
Total Assets................................................ $253,620 $226,930
======== ========
</TABLE>
Information regarding capital expenditures by segment and the
reconciliation to the consolidated amounts for the years ended December 31,
1998, 1997 and 1996 is as follows:
<TABLE>
<CAPTION>
1998 1997 1996
------- ------ ------
<S> <C> <C> <C>
Concrete Accessories................................... $ 3,348 $2,449 $2,335
Concrete Forming Systems............................... 2,044 1,231 --
Paving Products........................................ 1,200 401 379
Masonry Products....................................... 439 320 480
Corporate.............................................. 184 9 4
------- ------ ------
Property, Plant, and Equipment Additions............... $ 7,215 $4,410 $3,198
======= ====== ======
Concrete Accessories................................... $ 2,860 $1,966 $1,632
Concrete Forming Systems............................... 15,221 2,909 --
------- ------ ------
Rental Equipment Additions............................. $18,081 $4,875 $1,632
======= ====== ======
</TABLE>
(10) COMMITMENTS AND CONTINGENCIES
(a) Operating Leases- Rental expense for property, plant and equipment
(principally office and warehouse facilities and office equipment) was
$4,233, $2,758, and $1,899, for the years ended December 31, 1998, 1997
and 1996, respectively. Terms generally range from one to ten years and
some contain renewal options. The approximate aggregate minimum annual
rental commitments under non-cancelable operating leases are $4,117,
$3,321, $1,951, $1,637, $910, and $1,547 for 1999, 2000, 2001, 2002,
2003, and thereafter, respectively.
(b) Litigation- Symons is currently a defendant involved in a civil suit
brought by EFCO Corp., a competitor of Symons in one portion of their
business. EFCO Corp. alleged that Symons engaged in false advertising,
misappropriation of trade secrets, intentional interference with
contractual relations, and certain other activities. After a jury
trial, preliminary damages of approximately $14,000 were awarded
against Symons in January 1999. The Company believes that there is no
merit to these allegations, remains committed to vigorously pursuing
post-trial motions and appeals, and is seeking to vacate the judgments
in their entirety. The Company believes that, in the event the
judgments against it are not completely set aside, it has grounds for a
successful appeal and intends to vigorously pursue its appellate
rights. A successful appeal could result in judgment for Symons or a
new trial. Symons' liability, if any, cannot finally be determined
until such time as all rights of the parties have been exhausted or
have expired by lapse of time. The Company considers the ultimate
outcome of this litigation to be not estimable. Accordingly, the
Company has not recorded any liability for the resolution of this suit.
In the event the Company is unsuccessful in its post-trial motions and
appeals, it may have a material adverse effect on its consolidated
financial position, results of operations, or cash flows.
F-22
<PAGE> 117
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Additionally, the Company is a defendant in other various legal
proceedings arising out of the conduct of its business. While the
ultimate outcome of these lawsuits cannot be determined at this time,
management is of the opinion that any liability, notwithstanding
recoveries from insurance, would not have a material adverse effect on
the Company's consolidated financial position, results of operations,
or cash flows.
(c) Self-Insurance- The Company is self-insured for certain of its group
medical, workers' compensation and product and general liability
claims. The Company has stop loss insurance coverage at various per
occurrence and per annum levels depending on type of claim. The Company
consults with third party administrators to estimate the reserves
required for these claims. No material revisions were made to the
estimates for the years ended December 31, 1998, 1997 and 1996. The
Company has reserved $4,737 and $4,578 as of December 31, 1998 and
1997, respectively.
(11) RELATED PARTY TRANSACTIONS
During 1997, the Company paid Ripplewood a fee of $400 for financial
advisory services in connection with the acquisition of Symons Corporation and
related financing transactions.
During 1996, the Company paid Ripplewood a management fee of $125. This fee
was not charged after the initial public offering. The Company paid Ripplewood a
fee of $600 at the time the initial public offering was completed for additional
services provided in connection with the offering and related transactions. In
addition, prior to 1997, the Company reimbursed Ripplewood for the allocable
costs of certain insurance policies purchased by Ripplewood which covered both
the Company and Ripplewood.
(12) SUBSEQUENT EVENT (UNAUDITED)
On February 17, 1999, Ripplewood informed the Company that it was
converting all 757,569 Class B Common Shares held by it into an equal number of
Class A Common Shares and sold those Class A Common Shares. As a result of the
conversion, no Class B Common Shares remain outstanding.
(13) QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
1998
------------------------------------------------
FIRST SECOND THIRD FOURTH FULL
QUARTERLY OPERATING DATA QUARTER QUARTER QUARTER QUARTER YEAR
- ---------------------------------------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Net sales............................... $59,227 $76,754 $82,809 $64,059 $282,849
Gross profit............................ 20,254 28,441 34,174 25,557 108,426
Net income (loss)....................... (1,009) 3,731 6,226 1,128 10,076
Basic net income (loss) per share (a)... $ (0.18) $ 0.64 $ 1.05 $ 0.19 $ 1.72
Diluted net income (loss) per share
(a)................................... $ (0.18) $ 0.61 $ 1.01 $ 0.18 $ 1.65
Stock Price:
High.................................. $20.375 $22.125 $21.375 $20.875 $ 22.125
Low................................... $15.875 $16.500 $16.625 $14.375 $ 14.375
</TABLE>
F-23
<PAGE> 118
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
1997
------------------------------------------------
FIRST SECOND THIRD FOURTH FULL
QUARTERLY OPERATING DATA QUARTER QUARTER QUARTER QUARTER YEAR
- ---------------------------------------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Net sales............................... $25,980 $39,839 $42,592 $59,001 $167,412
Gross profit............................ 7,708 12,933 14,381 21,862 56,884
Net income.............................. 160 2,951 3,393 449 6,953
Basic net income per share (a).......... $ 0.03 $ 0.52 $ 0.60 $ 0.08 $ 1.22
Diluted net income per share (a)........ $ 0.03 $ 0.51 $ 0.58 $ 0.08 $ 1.17
Stock Price:
High.................................. $13.500 $13.250 $19.438 $19.000 $ 19.438
Low................................... $11.250 $ 9.750 $12.500 $14.813 $ 9.750
</TABLE>
(a) The total of the quarterly income (loss) per share before extraordinary
item does not equal the annual income per share before extraordinary
item due to the timing of the issuance of the Company's Common Shares
and the omission of common share equivalents in quarters with net
losses for 1998 and due to rounding and to fluctuations in the
Company's stock price for 1997.
F-24
<PAGE> 119
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF APRIL 2, 1999 AND DECEMBER 31, 1998
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
APRIL 2, DECEMBER 31,
1999 1998
-------- ------------
<S> <C> <C>
ASSETS
Current assets
Cash...................................................... $ -- $ 560
Accounts receivable, net of allowances for doubtful
accounts and sales returns and allowances of $4,608 and
$4,432................................................. 48,792 42,996
Inventories (Note 3)...................................... 38,361 36,058
Prepaid expenses and other current assets................. 3,199 4,396
Prepaid income taxes...................................... 904 828
Future income tax benefits................................ 3,497 3,521
-------- --------
Total current assets.............................. 94,753 88,359
-------- --------
Rental equipment, net (Note 3).............................. 56,593 52,586
-------- --------
Property, plant and equipment............................... 66,151 63,850
Less accumulated depreciation............................. (24,004) (22,069)
-------- --------
Net property, plant and equipment...................... 42,147 41,781
-------- --------
Goodwill and intangible assets, net of accumulated
amortization.............................................. 73,091 70,130
Other assets................................................ 711 764
-------- --------
Total assets...................................... $267,295 $253,620
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt (Note 4)................ $ 32 $ 32
Accounts payable.......................................... 23,485 20,749
Accrued compensation and benefits......................... 9,602 12,443
Other accrued liabilities................................. 8,622 10,408
-------- --------
Total current liabilities......................... 41,741 43,632
Long-term debt (Note 4)..................................... 133,735 118,173
Deferred income taxes....................................... 11,090 11,544
Other long-term liabilities................................. 6,599 5,683
-------- --------
Total liabilities................................. 193,165 179,032
-------- --------
Shareholders' equity
Class A common shares..................................... 47,353 42,316
Class B common shares..................................... 5,037
Class A treasury shares................................... (266) (145)
Cumulative other comprehensive income..................... (263) (281)
Retained earnings......................................... 27,306 27,661
-------- --------
Total shareholders' equity........................ 74,130 74,588
-------- --------
Total liabilities and shareholders' equity........ $267,295 $253,620
======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral of
these consolidated balance sheets.
F-25
<PAGE> 120
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE FISCAL MONTHS ENDED APRIL 2, 1999 AND APRIL 3, 1998
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Net sales................................................... $ 68,196 $ 59,227
Cost of sales............................................... 44,771 39,510
---------- ----------
Gross profit.............................................. 23,425 19,717
Selling, general and administrative expenses................ 20,449 17,965
Amortization of goodwill and intangibles.................... 647 495
---------- ----------
Income from operations.................................... 2,329 1,257
Other expenses
Interest expense, net..................................... 2,975 2,993
Other expense, net........................................ -- 4
---------- ----------
Loss before benefit for income taxes...................... (646) (1,740)
Benefit for income taxes.................................... (291) (731)
---------- ----------
Net loss.................................................... $ (355) $ (1,009)
========== ==========
Basic net loss per share.................................... $ (0.06) $ (0.18)
========== ==========
Basic weighted average common shares outstanding............ 5,947,516 5,728,996
========== ==========
Diluted net loss per share.................................. $ (0.06) $ (0.18)
========== ==========
Diluted weighted average common and common equivalents
shares outstanding........................................ 5,947,516 5,728,996
========== ==========
</TABLE>
The accompanying notes to consolidated financial statements are an integral of
these consolidated statements.
F-26
<PAGE> 121
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE FISCAL MONTHS ENDED APRIL 2, 1999 AND APRIL 3, 1998
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
------- -------
<S> <C> <C>
Cash Flows From Operating Activities:
Net loss.................................................. $ (355) $(1,009)
Adjustments to reconcile net loss to net cash used by
operating activities:
Depreciation........................................... 3,015 2,745
Amortization of goodwill and intangibles............... 647 495
Deferred income taxes.................................. (430) (114)
Amortization of debt discount and deferred financing
costs................................................. 200 182
Gain on sales of rental equipment and property, plant
and equipment......................................... (2,076) (1,592)
Changes in assets and liabilities, net of effects of
acquisitions:
Accounts receivable....................................... (5,111) (4,516)
Inventories............................................... (1,990) (1,953)
Prepaid income taxes...................................... (76) 60
Accounts payable.......................................... 2,630 4,129
Accrued liabilities and other long-term liabilities....... (3,711) (499)
Other, net................................................ 1,182 30
------- -------
Net cash used by operating activities............. (6,075) (2,042)
------- -------
Cash Flows From Investing Activities:
Property, plant and equipment additions................... (1,607) (1,159)
Proceeds from sale of fixed assets........................ 232 --
Rental equipment additions................................ (6,012) (4,034)
Proceeds from sales of rental equipment................... 2,971 2,392
Acquisitions (Note 2)..................................... (5,528) --
------- -------
Net cash used in investing activities............. (9,944) (2,801)
------- -------
Cash Flows From Financing Activities:
Issuance of long-term debt................................ 15,562 4,823
Purchase of treasury shares............................... (121) --
Issuance of common stock.................................. -- 14
------- -------
Net cash provided by financing activities......... 15,441 4,837
------- -------
Effect of Exchange Rate Changes on Cash..................... 18 6
------- -------
Net decrease in cash.............................. (560) --
Cash, beginning of period................................... 560 --
------- -------
Cash, end of period......................................... $ -- $ --
======= =======
Supplemental Disclosures:
Cash paid (refunded) for income taxes..................... $ 353 $ (728)
Cash paid for interest.................................... 2,915 2,640
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these consolidated statements.
F-27
<PAGE> 122
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE FISCAL MONTHS ENDED APRIL 2, 1999 AND APRIL 3, 1998
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
----- -------
<S> <C> <C>
Net loss.................................................... $(355) $(1,009)
Other comprehensive income:
Foreign currency translation adjustment................... 18 6
----- -------
Comprehensive loss.......................................... $(337) $(1,003)
===== =======
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these consolidated statements.
F-28
<PAGE> 123
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 2, 1999 AND APRIL 3, 1998
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
(1) CONSOLIDATED FINANCIAL STATEMENTS
The interim consolidated financial statements included herein have been
prepared by the Company, without audit, and include, in the opinion of
management, all adjustments necessary to state fairly the information set forth
therein. Any such adjustments were of a normal recurring nature. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
omitted, although the Company believes that the disclosures are adequate to make
the information presented not misleading. It is suggested that these unaudited
consolidated financial statements be read in conjunction with the consolidated
financial statements and the notes thereto included in the Company's annual
financial statements for the year ended December 31, 1998.
(2) ACQUISITIONS
(a) Symons Corporation - On September 29, 1997, the Company purchased the
stock of Symons Corporation ("Symons"). The purchase agreement between
the Company and the former stockholders of Symons ("the Former
Stockholders") relating to the Acquisition ("the Purchase Agreement")
provides for an adjustment to the purchase price under certain
circumstances. The Company has advised the Former Stockholders that it
believes it is entitled to a purchase price adjustment in its favor, and
the Former Stockholders similarly advised the Company that they believe
they are entitled to a purchase price adjustment in their favor. If the
Company and the Former Stockholders are unable to resolve these
differences, the dispute will be referred to a mutually satisfactory
accounting firm, which is expected to resolve such differences, in
accordance with the Purchase Agreement. On June 12, 1998, the Former
Stockholders filed a lawsuit in Delaware Chancery Court seeking a
determination with respect to a limited number of issues involved in the
dispute, which the Company believes can be resolved only through
arbitration. On October 28, 1998, the Court granted the Company's motion
to dismiss with respect to certain of these issues (as to which the
Company intends to proceed with arbitration) and retained jurisdiction
with respect to the remainder of the issues. On December 28, 1998, the
Court stayed the proceeding with respect to the issues as to which it
had retained jurisdiction, pending the outcome of arbitration commenced
by the parties with respect to the purchase price adjustment. Either
party may seek to reopen the proceedings following the arbitration. At
this time, the Company can make no determination as to the amount of the
adjustment, if any, that will be made to the purchase price. The Company
intends to vigorously pursue its rights under the Purchase Agreement.
(b) Cempro, Inc. - Effective January 1, 1999, the Company acquired
substantially all of the assets and assumed certain of the liabilities
of Cempro, Inc. ("Cempro") for approximately $5,500 in cash, including
acquisition costs of approximately $100. The business is being operated
as a part of the Company's concrete accessories business.
The acquisition has been accounted for as a purchase, and the results of
Cempro have been included in the accompanying consolidated financial
statements since the date of acquisition. The purchase price has been
allocated based on the estimated fair values of the assets acquired.
Certain appraisals and evaluations are preliminary and may change. Pro
forma financial information is not required.
F-29
<PAGE> 124
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(c) Secure, Inc. - In June 1998, the Company purchased substantially all of
the assets of Secure, Inc., ("Secure") a subsidiary of The Lofland
Company, for approximately $700 in cash, including acquisition costs of
approximately $100. This business is being operated as a part of the
Company's paving products business.
The acquisition has been accounted for as a purchase, and the results of
Secure have been included in the accompanying consolidated financial
statements since the date of acquisition. The purchase price has been
allocated based on the estimated fair values of the assets acquired.
Certain appraisals and evaluations are preliminary and may change. Pro
forma financial information is not required.
(d) Symons Concrete Forms, Inc. - In May 1998, the Company purchased Symons
Concrete Forms, Inc. (formerly known as CAI). The purchase price was
approximately $6,700, including acquisition costs of approximately $200,
and was paid in cash of approximately $400, assumption of long-term debt
of $2,200, and delivery of 222,496 Class A Common Shares valued at
approximately $4,100. The business is being operated as a part of the
Company's concrete forming systems division.
The acquisition has been accounted for as a purchase, and the results of
Symons Concrete Forms have been included in the accompanying
consolidated financial statements since the date of acquisition. The
purchase price has been allocated based on the estimated fair values of
the assets acquired and liabilities assumed. Certain appraisals and
evaluations are preliminary and may change. Pro forma financial
information is not required.
(e) Northwoods - In May 1998, the Company purchased the assets of the
Northwoods branches of Concrete Forming, Inc. ("Northwoods") for $750 in
cash. The Northwoods branches are being operated as a part of the
Company's concrete forming systems division.
The acquisition has been accounted for as a purchase, and the results of
the Northwoods branches have been included in the accompanying
consolidated financial statements since the date of acquisition. The
purchase price has been allocated based on the estimated fair values of
the assets acquired. Certain appraisals and evaluations are preliminary
and may change. Pro forma financial information is not required.
(3) ACCOUNTING POLICIES
The interim consolidated financial statements have been prepared in
accordance with the accounting policies described in the notes to the Company's
consolidated financial statements for the year ended December 31, 1998. While
management believes that the procedures followed in the preparation of interim
financial information are reasonable, the accuracy of some estimated amounts is
dependent upon facts that will exist or calculations that will be accomplished
at year end. Examples of such estimates include changes in the LIFO reserve
(based upon the Company's best estimate of inflation to date) and management
bonuses. Any adjustments pursuant to such estimates during the fiscal quarter
were of a normal recurring nature.
(a) Fiscal Quarter - The Company's fiscal quarters are defined as the
periods ending on the Friday nearest to the end of March, June and
September.
(b) Inventories - Substantially all inventories of the domestic Dayton
Superior and Dur-O-Wal operations are stated at the lower of last in,
first out (LIFO) cost or market (which approximates current cost). All
other inventories are stated at the lower of first-in, first-out (FIFO)
cost or market. The Company had no LIFO reserve as of April 2, 1999 and
December 31, 1998.
F-30
<PAGE> 125
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Following is a summary of the components of inventories as of April 2,
1999 and December 31, 1998:
<TABLE>
<CAPTION>
APRIL 2, DECEMBER 31,
1999 1998
-------- ------------
<S> <C> <C>
Raw materials..................................... $ 8,040 $ 7,659
Finished goods and work in progress............... 32,353 30,022
------- -------
40,393 37,681
Net realizable value reserve...................... (2,032) (1,623)
------- -------
$38,361 $36,058
======= =======
</TABLE>
(c) Rental Equipment - Rental equipment is manufactured by the Company for
resale and for rent to others on a short-term basis. Rental equipment is
recorded at the lower of FIFO cost or market and is depreciated over the
estimated useful life of the equipment, twelve to fifteen years, on a
straight-line method. The balances as of April 2, 1999 and December 31,
1998 are net of accumulated depreciation of $7,840 and $6,796,
respectively. Rental revenues were $10,509 and $9,040 for the three
fiscal months ended April 2, 1999 and April 3, 1998, respectively. Cost
of sales associated with rental revenues were $1,900 and $1,771 for the
three fiscal months ended April 2, 1999 and April 3, 1998, respectively.
(d) Financial Instruments - The Company uses interest rate swaps to manage
interest rate risk associated with its floating rate borrowing. The swap
agreements are contracts to exchange floating rate for fixed interest
payments periodically over the life of the agreements without the
exchange of the underlying amounts. The differential paid or received on
the interest rate agreements is recognized as an adjustment to interest
expense. The fair value of the interest rate swaps in place at April 2,
1999 is a liability of $981.
(e) Reclassifications - Certain reclassifications have been made to the 1998
amounts to conform to their 1999 classifications.
(4) CREDIT ARRANGEMENTS
Following is a summary of the Company's long-term debt as of April 2, 1999
and December 31, 1998:
<TABLE>
<CAPTION>
APRIL 2, DECEMBER 31,
1999 1998
-------- ------------
<S> <C> <C>
Revolving lines of credit, weighted average
interest rate of 6.4%.......................... $ 28,570 $ 13,000
Term Loan, weighted average interest rate of
7.75%.......................................... 100,000 100,000
Note payable to one of the Former Stockholders,
10.5%.......................................... 5,000 5,000
City of Parsons, Kansas Economic Development
Loan, 7%....................................... 197 205
-------- --------
Total long-term debt............................. 133,767 118,205
Less current portion............................. (32) (32)
-------- --------
Long-term portion................................ $133,735 $118,173
======== ========
</TABLE>
At April 2, 1999, $40,000 of the $40,000 Revolving Credit Facility was
available, of which $28,570 of borrowings was outstanding. Average borrowings
under the Revolving Credit Facility were $23,043 and $17,694 during the first
quarter of 1999 and 1998, respectively, at an approximate weighted average
F-31
<PAGE> 126
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
interest rate of 7.1% and 8.1%, respectively. The maximum borrowings outstanding
during the first quarter of 1999 and 1998 were $29,770 and $21,220,
respectively.
The Credit Agreement contains certain restrictive covenants which, among
other things, require that the Company maintain a minimum fixed charge coverage
ratio, not exceed a certain leverage ratio and limit the payment of dividends on
Common Shares. The Company was in compliance with its loan covenants as of April
2, 1999.
(5) STOCK OPTION PLANS
The Company has five stock option plans all of which provide for an option
exercise price equal to the stock's market price on the date of grant and all of
which are accounted for under APB Opinion No. 25, under which no compensation
costs have been recognized. Had compensation cost for these plans been
determined consistent with Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("SFAS 123"), the Company's net income
and net income per share for the three fiscal months ended April 2, 1999 and
April 3, 1998 would have been reduced to the following pro forma amounts:
<TABLE>
<CAPTION>
FOR THE THREE
FISCAL MONTHS
ENDED
--------------------
APRIL 2, APRIL 3,
1999 1998
-------- --------
<S> <C> <C>
Net loss
As Reported............................................... $(355) $(1,009)
Pro Forma................................................. (438) (1,044)
Basic net loss per share
As Reported............................................... (0.06) (0.18)
Pro Forma................................................. (0.07) (0.18)
Diluted net loss per share
As Reported............................................... (0.06) (0.18)
Pro Forma................................................. (0.07) (0.18)
</TABLE>
Because the SFAS 123 method of accounting has not been applied to options
granted prior to January 1, 1995, the resulting pro forma compensation cost may
not be representative of that to be expected in future years.
A summary of the activity of the Company's stock option plans for the three
fiscal months ended April 2, 1999 is presented in the table below:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
NUMBER OF EXERCISE PRICE
SHARES PER SHARE
--------- --------------
<S> <C> <C>
Outstanding at December 31, 1998..................... 358,033 $ 6.75
Granted at a fair value of $8.27..................... 80,100 19.44
------- ------
Outstanding at April 2, 1999......................... 438,133 $ 9.07
======= ======
</TABLE>
F-32
<PAGE> 127
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(6) SEGMENT REPORTING
The Company operates in four segments, each with a general manager:
concrete accessories, concrete forming systems, paving products, and masonry.
The segments are differentiated by their products and services, all of which
serve the construction industry.
Sales between segments are recorded at normal selling price by the selling
division and at cost for the buying division, with the profit recorded as an
intersegment elimination. Segment assets include accounts receivable;
inventories; property, plant, and equipment; rental equipment; and an allocation
of goodwill. Corporate and unallocated assets include cash, prepaid income
taxes, future tax benefits, and financing costs. Export sales and sales by
non-U.S. affiliates are not significant.
Information about the profit (loss) of each segment and the reconciliations
to the consolidated amounts for the three fiscal months ended April 2, 1999 and
April 3, 1998 is as follows:
<TABLE>
<CAPTION>
1999 1998
------- -------
<S> <C> <C>
Concrete Accessories........................................ $30,681 $27,723
Concrete Forming Systems.................................... 24,876 20,438
Paving Products............................................. 6,673 5,971
Masonry Products............................................ 5,966 5,095
------- -------
Net sales to external customers............................. $68,196 $59,227
======= =======
Concrete Accessories........................................ $ 1,060 $ 1,349
Concrete Forming Systems.................................... 1,232 893
Paving Products............................................. 97 --
------- -------
Net sales to other segments................................. $ 2,389 $ 2,242
======= =======
Concrete Accessories........................................ $ 975 $ 1,021
Concrete Forming Systems.................................... 1,701 1,648
Paving Products............................................. 182 188
Masonry Products............................................ 117 136
------- -------
Interest expense............................................ $ 2,975 $ 2,993
======= =======
Concrete Accessories........................................ $ 2,515 $ 1,908
Concrete Forming Systems.................................... 303 (640)
Paving Products............................................. (499) (242)
Masonry Products............................................ (386) (525)
Intersegment Eliminations................................... (1,181) (1,084)
Corporate................................................... (1,398) (1,157)
------- -------
Income (loss) before income taxes........................... $ (646) $(1,740)
======= =======
Concrete Accessories........................................ $ 753 $ 684
Concrete Forming Systems.................................... 1,694 1,512
Paving Products............................................. 223 207
Masonry Products............................................ 332 328
Corporate................................................... 13 14
------- -------
Depreciation................................................ $ 3,015 $ 2,745
======= =======
</TABLE>
F-33
<PAGE> 128
DAYTON SUPERIOR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
1999 1998
------- -------
<S> <C> <C>
Concrete Accessories........................................ $ 379 $ 330
Concrete Forming Systems.................................... 109 24
Paving Products............................................. 63 44
Masonry Products............................................ 96 97
------- -------
Amortization of goodwill and intangibles.................... $ 647 $ 495
======= =======
</TABLE>
Information regarding capital expenditures by segment and the
reconciliation to the consolidated amounts for the three fiscal months ended
April 3, 1999 and April 2, 1998 is as follows:
<TABLE>
<CAPTION>
1999 1998
------ ------
<S> <C> <C>
Concrete Accessories........................................ $ 746 $ 341
Concrete Forming Systems.................................... 385 605
Paving Products............................................. 276 181
Masonry Products............................................ 155 32
Corporate................................................... 45 --
------ ------
Property, Plant, and Equipment Additions.................... $1,607 $1,159
====== ======
Concrete Accessories........................................ $ 328 $ 543
Concrete Forming Systems.................................... 5,684 3,491
------ ------
Rental Equipment Additions.................................. $6,012 $4,034
====== ======
</TABLE>
There has been no material change in the relative assets employed by each
segment since December 31, 1998.
(7) CONTINGENCIES
Symons is currently a defendant involved in a civil suit brought by EFCO
Corp., a competitor of Symons in one portion of their business. EFCO Corp.
alleged that Symons engaged in false advertising, misappropriation of trade
secrets, intentional interference with contractual relations, and certain other
activities. After a jury trial, preliminary damages of approximately $14,000
were awarded against Symons in January 1999. In ruling on post-trial motions in
April 1999, the Judge dismissed EFCO's claim of intentional interference with
contractual relations, but increased the damages awarded to EFCO by $100.
The Company believes that Symons has grounds for a successful appeal and
remains committed to vigorously pursuing its appellate rights. A successful
appeal could result in judgment for Symons or a new trial. Symons' liability, if
any, cannot finally be determined until such time as all rights of the parties
have been exhausted or have expired by lapse of time. The Company considers the
ultimate outcome of this litigation to be not estimable. Accordingly, the
Company has not recorded any liability for the resolution of this suit. In the
event that Symons is unsuccessful in its post-trial motions and appeals, it may
have a material adverse effect on its consolidated financial position, results
of operations, or cash flows.
F-34
<PAGE> 129
, 1999
DAYTON SUPERIOR LOGO
DAYTON SUPERIOR CAPITAL TRUST
,000,000 PREFERRED SECURITIES
% Convertible Trust Preferred Securities
($25 liquidation amount per Preferred
Security) Guaranteed, to the extent described
herein by, and convertible into Class A Common
Shares of,
DAYTON SUPERIOR CORPORATION
------------------
PROSPECTUS
------------------
ROBERT W. BAIRD & CO.
INCORPORATED
LEGG MASON WOOD WALKER
INCORPORATED
MCDONALD INVESTMENTS INC.
- --------------------------------------------------------------------------------
You should only rely on the information contained or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
information different from that contained in this prospectus. We are offering to
sell, and seeking offers to buy, these securities only in jurisdictions where
offers and sales are permitted. The information contained in this prospectus is
accurate only as of the date of this prospectus, regardless of the time of
delivery of this prospectus or of any sale of these securities.
- --------------------------------------------------------------------------------
<PAGE> 130
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Set forth below is an estimate (other than the Commission Registration Fee
and the National Association of Securities Dealers, Inc. (the "NASD") Filing
Fee) of the fees and expenses, all of which are payable by the Company, in
connection with the registration and sale of the securities being registered
hereunder:
<TABLE>
<S> <C>
Commission Registration Fee................................. $ 9,591
NASD Filing Fee............................................. 3,950
NYSE Listing Fee............................................
Initial Trustees' Fees......................................
Blue Sky Fees and Expenses..................................
Legal Fees and Expenses.....................................
Accounting Fees and Expenses................................
Printing Expenses...........................................
Miscellaneous...............................................
--------
Total............................................. $
========
</TABLE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Article Eighth of the Company's Amended Articles of Incorporation 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 ("Derivative Actions").
In Third-Party Actions, the Company is required to indemnify each director
and officer against expenses, including attorneys' fees, judgments, decrees,
fines, penalties and amounts paid in settlement actually and reasonably incurred
by such person in connection with any threatened or actual proceeding in which
such person may be involved by reason of having acted in such capacity, if such
person acted in good faith and in a manner such person 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, such person had no reasonable cause
to believe that such person's conduct was unlawful.
In Derivative Actions, the Company is required to indemnify each director
and officer against expenses, including attorneys' fees, actually and reasonably
incurred by such person in connection with the defense or settlement of any such
proceeding if such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of the
Company, except that no indemnification is permitted with respect to (1) any
matter as to which such person has been adjudged to be liable for negligence or
misconduct in the performance of such person's duty to the Company unless a
court determines such person is entitled to indemnification and (2) any
liability asserted in connection with unlawful loans, dividends, distribution,
distributions of assets and repurchases of shares of the Company under Section
1701.95 of the Ohio Revised Code.
Unless indemnification is ordered by a court, the determination as to
whether or not a person 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
II-1
<PAGE> 131
directors so directs, by independent legal counsel in a written opinion; or by
shareholders of the Company.
Article Eighth of the Amended Articles of Incorporation does not limit in
any way other indemnification rights to which those seeking indemnification may
be entitled.
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 AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits:
See Exhibit Index following the signature pages 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.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers, and controlling persons of the Registrant
pursuant to the foregoing provisions 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 the
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 the Registration Statement as of the
time it was declared effective.
(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> 132
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 5th day of August, 1999.
DAYTON SUPERIOR CORPORATION
By: /s/ John A. Ciccarelli
-------------------------------------
John A. Ciccarelli
President and Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby authorizes and appoints
John A. Ciccarelli, Matthew O. Diggs, Jr. and Timothy C. Collins or any of them,
as his attorney-in-fact, with full power of substitution and resubstitution, to
sign and execute on behalf of the undersigned any amendment or amendments to
this Registration Statement on Form S-3, and to perform any acts necessary to be
done in order to file such amendment with exhibits thereto and other documents
in connection therewith with the Securities and Exchange Commission, and each of
the undersigned does hereby ratify and confirm all that said attorneys-in-fact
and agents, or their substitutes, shall 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>
<CAPTION>
NAME TITLE DATE
- ----------------------------------- ----------------------------------- ---------------
<S> <C> <C>
/s/ John A. Ciccarelli President, Chief Executive Officer August 5, 1999
- ----------------------------------- and Director (principal executive
John A. Ciccarelli officer)
/s/ Alan F. McIlroy Vice President and Chief Financial August 5, 1999
- ----------------------------------- Officer (principal financial
Alan F. McIlroy officer)
/s/ Thomas W. Roehrig Corporate Controller (principal August 5, 1999
- ----------------------------------- accounting officer)
Thomas W. Roehrig
/s/ Matthew O. Diggs, Jr. Non-Executive Chairman of the Board August 5, 1999
- -----------------------------------
Matthew O. Diggs, Jr.
/s/ William F. Andrews Director August 5, 1999
- -----------------------------------
William F. Andrews
Director
- -----------------------------------
Timothy C. Collins
/s/ Daniel W. Duval Director August 5, 1999
- -----------------------------------
Daniel W. Duval
/s/ Matthew M. Guerreiro Director August 5, 1999
- -----------------------------------
Matthew M. Guerreiro
/s/ Robert B. Holmes Director August 5, 1999
- -----------------------------------
Robert B. Holmes
</TABLE>
II-3
<PAGE> 133
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Dayton Superior
Capital Trust 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 August 5, 1999.
DAYTON SUPERIOR CAPITAL TRUST
By DAYTON SUPERIOR CORPORATION
By: /s/ John A. Ciccarelli
-------------------------------------
John A. Ciccarelli
President and Chief Executive Officer
II-4
<PAGE> 134
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
(1) UNDERWRITING AGREEMENT
1.1 Form of Underwriting Agreement*
(3) ARTICLES OF INCORPORATION AND BY-LAWS
3.1 Amended Articles of Incorporation of the Company*
3.2 Code of Regulations of the Company. [Incorporated herein by
reference to Exhibit 3.3 to the Company's Registration
Statement on Form S-1 (Reg. 333-2974)]
(4) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS,
INCLUDING INDENTURES
4.1 Senior Unsubordinated Redeemable Note of the Company in the
principal amount of $5,000,000 [Incorporated herein by
reference to Exhibit A to the Agreement set forth as Exhibit
2.1 to the Company's Current Report on Form 8-K dated June
2, 1997]
4.2 Credit Agreement dated as of September 29, 1997 among the
Company and the other parties thereto [Incorporated herein
by reference to Exhibit 4.2 to the Company's Current Report
on Form 8-K dated October 13, 1997]
4.2.1 First Amendment to Credit Agreement dated as of October 23,
1997 [Incorporated herein by reference to Exhibit 4.2.1 of
the Company's Annual Report on Form 10-K for the year ended
December 31, 1998]
4.2.2 Second Amendment to Credit Agreement dated as of June 26,
1998 [Incorporated herein by reference to Exhibit 4.1 of the
Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended April 2, 1999]
4.2.3 Third Amendment to Credit Agreement dated as of May 14,
1999*
4.3 Form of Class A Common Share Certificate [Incorporated
herein by reference to Exhibit 4.1 to the Company's
Registration Statement on Form S-1 (Reg. 333-2974)]
4.4 Certificate of Trust of Dayton Superior Capital Trust*
4.5 Form of Amended and Restated Trust Agreement of Dayton
Superior Capital Trust among Dayton Superior Corporation, as
depositor, Firstar Bank, N.A., as Property Trustee, Mark A.
Ferrucci, as Delaware Trustee, and the Administrative
Trustees named therein*
4.6 Form of Junior Convertible Subordinated Indenture between
Dayton Superior Corporation and Firstar Bank, N.A., as
Indenture Trustee*
4.7 Form of Preferred Security (included as Exhibit D to Exhibit
4.5)*
4.8 Form of Junior Convertible Subordinated Debenture (included
as Sections 2.2 and 2.3 to Exhibit 4.6)*
4.9 Form of Guarantee Agreement between Dayton Superior
Corporation, as Guarantor, and Firstar Bank, N.A., as
Guarantee Trustee, with respect to the Preferred Securities
of the Dayton Superior Capital Trust*
(5) OPINION REGARDING LEGALITY
5.1 Opinion of Thompson Hine & Flory LLP with respect to the
legality of the securities being registered+
5.2 Opinion of Young Conaway Stargatt and Taylor, LLP, special
Delaware counsel, as to the validity of the issuance of the
Preferred Securities being issued by the Dayton Superior
Capital Trust+
</TABLE>
II-5
<PAGE> 135
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
(8) OPINION REGARDING TAX MATTERS
8.1 Opinion of Thompson Hine & Flory LLP as to certain tax
matters+
(12) STATEMENTS REGARDING COMPUTATION OF RATIOS
12.1 Computation of Earnings to Fixed Charges*
(23) CONSENTS OF EXPERTS AND COUNSEL
23.1 Consent of Arthur Andersen LLP*
23.2 Consent of Thompson Hine & Flory LLP (contained in their
opinions set forth as Exhibits 5.1 and 8.1)
23.3 Consent of Young Conaway Stargett and Taylor, LLP (contained
in their opinion set forth in Exhibit 5.2)
(24) POWERS OF ATTORNEY
24.1 Power of Attorney (included on signature pages of this
Registration Statement)
(25) STATEMENT OF ELIGIBILITY OF TRUSTEE
25.1 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of Firstar Bank, N.A., as Trustee
under the Indenture, Property Trustee under the Trust
Agreement, and Guarantee Trustee under the Guarantee*
</TABLE>
- ---------------
* Filed herewith.
+ To be filed by Amendment.
II-6
<PAGE> 1
Exhibit 1.1
_____________ CONVERTIBLE TRUST PREFERRED SECURITIES*
DAYTON SUPERIOR CAPITAL TRUST
[______]% Convertible Trust Preferred Securities ($25 Liquidation
Amount per Convertible Trust Preferred Security). Guaranteed to the extent
described herein by, and Convertible into Class A Common Shares of, DAYTON
SUPERIOR CORPORATION.
UNDERWRITING AGREEMENT
August ___, 1999
Robert W. Baird & Co. Incorporated
Legg Mason Wood Walker Incorporated
McDonald Investments Inc.
As Representatives of the Several Underwriters
Identified in Schedule I Hereto
c/o Robert W. Baird & Co. Incorporated
777 East Wisconsin Avenue
Milwaukee, WI 53202
Ladies and Gentlemen:
1. INTRODUCTION.
DAYTON SUPERIOR CAPITAL TRUST (the "Trust"), a statutory
business trust created under the Business Trust Act (the "Delaware Act") of the
State of Delaware (Chapter 38, Title 12, of the Delaware Code, 12 Del. C.
Section 3801 et seq.), proposes, upon the terms and conditions set forth herein,
to issue and sell _,000,000 [____]% Convertible Trust Preferred Securities,
liquidation preference $25 per security (the "Firm Preferred Securities"), to
the several Underwriters named in Schedule I hereto (the "Underwriters"), who
are acting severally and not jointly. The Trust also proposes, upon the terms
and conditions set forth herein, to grant to the Underwriters an option to
purchase up to an aggregate of _________ additional [____]% Convertible
Preferred
_________________
* Plus an option to acquire an aggregate of ________ additional Convertible
Trust Preferred Securities that may be issued to cover over-allotments.
<PAGE> 2
Trust Securities, liquidation preference $25 per security solely for the purpose
of covering over-allotments (the "Additional Preferred Securities"). The Firm
Preferred Securities and the Additional Preferred Securities are hereinafter
collectively referred to as the "Preferred Securities."
Each Preferred Security is convertible at the option of the
holder thereof into Class A Common Shares (the "Conversion Shares"), without par
value (the "Class A Shares"), of Dayton Superior Corporation, an Ohio
corporation (the "Company" and together with the Trust, the "Offerors") at a
conversion rate of [_____] Conversion Shares for each Preferred Security,
subject to adjustment in certain circumstances, through the exchange of such
Preferred Security for Convertible Debentures (as defined below) and the
conversion of the Convertible Debentures so received. The Preferred Securities
will be guaranteed by the Company, to the extent set forth in the Guarantee (as
defined below), with respect to distributions and amounts payable upon
liquidation or redemption (the "Guarantee") pursuant to the Preferred Securities
Guarantee Agreement (the "Preferred Securities Guarantee Agreement") to be dated
as of the First Closing Date (as defined below) executed and delivered by the
Company and Firstar Bank, N.A. (the "Guarantee Trustee"), a _____________
banking corporation, not in its individual capacity but solely as trustee, for
the benefit of the holders from time to time of the Preferred Securities.
The entire proceeds from the sale of the Preferred Securities
will be combined with the entire proceeds from the sale by the Trust to the
Company of the Trust's common securities (the "Common Securities")and will be
used by the Trust to purchase the [______]% Convertible Subordinated Debentures
due 2029 (the "Convertible Debentures") issued by the Company.
The Preferred Securities and the Common Securities will be
issued pursuant to the Trust Agreement of the Trust, to be dated as of the
Closing Date (the "Trust Agreement"), among the Company, as Depositor, Firstar
Bank, N.A., as property trustee (the "Property Trustee"), Mark A. Ferrucci, as
Delaware trustee (the "Delaware Trustee"), and, ________________________ as
administrative trustees (the "Administrative Trustees," and together with the
Property Trustee, the Delaware Trustee, the "Trustees"), and the holders from
time to time of undivided beneficial interests in the assets of the Trust. The
Convertible Debentures will be issued pursuant to an Indenture, to be dated as
of the Closing Date (the "Indenture"), between the Company and Firstar Bank,
N.A., as trustee (the "Indenture Trustee"). The Preferred Securities, the
Preferred Securities Guarantee, the Convertible Debentures and the Conversion
Shares are collectively referred to herein as the "Securities."
The Offerors wish to confirm as follows their agreement with
you in connection with the several purchases of the Preferred Securities by the
Underwriters.
2
<PAGE> 3
2. REPRESENTATIONS AND WARRANTIES OF THE OFFERORS. The Company and the
Trust, jointly and severally, represent and warrant to, and agree with, each
Underwriter, and shall be deemed to represent and warrant to each Underwriter on
each Closing Date (as hereinafter defined), that:
(a) The Offerors have prepared and filed with the Securities
and Exchange Commission (the "Commission") in accordance with the provisions of
the Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Securities Act"), a registration
statement on Form S-3 (File No. 333-____) under the Securities Act (the
"Registration Statement"), including a prospectus subject to completion relating
to the Securities. The term "Registration Statement" as used in this Agreement
means the registration statement (including all financial schedules and
exhibits), as amended at the time it becomes effective, or, if the Registration
Statement became effective prior to the execution of this Agreement, as
supplemented or amended prior to the execution of this Agreement. If it is
contemplated, at the time this Agreement is executed, that a post-effective
amendment to the Registration Statement will be filed and must be declared
effective before the offering of the Preferred Securities may commence, the term
"Registration Statement" as used in this Agreement means the Registration
Statement as amended by said post-effective amendment. If an additional
registration statement is prepared and filed with the Commission in accordance
with Rule 462(b) under the Securities Act (an "Additional Registration
Statement"), the term "Registration Statement" as used in this Agreement
includes the Additional Registration Statement.
The term "Prospectus" as used in this Agreement means the
prospectus in the form included in the Registration Statement as supplemented by
the addition of Rule 430A information contained in the prospectus filed with the
Commission pursuant to Rule 424(b) under the Securities Act. The term
"Preliminary Prospectus" as used in this Agreement means the prospectus subject
to completion relating to the Preferred Securities in the form included in the
registration statement at the time of the initial filing of the registration
statement with the Commission, and as such prospectus shall have been amended
from time to time prior to the date of the Prospectus.
Any reference in this Agreement to the registration statement,
the Registration Statement, any Preliminary Prospectus or the Prospectus shall
be deemed to refer to and include the documents incorporated by reference
therein pursuant to Form S-3 under the Securities Act, as of the date of the
registration statement, the Registration Statement, such Preliminary Prospectus
or the Prospectus, as the case may be, and any reference to any amendment or
supplement to the registration statement, the Registration Statement, any
Preliminary Prospectus or the Prospectus shall be deemed to refer to and include
any documents filed after such date under the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "Exchange Act") which, upon filing, are incorporated by
reference
3
<PAGE> 4
therein, as required by Form S-3. As used herein, the term "Incorporated
Documents" means the documents which at the time are incorporated by reference
in the registration statement, the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto.
(b) Each of the Offerors and the transactions contemplated by
this Agreement meet the requirements for using Form S-3 under the Securities
Act.
(c) The Incorporated Documents heretofore filed, when they
were filed (or, if any amendment with respect to any such document was filed,
when such amendment was filed), conformed in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder, any
further Incorporated Documents so filed will, when they are filed, conform in
all material respects with the requirements of the Exchange Act and the rules
and regulations thereunder; no such document when it was filed (or, if an
amendment with respect to any such document was filed, when such amendment was
filed), contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading; and no such further document, when it is
filed, will contain an untrue statement of a material fact or will omit to state
a material fact required to be stated therein or necessary in order to make the
statements therein not misleading.
(d) The Registration Statement has become effective; no stop
order suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such purpose are pending before or, to the Offerors'
knowledge, threatened by the Commission.
(e) (i) Each part of the Registration Statement, when
such part became effective, did not contain and each such part, as amended or
supplemented, if applicable, will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading,
(ii) The Registration Statement and the Prospectus
comply and, as amended or supplemented, if applicable, will comply in all
material respects with the Securities Act, and
(iii) The Prospectus does not contain and, as
amended or supplemented, if applicable, will not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading,
4
<PAGE> 5
except that the representations and warranties set
forth in this paragraph (e) do not apply to statements or omissions in the
Registration Statement or the Prospectus based upon information relating to any
Underwriter furnished to the Company in writing by such Underwriter pursuant to
Section 3 hereof.
(f) The Company and each of its subsidiaries has been duly
incorporated, is validly existing as a corporation in good standing under the
laws of its jurisdiction of incorporation and has the corporate power and
authority to carry on its business as it is currently being conducted and to
own, lease and operate its properties, and each is duly qualified and is in good
standing as a foreign corporation authorized to do business in each jurisdiction
in which the nature of its business or its ownership or leasing of property
requires such qualification, except where the failure to be so qualified would
not have a material adverse effect on the business, properties, prospects,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole.
(g) The Trust has been duly created and is validly existing in
good standing as a business trust under the Delaware Act with the power and
authority to own property and to conduct its business as described in the
Registration Statement and the Prospectus, and any amendment or supplement
thereto, and to enter into and perform its obligations under this Agreement, the
Preferred Securities, the Common Securities and the Trust Agreement; the Trust
is duly qualified to transact business in each jurisdiction in which such
qualification is necessary, except to the extent that the failure to so qualify
would not have a material adverse effect on the Trust; and the Trust is not a
party to or otherwise bound by any agreement, other than those described in the
Prospectus, and any amendment or supplement thereto.
(h) All of the outstanding shares of capital stock of, or
other ownership interests in, each of the Company's subsidiaries have been duly
authorized and validly issued and are fully paid and non-assessable, and, except
as otherwise set forth in the Prospectus, are owned by the Company, free and
clear of any security interest, mortgage, pledge, lien, encumbrance, claim or
adverse interest of any nature. There are no outstanding options, warrants or
other rights to purchase or otherwise acquire any shares of capital stock of any
subsidiary of the Company or any security convertible into shares of capital
stock of any subsidiary of the Company, except as described in the Prospectus.
(i) As of the Closing Date, the authorized capital stock of
the Company consists of 5,000,000 Preferred Shares, without par value, of which
there are no shares outstanding, and 22,005,850 Class A Shares, of which there
are __________ shares outstanding. All outstanding shares of capital stock and
options and other rights to acquire capital stock have been issued in compliance
with the registration and qualification provisions of all applicable securities
laws (or applicable exemptions thereof) and were not issued in violation of any
preemptive rights, rights of first refusal and other similar rights. There are
no outstanding options, warrants or other rights to
5
<PAGE> 6
purchase or otherwise acquire any shares of capital stock of the Company or any
security convertible into shares of capital stock of the Company, except as
described in the Prospectus. All the outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid,
non-assessable and, as of the Closing Date, will not be subject to any
preemptive or similar rights. The Conversion Shares have been duly authorized,
and when issued upon conversion as described in the Prospectus, will be validly
issued, fully paid and non-assessable.
(j) The Common Securities have been duly authorized by the
Trust Agreement and, when issued and delivered by the Trust to the Company in
accordance with the terms of the Trust Agreement and against payment therefore
as described in the Prospectus, will be validly issued undivided beneficial
interests in the assets of the Trust; the issuance of the Common Securities is
not subject to preemptive or other similar rights; and at the First Closing Date
(as defined below), all of the issued and outstanding Common Securities of the
Trust will be directly owned by the Company free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or adverse interest of any
nature.
(k) The Trust Agreement has been duly authorized by the
Company and, when validly executed and delivered by the Company and the
Administrative Trustees, and assuming the due authorization, execution and
delivery of the Trust Agreement by the Delaware Trustee, the Trust Agreement
will be a valid and legally binding obligation of the Company and the
Administrative Trustees, enforceable against the Company and the Administrative
Trustees in accordance with its terms, except as enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or similar laws
affecting enforcement of creditors' rights generally and except as enforcement
thereof is subject to general principles of equity regardless of whether
enforcement is considered a proceeding in equity or at law; and the Trust
Agreement has been duly qualified under the Trust Indenture Act of 1939 (the
"1939 Act") and conforms to the description thereof in the Registration
Statement and the Prospectus and any amendment or supplement thereto.
(l) The Administrative Trustees of the Trust are officers or
employees of the Company and have been duly authorized by the Company to execute
and deliver the Trust Agreement.
(m) The Preferred Securities Guarantee Agreement has been duly
and validly authorized by the Company and, when validly executed and delivered
by the Company, and assuming due authorization, execution and delivery of the
Preferred Securities Guarantee Agreement by the Guarantee Trustee, will
constitute a valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except as enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation, all laws
relating to the fraudulent transfers),
6
<PAGE> 7
reorganization, moratorium or other similar laws affecting enforcement of
creditors' rights generally and except as enforcement thereof is subject to
general principles of equity regardless of whether enforcement is considered a
proceeding in equity or at law; and the Preferred Securities Guarantee Agreement
has been duly qualified under the 1939 Act and conforms to the description
thereof in the Registration Statement and the Prospectus and any amendment or
supplement thereto.
(n) The Preferred Securities have been duly authorized by the
Trust Agreement and, when authenticated in the manner provided for in the Trust
Agreement and issued and delivered pursuant to this Agreement against payment of
the consideration set forth herein, will be validly issued and (subject to the
terms of the Trust Agreement) fully paid and nonassessable undivided beneficial
interests in the assets of the Trust; the issuance of the Preferred Securities
is not subject to preemptive or other similar rights; and holders of Preferred
Securities will be entitled to the same limitation of personal liability
extended to stockholders of private corporations for profit incorporated under
the General Corporation Law of the State of Delaware and the Preferred
Securities have been registered under the Exchange Act and authorized for
listing on the New York Stock Exchange ("NYSE"), subject only to official notice
of issuance.
(o) The Indenture has been duly authorized by the Company,
and, when validly executed and delivered by the Company, and assuming the due
authorization, execution and delivery of the Indenture by the Indenture Trustee,
will be a valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or other similar
laws affecting enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity regardless of
whether enforcement is considered a proceeding in equity or at law; and the
Indenture has been (or will have been) duly qualified under the 1939 Act and
conforms to the description thereof in the Registration Statement and the
Prospectus, and any amendment or supplement thereto.
(p) Each of the Company and the Trust has full legal right,
power and authority to enter into this Agreement and perform the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by the Company and the Trust and is a valid and binding agreement on
the part of each of the Company and the Trust, enforceable against each of the
Company and the Trust in accordance with its terms, except as enforcement
thereof may be limited by bankruptcy, insolvency (including, without limitation,
all laws relating to fraudulent transfers), reorganization, moratorium or other
similar laws affecting enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity regardless of
whether enforcement is considered a proceeding in equity or at law.
7
<PAGE> 8
(q) The Convertible Debentures have been duly authorized by
the Company, and when validly executed, authenticated, issued and delivered in
the manner provided for in the Indenture and sold and paid for as provided in
this Agreement, the Convertible Debentures will be valid and binding obligations
of the Company entitled to the benefits of the Indenture and enforceable against
the Company in accordance with their terms, except as enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or similar laws
affecting enforcement of creditors' rights generally and except as enforcement
thereof is subject to general principles of equity regardless of whether
enforcement is considered a proceeding in equity or at law; and the Indenture
conforms to the description thereof in the Registration Statement and the
Prospectus, and any amendment or supplement thereto.
(r) The Company's obligations under the Preferred Security
Guarantee are (i) subordinated and junior in right of payment to all other
liabilities of the Company, (ii) pari passu with the most senior preferred stock
of the Company, if any, and with any guarantee now or hereafter entered into by
the Company in respect of any preferred or preference stock of any affiliate of
the Company and (iii) senior to the Class A Shares.
(s) The Convertible Debentures are subordinate and junior in
right of payment to all existing and future Senior Debt (as defined in the
Indenture) of the Company.
(t) The authorized capital stock of the Company and the Trust,
including the Class A Shares, the Preferred Securities, the Common Securities,
the Conversion Shares, the Convertible Debentures, the Trust Agreement, the
Preferred Securities Guarantee Agreement and the Indenture conform in all
material respects to the descriptions thereof in the Prospectus under the
captions "Description of the Preferred Securities", "Description of the
Guarantee", "Description of the Junior Subordinated Debentures", "Relationship
Among the Preferred Securities, the Junior Subordinated Debentures and the
Guarantee" and "Description of Our Capital Shares."
(u) Neither the Company nor any of its subsidiaries is in
violation of its respective charter, by-laws or code of regulations; the Trust
is not in violation of the Trust Agreement or its Certificate of Trust filed
with the State of Delaware on August __, 1999; and neither the Company, any
subsidiary or the Trust is in default in the performance of any obligation,
agreement or condition contained in any bond, debenture, note or any other
evidence of indebtedness or in any other agreement, indenture or instrument, to
which the Company, any of its subsidiaries or the Trust is a party or by which
the Company, any of its subsidiaries or the Trust or their respective property
is bound, which default could reasonably be expected to result in a material
adverse effect on the business, properties, prospects, financial condition or
results of operations of the Company and its subsidiaries, taken as a whole, or
of the Trust, as the case may be.
8
<PAGE> 9
(v) The execution and delivery of, and the performance by the
Company and the Trust of their respective obligations under, this Agreement, and
the consummation of the transactions contemplated hereby (i) will not require
any consent, approval, authorization or other order of any court, regulatory
body, administrative agency or other governmental body (except as such may be
required under the Securities Act, the Exchange Act, the securities or Blue Sky
laws of the various states, or the by-laws or rules of the NYSE and the National
Association of Securities Dealers, Inc. (the "NASD")), and (ii) will not
conflict with or constitute a breach of any of the terms or provisions of, or a
default under, the charter, by-laws or code of regulations of the Company or any
of its subsidiaries or the Trust or any agreement, indenture or other instrument
to which the Company, any of its subsidiaries or the Trust is a party or by
which the Company, any of its subsidiaries or the Trust, or their respective
property is bound, or violate or conflict with any laws, administrative
regulations or rulings or court decrees applicable to the Company, any of its
subsidiaries, the Trust or their respective property, other than conflicts or
breaches that, individually or in the aggregate, would not reasonably be
expected to result in a material adverse effect on the business, properties,
prospects, financial condition or results of operations of the Company and its
subsidiaries, taken as a whole, or of the Trust, as the case may be, or
materially impair the ability of the Company or the Trust to perform its
obligations under this Agreement.
(w) Except as otherwise set forth in the Prospectus, there are
no material legal or governmental proceedings pending to which the Company, any
of its subsidiaries or the Trust is a party or of which any of their respective
property is the subject, and, to the best of the Offerors' knowledge, no such
proceedings are threatened or contemplated. No contract or document of a
character required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement is not so
described or filed as required. The contracts so described or required to be
described in the Registration Statement or the Prospectus are in full force and
effect on the date hereof except as disclosed therein; and neither the Company
nor, to the Company's knowledge, any other party is in material breach of or
default under any of such contracts.
(x) Except as otherwise set forth in the Prospectus, neither
the Company nor any of its subsidiaries has violated any foreign, federal, state
or local law or regulation relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes, pollutants
or contaminants ("Environmental Laws"), nor any federal or state law relating to
discrimination in the hiring, promotion or pay of employees nor any applicable
federal or state wages and hours laws, nor any provisions of the Employee
Retirement Income Security Act or the rules and regulations promulgated
thereunder, which in any such case could reasonably be expected to result in
9
<PAGE> 10
any material adverse effect on the business, properties, prospects, financial
condition or results of operations of the Company and its subsidiaries, taken as
a whole.
(y) The Company and each of its subsidiaries has such permits,
licenses, franchises and authorizations of, and has made all declarations and
filings with, governmental or regulatory authorities ("permits"), including,
without limitation, under any applicable Environmental Laws, as are necessary to
own, lease and operate its respective properties and to conduct its business,
except for such permits the absence of which, individually or in the aggregate,
would not reasonably be expected to have a material adverse effect on the
business, properties, prospects, financial condition or results of operations of
the Company and its subsidiaries, taken as a whole; and the Company and each of
its subsidiaries has fulfilled and performed all of its material obligations
with respect to such permits and no event has occurred which allows, or after
notice or lapse of time would allow, revocation or termination thereof or
results in any other material impairment of the rights of the holder of any such
permit.
(z) Except as otherwise set forth in the Prospectus or such as
are not material to the business, properties, prospects, financial condition or
results of operation of the Company and its subsidiaries, taken as a whole, the
Company and each of its subsidiaries has good and marketable title, free and
clear of all liens, claims, encumbrances and restrictions except liens for taxes
not yet due and payable and liens that do not materially detract from the value
thereof or materially impair its use in the business of the Company or such
subsidiary, to all property and assets described in the Registration Statement
as being owned by it. No default has occurred or is continuing under any
material lease to which the Company or any of its subsidiaries is a party which
might result in any material adverse effect on the business, properties,
prospects, financial condition or results of operation of the Company and its
subsidiaries, taken as a whole.
(aa) The Company owns or possesses adequate rights to use, all
material patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks and
trade names currently employed by the Company in connection with the business
now operated by the Company, and, except as described in the Prospectus, the
Company has not received any notice of infringement of or conflict with asserted
rights of others with respect to any of the foregoing which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, might
result in any material adverse effect on the business, properties, prospects,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole.
(bb) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance
10
<PAGE> 11
with management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability; (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 the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(cc) Except as otherwise described in the Prospectus, no
material labor dispute with employees of the Company or any of its subsidiaries
exists or to the knowledge of the Company is imminent, and the Company is not
aware of any written communication of any existing, threatened or imminent labor
disturbance by the employees of any of its principal suppliers, manufacturers or
contractors that could reasonably be expected to result in any material adverse
effect on the business, properties, prospects, financial condition or results of
operations of the Company and its subsidiaries, taken as a whole. Except as
described in the Prospectus, the employment of each officer and employee of the
Company or any of its subsidiaries is terminable at the will of the Company or
such subsidiary.
(dd) To the Company's knowledge, after due investigation, the
software and systems of the Company or any of its subsidiaries will produce no
material, logical or arithmetic inconsistencies when dealing with leap years or
dates beyond the year 1999 that could reasonably be expected to result in any
material adverse effect on the business, properties, prospects, financial
condition or results of operations of the Company and its subsidiaries, taken as
a whole. Without limiting the foregoing, to the Company's knowledge, the
Company's services will not materially impede the accurate processing of data,
or cause programming or processing errors resulting from the rollover of
two-digit year values to "00" on January 1, 2000.
(ee) The Company and each of its subsidiaries maintain
reasonably adequate insurance.
(ff) To the Company's knowledge, Arthur Andersen LLP are
independent public accountants with respect to the Company as required by the
Securities Act.
(gg) The financial statements, together with related schedules
and notes forming part of the Registration Statement and the Prospectus (and any
amendment or supplement thereto), present fairly the consolidated financial
position, results of operations and changes in financial position of the Company
and its subsidiaries on the basis stated in the Registration Statement at the
respective dates or for the respective periods to which they apply; such
statements and related schedules and notes have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved, except as disclosed therein, and all adjustments
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<PAGE> 12
necessary for a fair presentation of results for such periods have been made;
and the other financial and statistical information and data set forth in the
Registration Statement and the Prospectus (and any amendment or supplement
thereto) are, in all material respects, accurately presented and prepared on a
basis consistent with such financial statements and the books and records of the
Company.
(hh) Neither the Company nor the Trust is, and upon the
issuance and sale of the Preferred Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Prospectus neither
will be, an "investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
(ii) Except as otherwise set forth in the Prospectus, no
holder of any security of the Company has any right to require registration of
the Class A Shares or any other security of the Company.
3. INFORMATION FURNISHED BY THE UNDERWRITERS. The information
set forth in the table immediately following the first paragraph under the
heading "Underwriting" in the Prospectus and the paragraphs relating to
stabilization practices and passive market making and the concession and
re-allowance amounts appearing under the caption "Underwriting" in the
Prospectus constitute all of the information furnished to the Company by and on
behalf of the Underwriters for use in connection with the preparation of the
Registration Statement and the Prospectus, as such information is referred to in
this Agreement.
4. PURCHASE, SALE AND DELIVERY OF PREFERRED SECURITIES.
(a) On the basis of the representations, warranties and
agreements herein contained, and subject to the terms and conditions herein set
forth, the Trust agrees to sell to the Underwriters identified in Schedule I
annexed hereto an aggregate of _,000,000 Firm Preferred Securities, and each of
the Underwriters agrees, severally and not jointly, to purchase from the Trust
the number of Firm Preferred Securities as hereinafter set forth at the purchase
price of $25 per Firm Preferred Security, plus accrued distributions, if any,
from _____________, 1999. The obligation of each Underwriter to the Company
shall be to purchase from the Company that number of full Firm Preferred
Securities which bears the same proportion to the number of Firm Preferred
Securities to be sold by the Trust as the number of Preferred Securities set
forth opposite the name of such Underwriter in Schedule I annexed hereto bears
to the total number of Firm Preferred Securities to be purchased by all of the
Underwriters under this Agreement.
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(b) The Company agrees that, in view of the fact that the
proceeds of the sale of the Preferred Securities will be invested in the
Convertible Debentures, it shall pay to the Underwriters as compensation
("Underwriters' Compensation") for their arranging the investment of the
proceeds therein, on the Closing Date, $25 per Firm Preferred Security. The
Underwriters shall inform the Company in writing on the First Closing Date of
the aggregate number of Firm Preferred Securities so sold.
(c) On the First Closing Date, the Trust will deliver to the
Underwriters, at the offices of Robert W. Baird & Co. Incorporated, 777 East
Wisconsin Avenue, Milwaukee, Wisconsin 53202, or through the facilities of The
Depository Trust Company, for the accounts of the several Underwriters,
certificates representing the Firm Preferred Shares to be sold by it against
payment in Milwaukee, Wisconsin of the purchase price therefor by wire transfer
of immediately available funds to the Trust with respect to the Firm Preferred
Shares being sold by the Trust. As referred to in this Agreement, the "First
Closing Date" shall be on the third full business day after the date of the
Prospectus, at 9:00 a.m., Milwaukee, Wisconsin time, or at such other date or
time not later than ten full business days after the date of the Prospectus as
the Underwriters and the Company may agree. The certificates for the Firm
Preferred Securities to be so delivered will be in denominations and registered
in such names as the Underwriters request by notice to the Trust, prior to the
First Closing Date, and such certificates will be made available for checking
and packaging at 9:00 a.m., Milwaukee, Wisconsin time on the first full business
day preceding the First Closing Date at a location to be designated by the
Underwriters.
(d) In addition, on the basis of the representations,
warranties and agreements herein contained, and subject to the terms and
conditions herein set forth, the Trust hereby agrees to sell to the
Underwriters, and the Underwriters, severally and not jointly, shall have the
right at any time within thirty days after the date of the Prospectus to
purchase up to an aggregate of _____________ Additional Preferred Securities
from the Trust at the purchase price per share to be paid for the Firm Preferred
Securities, for use solely in covering any over-allotments made by the
Underwriters in the sale and distribution of the Firm Preferred Securities.
The option granted hereunder may be exercised on one
occasion upon written notice by the Underwriters to the Offerors, within thirty
days after the date of the Prospectus setting forth the aggregate number of
Additional Preferred Securities to be purchased by the Underwriters and sold by
the Trust, the names and denominations in which the certificates are to be
registered and the date and place at which such certificates will be delivered.
Such date of delivery (the "Second Closing Date") shall be determined by the
Underwriters, provided that the Second Closing Date, which may be the same as
the First Closing Date, shall not be earlier than the First Closing Date and, if
after the First Closing Date, shall not be earlier than three nor later than ten
full business days after delivery of such notice to exercise. As referred to in
this Agreement, "Closing Date"
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<PAGE> 14
shall mean either the First Closing Date or the Second Closing Date.
Certificates for the Additional Preferred Securities will be made available for
checking and packaging at 9:00 a.m., Milwaukee, Wisconsin time, on the first
full business day preceding the Second Closing Date at a location to be
designated by the Underwriters. The manner of payment for and delivery of
(including the denominations of and the names in which certificates are to be
registered) the Additional Preferred Securities shall be the same as for the
Firm Preferred Securities.
If any Additional Preferred Securities are to be
purchased, each Underwriter agrees, severally and not jointly, to purchase the
number of Additional Preferred Securities that bears the same proportion to the
total number of Additional Preferred Securities to be purchased as the number of
Firm Preferred Securities in Schedule I annexed hereto bears to the total number
of Firm Preferred Securities.
5. COVENANTS OF THE COMPANY. The Company and the Trust, jointly
and severally, covenant and agree with the several Underwriters:
(a) To use their reasonable best efforts to cause the
Registration Statement to become effective at the earliest possible time.
(b) To advise you promptly after obtaining knowledge thereof
and, if requested by you, to confirm such advice in writing, (i) when the
Registration Statement has become effective and when any post-effective
amendment to it becomes effective, (ii) of any request by the Commission for
amendments to the Registration Statement or amendments or supplements to the
Prospectus or for additional information, (iii) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of the suspension of qualification of the Preferred Securities for
offering or sale in any jurisdiction, or the initiation of any proceeding for
such purposes, and (iv) of the happening of any event during the period referred
to in paragraph (e) below which makes any statement of a material fact made in
the Registration Statement or the Prospectus untrue or which requires the making
of any additions to or changes in the Registration Statement or the Prospectus
in order to make the statements therein not misleading. If at any time the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, the Offerors will make every reasonable effort to obtain
the withdrawal or lifting of such order at the earliest possible time.
(c) To furnish to you, without charge, three copies of the
Registration Statement as first filed with the Commission and of each amendment
to it, including all exhibits, and to furnish to you and each Underwriter
designated by you such number of conformed copies of the Registration Statement
as so filed and of each amendment to it, without exhibits, as you may reasonably
request.
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<PAGE> 15
(d) To (i) prepare and timely file with the Commission under
Rule 424(b) a Prospectus containing information previously omitted at the time
of effectiveness of the Registration Statement in reliance on Rule 430A, (ii)
not file any amendment or supplement to the Registration Statement, whether
before or after the time when it becomes effective, or to make any amendment or
supplement to the Prospectus, of which you shall not previously have been
advised or to which you shall reasonably object; and (iii) at any time prior to
the termination of the offering of the Preferred Securities, to prepare and file
with the Commission, promptly upon your reasonable request, any amendment to the
Registration Statement or supplement to the Prospectus which may be necessary or
advisable in connection with the distribution of the Preferred Securities by
you, and to use its best efforts to cause the same to become promptly effective.
(e) Promptly after the Registration Statement becomes
effective, and from time to time thereafter at any time prior to the termination
of the offering of the Preferred Securities if in the opinion of counsel for the
Underwriters a prospectus is required by law to be delivered in connection with
sales by an Underwriter or a dealer, to furnish to each Underwriter and dealer
as many copies of the Prospectus (and of any amendment or supplement to the
Prospectus) as such Underwriter or dealer may reasonably request. During such
period, the Company will file or cause to be filed all documents required to be
filed with the Commission pursuant to the Exchange Act within the time periods
required by the Exchange Act.
(f) If during the period specified in paragraph (e) any event
shall occur as a result of which, in the opinion of counsel for the Underwriters
it becomes necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances when the Prospectus is
delivered to a purchaser, not misleading, or if it is necessary to amend or
supplement the Prospectus to comply with any law, forthwith to prepare and file
with the Commission an appropriate amendment or supplement to the Prospectus so
that the statements in the Prospectus, as so amended or supplemented, will not
in the light of the circumstances when it is so delivered, be misleading, or so
that the Prospectus will comply with law, and to furnish to each Underwriter and
to such dealers as you shall specify, such number of copies thereof as such
Underwriter or dealers may reasonably request.
(g) Prior to any public offering of the Preferred Securities,
to cooperate with the Underwriters and counsel for the Underwriters in
connection with the registration or qualification of the Preferred Securities
for offer and sale by the several Underwriters and by dealers under the state
securities or Blue Sky laws of such jurisdictions as you may reasonably request,
to continue such qualification in effect so long as required for distribution of
the Preferred Securities and to file such other documents as may be necessary in
order to effect such registration or qualification; PROVIDED, HOWEVER, that
neither the Company nor any of its subsidiaries shall be obligated
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<PAGE> 16
to file any general consent to service of process or to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which it is not
so qualified or to subject itself to taxation in respect of doing business in
any jurisdiction in which it is not otherwise so subject.
(h) To make generally available to the Trust's security
holders as soon as reasonably practicable an earnings statement of the Company
covering a period of at least twelve months after the effective date of the
Registration Statement (but in no event commencing later than 90 days after such
date) which shall satisfy the provisions of Section 11(a) of the Securities Act.
(i) During the period of three years after the date of this
Agreement, the Company will furnish to you, (i) as soon as available a copy of
each report or other publicly available information of the Company mailed to the
holders of Class A Shares or filed with the Commission and such other publicly
available information concerning the Company and its subsidiaries as you may
reasonably request, and (ii) the Trust will furnish to you, upon your request, a
copy of each report of the Trust mailed to the holders of Preferred Securities
and Common Securities.
(j) To pay all costs, expenses, fees and taxes incident to (i)
the preparation, printing, filing and distribution under the Securities Act of
the Registration Statement (including financial statements and exhibits), each
Preliminary Prospectus and all amendments and supplements to any of them prior
to or during the period specified in paragraph (e), (ii) the printing and
delivery of the Prospectus and all amendments or supplements to it during the
period specified in paragraph (e), (iii) the delivery of this Agreement and all
other agreements, memoranda, correspondence and other documents delivered in
connection with the offering of the Preferred Securities (including in each case
any reasonable disbursements of counsel for the Underwriters relating to such
delivery), (iv) the registration or qualification of the Preferred Securities
for offer and sale under the securities or blue sky laws of the several states
(including in each case the reasonable fees and disbursements of counsel for the
Underwriters relating to such registration or qualification and memoranda
relating thereto), (v) filing fees relating to the clearance with the NASD in
connection with the offering, (vi) the listing of the Preferred Securities on
the NYSE, (vii) furnishing such copies of the Registration Statement, the
Prospectus and all amendments and supplements thereto as may be requested for
use in connection with the offering or sale of the Preferred Securities by the
Underwriters or by dealers to whom Preferred Securities may be sold and (viii)
the performance by the Company of its other obligations under this Agreement.
(k) To use its reasonable best efforts to maintain the listing
of the Class A Shares on the NYSE for a period of three years after the
effective date of the Registration Statement.
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<PAGE> 17
(l) To use its reasonable best efforts to do and perform all
things reasonably required or reasonably necessary to be done and performed
under this Agreement by the Company prior to the First Closing Date or the
Second Closing Date, as the case may be, and to satisfy all conditions precedent
to the delivery of the Preferred Securities.
(m) The Trust will apply the net proceeds from the sale of the
Preferred Securities, and the Company will apply the net proceeds from the sale
of the Convertible Debentures, substantially in accordance with the description
set forth in the Prospectus under "Use of Proceeds".
(n) Each of the Trust and the Company agree, during the period
beginning on the date of this Agreement and continuing to and including the date
that is [45] days after the Closing Date, not to offer, sell, contract to offer,
sell or otherwise dispose of any preferred securities, any preferred stock, any
common stock or any other securities (including any backup undertakings for such
preferred stock or other securities) of the Company or of the Trust, in each
case, that are substantially similar to the Preferred Securities, or any
securities convertible into or exchangeable for the Preferred Securities or such
substantially similar securities of either the Trust or the Company, without the
prior written consent of Robert W. Baird & Co. Incorporated.
(o) Except as stated in this Agreement and in the Preliminary
Prospectus and Prospectus, the Company has not taken, nor will it take, directly
or indirectly, any action designed to or that might reasonably be expected to
cause or result in stabilization or manipulation of the price of the Preferred
Securities to facilitate the sale or resale of the Preferred Securities.
(p) The Company will use its reasonable best efforts to have
the Preferred Securities listed on the NYSE. If the Convertible Debentures are
distributed to the holders of the Preferred Securities, the Company will use its
best efforts to have such Convertible Debentures listed on NYSE or such other
exchange where the Preferred Securities are listed.
6. PAYMENT OF EXPENSES. Whether or not the transactions
contemplated hereunder are consummated or this Agreement becomes effective, or
if this Agreement is terminated for any reason, the Company will pay the costs,
fees and expenses incurred by it and by the Trust in connection with the
performance by the Company and the Trust of their obligations hereunder. Such
costs, fees and expenses to be paid by the Company include, without limitation:
(a) All costs, fees and expenses (excluding the expenses
incurred by the Underwriters and the legal fees and disbursements of counsel for
the Underwriters, but including such fees and disbursements described in
subsection (b) of this Section 6)
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<PAGE> 18
incurred in connection with the performance of the Company's obligations
hereunder, including without limiting the generality of the foregoing: the
registration fees related to the filing of the Registration Statement with the
Commission; the fees and expenses related to the registration of the Preferred
Securities under the Exchange Act and the listing of the Preferred Securities on
the NYSE; the fees and expenses of the Company's counsel, accountants, transfer
agent and registrar; the fees and expenses of the Delaware Trustee, the
Guarantee Trustee and the Indenture Trustee; the costs and expenses incurred in
connection with the preparation, printing, shipping and delivery of the
Registration Statement, each Preliminary Prospectus and the Prospectus
(including all exhibits and financial statements and documents incorporated by
reference therein) and all agreements and supplements provided for herein and
this Agreement including, without limitation, shipping expenses via overnight
delivery, and/or courier service to comply with applicable prospectus delivery
requirements; the costs and expenses incurred in connection with the preparation
of the Statement of Eligibility and Qualification of each of the Guarantee
Trustee and the Indenture Trustee; and the costs and expenses associated with
the production of materials related to, and travel expenses incurred by the
management of the Offerors in connection with, the various meetings to be held
between the Offerors' management and prospective investors. The Underwriters
shall pay their own travel expenses related to such meetings.
(b) All registration fees and expenses, including reasonable
legal fees and disbursements of counsel for the Underwriters incurred in
connection with qualifying or registering all or any part of the Preferred
Securities for offer and sale under the blue sky laws; provided, however, that
in no event shall such legal fees and disbursements exceed $3,000.
(c) All fees and expenses related to printing of the
certificates for the Preferred Securities, and all transfer taxes, if any, with
respect to the sale and delivery of the Preferred Securities.
7. CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the several Underwriters under this Agreement shall be subject to
the accuracy, in all material respects, of the representations and warranties on
the part of the Offerors herein set forth as of the date hereof and as of each
Closing Date, to the accuracy of the statements of the officers of the Company
and the Administrative Trustees of the Trust made pursuant to the provisions
hereof, to the performance by the Offerors of their obligations hereunder, and
to the following additional conditions, unless waived in writing by the
Underwriters:
(a) The Registration Statement shall have been declared
effective by the Commission not later than 5:30 p.m., Washington, D. C. time, on
the day prior to the date of this Agreement, or such later time as shall have
been consented to by you, which consent shall be deemed to have been given if
the Registration Statement shall have been
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<PAGE> 19
declared effective on or before the date and time requested in the acceleration
request submitted on behalf of the Underwriters pursuant to Rule 461 under the
Securities Act; all filings required by Rules 424(b) and 430A under the
Securities Act shall have been timely made; no stop order suspending the
effectiveness of the Registration Statement shall have been issued by the
Commission or any state securities commission nor, to the knowledge of the
Company, shall any proceedings for that purpose have been initiated or
threatened; and any request of the Commission or any state securities commission
for inclusion of additional information in the Registration Statement, or
otherwise, shall have been complied with to the reasonable satisfaction of the
Underwriters.
(b) The legality and sufficiency of the sale of the Preferred
Securities hereunder and the validity and form of the certificates representing
the Preferred Securities, all corporate proceedings and other legal matters
incident to the foregoing, and the form of the Registration Statement and of the
Prospectus (except as to the financial statements contained therein), shall have
been approved at or prior to the Closing Date by Reinhart, Boerner, Van Deuren,
Norris & Rieselbach, s.c., counsel for the Underwriters.
(c) Since the dates as of which information is given in the
Registration Statement:
(i) there shall not have occurred any change or
development involving, or which could be expected to involve, a material adverse
effect on the business, properties, prospects, financial condition or results of
operations of the Company and its subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business;
(ii) the Company shall not have sustained any loss or
interference from any labor dispute, strike, fire, flood, windstorm, accident or
other calamity (whether or not insured) or from any court or governmental
action, order or decree; and
(iii) there shall not have occurred any change in the
long-term debt or capital stock of the Company.
the effect of which on the Company, in any such case
described in clause (i), (ii) or (iii) above, is in the reasonable written
opinion of the Underwriters so material and adverse as to make it impracticable
or inadvisable to proceed with the public offering or the delivery of the
Preferred Securities on the terms and in the manner contemplated in the
Registration Statement and the Prospectus.
(d) The Underwriters shall not have advised the Company that
the Registration Statement or the Prospectus contains an untrue statement of
fact that, in the reasonable opinion of the Underwriters or counsel for the
Underwriters, is material, or omits to state a fact that, in the reasonable
opinion of the Underwriters or such counsel, is
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<PAGE> 20
material and is required to be stated therein or necessary to make the
statements therein not misleading.
(e) The Underwriters shall have received an opinion of
Thompson Hine & Flory LLP, counsel for the Company addressed to the
Underwriters, covering the matters set forth in Annex A hereto, and dated the
First Closing Date or the Second Closing Date, as the case may be, in form and
substance satisfactory to the Underwriters and counsel to the Underwriters.
(f) The Underwriters shall have received an opinion of
_______________________, special Delaware counsel to the Offerors, addressed to
the Underwriters and dated the First Closing Date or the Second Closing Date, as
the case may be, to the effect that:
(i) The Trust has been duly created and is validly
existing in good standing as a business trust under the Delaware Act.
(ii) Under the Trust Agreement and the Delaware Act, the
Trust has the trust power and authority to enter into and perform its
obligations under the Agreement, and under the Trust Agreement and the Delaware
Act the Agreement has been duly authorized, executed and delivered by all
necessary trust action on the part of the Trust.
(iii) The Trust Agreement constitutes a valid and binding
obligation of the Company and the Delaware Trustee, and is enforceable against
the Company and the Delaware Trustee, in accordance with its terms subject to
the effect upon the Trust Agreement of
[a] bankruptcy, insolvency, moratorium,
receivership, reorganization, liquidation, fraudulent conveyance or transfer and
other similar laws relating to or affecting the rights and remedies of creditors
generally,
[b] principles of equity, including applicable law
relating to fiduciary duties (regardless of whether considered and applied in a
proceeding in equity or at law), and
[c] the effect of applicable public policy on the
enforceability of provisions relating to indemnification or contribution.
(iv) Under the Trust Agreement and the Delaware Act, the
Trust has the trust power and authority to issue and sell and perform its
obligations under the Trust Securities and to purchase and hold the Convertible
Debentures.
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(v) The Preferred Securities have been duly authorized for
issuance by the Trust Agreement and, when issued, executed and authenticated
pursuant to the Trust Agreement and delivered and paid for in accordance with
the Agreement, will be, subject to the qualifications set forth herein, fully
paid and nonassessable undivided beneficial interests in the assets of the Trust
and will entitle the holders thereof to the benefits of the Trust Agreement
(subject to the terms of the Trust Agreement); the issuance of the Preferred
Securities is not subject to preemptive or other similar rights under the Trust
Agreement or the Delaware Act.
(vi) The holders of the Preferred Securities, as
beneficial owners of the Trust, will be entitled to the same limitation of
personal liability extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware. Such
counsel may note that the holders of the Preferred Securities may be obligated,
pursuant to the Trust Agreement, (A) to provide indemnity and/or security in
connection with and pay taxes or governmental charges arising from transfers or
exchanges of Preferred Security certificates and the issuance of replacement
Preferred Security certificates, and (B) to provide security or indemnity in
connection with requests of or directions to the Property Trustee to exercise
its rights and powers under the Trust Agreement.
(vii) The issuance and sale by the Trust of the Trust
Securities, the performance by the Trust of its obligations under the Trust
Securities and the Agreement and the purchase by the Trust of the Convertible
Debentures, do not violate the Trust Agreement or any applicable law of the
State of Delaware or require any approval of any governmental authority of the
State of Delaware.
(viii) The holders of the Preferred Securities (other than
those holders who reside or are domiciled in the State of Delaware) will have no
liability for income taxes imposed by the State of Delaware solely as a result
of their participation in the Trust, and the Trust will not be liable for any
income tax imposed by the State of Delaware or any political subdivision or
taxing authority thereof.
(g) The Underwriters shall have received an opinion of
_______________________________________, counsel to the Delaware Trustee and
the Property Trustee, addressed to the Underwriters and dated the First Closing
Date or the Second Closing Date, as the case may be, to the effect that:
(i) The Trust Company is duly incorporated and is
validly existing in good standing as a banking corporation with trust powers
under the laws of the State of ________________________________.
(ii) The Indenture Trustee has the requisite power and
authority to execute, deliver and perform its obligations under the Indenture,
and has taken all necessary corporate action to authorize the execution,
delivery and performance by it of the Indenture.
(iii) The Preferred Securities Guarantee Trustee has the
requisite power and authority to execute, deliver and perform its obligations
under the Guarantee Agreement, and has taken all necessary corporate action to
authorize the execution, delivery and performance by it of the Guarantee
Agreement.
(iv) The Property Trustee has the requisite power and
authority to execute and deliver the Trust Agreement, and has taken all
necessary corporate action to authorize the execution and delivery of the Trust
Agreement.
(v) Each of the Indenture and the Preferred Securities
Guarantee Agreement has been duly executed and delivered by the Indenture
Trustee and the Preferred Securities Guarantee Trustee, respectively, and
constitutes a legal, valid and binding obligation of the Indenture Trustee and
the Preferred Securities Guarantee Trustee, respectively, enforceable against
the Indenture Trustee and the Preferred Securities Guarantee Trustee,
respectively in accordance with its respective terms, except that certain
payment obligations may be enforceable solely against the assets of the Trust
and except that such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium, liquidation, fraudulent conveyance and transfer or
other similar laws affecting the enforcement of creditors' rights generally,
and by general principles of equity, including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing (regardless of whether
such enforceability is considered in a proceeding in equity or at law), and by
the effect of applicable public policy on the enforceability of provisions
relating to indemnification or contribution.
(vi) The Convertible Subordinated Debentures delivered on
the date hereof have been duly authenticated by the Indenture Trustee in
accordance with the terms of the Indenture.
(h) The Underwriters shall have received an opinion of
Reinhart, Boerner, Van Deuren, Norris & Rieselbach, s.c., counsel for the
Underwriters, dated the First Closing Date or the Second Closing Date, as the
case may be, with respect to the issuance and sale of the Preferred Securities
by the Trust, the Registration Statement and other related matters as the
Underwriters may reasonably require, and the Company shall have furnished to
such counsel such documents and shall have exhibited to them such papers and
records as they have reasonably requested for the purpose of enabling them to
pass upon such matters.
(i) The Underwriters shall have received on each Closing
Date, a certificate of each of the chief executive officer or the chief
operating officer and the
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chief financial officer of the Company and of one of the Administrative Trustees
of the Trust, to the effect that, to the best of their knowledge and belief:
(i) The representations and warranties of the Company or
the Trust, as the case may be, set forth in Section 2 hereof are true and
correct as of the date of such certificate, and the Company or the Trust, as the
case may be, has complied with all the agreements and satisfied all the
conditions to be performed or satisfied by it at or prior to the date of such
certificate;
(ii) The Commission has not issued an order preventing or
suspending the use of the Prospectus or any Preliminary Prospectus or any
amendment or supplement thereto; no stop order suspending the effectiveness of
the Registration Statement has been issued; and to the knowledge of the
respective signatories, no proceedings for that purpose have been initiated or
are pending or contemplated under the Securities Act or under the blue sky laws
of any jurisdiction;
(iii) Each of the respective signatories has examined the
Registration Statement and the Prospectus, and any amendment or supplement
thereto, and such documents are true and correct in all material respects; and
(iv) Since the date on which the Registration Statement
was declared effective with the Commission, there shall not have occurred any
change or development involving, or which could be expected to involve, a
material adverse effect, whether or not arising from transactions in the
ordinary course of business, except as disclosed in the Prospectus and the
Registration Statement as heretofore amended or (but only if the Underwriters
expressly consent thereto in writing) as disclosed in an amendment or supplement
thereto filed with the Commission and delivered to the Underwriters after the
execution of this Agreement; since such date and except as so disclosed or in
the ordinary course of business, the Company has not incurred any liability or
obligation, direct or indirect, or entered into any transaction which is
material to the Company; since such date and except as so disclosed, there has
not been any change in the outstanding capital stock of the Company, or any
change that is material to the Company in the short-term debt or long-term debt
of the Company; since such date and except as so disclosed, the Company has not
acquired any of the Class A Shares or other capital stock of the Company nor has
the Company declared or paid any dividend, or made any other distribution, upon
its outstanding Class A Shares payable to stockholders of record on a date prior
to such Closing Date; since such date and except as so disclosed, the Company
has not incurred any material contingent obligations, and no material litigation
is pending or threatened against the Company; and, since such date and except as
so disclosed, the Company has not sustained any material loss or interference
from any strike, fire, flood, windstorm, accident or other calamity (whether or
not insured) or from any court or governmental action, order or decree.
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<PAGE> 23
The delivery of the certificate provided for in this
subsection (h) shall be and constitute a representation and warranty of the
Company and the Trust as of the date of the certificate as to the facts required
in the immediately foregoing clauses (i), (ii), (iii) and (iv) to be set forth
in said certificate.
(i) At the time this Agreement is executed and also on each
Closing Date, there shall be delivered to the Underwriters a letter addressed to
the Underwriters from Arthur Andersen LLP, the Company's independent
accountants, the first letter to be dated the date of this Agreement, the second
letter to be dated the First Closing Date and the third letter (if applicable)
to be dated the Second Closing Date, which shall be in form and substance
satisfactory to the Underwriters and shall contain information as of a date
within five days of the date of such letter. There shall not have been any
change or decrease set forth in any of the letters referred to in this
subsection (i) which makes it impracticable or inadvisable in the judgment of
the Underwriters to proceed with the public offering or purchase of the
Preferred Securities as contemplated hereby.
(j) The underwriting terms and arrangements for the offering
shall have been cleared by the NASD, and the Preferred Securities shall have
been approved for listing on the NYSE upon official notice of issuance.
(k) Such further certificates and documents as the
Underwriters may reasonably request (including certificates of officers of the
Company).
All such opinions, certificates, letters and documents
shall be in compliance with the provisions hereof only if they are reasonably
satisfactory to the Underwriters and to Reinhart, Boerner, Van Deuren, Norris &
Rieselbach, s.c., counsel for the Underwriters. The Company shall furnish the
Underwriters with such manually signed or conformed copies of such opinions,
certificates, letters and documents as the Underwriters may reasonably request.
If any condition to the Underwriters' obligations
hereunder to be satisfied prior to or at either Closing Date is not so
satisfied, this Agreement at the election of the Underwriters will terminate
upon notification to the Company without liability on the part of any
Underwriter, or the Company; provided, however, that (i) in the event of such
termination, the Company agrees to indemnify and hold harmless the Underwriters
from all costs or expenses incident to the performance of the obligations of the
Company under this Agreement, including all costs and expenses referred to in
Section 6 hereof, and (ii) if this Agreement is terminated by the Underwriters
because of any refusal, inability or failure on the part of the Company or the
Trust to perform any agreement herein, to fulfill any of the conditions herein,
or to comply with any provision hereof other than by reason of a default by any
of the Underwriters, the Company will reimburse the Underwriters severally upon
demand for all out-of-pocket expenses (including reasonable fees and
disbursements of counsel) that
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<PAGE> 24
shall have been incurred by them in connection with the transactions
contemplated hereby.
8. MAINTAIN EFFECTIVENESS OF REGISTRATION STATEMENT. The Company
will use its reasonable efforts to prevent the issuance of any stop order
suspending the effectiveness of the Registration Statement, and, if such stop
order is issued, to obtain as soon as possible the lifting thereof.
9. INDEMNIFICATION.
(a) Each of the Company and the Trust (for purposes of this
Section 9, the term Company shall include the Company's subsidiaries and the
Trust) jointly and severally agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
from and against any and all losses, claims, damages, liabilities and judgments,
joint or several, to which such indemnified parties or any of them may become
subject under the Securities Act, the Exchange Act, or the common law or
otherwise, and the Company agrees to reimburse each such Underwriter and
controlling person for any legal or other expenses (including, except as
otherwise hereinafter provided, reasonable fees and disbursements of counsel)
incurred by the respective indemnified parties in connection with defending
against any such losses, claims, damages or liabilities or in connection with
any investigation or inquiry of, or other proceeding which may be brought
against, the respective indemnified parties, in each case arising out of or
based upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) or any Preliminary Prospectus, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages, liabilities or judgments are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to any Underwriters furnished in writing to the Company by
or on behalf of any Underwriter through you expressly for use therein; PROVIDED,
HOWEVER, that the foregoing indemnity agreement with respect to any Preliminary
Prospectus shall not inure to the benefit of any Underwriter from whom the
person asserting any such losses, claims, damages and liabilities and judgments
purchased Preferred Securities, or any person controlling such Underwriter, if a
copy of the Prospectus (as then amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) was not sent or given by
or on behalf of such Underwriter to such person, if required by law so to have
been delivered, at or prior to the written confirmation of the sale of the
Preferred Securities to such person, and if the Prospectus (as so amended and
supplemented) would have cured the defect giving rise to such loss, claim,
damage, liability or judgment. The indemnity agreements contained in this
paragraph (a) and the representations and
24
<PAGE> 25
warranties of the Company and the Trust contained in Section 2 hereof shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of any indemnified party and shall survive the delivery of
and payment for the Preferred Securities.
(b) In case any action shall be brought against any
Underwriter or any person controlling such Underwriter, based upon any
Preliminary Prospectus, the Registration Statement or the Prospectus or any
amendment or supplement thereto and with respect to which indemnity may be
sought against the Company, such Underwriter shall promptly notify the Company
in writing and the Company shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to such indemnified party and
payment of all reasonable fees and expenses. Any Underwriter or any such
controlling person shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the reasonable fees and
expenses of such counsel shall be at the expense of such Underwriter or such
controlling person unless
(i) the employment of such counsel shall have been
specifically authorized in writing by the Company,
(ii) the Company shall have failed to assume the defense
and employ counsel or
(iii) the named parties to any such action (including any
impleaded parties) include both such Underwriter or such controlling person and
the Company and such Underwriter or such controlling person shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the Company
(in which case the Company shall not have the right to assume the defense of
such action on behalf of such Underwriter or such controlling person, it being
understood, however, that the Company shall not, in connection with any one such
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys (in addition to any local counsel) for all such Underwriters and
controlling persons, which firm shall be designated in writing by Robert W.
Baird & Co. Incorporated and that all such reasonable fees and expenses shall be
reimbursed as they are incurred).
The Company shall not be liable for any settlement of any
such action effected without its written consent but if settled with the written
consent of the Company, the Company agrees to indemnify and hold harmless any
Underwriter and any such controlling person from and against any loss or
liability by reason of such settlement. No indemnifying party shall, without the
prior written consent of the indemnified party, which consent shall not be
unreasonably withheld, effect any
25
<PAGE> 26
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity reasonably could
have been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all liability
on claims that are the subject matter of such proceeding.
(c) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement and any person controlling the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
to the same extent as the foregoing indemnity from the Company to each
Underwriter but only with reference to information relating to such Underwriter
furnished in writing by or on behalf of such Underwriter through you expressly
for use in the Registration Statement, the Prospectus or any Preliminary
Prospectus. In case any action shall be brought against the Company, any of its
directors, any such officer or any person controlling the Company based on the
Registration Statement, the Prospectus or any preliminary prospectus and in
respect of which indemnity may be sought against any Underwriter, the
Underwriter shall have the rights and duties given to the Company (except that
if the Company shall have assumed the defense thereof, such Underwriter shall
not be required to do so, but may employ separate counsel therein and
participate in the defense thereof but the fees and expenses of such counsel
shall be at the expense of such Underwriter), and the Company, its directors,
any such officers and any person controlling the Company shall have the rights
and duties given to the Underwriter, by Section 9(b) hereof.
(d) If the indemnification provided for in this Section 9 is
unavailable other than as expressly provided above) to an indemnified party in
respect of any losses, claims, damages, liabilities or judgments referred to
therein, then each indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities and judgments (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company on the one hand and the Underwriters on the other hand from the
offering of the Preferred Securities or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company and the Underwriters in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations.
The relative benefits received by the Company and the
Underwriters shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the Company,
and the total underwriting discounts and commissions received by the
Underwriters, bear to the total price to the public of the Preferred Securities,
in each case as set forth in the table on the cover page
26
<PAGE> 27
of the Prospectus. The relative fault of the Company and the Underwriters shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the Company or the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not
be just and equitable if contribution pursuant to this Section 9(d) were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or judgments referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 9, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Preferred Securities underwritten by it
and distributed to the public were offered to the public exceeds the amount of
any damages which such Underwriter has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute pursuant to this Section 9(d) are several in
proportion to the respective number of Preferred Securities purchased by each of
the Underwriters hereunder and not joint.
10. DEFAULT OF UNDERWRITERS. It shall be a condition to the
obligations of each Underwriter to purchase the Preferred Securities in the
manner as described herein, that, except as hereinafter provided in this
section, each of the Underwriters shall purchase and pay for all the Preferred
Securities agreed to be purchased by such Underwriter hereunder upon tender to
the Underwriters of all such Preferred Securities in accordance with the terms
hereof.
If any Underwriter or Underwriters default in their
obligations to purchase Preferred Securities hereunder on either the First
Closing Date or the Second Closing Date and the aggregate number of Preferred
Securities which such defaulting Underwriter or Underwriters agreed but failed
to purchase does not exceed ten percent (10%) of the total number of Preferred
Securities which the Underwriters are obligated to purchase on such Closing
Date, the Underwriters may make arrangements for the purchase of such Preferred
Securities by other persons, including any of the Underwriters, but if no such
arrangements are made by such Closing Date the nondefaulting Underwriters shall
be obligated severally, in proportion to their respective commitments hereunder,
to purchase
27
<PAGE> 28
the Preferred Securities which such defaulting Underwriters agreed but failed to
purchase on such Closing Date.
If any Underwriter or Underwriters so default and the
aggregate number of Preferred Securities with respect to which such default or
defaults occur is greater than ten percent (10%) of the total number of
Preferred Securities which the Underwriters are obligated to purchase on such
Closing Date, and arrangements satisfactory to the Underwriters for the purchase
of such Preferred Securities by other persons are not made within thirty-six
hours after such default, this Agreement will terminate without liability on the
part of any nondefaulting Underwriter or the Company, except for the expenses to
be paid by the Company pursuant to Section 6 hereof and except to the extent
provided in Section 9 hereof.
In the event that Preferred Securities to which a default
relates are to be purchased by the nondefaulting Underwriters or by another
party or parties, the Underwriters shall have the right to postpone the First
Closing Date or the Second Closing Date, as the case may be, for not more than
seven business days in order that the necessary changes in the Registration
Statement, Prospectus and any other documents, as well as any other
arrangements, may be effected. As used in this Agreement, the term "Underwriter"
includes any person substituted for an Underwriter under this Section. Nothing
herein will relieve a defaulting Underwriter from liability for its default.
11. EFFECTIVE DATE. This Agreement shall become effective upon the
execution and delivery of this Agreement by the parties hereto. Such execution
and delivery shall include an executed copy of this Agreement sent by
telecopier, facsimile transmission or other means of transmitting written
documents.
12. TERMINATION. Without limiting the right to terminate this
Agreement pursuant to any other provision hereof, this Agreement may be
terminated by the Underwriters prior to or on the First Closing Date and the
over-allotment option from the Trust referred to in Section 4 hereof, if
exercised, may be canceled by the Underwriters at any time prior to or on the
Second Closing Date, if in the judgment of the Underwriters, payment for and
delivery of the Preferred Securities is rendered impracticable or inadvisable
because:
(a) additional governmental restrictions, not in force and
effect on the date hereof, shall have been imposed upon trading in securities
generally or minimum or maximum prices shall have been generally established on
the NYSE, or trading in securities generally shall have been suspended or
materially limited on such exchange (other than pursuant to so-called circuit
breaker rules) or a general banking moratorium shall have been established by
either federal or state authorities in New York or Wisconsin;
28
<PAGE> 29
(b) any event shall have occurred or shall exist which makes
untrue or incorrect in any material respect any statement or information
contained in the Registration Statement or which is not reflected in the
Registration Statement but should be reflected therein to make the statements or
information contained therein not misleading in any material respect; or
(c) an outbreak or escalation of hostilities in which the
United States is involved or other national or international calamity or any
substantial change in political, financial or economic conditions shall have
occurred or shall have accelerated to such extent, in the reasonable judgment of
the Underwriters, as to have a material adverse effect on the financial markets
of the United States, or to make it impracticable or inadvisable to proceed with
completion of the sale of and payment for the Preferred Securities as provided
in this Agreement.
Any termination pursuant to this Section shall be without
liability on the part of any Underwriter to the Company, or on the part of the
Company to any Underwriter, except for expenses to be paid by the Company
pursuant to Section 6 hereof or except as to indemnification to the extent
provided in Section 9hereof.
13. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY
REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The respective indemnities,
agreements, representations, warranties, covenants and other statements of the
Offerors, of officers or directors of the Company, and of the several
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation made by or on behalf of any
Underwriter or the Company, or the Trust or any of its or their partners,
officers, directors or any controlling person, as the case may be, and will
survive delivery of and payment for the Preferred Securities sold hereunder.
14. NOTICES. All communications hereunder will be in writing
and, if sent to the Underwriters, will be mailed, delivered, telecopied (with
receipt confirmed) or telegraphed and confirmed to Robert W. Baird & Co.
Incorporated at 777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202,
Attention: Steven G. Booth, with a copy to James M. Bedore, Esq., Reinhart,
Boerner, Van Deuren, Norris & Rieselbach, s.c., 1000 North Water Street, Suite
2100, Milwaukee, Wisconsin 53202; and if sent to the Company, will be mailed,
delivered, telecopied (with receipt confirmed) or telegraphed and confirmed to
the Company at Dayton Superior Corporation, 7777 Washington Village Drive, Suite
130, Dayton, Ohio 45459, Attention: John A. Ciccarelli, President and Chief
Executive Officer, with a copy to David A. Neuhardt, Esq., Thompson Hine & Flory
LLP, 2000 Courthouse Plaza NE, P.O. Box 8801, Dayton, Ohio 45401-8801.
15. SUCCESSORS. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors, personal
representatives and assigns, and to the benefit of the officers and directors
and controlling persons referred to
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<PAGE> 30
in Section 9 hereof and no other person will have any right or obligation
hereunder. The term "successors" shall not include any purchaser of the
Preferred Securities as such from any of the Underwriters merely by reason of
such purchase.
16. PARTIAL UNENFORCEABILITY. If any section, paragraph,
clause or provision of this Agreement is for any reason determined to be invalid
or unenforceable, such determination shall not affect the validity or
enforceability of any other section, paragraph, clause or provision hereof.
17. APPLICABLE LAW, COUNTERPARTS. This Agreement shall be
governed by and construed in accordance with the internal laws of the State of
[Wisconsin] without reference to conflict of law principles thereunder. This
Agreement may be signed in various counterparts which together shall constitute
one and the same instrument, and shall be effective when at least one
counterpart hereof shall have been executed by or on behalf of each party
hereto. If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company and the several
Underwriters, all in accordance with its terms.
Very truly yours,
DAYTON SUPERIOR CAPITAL TRUST
By: DAYTON SUPERIOR CORPORATION,
as Depositor
By: ____________________________
Name:_______________________
Title:______________________
DAYTON SUPERIOR CORPORATION
By:______________________________
Name:_______________________
Title:______________________
The foregoing Underwriting Agreement is hereby confirmed and
accepted as of the date first above written.
30
<PAGE> 31
ROBERT W. BAIRD & CO. INCORPORATED
BY ___________________________________
Its______________________________
LEGG MASON WOOD WALKERINCORPORATED
BY ___________________________________
Its______________________________
MCDONALD INVESTMENTS INC.
BY ___________________________________
Its______________________________
31
<PAGE> 32
DAYTON SUPERIOR CAPITAL TRUST
SCHEDULE I
NUMBER OF FIRM __________
PREFERRED SECURITIES
NAME OF UNDERWRITER ____________________________________
TO BE PURCHASED _______
_______
_______
_______
Total _______
32
<PAGE> 1
EXHIBIT 3.1
-----------
AMENDED
ARTICLES OF INCORPORATION
OF
DAYTON SUPERIOR CORPORATION
---------------------------
FIRST: The name of the Corporation is Dayton Superior Corporation.
SECOND: The place in the State of Ohio where the principal office of the
Corporation is located is Miamisburg in Montgomery County.
THIRD: The purposes for which the Corporation is formed is to
manufacture and supply concrete and masonry accessories and to engage in any
other lawful act or activity for which a corporation may be formed under Chapter
1701 of the Ohio Revised Code.
FOURTH: The Corporation shall have authority to issue 27,005,850 capital
shares, classified as follows:
(i) 22,005,850 Class A Common Shares, without par value ("Class A
Common Shares"); and
(ii) 5,000,000 Preferred Shares, without par value ("Preferred
Shares").
The Class A Common Shares sometimes are referred to herein as the "Common
Shares."
A. COMMON SHARES. The express terms of the Common Shares shall be
as follows:
1. IDENTICAL RIGHTS. Except as otherwise provided in this Article
Fourth, all Common Shares shall be identical and shall entitle the holder
thereof to the same rights and privileges.
2. DIVIDENDS. From and after the date of issuance, the holders of
outstanding Common Shares shall be entitled to receive dividends on the Common
Shares when, as and if declared by the directors out of funds legally available
for such purpose. All holders of Common Shares shall share ratably, in
accordance with the number of shares held by each such holder, in all dividends
or distributions payable in cash, in property or in securities (other than
Common Shares) of the Corporation.
3. LIQUIDATION. In the event of any voluntary or involuntary
liquidation, dissolution or winding-up of the affairs of the Corporation, the
holders of the Common Shares shall share ratably, in accordance with the number
of shares held by each such holder, in all of the assets of the Corporation
available for distribution to the holders of Common Shares.
4. VOTING RIGHTS. The holder or holders of the Common Shares shall
be entitled to one vote for each Common Share held of record.
<PAGE> 2
5. PRE-EMPTIVE RIGHTS. The holders of the Common Shares shall not
have any preemptive rights under Section 1701.15 of the Ohio Revised Code.
B. PREFERRED SHARES. The express terms of the Preferred Shares
shall be as follows:
1. SERIES OF PREFERRED SHARES. Within the limitations and
restrictions set forth in this Article Fourth, the directors are authorized, at
any time or from time to time, to adopt amendments to these Amended Articles of
Incorporation with respect to any authorized and unissued Preferred Shares to
fix or alter the division of such shares into series, the designation and number
of shares of each series, the dividend rates, dates of payment of dividends and
the dates from which they are cumulative, redemption rates, redemption prices,
liquidation prices, sinking fund requirements, conversion rights, any
restrictions on issuance of shares of the same series or of any other class or
series and any other terms not prohibited by law.
2. VOTING RIGHTS. Except as otherwise provided by law, the holders
of the Preferred Shares shall have no voting rights; provided, however, that so
long as there are no Preferred Shares issued and outstanding, the directors are
authorized, at any time or from time to time, to adopt an amendment to these
Amended Articles of Incorporation to fix or alter the voting rights of the
Preferred Shares, as a class.
FIFTH: When authorized by the affirmative vote of the directors, without
any action by the shareholders, the Corporation may purchase its own shares for
such prices, in such manner and upon such terms and conditions as the directors
from time to time may determine, except that no such purchase shall be made if
immediately thereafter the Corporation's assets would be less than its
liabilities plus stated capital, if any, or if the Corporation is insolvent (as
defined in Chapter 1701 of the Ohio Revised Code) or if there is reasonable
ground to believe that by such purchase it would be rendered insolvent.
SIXTH: The shareholders of the Corporation shall have no right to vote
cumulatively in the election of directors.
SEVENTH: Notwithstanding any provision of Chapter 1701 of the Ohio
Revised Code (or any successor provision) now or hereafter in force designating
for any purpose the vote or consent of the holders of shares entitling them to
exercise in excess of a majority of the voting power of the Corporation, or of
any particular class or classes of shares of the Corporation, such action,
unless otherwise expressly required by statute or these Amended Articles of
Incorporation, may be taken by the vote of the holders of shares entitling them
to exercise a majority of the voting power of the Corporation or of such class
or classes.
EIGHTH:
8.1 LIMITATION OF LIABILITY. (a) No person shall be found to have
violated any duties to the Corporation as a director of the Corporation in any
action brought against the person (including
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<PAGE> 3
actions involving or affecting any of the following: (i) a change or potential
change in control of the Corporation; (ii) a termination or potential
termination of the person's service to the Corporation as a director; or (iii)
the person's service in any other position or relationship with the
Corporation), unless it is proved by clear and convincing evidence that the
person did not act in good faith, in a manner the person reasonably believed to
be in or not opposed to the best interests of the Corporation, or with the care
that an ordinarily prudent person in a like position would use under similar
circumstances.
(b) In performing any duties to the Corporation as a director, the
director shall be entitled to rely on information, opinions, reports, or
statements, including financial statements and other financial data, that are
prepared or presented by: (i) one or more directors, officers, or employees of
the Corporation who the director reasonably believes are reliable and competent
in the matters prepared or presented; (ii) counsel, public accountants, or other
persons as to matters that the director reasonably believes are within the
person's professional or expert competence; or (iii) a committee of the
directors upon which the director does not serve, duly established in accordance
with the provisions of the Corporation's Code of Regulations, as to matters
within its designated authority, which committee the director reasonably
believes to merit confidence. A director shall not be considered to be acting in
good faith if the director has knowledge concerning the matter in question that
would cause reliance on information, opinions, reports, or statements that are
prepared by the foregoing persons to be unwarranted.
(c) In determining what a director reasonably believes to be in the best
interests of the Corporation, the director shall consider the interests of the
shareholders and, in the director's discretion, may consider any of the
following: (i) the interests of the Corporation's employees, suppliers,
creditors, and customers; (ii) the economy of the state and nation; (iii)
community and societal considerations; and (iv) the long-term as well as
short-term interests of the Corporation and its shareholders, including the
possibility that these interests may be best served by the continued
independence of the Corporation.
(d) A director shall be liable in damages for any action the director
takes or fails to take as a director only if it is proved by clear and
convincing evidence in a court of competent jurisdiction that the action or
failure to act involved an act or omission undertaken with deliberate intent to
cause injury to the Corporation or undertaken with reckless disregard for the
best interests of the Corporation. Notwithstanding the foregoing, nothing
contained in this paragraph (d) affects the liability of directors under Section
1701.95 of the Ohio Revised Code or limits relief available under Section
1701.60 of the Ohio Revised Code.
8.2 THIRD PARTY ACTION INDEMNIFICATION. The Corporation shall indemnify
any person who was or is a party or is threatened to be made a party, to any
threatened, pending, or completed action, suit, or proceeding, whether civil,
criminal, administrative, or investigative (other than an action by or in the
right of the Corporation) by reason of the fact that the person is or was a
director or officer of the Corporation, or is or was serving at the request of
the Corporation as a director, trustee, officer, employee, member, manager or
agent of another corporation, domestic or foreign, nonprofit
-3-
<PAGE> 4
or for profit, limited liability company, partnership, joint venture, trust, or
other enterprise, against expenses, including attorney's fees, judgments, fines,
and amounts paid in settlement actually and reasonably incurred by the person in
connection with such action, suit, or proceeding if the person acted in good
faith and in a manner the person reasonably believed to be in or not opposed to
the best interests of the Corporation, and with respect to any criminal action
or proceeding, had no reasonable cause to believe the conduct was unlawful. The
termination of any action, suit, or proceeding by judgment, order, settlement,
or conviction, or upon a plea of nolo contendere or its equivalent, shall not,
of itself, create a presumption that the person did not act in good faith and in
a manner the person reasonably believed to be in or not opposed to the best
interests of the Corporation and, with respect to any criminal action or
proceeding, the person had reasonable cause to believe that the conduct was
unlawful.
8.3 DERIVATIVE ACTION INDEMNIFICATION. The Corporation shall indemnify
any person who was or is a party or is threatened to be made a party, to any
threatened, pending, or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that the
person is or was a director or officer of the Corporation, or is or was serving
at the request of the Corporation as a director, trustee, officer, employee,
member, manager or agent of another corporation, domestic or foreign, nonprofit
or for profit, limited liability company, partnership, joint venture, trust, or
other enterprise, against expenses, including attorney's fees, actually and
reasonably incurred by the person in connection with the defense or settlement
of such action or suit if the person acted in good faith and in a manner the
person reasonably believed to be in or not opposed to the best interests of the
Corporation, except that no indemnification shall be made in respect of any of
the following:
(i) any claim, issue, or matter as to which the person is adjudged
to be liable for negligence or misconduct in the performance of the
person's duty to the Corporation unless, and only to the extent that,
the court of common pleas or the court in which such action or suit was
brought determines upon application that, despite the adjudication of
liabilities, but in view of all the circumstances of the case, the
person is fairly and reasonably entitled to indemnity for such expenses
as the court of common pleas or such other court shall deem proper; or
(ii) any action or suit in which the only liability asserted
against the director is pursuant to Section 1701.95 of the Ohio Revised
Code.
8.4 SUCCESS ON MERITS. To the extent that a director, trustee, officer,
employee, or agent has been successful on the merits or otherwise in defense of
any action, suit, or proceeding referred to in Section 8.2 or 8.3, or in defense
of any claim, issue, or matter therein, the person shall be indemnified against
expenses, including attorney's fees, actually and reasonably incurred by the
person in connection with the action, suit or proceeding.
8.5 AUTHORIZATION OF INDEMNIFICATION. Any indemnification under Section
8.2 or 8.3, unless ordered by a court, shall be made by the Corporation only as
authorized in the specific case upon a
-4-
<PAGE> 5
determination that indemnification of the director or officer is proper in the
circumstances because the person has met the applicable standard of conduct set
forth in Section 8.2 or 8.3. Such determination shall be made as follows:
(i) by a majority vote of a quorum consisting of directors of the
Corporation who were not and are not parties to or threatened with any
such action, suit, or proceeding;
(ii) if the quorum described in subparagraph (a) of this Section
8.5 is not obtainable or if a majority vote of a quorum of disinterested
director so directs, in a written opinion by independent legal counsel
other than an attorney, or a firm having associated with it an attorney,
who has been retained by or who has performed services for the
Corporation or any person to be indemnified within the past five years;
(iii) by the shareholders; or
(iv) by the court of common pleas or the court in which the action,
suit, or proceeding was brought.
In the case of an action or suit brought by or in the right of the Corporation
under Section 8.3, any determination made by the disinterested directors under
subparagraph (i) of this Section 8.5 or by independent legal counsel under
subparagraph (ii) of this Section 8.5 shall be communicated promptly to the
person who threatened or brought the action or suit, and within ten days after
receipt of the notification, the person shall have the right to petition the
court of common pleas or the court in which such action or suit was brought to
review the reasonableness of such determination.
8.6 PAYMENT OF EXPENSES IN ADVANCE. (a) Unless the only liability
asserted against a director in an action, suit, or proceeding referred to in
Section 8.2 or 8.3 is pursuant to Section 1701.95 of the Ohio Revised Code,
expenses, including attorney's fees, incurred by the director in defending the
action, suit, or proceeding shall be paid by the Corporation as they are
incurred, in advance of the final disposition of the action, suit, or
proceeding, upon receipt of an undertaking by or on behalf of the director in
which the director agrees to do both of the following: (i) repay such amount if
it is proved by clear and convincing evidence in a court of competent
jurisdiction that the director's action or failure to act involved an act or
omission undertaken with deliberate intent to cause injury to the Corporation or
undertaken with reckless disregard for the best interests of the Corporation;
and (ii) reasonably cooperate with the Corporation concerning the action, suit,
or proceeding.
(b) Expenses, including attorney's fees, incurred by a director or
officer in defending any action, suit, or proceeding referred to in Section 8.2
or 8.3, may be paid by the Corporation as they are incurred, in advance of the
final disposition of the action, suit, or proceeding as authorized by the
directors in the specific case upon receipt of an undertaking by or on behalf of
the director or officer to repay such amount, if it ultimately is determined
that the director or officer is not entitled to be indemnified by the
Corporation.
-5-
<PAGE> 6
8.7 NONEXCLUSIVITY. The indemnification authorized by this Article
Eighth shall not be exclusive of, and shall be in addition to, any other rights
granted to those seeking indemnification under these Amended Articles of
Incorporation, the Code of Regulations or any agreement, vote of shareholders or
disinterested directors, or otherwise, both as to action in the person's
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director or
officer, and shall inure to the benefit of the heirs, executors, and
administrators of such a person.
8.8 INSURANCE. The Corporation may purchase and maintain insurance or
furnish similar protection including but not limited to trust funds, letters of
credit, or self-insurance, on behalf of or for any person who is or was a
director, officer, employee, or agent of the Corporation, or is or was serving
at the request of the Corporation as a director, trustee, officer, employee, or
agent of another corporation, domestic or foreign, nonprofit or for profit,
partnership, joint venture, trust, or other enterprise, against any liability
asserted against the person and incurred by the person in any such capacity, or
arising out of the person's status as such, whether or not the Corporation would
have the power to indemnify the person against such liability under this Article
Eighth. Insurance may be purchased from or maintained with a person in which the
Corporation has a financial interest.
8.9 NO LIMITATION. The authority of the Corporation to indemnify persons
pursuant to Sections 8.2 and 8.3 does not limit the payment of expenses as they
are incurred, indemnification, insurance, or other protection that may be
provided pursuant to Sections 8.6, 8.7 and 8.8. Sections 8.2 and 8.3 do not
create any obligation to repay or return payments made by the Corporation
pursuant to Sections 8.6, 8.7 and 8.8.
NINTH: The provisions of Section 1701.831 of the Ohio Revised Code shall
not apply to control share acquisitions of shares of the Corporation.
TENTH: These Amended Articles of Incorporation supersede the existing
Amended Articles of Incorporation of the Corporation.
-6-
<PAGE> 1
EXHIBIT 4.2.3
-------------
CONFORMED
THIRD AMENDMENT TO
CREDIT AGREEMENT
This THIRD AMENDMENT TO CREDIT AGREEMENT, dated as of May 14, 1999
(this "AMENDMENT"), to the Existing Credit Agreement (as defined below), is
among DAYTON SUPERIOR CORPORATION, an Ohio corporation (the "BORROWER"), each of
the entities identified as Consenting Obligors on the signature pages hereto
(collectively, the "CONSENTING OBLIGORS"), the various financial institutions
signatories hereto as Revolving Lenders (collectively, the "REVOLVING LENDERS"),
DLJ CAPITAL FUNDING, INC., as syndication agent (the "SYNDICATION AGENT"), BANK
OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as documentation agent (the
"DOCUMENTATION AGENT"), BANKERS TRUST COMPANY, as administrative agent (the
"ADMINISTRATIVE AGENT") and BANK ONE, N.A., as facility agent (the "FACILITY
AGENT").
WITNESSETH:
-----------
WHEREAS, the Borrower, the lenders from time to time parties
thereto (including the Revolving Lenders), and the Agents are parties
-to a Credit Agreement, dated as of September 29, 1997 (as further
amended, supplemented, amended and restated or otherwise modified prior
to the date hereof, the "EXISTING CREDIT AGREEMENT");
WHEREAS, the Borrower has requested that the Revolving Lenders
amend the Existing Credit Agreement to increase the Revolving Loan
Commitment Amount;
WHEREAS, all Loans and Obligations shall continue to be and
shall be fully guaranteed pursuant to the Subsidiary Guaranty and fully
secured by, among other things, the Borrower Pledge Agreement, the
Subsidiary Pledge Agreement, the Borrower Security Agreement and the
Subsidiary Security Agreement; and
WHEREAS, the Revolving Lenders have agreed, subject to the
terms and conditions hereinafter set forth, to amend the Existing
Credit Agreement in certain respects as set forth below (the Existing
Credit Agreement, as amended by this Amendment, being referred to as
the "CREDIT AGREEMENT");
NOW, THEREFORE, in consideration of the agreements herein
contained, the parties hereto agree as follows:
<PAGE> 2
PART I
DEFINITIONS
SUBPART 1.1. CERTAIN DEFINITIONS. The following terms (whether or not
underscored) when used in this Amendment shall have the following meanings (such
meanings to be equally applicable to the singular and plural form thereof):
"ADMINISTRATIVE AGENT" is defined in the PREAMBLE.
"AMENDMENT" is defined in the PREAMBLE.
"BORROWER" is defined in the PREAMBLE.
"CONSENTING OBLIGORS" means each of the entities identified as such on
the signature pages hereof.
"CREDIT AGREEMENT" is defined in the FOURTH RECITAL.
"DOCUMENTATION AGENT" is defined in the PREAMBLE.
"EXISTING CREDIT AGREEMENT" is defined in the FIRST RECITAL.
"FACILITY AGENT" is defined in the PREAMBLE.
"REVOLVING LENDERS" is defined in the PREAMBLE.
"SYNDICATION AGE" is defined in the PREAMBLE.
"THIRD AMENDMENT EFFECTIVE DATE" is defined in SUBPART 4. 1.
SUBPART 1.2. OTHER DEFINITIONS. Terms for which meanings are provided
in the Existing Credit Agreement are, unless otherwise defined herein or the
context otherwise requires, used in this Amendment with such meanings.
PART II
AMENDMENTS TO THE
EXISTING CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the Third Amendment
Effective Date, the Existing Credit Agreement is hereby amended in accordance
with this PART II. Except as so amended, the Existing Credit Agreement shall
continue in full force and effect in accordance with its terms and is hereby
ratified and confirmed in all respects.
-2-
<PAGE> 3
SUBPART 2.1. AMENDMENT TO ARTICLE I. The definition of "Revolving Loan
Commitment Amount" contained in Section 1. 1 of the Existing Credit Agreement is
hereby amended by deleting the amount of "140,000,000" in the second line
thereof and inserting the amount of "$50,000,000" in its place.
PART III
AFFIRMATION AND CONSENT
SUBPART 3.1. ACKNOWLEDGMENT AND REAFFIRMATION. Each of the Consenting
Obligors hereby acknowledges the amendments to the Existing Credit Agreement
pursuant to the terms and provisions set forth in this Amendment. Each of the
Consenting Obligors hereby reaffirms, as of the Third Amendment Effective Date,
(i) the covenants and agreements contained in each Loan Document to which it is
a party, including, in each case, as such covenants and agreements may be
modified by this Amendment, (ii) its grant of a security interest pursuant to
the applicable Loan Document to which it is a party and (iii) its guarantee of
payment of the Obligations pursuant to the Subsidiary Guaranty.
SUBPART 3.2. REPRESENTATIONS AND WARRANTIES, ETC. Each of the
Consenting Obligors hereby certifies that, as of the date hereof (after giving
effect to the occurrence of the Third Amendment Effective Date), the
representations and warranties made by it in the Loan Documents to which it is a
party are true and correct in all material respects with the same effect as if
made on the date hereof (unless stated to relate solely to an earlier date, in
which case such representations and warranties were true and correct in all
material respects as of such earlier date).
SUBPART 3.3. LOAN DOCUMENTS. Each of the Consenting Obligors further
confirms that each Loan Document is and shall continue to be in full force and
effect and the same is hereby ratified and confirmed in all respects, except
that upon the occurrence of the Third Amendment Effective Date, all references
in each such Loan Document to the "Credit Agreement", "Loan Documents",
"thereunder", "thereof", or words of similar import shall mean the Credit
Agreement and the Loan Documents, as the case may be, in each case after giving
effect to the amendments and other modifications provided for in this Amendment.
SUBPART 3.4. COURSE OF DEALING, ETC. Each of the Consenting Obligors
hereby acknowledges and agrees that the acceptance by the Agents and each
Revolving Lender of this document shall not be construed in any manner to
establish any course of dealing on the Agents' or Revolving Lender's part,
including the providing of any notice or the requesting of any acknowledgment
not otherwise expressly provided for in any Loan Document with respect to any
future amendment, waiver, supplement or other modification to any Loan Document
or any arrangement contemplated by any Loan Document.
-3-
<PAGE> 4
PART I
CONDITIONS TO EFFECTIVENESS
SUBPART 4.1. AMENDMENT EFFECTIVE DATE. This Amendment shall become
effective as of the date (the "THIRD AMENDMENT EFFECTIVE DATE") on which the
Agents shall have received counterparts of this Amendment duly executed by the
Borrower, the Consenting Obligors and each Revolving Lender (or evidence thereof
satisfactory to the Agents). The delivery of an executed counterpart hereof by
the Borrower shall constitute a representation and warranty by the Borrower
that, on the Third Amendment Effective Date, after giving effect to this
Amendment, all statements set forth in Article VI of the Credit Agreement, as
amended by this Amendment, are true and correct as of such date, except to the
extent that such statement expressly relates to an earlier date (in which case
such statement shall be true and correct on and as of such earlier date).
SUBPART 4.1.1. RESOLUTIONS, ETC. The Agents shall have received from
the Borrower and the Consenting Obligors certificates, each dated the Third
Amendment Effective Date with counterparts for each Revolving Lender, duly
executed and delivered by the Borrower's or such Consenting Obligor's Secretary
or Assistant Secretary as to. (i) resolutions of such Person's Board of
Directors then in full force and effect authorizing, to the extent relevant, the
execution, delivery and performance of this Amendment, the Revolving Notes and
each other Loan Document to be executed by such Person and the transactions
contemplated hereby and thereby, and (ii) the incumbency and signatures of those
of its officers authorized to act with respect to this Amendment, the Revolving
Notes and each other Loan Document executed by such Person, upon which
certificate each Revolving Lender may conclusively rely until it shall have
received a further certificate of the Secretary or Assistant Secretary of such
Person canceling or amending the prior certificate.
SUBPART 4.1.2. PAYMENT OF FEES AND EXPENSES. The Facility Agent shall
have received an amendment fee for the account of each Revolving Lender which
shall have delivered to the Agents a duly executed counterpart of this
Amendment. In addition, the Borrower hereby agrees to pay and reimburse the
Syndication Agent for all its reasonable fees and expenses incurred in
connection with the negotiation, preparation, execution and delivery of this
Amendment and related documents, including all reasonable fees and disbursements
of counsel to the Syndication Agent.
SUBPART 4.1.3. DELIVERY OF REVOLVING NOTES. The Facility Agent shall
have received, for the account of each Revolving Lender, its Revolving Notes,
issued in substitution and exchange for, and not in satisfaction of, the
Revolving Notes delivered under the terms of the Existing Credit Agreement, duly
executed and delivered on behalf of an Authorized Officer of the Borrower.
SUBPART 4.1.4. OPINION OF COUNSEL. The Agents shall have
received an opinion, dated
-4-
<PAGE> 5
the Third Amendment Effective Date and addressed to the Agents and all Revolving
Lenders, from Thompson Hine & Flory LLP, counsel to the Obligors, in form and
substance satisfactory to the Agents.
SUBPART 4.2. LEGAL DETAILS. The Agents and their counsel shall have
received all information, and such counterpart originals or such certified or
other copies of such materials, as the Agents or their counsel may reasonably
request, and all legal matters incident to the effectiveness of this Amendment
shall be satisfactory to the Agents and their counsel. All documents executed or
submitted pursuant hereto or in connection herewith shall be reasonably
satisfactory in form and substance to the Agents and their counsel.
SUBPART 4.3. LIMITATION. Except as expressly provided hereby, all of
the representations, warranties, terms, covenants and conditions of the Existing
Credit Agreement and each other Loan Document shall remain unwaived and shall
continue to be, and shall remain, in full force and effect in accordance with
their respective terms. The modifications and consents set forth herein shall be
limited precisely as provided for herein, and shall not be deemed to be a waiver
of, consent to or modification of any other term or provision of the Existing
Credit Agreement or of any term or provision of any other Loan Document or other
instrument referred to therein or herein, or of any transaction or further or
future action on the part of the Borrower or any other Person which would
require the consent of the Agents or any of the Revolving Lenders under the
Existing Credit Agreement or any such other Loan Document or instrument.
PART V
MISCELLANEOUS
SUBPART 5.1. CROSS-REFERENCES. References in this Amendment to any Part
or Subpart are, unless otherwise specified, to such Part or Subpart of this
Amendment. References in this Amendment to any Article or Section are, unless
otherwise specified, to such Article or Section of the Existing Credit
Agreement.
SUBPART 5.2. LOAN DOCUMENT PURSUANT TO EXISTING CREDIT AGREEMENT. This
Amendment is a Loan Document executed pursuant to the Existing Credit Agreement
and shall (unless otherwise expressly indicated therein) be construed,
administered and applied in accordance with all of the terms and provisions of
the Existing Credit Agreement, as amended hereby, including Article X thereof.
SUBPART 5.3. SUCCESSORS AND ASSIGNS. This Amendment shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
SUBPART 5.4. COUNTERPARTS. This Amendment may be executed by the
parties hereto in several counterparts, each of which when executed and
delivered shall be an original and all of which shall constitute together but
one and the same agreement.
-5-
<PAGE> 6
SUBPART 5.5. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
BORROWER: DAYTON SUPERIOR CORPORATION
- ---------
By: /s/ JOHN M. RUTHERFORD
Name: John M. Rutherford
Title: Treasurer and Assistant Secretary
CONSENTING OBLIGORS: SYMONS CORPORATION
- --------------------
By: /s/ JOHN M. RUTHERFORD
Name: John M. Rutherford
Title: Treasurer and Assistant Secretary
DUR-O-WAL, INC.
By: /s/ JOHN M. RUTHERFORD
Name: John M. Rutherford
Title: Treasurer and Assistant Secretary
CONCRETE ACCESSORIES, INC.
By: /s/ JOHN M. RUTHERFORD
Name: John M. Rutherford
Title: Treasurer and Assistant Secretary
BANK ONE, N.A., as Facility Agent and a
Revolving Lender
By: /s/ PAUL HARRIS
Name:
Title:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Documentation
Agent and a Revolving Lender
-6-
<PAGE> 7
By: /s/ STEVEN KESSLER
Name: Steven Kessler
Title: Senior Vice President
-7-
<PAGE> 8
NATIONAL CITY BANK
successor by merger to
National City Bank, Dayton,
formerly known as National
City Bank of Dayton as a
Revolving Lender
By: /s/ NEAL J. HINKER
Name: Neal J. Hinker
Title: Vice President
DLJ CAPITAL FUNDING, INC.,
as Syndication Agent
By_________________________
Name:
Title:
BANKERS TRUST COMPANY,
as Administrative Agent
By:________________________
Name:
Title:
<PAGE> 1
Exhibit 4.4
-----------
CERTIFICATE OF TRUST
OF
DAYTON SUPERIOR CAPITAL TRUST
THIS Certificate of Trust of Dayton Superior Capital Trust (the
"Trust"), dated as of August 4, 1999, is being duly executed and filed by the
undersigned, as trustee, to form a business trust under the Delaware Business
Trust Act (12 DEL. C. Section 3801 ET SEQ.).
1. NAME. The name of the business trust formed hereby is Dayton
Superior Capital Trust.
2. DELAWARE TRUSTEE. The name and business address of the trustee of
the Trust with a principal place of business in the State of Delaware is Mark A.
Ferrucci, The Corporation Trust Company, Corporation Trust Center, 1209 Orange
Street, Wilmington, Delaware 19801.
3. EFFECTIVE DATE. This Certificate of Trust shall be effective upon
filing.
IN WITNESS WHEREOF, the undersigned, being the trustee of the Trust,
has executed this Certificate of Trust as of the date first written above.
/s/ Mark A. Ferrucci
------------------------------------------------
MARK A. FERRUCCI, not in his individual capacity
but solely as trustee of the Trust
<PAGE> 1
Exhibit 4.5
-----------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AMENDED AND RESTATED
TRUST AGREEMENT
AMONG
DAYTON SUPERIOR CORPORATION
AS DEPOSITOR,
FIRSTAR BANK, N.A.
AS PROPERTY TRUSTEE,
MARK A. FERRUCCI
AS DELAWARE TRUSTEE,
AND
THE ADMINISTRATIVE TRUSTEES NAMED HEREIN
DATED AS OF ______________, 1999
DAYTON SUPERIOR CAPITAL TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE 1
DEFINED TERMS
SECTION 1.1. DEFINITIONS.......................................................
ARTICLE 2
ESTABLISHMENT OF THE TRUST
SECTION 2.1. NAME..............................................................
SECTION 2.2. OFFICE OF THE DELAWARE TRUSTEE; PRINCIPAL PLACE OF
BUSINESS.......................................................
SECTION 2.3. ORGANIZATIONAL EXPENSES...........................................
SECTION 2.4. ISSUANCE OF THE PREFERRED SECURITIES..............................
SECTION 2.5. SUBSCRIPTION AND PURCHASE OF DEBENTURES;
ISSUANCE OF THE COMMON SECURITIES..............................
SECTION 2.6. DECLARATION OF TRUST..............................................
SECTION 2.7. AUTHORIZATION TO ENTER INTO CERTAIN TRANSACTIONS..................
SECTION 2.8. ASSETS OF TRUST...................................................
SECTION 2.9. TITLE TO TRUST PROPERTY...........................................
ARTICLE 3
PAYMENT ACCOUNT
SECTION 3.1. PAYMENT ACCOUNT...................................................
ARTICLE 4
DISTRIBUTIONS; REDEMPTION; EXCHANGE; CONVERSION
SECTION 4.1. DISTRIBUTIONS.....................................................
SECTION 4.2. REDEMPTION........................................................
SECTION 4.3. CONVERSION........................................................
SECTION 4.4. SPECIAL EVENT EXCHANGE OR REDEMPTION..............................
SECTION 4.5. SUBORDINATION OF COMMON SECURITIES................................
SECTION 4.6. PAYMENT PROCEDURES................................................
SECTION 4.7. TAX RETURNS AND REPORTS...........................................
SECTION 4.8. PAYMENT OF TAXES, DUTIES, ETC. OF THE TRUST.......................
SECTION 4.9. PAYMENTS UNDER INDENTURE..........................................
ARTICLE 5
TRUST SECURITIES CERTIFICATES
SECTION 5.1. INITIAL OWNERSHIP.................................................
SECTION 5.2. THE TRUST SECURITIES CERTIFICATES.................................
SECTION 5.3. DELIVERY OF TRUST SECURITIES CERTIFICATES.........................
SECTION 5.4. REGISTRATION OF TRANSFER AND EXCHANGE OF PREFERRED
SECURITIES.....................................................
SECTION 5.5. MUTILATED, DESTROYED, LOST OR STOLEN TRUST SECURITIES
CERTIFICATES...................................................
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
SECTION 5.6. PERSONS DEEMED SECURITY HOLDERS...................................
SECTION 5.7. ACCESS TO LIST OF SECURITY HOLDERS' NAMES AND
ADDRESSES .....................................................
SECTION 5.8. MAINTENANCE OF OFFICE OR AGENCY...................................
SECTION 5.9. APPOINTMENT OF PAYING AGENT.......................................
SECTION 5.10. OWNERSHIP OF COMMON SECURITIES BY DEPOSITOR.......................
SECTION 5.11. GLOBAL SECURITIES; NON-GLOBAL SECURITIES;
COMMON SECURITIES CERTIFICATE..................................
SECTION 5.12. NOTICES TO CLEARING AGENCY........................................
SECTION 5.13. DEFINITIVE PREFERRED SECURITIES CERTIFICATES......................
SECTION 5.14. RIGHTS OF SECURITY HOLDERS........................................
ARTICLE 6
ACT OF SECURITY HOLDERS; MEETINGS; VOTING
SECTION 6.1. LIMITATIONS ON VOTING RIGHTS......................................
SECTION 6.2. NOTICE OF MEETINGS................................................
SECTION 6.3. MEETINGS OF PREFERRED SECURITY HOLDERS............................
SECTION 6.4. VOTING RIGHTS.....................................................
SECTION 6.5. PROXIES, ETC......................................................
SECTION 6.6. SECURITY HOLDER ACTION BY WRITTEN CONSENT.........................
SECTION 6.7. RECORD DATE FOR VOTING AND OTHER PURPOSES.........................
SECTION 6.8. ACTS OF SECURITY HOLDERS..........................................
SECTION 6.9. INSPECTION OF RECORDS.............................................
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
SECTION 7.1. REPRESENTATIONS AND WARRANTIES OF THE PROPERTY TRUSTEE
AND THE DELAWARE TRUSTEE .......................................
SECTION 7.2. REPRESENTATIONS AND WARRANTIES OF DEPOSITOR.......................
ARTICLE 8
THE TRUSTEES
SECTION 8.1. CERTAIN DUTIES AND RESPONSIBILITIES...............................
SECTION 8.2. NOTICE OF DEFAULTS................................................
SECTION 8.3. CERTAIN RIGHTS OF PROPERTY TRUSTEE................................
SECTION 8.4. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF
SECURITIES.....................................................
SECTION 8.5. MAY HOLD SECURITIES...............................................
SECTION 8.6. COMPENSATION; INDEMNITY; FEES.....................................
SECTION 8.7. PROPERTY TRUSTEE REQUIRED; ELIGIBILITY OF TRUSTEES................
SECTION 8.8. CONFLICTING INTERESTS.............................................
SECTION 8.9. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.................
SECTION 8.10. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR............................
SECTION 8.11. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION
TO BUSINESS....................................................
SECTION 8.12. PREFERENTIAL COLLECTION OF CLAIMS AGAINST DEPOSITOR OR
TRUST..........................................................
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C>
SECTION 8.13. REPORTS BY PROPERTY TRUSTEE.......................................
SECTION 8.14. REPORTS TO THE PROPERTY TRUSTEE...................................
SECTION 8.15. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT..................
SECTION 8.16. NUMBER OF TRUSTEES................................................
SECTION 8.17. DELEGATION OF POWER...............................................
ARTICLE 9
DISSOLUTION, LIQUIDATION AND MERGER
SECTION 9.1. DISSOLUTION UPON EXPIRATION DATE..................................
SECTION 9.2. EARLY DISSOLUTION.................................................
SECTION 9.3. DISSOLUTION.......................................................
SECTION 9.4. LIQUIDATION.......................................................
SECTION 9.5. MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR
REPLACEMENTS OF THE TRUST......................................
ARTICLE 10
MISCELLANEOUS PROVISIONS
SECTION 10.1. LIMITATION OF RIGHTS OF SECURITY HOLDERS..........................
SECTION 10.2. AMENDMENT.........................................................
SECTION 10.3. SEPARABILITY......................................................
SECTION 10.4. GOVERNING LAW.....................................................
SECTION 10.5. PAYMENTS DUE ON NON-BUSINESS DAY..................................
SECTION 10.6. SUCCESSORS........................................................
SECTION 10.7. HEADINGS..........................................................
SECTION 10.8. REPORTS, NOTICES AND DEMANDS......................................
SECTION 10.9. AGREEMENT NOT TO PETITION.........................................
SECTION 10.10. TRUST INDENTURE ACT; CONFLICT WITH TRUST
INDENTURE ACT..................................................
SECTION 10.11. ACCEPTANCE OF TERMS OF TRUST AGREEMENT, GUARANTEE
AND INDENTURE..................................................
SECTION 10.12. COUNTERPARTS......................................................
</TABLE>
EXHIBIT A -- Certificate of Trust of
Dayton Superior Capital Trust
EXHIBIT B -- Form of Certificate
Depositary Agreement
EXHIBIT C -- Form of Common Securities of
Dayton Superior Capital Trust
EXHIBIT D -- Form of Preferred Securities of
Dayton Superior Capital Trust
EXHIBIT E -- Notice of Conversion
iii
<PAGE> 5
DAYTON SUPERIOR CAPITAL TRUST
Certain Sections of this Trust Agreement
relating to Sections 310 through 318
of the Trust Indenture Act of 1939:
TRUST INDENTURE TRUST AGREEMENT
ACT SECTION SECTION
Section 310
(a)(1)....................................................................8.7
(a)(2)....................................................................8.7
(a)(3).........................................................Not Applicable
(a)(4).............................................................2.7(a)(ii)
(b).......................................................................8.8
Section 311
(a)......................................................................8.12
(b)......................................................................8.12
Section 312
(a).......................................................................5.7
(b).......................................................................5.7
(c).......................................................................5.7
Section 313
(a)...................................................................8.13(a)
(c)......................................................................10.8
(d)...................................................................8.13(c)
(a)(4)................................................................8.13(b)
(b)...................................................................8.13(b)
Section 314
(a)......................................................................8.14
(b)............................................................Not Applicable
(c)(1)...................................................................8.15
(c)(2)...................................................................8.15
(c)(3).........................................................Not Applicable
(d)............................................................Not Applicable
(e).................................................................1.1, 8.15
Section 315
(a)............................................................8.1(a), 8.3(a)
(b).................................................................8.2, 10.8
(c)....................................................................8.1(a)
(d)..................................................................8.1, 8.3
(e)............................................................Not Applicable
Section 316
(a)............................................................Not Applicable
(a)(1)(A)......................................................Not Applicable
(a)(1)(B)......................................................Not Applicable
a
<PAGE> 6
(a)(2)........................................................Not Applicable
(b)...........................................................Not Applicable
(c)......................................................................6.7
Section 317
(a)(1)........................................................Not Applicable
(b)......................................................................5.9
Section 318
(a)....................................................................10.10
- ---------------
* Note: This reconciliation and tie sheet shall not, for any purpose, be
deemed to be a part of the Trust Agreement.
b
<PAGE> 7
THIS AMENDED AND RESTATED TRUST AGREEMENT is dated as of
______________, 1999 among: (i) Dayton Superior Corporation, an Ohio corporation
(including any successors or assigns, the "Depositor"); (ii) Firstar Bank, N.A.,
a national banking association, as property trustee (in such capacity, the
"Property Trustee" and, in its personal capacity and not in its capacity as
Property Trustee, the "Bank"); (iii) Mark A. Ferrucci, as Delaware trustee (in
such capacity, the "Delaware Trustee"); (iv) John A. Ciccarelli, Alan F. McIlroy
and John M. Rutherford, each of whose address is c/o Dayton Superior
Corporation, 7777 Washington Village Drive, Suite 130, Dayton, Ohio 45459 (each,
an "Administrative Trustee" and, collectively, the "Administrative Trustees"
and, collectively with the Property Trustee and Delaware Trustee, the
"Trustees") and (iv) the several Holders as hereinafter defined.
W I T N E S S E T H:
WHEREAS, the Depositor and the Delaware Trustee have duly declared and
created a business trust pursuant to the Delaware Business Trust Act by the
entering into a certain trust agreement dated as of August 4, 1999 (the
"Original Trust Agreement"), and by the execution and filing by the Delaware
Trustee with the Secretary of State of the State of Delaware of the Certificate
of Trust, filed on August 4, 1999, attached as Exhibit A, for the sole purpose
of issuing and selling certain securities representing undivided beneficial
interests in the assets of the Trust and investing the proceeds thereof in the
Debentures (as defined herein); and
WHEREAS, the parties hereto desire to amend and restate the Original
Trust Agreement in its entirety as set forth herein to provide for, among other
things, (i) the issuance and sale of the Common Securities (as defined herein)
by the Trust to the Depositor, (ii) the issuance and sale of the Preferred
Securities by the Trust pursuant to the Underwriting Agreement (each as defined
herein) and (iii) the acquisition by the Trust from the Depositor of all of the
right, title and interest in the Debentures;
NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the sufficiency of
which is hereby acknowledged, each party, for the benefit of the other parties
and for the benefit of the Holders of the Preferred Securities, hereby agrees as
follows:
ARTICLE 1 DEFINED TERMS
SECTION 1.1. DEFINITIONS. For all purposes of this Trust Agreement,
except as otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular;
(b) all other terms used herein that are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(c) unless the context otherwise requires, any reference to
an "Article" or a "Section" refers to an Article or a Section, as the
case may be, of this Trust Agreement; and
(d) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Trust Agreement as a whole and
not to any particular Article, Section or other subdivision.
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<PAGE> 8
"ACT" has the meaning specified in Section 6.8.
"ADDITIONAL AMOUNT" means, with respect to the Trust Securities, the
amount of Additional Interest (as defined in the Indenture) paid by the
Depositor on the Debentures.
"ADDITIONAL SUMS" means, with respect to the Trust Securities, the
amount of Additional Sums (as defined in the Indenture) paid by the Depositor on
the Debentures.
"ADMINISTRATIVE TRUSTEE" means each of John A. Ciccarelli, Alan F.
McIlroy and John M. Rutherford, each solely in his capacity as Administrative
Trustee of the Trust and not in his individual capacity, or such Administrative
Trustee's successor in interest in such capacity, or any successor in interest
in such capacity, or any successor administrative trustee appointed as herein
provided.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person, provided, however that an Affiliate of the
Depositor shall be deemed not to include the Trust. For the purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"APPLICABLE PROCEDURES" means, with respect to any transfer or
transaction involving a Global Certificate or beneficial interest therein, the
rules and procedures of Euroclear and Cedel, and of the Clearing Agency for such
security, in each case to the extent applicable to such transaction and as in
effect from time to time.
"BANK" has the meaning specified in the preamble to this Trust
Agreement.
"BANKRUPTCY EVENT" means, with respect to any Person:
(a) the entry of a decree or order by a court having
jurisdiction in the premises judging such Person as bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjudication or composition of or in
respect of such Person under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law, or
appointing a receiver, liquidator, assignee, trustee, sequestrator (or
other similar official) of such Person or of any substantial part of
its property or ordering the winding-up or liquidation of its affairs,
and the continuance of any such decree or order unstayed and in effect
for a period of 60 consecutive days; or
(b) the institution by such Person of proceedings to be
adjudicated as bankrupt or insolvent, or the consent by it to the
institution of bankruptcy or insolvency proceedings against it, or the
filing by it of a petition or answer or consent seeking reorganization
or relief under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law, or the consent by it to the filing
of any such petition or to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or similar official) of such Person or
of any substantial part of its property, or the making by it of an
assignment for the benefit of creditors, or the admission by it
2
<PAGE> 9
in writing of its inability to pay its debts generally as they become
due and its willingness to be adjudicated a bankrupt, or the taking of
corporate action by such Person in furtherance of any such action.
"BANKRUPTCY LAWS" has the meaning specified in Section 10.9.
"BOARD OF DIRECTORS" means either the board of directors of the
Depositor or any committee of that board duly authorized to act hereunder.
"BOOK-ENTRY PREFERRED SECURITIES CERTIFICATES" means a beneficial
interest in the Preferred Securities Certificates, ownership and transfers of
which shall be made through book entries by a Clearing Agency as described in
Section 5.11.
"BUSINESS DAY" means any day other than a Saturday or Sunday or a day
on which banking institutions in the city of New York are authorized or required
by law or executive order to remain closed or a day on which the Corporate Trust
Office of the Property Trustee or the corporate trust office of the Debenture
Trustee, is closed for business.
"CERTIFICATE DEPOSITORY AGREEMENT" means the agreement among the Trust,
the Depositor and The Depository Trust Company, as the initial Clearing Agency,
dated as of the Closing Date, relating to the Trust Securities Certificates
substantially in the form attached as Exhibit B, as the same may be amended and
supplemented from time to time.
"CERTIFICATED PREFERRED SECURITY" has the meaning specified in Section
5.2.
"CLEARING AGENCY" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended. The Depository Trust Company will be the initial Clearing Agency.
"CLEARING AGENCY PARTICIPANT" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"CLOSING DATE" means the First Closing Date (as defined in the
Underwriting Agreement), which date is also the date of execution and delivery
of this Trust Agreement.
"COMMISSION" means the Securities and Exchange Commission, as from time
to time constituted, created under the Securities Exchange Act of 1934, as
amended, or, if at any time after the execution of this instrument such
Commission is not existing and performing the duties now assigned to it under
the Trust Indenture Act, then the body performing such duties at such time.
"COMMON SECURITIES CERTIFICATE" means a certificate evidencing
ownership of Common Securities, substantially in the form attached as Exhibit C.
"COMMON SECURITY" means an undivided beneficial interest in the assets
of the Trust, having a Liquidation Amount with respect to the assets of the
Trust of $25 and having the rights
3
<PAGE> 10
provided therefor in this Trust Agreement, including the right to receive
Distributions and a Liquidation Distribution as provided herein.
"COMMON STOCK" means the Common Shares, without par value, of the
Depositor.
"CONVERSION AGENT" has the meaning specified in Section 4.3.
"CONVERSION DATE" has the meaning specified in Section 4.3.
"CONVERSION PRICE" has the meaning specified in Section 4.3.
"CORPORATE TRUST OFFICE" means the principal corporate trust office of
the Property Trustee at which at any particular time its corporate trust
business shall be administered, which office at the date hereof is located at
425 Walnut Street, M/L 5125, Cincinnati, Ohio 45201-1118.
"CURRENT MARKET PRICE," with respect to Common Stock, means for any day
the last reported sale price, regular way, on such day, or, if no sale takes
place on such day, the average of the reported closing bid and asked prices on
such day, regular way, in either case as reported on the New York Stock Exchange
Composite Transactions Tape, or, if Common Stock is not listed or admitted to
trading on the New York Stock Exchange on such day, on the principal national
securities exchange on which Common Stock is listed or admitted to trading, if
Common Stock is listed on a national securities exchange, or the Nasdaq National
Market, or, if Common Stock is not quoted or admitted to trading on such
quotation system, on the principal quotation system on which Common Stock may be
listed or admitted to trading or quoted, or, if not listed or admitted to
trading or quoted on any national securities exchange or quotation system, the
average of the closing bid and asked prices of Common Stock in the
over-the-counter market on the day in question as reported by the National
Quotation Bureau Incorporated, or a similar generally accepted reporting
service, or, if not so available in such manner, as furnished by any New York
Stock Exchange member firm selected from time to time by the Board of Directors
for that purpose or, if not so available in such manner, as otherwise determined
in good faith by the Board of Directors.
"DEBENTURE EVENT OF DEFAULT" means an "Event of Default" as defined in
the Indenture.
"DEBENTURE REDEMPTION DATE" means, with respect to any Debentures to be
redeemed under the Indenture, the date fixed for redemption thereof under the
Indenture.
"DEBENTURE TRUSTEE" means Firstar Bank, N.A., a national banking
association, as trustee under the Indenture.
"DEBENTURES" means all of the Depositor's ___% junior convertible
subordinated debentures, $_____,000,000 principal amount, issued pursuant to the
Indenture ($____,000 principal amount if the Underwriters' over-allotment option
is exercised in full).
"DEFINITIVE PREFERRED SECURITIES CERTIFICATES" means either or both (as
the context requires) of (a) Preferred Securities Certificates issued in
certificated, fully registered form as
4
<PAGE> 11
provided in Section 5.11(a) and (b) Preferred Securities Certificates issued in
certificated, fully registered form as provided in Section 5.13.
"DELAWARE BUSINESS TRUST ACT" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. C. Section 3801, et. seq., as it may be amended from time
to time.
"DELAWARE TRUSTEE" means the Person identified as the "Delaware
Trustee" in the preamble to this Trust Agreement solely in its capacity as
Delaware Trustee of the Trust and not in its individual capacity, or its
successor in interest in such capacity, or any successor Delaware trustee
appointed as herein provided.
"DEPOSITOR" has the meaning specified in the preamble to this Trust
Agreement.
"DIRECT ACTION" has the meaning specified in Section 6.8.
"DISTRIBUTION DATE" has the meaning specified in Section 4.1(a).
"DISTRIBUTIONS" means amounts payable in respect of the Trust
Securities as provided in Section 4.1.
"EARLY DISSOLUTION EVENT" has the meaning specified in Section 9.2.
"EVENT OF DEFAULT" means the occurrence of a Debenture Event of
Default, whatever the reason for such Debenture Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body.
"EXCHANGE NOTICE" has the meaning specified in Section 4.4(b).
"EXPIRATION DATE" has the meaning specified in Section 9.1.
"GLOBAL CERTIFICATE" means a Preferred Security that is registered in
the Securities Register in the name of a Clearing Agency or a nominee thereof.
"GUARANTEE" means the Guarantee Agreement executed and delivered by the
Depositor and Firstar Bank, N.A., a national banking association, as guarantee
trustee, contemporaneously with the execution and delivery of this Trust
Agreement, for the benefit of the Holders of the Preferred Securities, as
amended from time to time.
"HOLDER" means a Person in whose name a Trust Securities Certificate
representing a Trust Security is registered, such Person being a beneficial
owner within the meaning of the Delaware Business Trust Act.
"INDENTURE" means the Junior Convertible Subordinated Indenture, dated
as of ___________, 1999 between the Depositor and the Debenture Trustee, as
amended or supplemented from time to time.
5
<PAGE> 12
"INVESTMENT COMPANY EVENT" means the receipt by the Property Trustee,
on behalf of the Trust, of an Opinion of Counsel, rendered by a law firm having
a national tax and securities practice (which Opinion of Counsel shall not have
been rescinded by such law firm), to the effect that, as a result of the
occurrence of a change in law or regulation or a change in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority (a "Change in 1940 Act Law"), there is more than
an insubstantial risk that the Trust is or will be considered an "investment
company" that is required to be registered under the 1940 Act, which Change in
1940 Act Law becomes effective on or after the date of original issuance of the
Preferred Securities under this Trust Agreement.
"LIEN" means any lien, pledge, charge, encumbrance, mortgage, deed of
trust, adverse ownership interest, hypothecation, assignment, security interest
or preference, priority or other security agreement or preferential arrangement
of any kind or nature whatsoever.
"LIQUIDATION AMOUNT" means an amount with respect to the assets of the
Trust equal to $25 per Trust Security.
"LIQUIDATION DATE" means each date on which Debentures or cash are to
be distributed to Holders of Trust Securities in connection with a dissolution
and liquidation of the Trust pursuant to Section 9.4(a).
"LIQUIDATION DISTRIBUTION" has the meaning specified in Section 9.4(d).
"1940 ACT" means the Investment Company Act of 1940, as amended.
"NOTICE OF CONVERSION" means the notice given by a Holder of Preferred
Securities to the Conversion Agent directing the Conversion Agent to exchange
such Preferred Security for Debentures and to convert such Debentures into
Common Stock on behalf of such holder. Such notice is substantially in the form
set forth in Exhibit E.
"OFFICERS' CERTIFICATE" means a certificate signed by (i) the Chairman
of the Board, a Vice Chairman, the President or a Vice President, and by (ii)
the Treasurer, an Assistant Treasurer, the Controller, the Secretary or an
Assistant Secretary, of the Depositor, and delivered to the Trustee. One of the
officers signing an Officers' Certificate given pursuant to Section 8.15 shall
be the principal executive, financial or accounting officer of the Depositor.
Any Officers' Certificate delivered with respect to compliance with a condition
or covenant provided for in this Trust Agreement shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant of condition and the definitions
relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering
the Officers' Certificate;
(c) a statement that each officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable
such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
6
<PAGE> 13
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"OPINION OF COUNSEL" means a written opinion of counsel, who may be
counsel for the Trust, the Property Trustee or the Depositor, and who may be an
employee of any thereof, and who shall be acceptable to the Property Trustee.
Any Opinion of Counsel delivered with respect to compliance with a condition or
covenant provided for in this Trust Agreement shall include:
(a) a statement that each individual signing the Opinion of
Counsel has read the covenant or condition and the definitions relating
thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each individual in rendering
the Opinion of Counsel;
(c) a statement that each individual has made such examination
or investigation as is necessary to enable such individual to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
"OPTIONAL REDEMPTION PRICE" means with respect to the Preferred
Securities (except as set forth below with respect to redemption upon the
occurrence of a Tax Event or with respect to a Provisional Redemption), the
following percentages of the Liquidation Amounts thereof, plus accumulated and
unpaid Distributions, if any, to the date fixed for redemption if redeemed
during the twelve-month period commencing ______________ in each of the
following years indicated:
Redemption Price
Year ((%) of principal amount)
2002
2003
2004
2005
2006
2007
2008
2009 and thereafter 100%
In the event of a redemption of Trust Securities upon the occurrence of
a Tax Event, Trust Securities shall be redeemed at the redemption price of $25
per Trust Security and all accumulated and unpaid Distributions, if any, to the
date fixed for redemption.
In the event of a Provisional Redemption, Trust Securities shall be
redeemed at the redemption price of __% of the Liquidation Amounts thereof, plus
accumulated and unpaid Distributions, if any, to the date fixed for redemption.
"ORIGINAL TRUST AGREEMENT" has the meaning specified in the recitals to
this Trust Agreement.
7
<PAGE> 14
"OUTSTANDING," when used with respect to Trust Securities, means, as of
the date of determination, all Trust Securities theretofore executed and
delivered under this Trust Agreement, except:
(a) Trust Securities theretofore canceled by the Securities
Registrar or delivered to the Securities Registrar for cancellation or
tendered for conversion;
(b) Trust Securities for whose payment or redemption money in
the necessary amount has been theretofore deposited with the Property
Trustee or any Paying Agent for the Holders of such Trust Securities;
provided that, if such Trust Securities are to be redeemed, notice of
such redemption has been duly given pursuant to this Trust Agreement;
(c) Trust Securities which have been exchanged for Debentures
pursuant to Section 4.4; and
(d) Trust Securities which have been paid or in exchange for
or in lieu of which other Trust Securities have been executed and
delivered pursuant to Section 5.5;
provided, however, that in determining whether the Holders of the requisite
Liquidation Amount of the Outstanding Trust Securities have given any request,
demand, authorization, direction, notice, consent or waiver hereunder, Trust
Securities owned by the Depositor, any Trustee or any Affiliate of the Depositor
or any Trustee shall be disregarded and deemed not to be Outstanding, except
that (a) in determining whether any Trustee shall be fully protected in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Trust Securities that a Responsible Officer of the Property Trustee
or the Delaware Trustee, or an individual Administrative Trustee, as the case
may be, actually knows to be so owned shall be so disregarded and (b) the
foregoing shall not apply at any time when all of the Outstanding Trust
Securities are owned by the Depositor, one or more of the Trustees and/or any
such Affiliate. Trust Securities so owned which have been pledged in good faith
may be regarded as Outstanding if the pledgee establishes to the satisfaction of
the Securities Registrar the pledgee's right so to act with respect to such
Trust Securities and that the pledgee is not the Depositor or any Affiliate of
the Depositor.
"OWNER" means each Person who is the beneficial owner of a Book-Entry
Preferred Securities Certificate as reflected in the records of the Clearing
Agency or, if a Clearing Agency Participant is not the Owner, then as reflected
in the records of a Person maintaining an account with such Clearing Agency
(directly or indirectly, in accordance with the rules of such Clearing Agency).
"PAYING AGENT" means any paying agent or co-paying agent appointed
pursuant to Section 5.9.
"PAYMENT ACCOUNT" means a segregated non-interest bearing corporate
trust account maintained by the Property Trustee with the Bank in its trust
department for the benefit of the Security Holders in which all amounts paid in
respect of the Debentures will be held and from which the Property Trustee shall
make payments to the Security Holders in accordance with Section 4.1.
8
<PAGE> 15
"PERSON" means any individual, corporation, partnership, joint venture,
trust, limited liability company or corporation, unincorporated organization or
government or any agency or political subdivision thereof.
"PREFERRED SECURITIES CERTIFICATE" means a certificate evidencing
ownership of Preferred Securities, substantially in the form attached as Exhibit
D.
"PREFERRED SECURITY" means an undivided beneficial interest in the
assets of the Trust, having a Liquidation Amount with respect to the assets of
the Trust of $25 and having the rights provided therefor in this Trust
Agreement, including the right to receive Distributions and a Liquidation
Distribution as provided herein.
"PROPERTY TRUSTEE" means the commercial bank or trust company
identified as the "Property Trustee" in the preamble to this Trust Agreement
solely in its capacity as Property Trustee of the Trust and not in its
individual capacity, or its successor in interest in such capacity, or any
successor property trustee appointed as herein provided.
"PROVISIONAL REDEMPTION" has the meaning specified in the Indenture.
"REDEMPTION DATE" means, with respect to any Trust Security to be
redeemed, each Debenture Redemption Date.
"REDEMPTION PRICE" means, with respect to any Trust Security, $25 per
Trust Security, plus accumulated and unpaid Distributions (including any
Additional Sums) to the date of redemption.
"RELEVANT TRUSTEE" has the meaning specified in Section 8.9.
"RESPONSIBLE OFFICER" means any officer assigned to the Corporate Trust
Office, including any managing director, vice president, assistant vice
president, assistant treasurer, assistant secretary or any other officer of the
Property Trustee or the Delaware Trustee customarily performing functions
similar to those performed by any of the above designated officers and having
direct responsibility for the administration of this Trust Agreement, and also,
with respect to a particular matter, any other officer, to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.
"SECURITIES REGISTER" and "SECURITIES REGISTRAR" have the respective
meanings specified in Section 5.4.
"SECURITY HOLDER" or "HOLDER" means a Person in whose name a Trust
Security or Securities is registered in the Securities Register; any such Person
shall be deemed to be a beneficial owner within the meaning of the Delaware
Business Trust Act.
"SPECIAL EVENT" means a Tax Event or an Investment Company Event.
"SUCCESSOR PROPERTY TRUSTEE" has the meaning specified in Section 8.9.
"SUCCESSOR DELAWARE TRUSTEE" has the meaning specified in Section 8.9.
"SUCCESSOR SECURITIES" has the meaning specified in Section 9.5.
9
<PAGE> 16
"SUPER MAJORITY" has the meaning specified in Section 8.2.
"TAX EVENT" means the receipt by the Property Trustee, on behalf of the
Trust, of an Opinion of Counsel, rendered by a law firm having a national tax
and securities practice (which Opinion of Counsel shall not have been rescinded
by such law firm), to the effect that, as a result of any amendment to, or
change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein affecting taxation, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
such pronouncement or decision is announced on or after the date of issuance of
the Preferred Securities under this Trust Agreement and does not pertain to the
use of the proceeds of the issuance of the Debentures, there is more than an
insubstantial risk in each case after the date thereof that (i) the Trust is, or
will be within 90 days after the date thereof, subject to United State Federal
income tax with respect to income received or accrued on the Debentures, (ii)
interest payable by the Depositor on the Debentures is not, or will not be,
within 90 days after the date thereof, deductible, in whole or in part, for
United States Federal income tax purposes or (iii) the Trust is, or will be
within 90 days after the date thereof, subject to more than DE MINIMIS amount of
other taxes, duties, assessments or other governmental charges.
"TRUST" means the Delaware business trust continued hereby and
identified on the cover page of this Trust Agreement.
"TRUST AGREEMENT" means this Trust Agreement, as the same may be
modified, amended or supplemented in accordance with the applicable provisions
hereof, including all exhibits hereto, including, for all purposes of this Trust
Agreement any such modification, amendment or supplement, the provisions of the
Trust Indenture Act that are deemed to be a part of and govern this Trust
Agreement and any such modification, amendment or supplement, respectively.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed; provided, however,
that in the event the Trust Indenture Act of 1939 is amended after such date,
"Trust Indenture Act" means, to the extent required by any such amendment, the
Trust Indenture Act of 1939 as so amended.
"TRUST PROPERTY" means (a) the Debentures, (b) any cash on deposit in,
or owing to, the Payment Account and (c) all proceeds and rights in respect of
the foregoing to be held by the Property Trustee pursuant to the terms of this
Trust Agreement for the benefit of the Security Holders.
"TRUST SECURITY" means any one of the Common Securities or the
Preferred Securities.
"TRUST SECURITIES CERTIFICATE" means any one of the Common Securities
Certificates, the Global Certificates or the Certificated Preferred Securities.
"TRUSTEES" means, collectively, the Property Trustee, the Delaware
Trustee and the Administrative Trustees.
"UNDERWRITING AGREEMENT" means the Underwriting Agreement, date as of
________________, 1999 among the Trust, the Depositor and the Underwriters named
therein.
10
<PAGE> 17
ARTICLE 2 ESTABLISHMENT OF THE TRUST
SECTION 2.1. NAME. The Trust continued hereby shall be known as "Dayton
Superior Capital Trust," as such name may be modified from time to time by the
Administrative Trustees following written notice to the Holders of Trust
Securities and the other Trustees, in which name the Trustees may conduct the
business of the Trust, make and execute contracts and other instruments on
behalf of the Trust and sue and be sued.
SECTION 2.2. OFFICE OF THE DELAWARE TRUSTEE; PRINCIPAL PLACE OF
BUSINESS. The address of the Delaware Trustee in the State of Delaware is c/o
The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware 19801, or such other address in the State of Delaware as
the Delaware Trustee may designate by written notice to the Depositor. The
principal executive office of the Trust is 7777 Washington Village Drive, Suite
130, Dayton, Ohio 45459.
SECTION 2.3. ORGANIZATIONAL EXPENSES. The Depositor shall pay
organizational expenses of the Trust as they arise or shall, upon request of any
Trustee, promptly reimburse such Trustee for any such expenses paid by such
Trustee. The Depositor shall make no claim upon the Trust Property for the
payment of such expenses.
SECTION 2.4. ISSUANCE OF THE PREFERRED SECURITIES. On ____________,
1999, the Depositor on behalf of the Trust executed and delivered the
Underwriting Agreement. Contemporaneously with the execution and delivery of
this Trust Agreement, an Administrative Trustee, on behalf of the Trust, shall
execute in accordance with Section 5.2 and deliver to the Underwriters named in
the Underwriting Agreement Preferred Securities Certificates, in an aggregate
amount of __,_00,000 (__,_00,000 if the Underwriters' over-allotment option is
exercised in full) Preferred Securities having an aggregate Liquidation Amount
of $__,000,000 ($__,_00,000 if the Underwriters' over-allotment option is
exercised in full), against receipt of the aggregate purchase price of such
Preferred Securities of $__,000,000 ($__,_00,000 if the Underwriters'
over-allotment option is exercised in full), which amount the Administrative
Trustees shall promptly deliver to the Property Trustee.
SECTION 2.5. SUBSCRIPTION AND PURCHASE OF DEBENTURES; ISSUANCE OF THE
COMMON SECURITIES. Contemporaneously with the execution and delivery of this
Trust Agreement, an Administrative Trustee, on behalf of the Trust, shall
subscribe to and purchase from the Depositor Debentures, registered in the name
of the Property Trustee (in its capacity as such) and having an aggregate
principal amount equal to $__,000,000 ($__,_00,000 if the Underwriters'
over-allotment option is exercised in full), and, in satisfaction of the
purchase price for such Debentures, the Property Trustee, on behalf of the
Trust, shall deliver to the Depositor the sum of $__,000,000 ($__,000,000 if the
Underwriters' over-allotment option is exercised in full). Contemporaneously
therewith, an Administrative Trustee, on behalf of the Trust, shall execute in
accordance with Section 5.2 and deliver to the Depositor Common Securities
Certificates registered in the name of the Depositor, in an aggregate amount of
__,000 (__,000 if the Underwriters' over-allotment option is exercised in full)
Common Securities having an aggregate Liquidation Amount of $_,_00,000
($_,___,000 if the Underwriters' over-allotment option is exercised in full)
against receipt of the aggregate purchase price of such Common Securities from
the Depositor of Debentures, registered in the name of the Property Trustee (in
its capacity as such) and having an aggregate principal amount equal to
$_,_00,000 ($_,___,000 if the Underwriters' over-allotment option is exercised
in full).
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SECTION 2.6. DECLARATION OF TRUST. The exclusive purposes and functions
of the Trust are (a) to issue and sell Trust Securities and use the proceeds
from such sale to acquire the Debentures, (b) to distribute the Trust's income
as provided in this Trust Agreement and (c) to engage in only those other
activities necessary or incidental thereto. The Trust shall not borrow money,
issue debt or reinvest proceeds derived from investments, mortgage or pledge any
of its assets or otherwise undertake (or permit to be undertaken) any activity
that would cause the Trust not to be classified for United States Federal income
tax purposes as a grantor trust. The Depositor hereby appoints the Trustees as
trustees of the Trust, to have all the rights, powers and duties to the extent
set forth herein, and the Trustees hereby accept such appointment. The Property
Trustee hereby declares that it will hold the Trust Property upon and subject to
the conditions set forth herein for the benefit of the Trust and the Security
Holders. The Administrative Trustees shall have all rights, powers and duties
set forth herein and in accordance with applicable law with respect to
accomplishing the purposes of the Trust. The Delaware Trustee shall not be
entitled to exercise any powers, nor shall the Delaware Trustee have any of the
duties and responsibilities, of the other Trustees set forth herein. The
Delaware Trustee shall be one of the Trustees of the Trust for the sole and
limited purpose of fulfilling the requirements of Section 3807 of the Delaware
Business Trust Act.
SECTION 2.7. AUTHORIZATION TO ENTER INTO CERTAIN TRANSACTIONS.
(a) The Trustees shall conduct the affairs of the Trust in
accordance with the terms of this Trust Agreement. Subject to the
limitations set forth in Section 2.6 and paragraph (b) of this Section,
and in accordance with the following provisions (i) and (ii), the
Trustees shall have the exclusive power, duty and the authority to
cause the Trust to engage in the following activities:
(i) As among the Trustees, each Administrative
Trustee shall have the power and authority to act on behalf of
the Trust with respect to the following matters:
(A) to issue and sell the Trust Securities;
provided, however, that the Trust may issue no more
than one series of Preferred Securities and no more
than one series of Common Securities; provided,
further, that there shall be no interests in the
Trust other than the Trust Securities, and the
issuance of Trust Securities shall be limited to
simultaneous issuance of both Preferred Securities
and Common Securities on the Closing Date and any
other date Preferred Securities and Common Securities
are sold pursuant to the over-allotment option
granted to the Underwriters named in the Underwriting
Agreement, subject to the issuance of Trust
Securities pursuant to Section 5.5 and Successor
Securities pursuant to Section 9.5;
(B) to cause the Trust to enter into, and to
execute, deliver and perform on behalf of the Trust,
the Certificate Depository Agreement and such other
agreements as may be necessary or incidental to the
purposes and function of the Trust;
(C) to assist in the registration of the
Preferred Securities under the Securities Act of
1933, as amended, and under state securities or blue
sky laws, and the qualification of this Trust
Agreement as a trust indenture under the Trust
Indenture Act;
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(D) to assist in the listing of the
Preferred Securities upon such securities exchange or
exchanges, if any, as shall be determined by the
Depositor and the registration of the Preferred
Securities under the Securities Exchange Act of 1934,
as amended, and the preparation and filing of all
periodic and other reports and other documents
pursuant to the foregoing (only to the extent that
such listing or registration is requested by the
Depositor);
(E) to appoint a Paying Agent, a Securities
Registrar and an authenticating agent in accordance
with this Trust Agreement;
(F) to the extent provided in this Trust
Agreement, to wind up the affairs of and liquidate
the Trust and prepare, execute and file the
certificate of cancellation with the Secretary of
State of the State of Delaware;
(G) unless otherwise required by the
Delaware Business Trust Act or the Trust Indenture
Act, to execute on behalf of the Trust (either acting
alone or together with any other Administrative
Trustees) any documents that the Administrative
Trustees have the power to execute pursuant to this
Trust Agreement; and
(H) to take any action incidental to the
foregoing as the Trustees may from time to time
determine is necessary or advisable to give effect to
the terms of this Trust Agreement including, but not
limited to:
(i) causing the Trust not to be
deemed to be an Investment Company required
to be registered under the 1940 Act;
(ii) causing the Trust to be
classified for United States Federal income
tax purposes as a grantor trust; and
(iii) cooperating with the Depositor
to ensure that the Debentures will be
treated as indebtedness of the Depositor for
United States Federal income tax purposes;
provided that such action does not adversely affect
in any material respect the interests of Security
Holders except as otherwise provided in Section
10.2(a).
(ii) As among the Trustees, the Property Trustee
shall have the power, duty and authority to act on behalf of
the Trust with respect to the following matters:
(A) the establishment of the Payment
Account;
(B) the receipt of and taking title to the
Debentures;
(C) the collection of interest, principal
and any other payments made in respect of the
Debentures in the Payment Account;
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(D) the distribution from the Trust Property
of amounts owed to the Security Holders in respect of
the Trust Securities;
(E) the exercise of all of the rights,
powers and privileges of a holder of the Debentures;
(F) the sending of notices of default, other
notices and other information regarding the Trust
Securities and the Debentures to the Security Holders
in accordance with this Trust Agreement;
(G) the distribution of the Trust Property
in accordance with the terms of this Trust Agreement;
(H) to the extent provided in this Trust
Agreement, the winding up of the affairs of and
liquidation of the Trust;
(I) after an Event of Default, the taking of
any action incidental to the foregoing as the
Property Trustee may from time to time determine is
necessary or advisable to give effect to the terms of
this Trust Agreement and protect and conserve the
Trust Property for the benefit of the Security
Holders (without consideration of the effect of any
such action on any particular Security Holder);
(J) subject to this Section 2.7(a)(ii), the
Property Trustee shall have none of the duties,
liabilities, powers or the authority of the
Administrative Trustees set forth in Section
2.7(a)(i); and
(K) to act as Paying Agent and/or Securities
Registrar to the extent appointed as such hereunder.
(b) So long as this Trust Agreement remains in effect, the
Trust (or the Trustees acting on behalf of the Trust) shall not
undertake any business, activities or transaction except as expressly
provided herein or contemplated hereby. In particular, the Trust shall
not, and the Trustees shall not, cause the Trust to (i) invest any
proceeds received by the Trust from holding the Debentures (rather, the
Trustees shall distribute all such proceeds to the Security Holders
pursuant to the terms of this Trust Agreement and the Trust
Securities), acquire any investments or engage in any activities not
authorized by this Trust Agreement, (ii) sell, assign, transfer,
exchange, mortgage, pledge, set-off or otherwise dispose of any of the
Trust Property or interests therein, including to Security Holders,
except as expressly provided herein, (iii) take any action that would
cause the Trust to fail or cease to qualify as a "grantor trust" for
United States Federal income tax purposes, (iv) make any loans or incur
any indebtedness for borrowed money or issue any other debt, (v) take
or consent to any action that would result in the placement of a Lien
on any of the Trust Property, (vi) possess any power or otherwise act
in such a way as to vary the Trust assets or the terms of the Trust
Securities in any way whatsoever except as permitted by the terms of
this Trust Agreement, or (vii) issue any securities or other evidences
of beneficial ownership of, or beneficial interest in, the Trust other
than the Trust Securities. The Administrative Trustees shall defend all
claims and demands of all Persons at any time claiming
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any Lien on any of the Trust Property adverse to the interest of the
Trust or the Security Holders in their capacity as Security Holders.
(c) In connection with the issue and sale of the Preferred
Securities, the Depositor shall have the right and responsibility to
assist the Trust with respect to, or effect on behalf of the Trust, the
following actions (and any actions taken by the Depositor in
furtherance of the following prior to the date of this Trust Agreement
are hereby ratified and confirmed in all respects):
(i) to file by the Trust with the Commission and to
execute on behalf of the Trust a registration statement on the
appropriate form in relation to the Preferred Securities,
including any amendments thereto;
(ii) to determine the States and foreign
jurisdictions in which to take appropriate action to qualify
or register for resale all or part of the Preferred Securities
and to do any and all such acts, other than actions which must
be taken by or on behalf of the Trust, and advise the Trustees
of actions they must take on behalf of the Trust, and prepare
for execution and filing any documents to be executed and
filed by the Trust or on behalf of the Trust, as the Depositor
deems necessary or advisable in order to comply with the
applicable laws of any such States and foreign jurisdictions;
(iii) to the extent necessary, to prepare for filing
by the Trust with the Commission and to execute on behalf of
the Trust a registration statement on Form 8-A relating to the
registration of the Preferred Securities under Section 12(b)
or 12(g) of the Securities Exchange Act of 1934, as amended,
including any amendments thereto (it being understood that
neither the Trust nor the Depositor has any obligation under
the Indenture, the Underwriting Agreement or the Trust
Agreement to register any Trust Securities under the
Securities Exchange Act of 1934, as amended or to list any
Trust Securities on any securities exchange);
(iv) to negotiate, and to execute and deliver, on
behalf of the Trust, the Underwriting Agreement; and
(v) any other actions necessary or incidental to
carry out any of the foregoing activities.
(d) Notwithstanding anything herein to the contrary, the
Administrative Trustees are authorized and directed to conduct the
affairs of the Trust and to operate the Trust so that the Trust will
not be deemed to be an "investment company" required to be registered
under the 1940 Act, or taxed as a corporation or a partnership for
United States Federal income tax purposes and so that the Debentures
will be treated as indebtedness of the Depositor for United States
Federal income tax purposes. In this connection, the Depositor and the
Administrative Trustees are authorized to take any action, not
inconsistent with applicable law, the Certificate of Trust or this
Trust Agreement, that each of the Depositor and the Administrative
Trustees determines in their discretion to be necessary or desirable
for such purposes, so long as such action does not adversely affect in
any material respect the interests of the Holders of the Preferred
Securities except as otherwise provided in Section 10.2(a).
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SECTION 2.8. ASSETS OF TRUST. The assets of the Trust shall consist of
only the Trust Property.
SECTION 2.9. TITLE TO TRUST PROPERTY. Legal title to all Trust Property
shall be vested at all times in the Property Trustee (in its capacity as such)
and shall be held and administered by the Property Trustee for the benefit of
the Trust and the Security Holders in accordance with this Trust Agreement. The
Security Holders shall not have legal title to any part of the assets of the
Trust, but shall have an undivided beneficial interest in the assets of the
Trust.
ARTICLE 3 PAYMENT ACCOUNT
SECTION 3.1. PAYMENT ACCOUNT. (a) On or prior to the Closing Date, the
Property Trustee shall establish the Payment Account. The Property Trustee and
any agent of the Property Trustee shall have exclusive control and sole right of
withdrawal with respect to the Payment Account for the purpose of making
deposits in and withdrawals from the Payment Account in accordance with this
Trust Agreement. All monies and other property deposited or held from time to
time in the Payment Account shall be held by the Property Trustee in the Payment
Account for the exclusive benefit of the Security Holders and for distribution
as herein provided, including (and subject to) any priority of payments provided
for herein.
(b) The Property Trustee shall deposit in the Payment Account, promptly
upon receipt, all payments of principal of or interest on, and any other
payments or proceeds with respect to, the Debentures. Amounts held in the
Payment Account shall not be invested by the Property Trustee pending
distribution thereof.
ARTICLE 4 DISTRIBUTIONS; REDEMPTION; EXCHANGE; CONVERSION
SECTION 4.1. DISTRIBUTIONS. (a) Distributions on the Trust Securities
shall be cumulative, and shall accrue from the date of original issuance, or the
most recent Distribution Date (as defined herein) and, except in the event that
the Depositor exercises its right to defer the payment of interest on the
Debentures pursuant to the Indenture, shall be payable quarterly in arrears on
September 30, December 31, March 31, and June 30 of each year, commencing on
September 30, 1999 (which dates correspond to the interest payment dates on the
Debentures), when, as and if available for payment by the Property Trustee, as
further described in paragraph (c) of this Section 4.1. If any date on which
Distributions are otherwise payable on the Trust Securities is not a Business
Day, then the payment of such Distributions shall be made on the next succeeding
day which is a Business Day (and no interest shall accrue for the period from
and after such date until the next succeeding Business Day) with the same force
and effect as if made on such date (each date on which Distributions are payable
in accordance with this Section 4.1(a), a "Distribution Date").
(b) The Trust Securities represent undivided beneficial interests in
the Trust Property, and the Distributions on the Trust Securities shall be
payable at a rate of ___% per annum of the Liquidation Amount of the Trust
Securities, such rate being the rate of interest payable on the Debentures to be
held by the Property Trustee. The amount of Distributions payable for any period
shall be computed on the basis of a 360-day year of twelve 30-day months. For
periods less than a full month, Distributions shall reflect interest on
Debentures computed on the basis of the actual number of elapsed days based on a
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360-day year. The amount of Distributions payable for any period shall include
the Additional Amounts, if any.
(c) Distributions on the Trust Securities shall be made by the
Property Trustee from the Payment Account and shall be payable on each
Distribution Date only to the extent that the Trust has funds then on hand and
available in the Payment Account for the payment of such Distributions.
(d) Distributions on the Trust Securities with respect to a
Distribution Date shall be payable to the Holders thereof as they appear on the
Securities Register for the Trust Securities on the relevant record date, which
shall be the date which is the fifteenth day (whether or not a Business Day)
next preceding such Distribution Date.
SECTION 4.2. REDEMPTION. (a) Upon an optional redemption (as set forth
in the Indenture) of Debentures, the proceeds from such redemption shall be
applied to redeem Trust Securities having an aggregate Liquidation Amount equal
to the aggregate principal amount of the Debentures so redeemed by the
Depositor, including pursuant to Section 4.4, at the Optional Redemption Price,
and upon a mandatory redemption (as set forth in the Indenture) of Debentures,
the proceeds from such redemption shall be applied to redeem Trust Securities,
having an aggregate Liquidation Amount equal to the aggregate principal amount
of the Debentures so redeemed by the Depositor, at the Redemption Price. The
Trust may not redeem fewer than all the Outstanding Trust Securities unless all
accrued and unpaid Distributions have been paid on all Trust Securities for all
quarterly Distribution periods terminating on or prior to the date of
redemption.
(b) Notice of redemption (which notice will be irrevocable) shall be
given by the Property Trustee by first-class mail, postage prepaid, mailed not
less than 30 nor more than 60 days prior to the Redemption Date to the Depositor
and each Holder of Trust Securities to be redeemed, at such Holder's address as
it appears in the Securities Register. All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price or the Optional Redemption Price, as
the case may be;
(iii) the record date for the determination of Holders
entitled to receive payment of the Redemption Price or Optional
Redemption Price, as the case may be, as provided in Section 4.2(d);
(iv) the CUSIP number;
(v) if less than all of the Outstanding Trust Securities are
to be redeemed, the identification and the aggregate Liquidation Amount
of the particular Trust Securities to be redeemed;
(vi) the Conversion Price and that a Holder of Preferred
Securities who desires to convert such Preferred Securities called for
redemption must satisfy the requirements for conversion contained in
Section 4.3 below;
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(vii) that on the Redemption Date the Redemption Price or the
Optional Redemption Price, as the case may be, will become due and
payable upon each such Trust Security to be redeemed and that
Distributions thereon will cease to accrue on and after said date; and
(viii) the place or places where such Trust Securities are to
be surrendered for payment of the Redemption Price or the Optional
Redemption Price, as the case may be.
(c) The Trust Securities redeemed on each Redemption Date shall be
redeemed at the Redemption Price or the Optional Redemption Price, as the case
may be, with the proceeds from the contemporaneous redemption of Debentures.
Redemptions of the Trust Securities shall be made and the Redemption Price or
the Optional Redemption Price, as the case may be, shall be payable on each
Redemption Date only to the extent that the Trust has funds then on hand and
available in the Payment Account for the payment of such Redemption Price or the
Optional Redemption Price, as the case may be.
(d) If the Property Trustee gives a notice of redemption in respect of
any Preferred Securities, then, by 12:00 noon, New York time, on the Redemption
Date, subject to Section 4.2(c), the Property Trustee will, so long as and to
the extent the Preferred Securities are in book-entry-only form, irrevocably
deposit with the Clearing Agency for the Preferred Securities funds sufficient
to pay the applicable Redemption Price. If the Preferred Securities are no
longer in book-entry-only form, the Property Trustee, subject to Section 4.2(c),
will irrevocably deposit with the Paying Agent funds sufficient to pay the
applicable Redemption Price or Optional Redemption Price, as the case may be, on
such Preferred Securities held in certificated form and will give the Paying
Agent irrevocable instructions and authority to pay the Redemption Price or the
Optional Redemption Price, as the case may be, to the Holders thereof upon
surrender of their Preferred Securities Certificates. Notwithstanding the
foregoing, Distributions payable on or prior to the Redemption Date for any
Trust Securities called for redemption shall be payable to the Holders of such
Trust Securities as they appear on the Securities Register for the Trust
Securities on the relevant record dates for the related Distribution Dates. If
notice of redemption shall have been given and funds deposited as required,
then, upon the date of such deposit, all rights of Security Holders holding
Trust Securities so called for redemption will cease, except (i) the right of
such Security Holders to receive the Redemption Price or the Optional Redemption
Price, as the case may be, but without interest, and (ii) the right to convert
such Preferred Securities into Common Stock in the manner provided in Section
4.3 through the close of business on the Redemption Date; and such Trust
Securities will cease to be Outstanding. In the event that any date on which any
Redemption Price or the Optional Redemption Price, as the case may be, is
payable is not a Business Day, then payment of the Redemption Price or the
Optional Redemption Price, as the case may be, payable on such date will be made
on the next succeeding day which is a Business Day (and without any interest or
other payment in respect of any such delay), except that, if such Business Day
is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case, with the same force and effect
as if made on such date. Payment of the Redemption Price or the Optional
Redemption Price, as the case may be, shall be made to the Holders of such Trust
Securities as they appear on the Securities Register for the Trust Securities on
the relevant record date, which shall be the date which is the fifteenth day
(whether or not a Business Day) preceding such Redemption Date.
(e) If less than all the Outstanding Trust Securities are to be
redeemed on a Redemption Date, then the aggregate Liquidation Amount of Trust
Securities to be redeemed shall be allocated on a PRO RATA basis (based on
Liquidation Amounts) among the Common Securities and the Preferred Securities
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that are to be redeemed. The particular Preferred Securities to be redeemed
shall be selected not more than 60 days prior to the Redemption Date by the
Property Trustee from the Outstanding Preferred Securities not previously called
for redemption, by lot or by such other method as the Property Trustee shall
deem fair and appropriate and which may provide for the selection for redemption
of portions (equal to $25 or an integral multiple of $25 in excess thereof) of
the Liquidation Amount of the Preferred Securities. The Property Trustee shall
promptly notify the Securities Registrar and the Conversion Agent in writing of
the Preferred Securities selected for redemption and, in the case of any
Preferred Securities selected for partial redemption, the Liquidation Amount
thereof to be redeemed; it being understood that, in the case of Preferred
Securities registered in the name of and held of record by the Clearing Agency
(or any successor) or any nominee, the distribution of the proceeds of such
redemption will be made in accordance with the procedures of the Clearing Agency
or its nominee. For all purposes of this Trust Agreement, unless the context
otherwise requires, all provisions relating to the redemption of Preferred
Securities shall relate, in the case of any Preferred Securities redeemed or to
be redeemed only in part, to the portion of the Liquidation Amount of Preferred
Securities which has been or is to be redeemed. In the event of any redemption
in part, the Trust shall not be required to (i) issue, register the transfer of
or exchange of any Preferred Security during a period beginning at the opening
of business 15 days before any selection for redemption of Preferred Securities
and ending at the close of business on the earliest date in which the relevant
notice of redemption is deemed to have been given to all Holders of Preferred
Securities to be so redeemed or (ii) register the transfer of or exchange of any
Preferred Securities so selected for redemption, in whole or in part, except for
the unredeemed portion of any Preferred Securities being redeemed in part.
(f) In the event of any redemption, the Trust shall not be required to
issue, register the transfer of or register the exchange of any Preferred
Security during a period beginning at the opening of business 15 days before any
Redemption Date and ending at the close of business on such Redemption Date.
SECTION 4.3. CONVERSION. The Holders of Trust Securities, subject to
the limitations set forth in this Section, shall have the right, at their
option, to cause the Conversion Agent to convert Trust Securities, on behalf of
the converting Holders, into shares of Common Stock in the manner described
herein on and subject to the following terms and conditions:
(i) The Trust Securities will be convertible into fully paid
and nonassessable shares of Common Stock pursuant to the Holder's
direction to the Conversion Agent to exchange such Trust Securities for
a portion of the Debentures having a principal amount equal to the
aggregate Liquidation Amount of such Trust Securities, and immediately
convert such amount of Debentures into fully paid and nonassessable
shares of Common Stock at an initial rate of______ shares of Common
Stock for each Trust Security (which is equivalent to a conversion
price of approximately $ _____ per $25 principal amount of Debentures),
subject to all of the adjustments with respect to the conversion price
of the Debentures, as set forth in the Indenture (as so adjusted,
"Conversion Price").
(ii) In order to convert Trust Securities into Common Stock,
the Holder of such Trust Securities shall submit to the Conversion
Agent an irrevocable Notice of Conversion to convert Trust Securities
on behalf of such Holder, together, if the Trust Securities are in
certificated form, with such certificates. The Notice of Conversion
shall (i) set forth the number of Trust Securities to be converted and
the name or names, if other than the Holder, in which the shares of
Common Stock should be issued and (ii) direct the Conversion Agent (a)
to exchange such Trust
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Securities for a portion of the Debentures held by the Property Trustee
(at the rate of exchange specified in the preceding paragraph) and (b)
to immediately convert such Debentures, on behalf of such Holder, into
Common Stock (at the conversion rate specified in the preceding
paragraph). The Conversion Agent shall notify the Property Trustee in
writing of the Holder's election to exchange Trust Securities for a
portion of the Debentures held by the Property Trustee and the Property
Trustee shall, upon receipt of such written notice, deliver to the
Conversion Agent the appropriate principal amount of Debentures for
exchange in accordance with this Section. The Conversion Agent shall
thereupon notify the Depositor of the Holder's election to convert such
Debentures into shares of Common Stock. Holders of Trust Securities at
the close of business on a Distribution payment record date will be
entitled to receive the Distribution paid on such Trust Securities on
the corresponding Distribution Date notwithstanding the conversion of
such Trust Securities on or following such record date but prior to
such Distribution Date. Except as provided above, neither the Trust nor
the Depositor will make, or be required to make, any payment, allowance
or adjustment upon any conversion on account of any accumulated and
unpaid Distributions whether or not in arrears accrued on the Trust
Securities surrendered for conversion, or on account of any accumulated
and unpaid dividends on the shares of Common Stock issued upon such
conversion. Trust Securities submitted for conversion prior to the
expiration of conversion rights as provided in Section 4.3(iii) shall
be deemed to have been converted immediately prior to the close of
business on the day on which an irrevocable Notice of Conversion
relating to such Trust Securities is received by the Conversion Agent
in accordance with the foregoing provision (the "Conversion Date"). The
Person or Persons entitled to receive the Common Stock issuable upon
conversion of the Debentures shall be treated for all purposes as the
record holder or holders of such Common Stock on the date of
conversion. As promptly as practicable on or after the Conversion Date,
the Depositor shall issue and deliver at the office of the Conversion
Agent a certificate or certificates for the number of full shares of
Common Stock issuable upon such conversion, together with the cash
payment, if any, in lieu of any fraction of any share to the Person or
Persons entitled to receive the same, unless otherwise directed by the
Holder in the notice of conversion and the Conversion Agent shall
distribute such certificate or certificates to such Person or Persons.
(iii) The conversion rights of holders of the Debentures and
the corresponding conversion rights of Holders of Trust Securities
shall expire at the close of business on the date set for redemption of
the Trust Securities upon the mandatory or optional redemption of the
Debentures.
(iv) Each Holder of a Trust Security by its acceptance thereof
initially appoints ____________________ not in its individual capacity
but solely as conversion agent (the "Conversion Agent") for the purpose
of effecting the conversion of Trust Securities in accordance with this
Section. In effecting the conversion and transactions described in this
Section, the Conversion Agent shall be acting as agent of the Holders
of Trust Securities directing it to effect such conversion
transactions. The Conversion Agent is hereby authorized (i) to exchange
Trust Securities from time to time for Debentures held by the Trust in
connection with the conversion of such Trust Securities in accordance
with this Section and (ii) to convert all or a portion of the
Debentures into Common Stock and thereupon to deliver such shares of
Common Stock in accordance with the provisions of this Section and to
deliver to the Property Trustee any new Debenture or Debentures for any
resulting unconverted principal amount delivered to the Conversion
Agent by the Debenture Trustee.
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(v) No fractional shares of Common Stock will be issued as a
result of conversion, but, in lieu thereof, such fractional interest
will be paid in cash by the Depositor to the Conversion Agent in an
amount equal to the Current Market Price of the fractional share of the
Common Stock, and the Conversion Agent will in turn make such payment
to the Holder or Holders of Trust Securities so converted.
(vi) Nothing in this Section 4.3 shall limit the requirement
of the Trust to withhold taxes pursuant to the terms of the Trust
Securities or as set forth in this Trust Agreement or otherwise
required of the Property Trustee or the Trust to pay any amounts on
account of such withholdings.
SECTION 4.4. SPECIAL EVENT EXCHANGE OR REDEMPTION. (a) If a Special
Event shall occur and be continuing, the Property Trustee shall direct the
Conversion Agent to exchange all Outstanding Trust Securities for Debentures
having a principal amount equal to the aggregate Liquidation Amount of the Trust
Securities to be exchanged and with accrued interest in an amount equal to any
unpaid Distribution (including any Additional Amounts) on the Trust Securities;
provided, however, that, in the case of a Tax Event, the Depositor shall have
the right to (i) direct that less than all, or none, as appropriate, of the
Trust Securities be so exchanged if and for so long as the Depositor shall have
elected to pay any Additional Sums (as defined in the Indenture) such that the
amount received by Holders of Trust Securities not so exchanged in respect of
Distributions and other distributions are not reduced as a result of such Tax
Event, and shall not have revoked any such election or failed to make such
payments or (ii) cause the Trust Securities to be redeemed in the manner set
forth below. If a Tax Event shall occur or be continuing, the Depositor shall
have the right, upon not less than 30 nor more than 60 days' notice, to redeem
the Debentures, in whole or in part, for cash upon the later of (i) 90 days
following the occurrence of such Tax Event or (ii) __________, ____[DATE].
Promptly following such redemption, Trust Securities with an aggregate
Liquidation Amount equal to the aggregate principal amount of the Debentures so
redeemed will be redeemed by the Trust at the Optional Redemption Price
applicable in the event of a redemption upon the occurrence of a Tax Event on a
pro rata basis.
(b) Notice of any exchange pursuant to this Section 4.4 (an "Exchange
Notice") of the Trust Securities, which Exchange Notice shall be irrevocable,
will be given by the Property Trustee by first-class mail to the Depositor and
to each record Holder of Trust Securities to be exchanged not fewer than 30 nor
more than 60 days prior to the date fixed for exchange thereof. For purposes of
the calculation of the date of exchange and the dates on which notices are given
pursuant to this paragraph (b), an Exchange Notice shall be deemed to be given
on the day such notice is first mailed by first-class mail, postage prepaid, to
each Holder. Each Exchange Notice shall be addressed to each Holder of Trust
Securities at the address of such Holder appearing in the books and records of
the Trust. Each Exchange Notice shall state: (A) the exchange date; (B) the
aggregate Liquidation Amount and any unpaid Distributions (including any
Additional Amounts) on the Trust Securities to be exchanged and the aggregate
principal amount and any accrued interest on the Debentures to be exchanged
therefor; (C) that on the exchange date the Trust Securities to be so exchanged
shall be exchanged for Debentures and that Distributions on the Trust Securities
so exchanged will cease to accumulate on and after said date; (D) the record
date for the determination of Holders of Trust Securities to be exchanged as
provided in Section 4.4(g); and (E) the identity of the Conversion Agent, if
any, and the place or places where each Trust Certificate to be exchanged is to
be surrendered in exchange for Debentures. No defect in the Exchange Notice or
in the mailing thereof with respect to any Trust Security shall affect the
validity of the exchange proceedings for any other Trust Security.
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(c) In the event that fewer than all the Outstanding Preferred
Securities are to be exchanged, then, on the exchange date, (i) if all of the
Outstanding Preferred Securities are represented by Definitive Preferred
Securities Certificates, the particular Preferred Securities to be exchanged
will be selected by the Property Trustee from the Outstanding Preferred
Securities not previously called for redemption or exchange on a pro rata basis,
(ii) if all of the Outstanding Preferred Securities are represented by
Book-Entry Preferred Securities Certificates, the Property Trustee shall provide
for the selection for exchange of a portion of the Global Certificate
representing the Book-Entry Preferred Securities Certificates on a pro rata
basis and (iii) if Outstanding Trust Securities are represented by both
Definitive Preferred Securities Certificates and Book-Entry Preferred Securities
Certificates, the Property Trustee shall select the portion of the Global
Certificate representing the Book-Entry Preferred Securities Certificates and
the particular Outstanding Preferred Securities represented by Definitive
Preferred Securities Certificates to be exchanged on a pro rata basis. In the
case of clause (ii) or (iii) above, the particular Book-Entry Preferred
Securities Certificates to be exchanged shall be selected in accordance with the
applicable rules and procedures for the Clearing Agency in whose name, or whose
nominee's name, such global certificate is then held. Any Preferred Securities
Certificate that is to be exchanged only in part shall be surrendered with due
endorsement or by a written instrument of transfer fully executed by the Holder
thereof (or its attorney duly authorized in writing) and the Trust shall prepare
and deliver to such Holder, without service charge, a new Preferred Securities
Certificate or Certificates in aggregate stated Liquidation Amount equal to, and
in exchange for, the unredeemed portion of the Preferred Securities Certificate
so surrendered. The Common Securities shall be exchanged in a similar manner.
(d) In the event of an exchange pursuant to this Section 4.4, on the
date fixed for any such exchange, (i) if the Preferred Securities are
represented by Book-Entry Preferred Securities Certificates, the Clearing Agency
or its nominee, as the record Holder of the Preferred Securities, will exchange
through the Conversion Agent the Global Certificate representing the Preferred
Securities to be exchanged for a registered Global Certificate or certificates
representing the Debentures to be delivered upon such exchange, (ii) if the
Preferred Securities are represented by Definitive Preferred Securities
Certificates, the certificates representing the Preferred Securities to be so
exchanged will be deemed to represent Debentures having a principal amount equal
to the aggregate stated Liquidation Amount of such Preferred Securities until
such certificates are presented to the Conversion Agent for exchange for
definitive certificates representing Debentures and (iii) all rights of the
Holders of the Preferred Securities so exchanged will cease, except for the
right of such Holders to receive Debentures. The Common Securities shall be
exchanged in a similar manner.
(e) Each Holder, by becoming a party to this Trust Agreement pursuant
to Section 10.11 of this Trust Agreement, will be deemed to have agreed to be
bound by these exchange provisions in regard to the exchange of Trust Securities
for Debentures pursuant to the terms described above.
(f) Nothing in this Section 4.4 shall limit the requirement of the
Trust to withhold taxes pursuant to the terms of the Trust Securities or as set
forth in this Trust Agreement or otherwise require the Property Trustee or the
Trust to pay any amounts on account of such withholdings.
(g) An exchange of Trust Securities for Debentures pursuant to this
Section 4.4 shall be made to Holders of Trust Securities as they appear on the
Securities Register for Trust Securities on the relevant record date, which
shall be the date which is the fifteenth day (whether or not a Business Day)
preceding the exchange date.
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SECTION 4.5. SUBORDINATION OF COMMON SECURITIES. Payment of
Distributions (including Additional Amounts, if applicable) on, and the
Redemption Price of, the Trust Securities, as applicable, shall be made PRO RATA
based on the Liquidation Amount of the Trust Securities; provided, however, that
if on any Distribution Date or Redemption Date an Event of Default shall have
occurred and be continuing, no payment of any Distribution (including Additional
Amounts, if applicable) on, or the Redemption Price of, any Common Security, and
no other payment on account of the redemption, liquidation or other acquisition
of Common Securities, shall be made unless payment in full in cash of all
accumulated and unpaid Distributions (including Additional Amounts, if
applicable) on all Outstanding Preferred Securities for all Distribution periods
terminating on or prior thereto, or in the case of payment of the Redemption
Price the full amount of such Redemption Price on all Outstanding Preferred
Securities, shall have been made or provided for, and all funds immediately
available to the Property Trustee shall first be applied to the payment in full
in cash of all Distributions (including Additional Amounts, if applicable) on,
or the Redemption Price of, Preferred Securities then due and payable.
SECTION 4.6. PAYMENT PROCEDURES. Payments in respect of the Preferred
Securities shall be made by check mailed to the address of the Person entitled
thereto as such address shall appear on the Securities Register or, if the
Preferred Securities are held by a Clearing Agency, such Distributions shall be
made to the Clearing Agency in immediately available funds, in accordance with
the Certificate Depositary Agreement on the applicable Distribution Dates.
Payments in respect of the Common Securities shall be made in such manner as
shall be mutually agreed between the Property Trustee and the Holder of the
Common Securities.
SECTION 4.7. TAX RETURNS AND REPORTS. The Administrative Trustees shall
prepare (or cause to be prepared), at the Depositor's expense, and file all
United States Federal, State and local tax and information returns and reports
required to be filed by or in respect of the Trust. In this regard, the
Administrative Trustees shall (a) prepare and file (or cause to be prepared or
filed) Form 1041 or the appropriate Internal Revenue Service form required to be
filed in respect of the Trust in each taxable year of the Trust and (b) prepare
and furnish (or cause to be prepared and furnished) to each Security Holder a
Form 1099 or the appropriate Internal Revenue Service form required to be
furnished to such Security Holder or the information required to be provided on
such form. The Administrative Trustees shall provide the Depositor with a copy
of all such returns, reports and schedules promptly after such filing or
furnishing. The Trustees shall comply with United States Federal withholding and
backup withholding tax laws and information reporting requirements with respect
to any payments to Security Holders under the Trust Securities.
SECTION 4.8. PAYMENT OF TAXES, DUTIES, ETC. OF THE TRUST. Upon receipt
under the Debentures of Additional Sums, the Property Trustee, upon receipt of
written notice from the Depositor or the Administrative Trustees, shall promptly
pay from such Additional Sums any taxes, duties or governmental charges of
whatsoever nature (other than withholding taxes) imposed on the Trust by the
United States or any other taxing authority.
SECTION 4.9. PAYMENTS UNDER INDENTURE. Any amount payable hereunder to
any Holder of Preferred Securities shall be reduced by the amount of any
corresponding payment such Holder (or any Owner with respect thereto) has
directly received pursuant to Section 5.8 of the Indenture in accordance with
the terms of Section 6.8 hereof.
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ARTICLE 5 TRUST SECURITIES CERTIFICATES
SECTION 5.1. INITIAL OWNERSHIP. Upon the creation of the Trust and
until the issuance of the Trust Securities, and at any time during which no
Trust Securities are Outstanding, the Depositor shall be the sole beneficial
owner of the Trust.
SECTION 5.2. THE TRUST SECURITIES CERTIFICATES. The Preferred
Securities Certificates shall be issued in minimum denominations of $25
Liquidation Amount and integral multiples of $25 in excess thereof, and the
Common Securities Certificates shall be issued in denominations of $25
Liquidation Amount and integral multiples thereof. The consideration received by
the Trust for the issuance of the Trust Securities shall constitute a
contribution to the capital of the Trust and shall not constitute a loan to the
Trust. The Preferred Securities initially will be represented by one or more
certificates in registered, global form (collectively, the "Global
Certificate"). Preferred Securities initially transferred, in accordance with
Section 5.4, in a manner exempt from the registration requirements of the
Securities Act will be exchanged for Preferred Securities in registered,
certificated form (the "Certificated Preferred Securities"). The Trust
Securities Certificates shall be executed on behalf of the Trust by manual or
facsimile signature of at least one Administrative Trustee and authenticated by
the Property Trustee. Trust Securities Certificates bearing the manual or
facsimile signatures of individuals who were, at the time when such signatures
shall have been affixed, authorized to sign on behalf of the Trust, shall be
validly issued and entitled to the benefit of this Trust Agreement,
notwithstanding that such individuals or any of them shall have ceased to be so
authorized prior to the delivery of such Trust Securities Certificates or did
not hold such offices at the date of delivery of such Trust Securities
Certificates. A transferee of a Trust Securities Certificate shall become a
Security Holder, and shall be entitled to the rights and subject to the
obligations of a Security Holder hereunder, upon due registration of such Trust
Securities Certificate in such transferee's name pursuant to Section 5.4.
SECTION 5.3. DELIVERY OF TRUST SECURITIES CERTIFICATES. On the Closing
Date, the Administrative Trustees shall cause Trust Securities Certificates, in
an aggregate Liquidation Amount as provided in Sections 2.4 and 2.5, to be
executed on behalf of the Trust and delivered to or upon the written order of
the Depositor, signed by its Chairman of the Board, any Vice Chairman, its
President, any Senior Vice President or any Vice President, Treasurer or
Assistant Treasurer or Controller without further corporate action by the
Depositor, in authorized denominations.
A Trust Security Certificate shall not be valid until authenticated by
the manual signature of an authorized signatory of the Property Trustee. The
signature shall be conclusive evidence that the Trust Security Certificate has
been authenticated under this Trust Agreement. Upon a written order of the Trust
signed by one Administrative Trustee, the Property Trustee shall authenticate
the Trust Security Certificates for original issue.
The Property Trustee may appoint an authenticating agent acceptable to
the Administrative Trustees to authenticate Trust Security Certificates. An
authenticating agent may authenticate Trust Security Certificates whenever the
Property Trustee may do so. Each reference in this Trust Agreement to
authentication by the Property Trustee includes authentication by such agent. An
authenticating agent has the same rights as the Property Trustee to deal with
the Depositor or an Affiliate with respect to the authentication of Trust
Securities.
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SECTION 5.4. REGISTRATION OF TRANSFER AND EXCHANGE OF PREFERRED
SECURITIES. The Securities Registrar shall keep or cause to be kept, at the
office or agency maintained pursuant to Section 5.8, a Securities Register in
which, subject to such reasonable regulations as it may prescribe, the
Securities Registrar shall provide for the registration of Preferred Securities
Certificates and Common Securities Certificates (subject to Section 5.10 in the
case of the Common Securities Certificates) and registration of transfers and
exchanges of Preferred Securities Certificates as herein provided. The Property
Trustee shall be the initial Securities Registrar.
Subject to the other provisions of this Trust Agreement regarding
restrictions on transfer, upon surrender for registration of transfer of any
Preferred Security at an office or agency of the Securities Registrar designated
pursuant to Section 5.8 for such purpose, an Administrative Trustee shall
execute on behalf of the Trust by manual or facsimile signature, and the
Property Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Preferred Securities of any
authorized denominations and of a like aggregate principal amount and bearing
such restrictive legends as may be required by this Trust Agreement.
At the option of the Holder, and subject to the other provisions of
this Section 5.4, Preferred Securities may be exchanged for other Preferred
Securities of any authorized denomination and of a like Liquidation Amount, upon
surrender of the Preferred Securities to be exchanged at any such office or
agency. Whenever any Preferred Securities are so surrendered for exchange, an
Administrative Trustee shall execute on behalf of the Trust by manual or
facsimile signature, and the Property Trustee shall authenticate and deliver,
the Preferred Securities which the Holder making the exchange is entitled to
receive.
All Preferred Securities issued upon any registration of transfer or
exchange of Preferred Securities shall be entitled to the same benefits under
this Trust Agreement, as the Securities surrendered upon such registration of
transfer or exchange.
Every Preferred Security presented or surrendered for registration of
transfer or for exchange shall (if so requested by the Depositor or the
Securities Registrar) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Depositor and the Securities
Registrar duly executed, by the Holder thereof or his attorney duly authorized
in writing.
No service charge shall be made for any registration of transfer or
exchange of Preferred Securities Certificates, but the Securities Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Preferred
Securities Certificates.
SECTION 5.5. MUTILATED, DESTROYED, LOST OR STOLEN TRUST SECURITIES
CERTIFICATES. If (a) any mutilated Trust Securities Certificate shall be
surrendered to the Securities Registrar, or if the Securities Registrar shall
receive evidence to its satisfaction of the destruction, loss or theft of any
Trust Securities Certificate and (b) there shall be delivered to the Securities
Registrar and the Administrative Trustees such security or indemnity as may be
required by them to save each of them harmless, then in the absence of notice
that such Trust Securities Certificate shall have been acquired by a bona fide
purchaser, the Administrative Trustees, or any one of them, on behalf of the
Trust shall execute and make available for authentication and delivery, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen Trust
Securities Certificate, a new Trust Securities Certificate of like
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denomination. In connection with the issuance of any new Trust Securities
Certificate under this Section, the Securities Registrar may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith. Any duplicative Trust Securities Certificate
issued pursuant to this Section shall constitute conclusive evidence of an
undivided beneficial interest in the assets of the Trust, as if originally
issued, whether or not the lost, stolen or destroyed Trust Securities
Certificate shall be found at any time.
SECTION 5.6. PERSONS DEEMED SECURITY HOLDERS. The Property Trustee and
the Securities Registrar shall treat the Person in whose name any Trust
Securities Certificate shall be registered in the Securities Register as the
owner of such Trust Securities Certificate for the purpose of receiving
Distributions and for all other purposes whatsoever, and neither the Property
Trustee nor the Securities Registrar shall be bound by any notice to the
contrary.
SECTION 5.7. ACCESS TO LIST OF SECURITY HOLDERS' NAMES AND ADDRESSES.
The Administrative Trustees or the Depositor shall furnish or cause to be
furnished (unless the Property Trustee is acting as Securities Registrar with
respect to the Trust Securities under the Trust Agreement) a list, in such form
as the Property Trustee may reasonably require, of the names and addresses of
the Security Holders as of the most recent record date (a) to the Property
Trustee, quarterly at least 5 Business Days before each Distribution Date, and
(b) to the Property Trustee, promptly after receipt by the Depositor of a
written request therefor from the Property Trustee in order to enable the
Property Trustee to discharge its obligations under this Trust Agreement, in
each case to the extent such information is in the possession or control of the
Administrative Trustees or the Depositor and is not identical to a previously
supplied list or has not otherwise been received by the Property Trustee in its
capacity as Securities Registrar. The rights of Security Holders to communicate
with other Security Holders with respect to their rights under this Trust
Agreement or under the Trust Securities, and the corresponding rights of the
Trustee shall be as provided in the Trust Indenture Act, except to the extent
Section 3819 of the Delaware Business Trust Act would require greater access to
such information, in which case the latter shall apply. Each Holder, by
receiving and holding a Trust Securities Certificate, and each Owner shall be
deemed to have agreed not to hold the Depositor, the Property Trustee or the
Administrative Trustees accountable by reason of the disclosure of its name and
address, regardless of the source from which such information was derived.
SECTION 5.8. MAINTENANCE OF OFFICE OR AGENCY. The Securities Registrar
shall maintain in the city of New York an office or offices or agency or
agencies where Preferred Securities Certificates may be surrendered for
registration of transfer, exchange or conversion and where notices and demands
to or upon the Trustees in respect of the Trust Securities Certificates may be
served. The Securities Registrar initially designates _________________,
________________________________, [ADDRESS] as its principal corporate trust
office for such purposes. The Securities Registrar shall give prompt written
notice to the Depositor and to the Security Holders of any change in the
location of the Securities Register or any such office or agency.
SECTION 5.9. APPOINTMENT OF PAYING AGENT. In the event that the
Preferred Securities are not in book-entry form only, the Trust shall maintain
in Cincinnati, Ohio, an office or agency (the "Paying Agent") where the
Preferred Securities may be presented for payment. The Paying Agent shall make
Distributions to Security Holders from the Payment Account and shall report the
amounts of such Distributions to the Property Trustee and the Administrative
Trustees.
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Any Paying Agent shall have the revocable power to withdraw funds from
the Payment Account for the purpose of making the Distributions referred to
above. The Administrative Trustees may revoke such power and remove the Paying
Agent if such Trustees determine in their sole discretion that the Paying Agent
shall have failed to perform its obligations under this Trust Agreement in any
material respect. The Paying Agent shall initially be the Property Trustee, and
any co-paying agent chosen by the Property Trustee and acceptable to the
Administrative Trustees and the Depositor. Any Person acting as Paying Agent
shall be permitted to resign as Paying Agent upon 30 days' written notice to the
Property Trustee and the Depositor. In the event that the Property Trustee shall
no longer be the Paying Agent or a successor Paying Agent shall resign or its
authority to act be revoked, the Administrative Trustees shall appoint a
successor that is acceptable to the Property Trustee and the Depositor to act as
Paying Agent (which shall be a bank or trust company). Each successor Paying
Agent or any additional Paying Agent shall agree with the Trustees that, as
Paying Agent, such successor Paying Agent or additional Paying Agent will hold
all sums, if any, held by it for payment to the Security Holders in trust for
the benefit of the Security Holders entitled thereto until such sums shall be
paid to each Security Holder. The Paying Agent shall return all unclaimed funds
to the Property Trustee and upon removal of a Paying Agent such Paying Agent
shall also return all funds in its possession to the Property Trustee. The
provisions of Sections 8.1, 8.3 and 8.6 shall apply to the Property Trustee also
in its role as Paying Agent, for so long as the Property Trustee shall act as
Paying Agent and, to the extent applicable, to any other paying agent appointed
hereunder. Any reference in this Agreement to the Paying Agent shall include any
co-paying agent unless the context requires otherwise.
SECTION 5.10. OWNERSHIP OF COMMON SECURITIES BY DEPOSITOR. On the
Closing Date provided for in Section 2.5, the Depositor shall acquire beneficial
and record ownership of the Common Securities. The Depositor has covenanted in
the Indenture to maintain directly or indirectly 100% ownership of the Common
Securities; provided that any permitted successor of the Company under the
Indenture may succeed to the Company's ownership of the Common Securities. To
the fullest extent permitted by law, any attempted transfer of the Common
Securities in violation of that covenant shall be void. The Administrative
Trustees shall cause each Common Securities Certificate to contain a legend
stating, "THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT TO AN ENTITY WHOLLY OWNED
BY DAYTON SUPERIOR CORPORATION OR TO CERTAIN SUCCESSORS OF DAYTON SUPERIOR
CORPORATION"
SECTION 5.11. GLOBAL SECURITIES; NON-GLOBAL SECURITIES; COMMON
SECURITIES CERTIFICATE. (a) Each Global Certificate authenticated under this
Trust Agreement shall be registered in the name of the Clearing Agency
designated by the Depositor for such Global Certificate or a nominee thereof and
delivered to such Clearing Agency or a nominee thereof or custodian therefor,
and each such Global Certificate shall constitute a Preferred Security for all
purposes of this Trust Agreement.
(b) If a Global Certificate is to be exchanged for Certificated
Preferred Securities or canceled in whole, it shall be surrendered by or on
behalf of the Clearing Agency, its nominee or custodian to the Property Trustee,
as Securities Registrar, for exchange or cancellation as provided in this
Article 5. If any Global Certificate is to be exchanged for Certificated
Preferred Securities or canceled in part, or if another Preferred Security is to
be exchanged in whole or in part for a beneficial interest in any Global
Certificate, in each case, as provided in Section 5.4, then either (i) such
Global Certificate shall be so surrendered for exchange or cancellation as
provided in this Article 5 or (ii) the principal amount thereof (or number of
Preferred Securities represented thereby) shall be reduced or increased by an
amount equal
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to the portion thereof to be so exchanged or canceled, or equal to the principal
amount of (or number of securities represented by) such Certificated Preferred
Security to be so exchanged for a beneficial interest therein, as the case may
be, by means of an appropriate adjustment made on the records of the Property
Trustee, as Securities Registrar, whereupon the Property Trustee, in accordance
with the Applicable Procedures, shall instruct the Clearing Agency or its
authorized representative to make a corresponding adjustment to its records.
Upon any such surrender or adjustment of a Global Certificate, an Administrative
Trustee shall execute on behalf of the Trust by manual or facsimile signature,
and the Property Trustee shall, subject to Section 5.4 and as otherwise provided
in this Article 5, authenticate and deliver any Preferred Securities issuable in
exchange for such Global Certificate (or any portion thereof) to or upon the
written order of, and registered in such names as may be directed by, the
Clearing Agency or its authorized representative. Upon the request of the
Property Trustee in connection with the occurrence of any of the events
specified in the preceding paragraph, the Depositor shall promptly make
available to the Property Trustee a reasonable supply of Preferred Securities
that are not in the form of Global Certificates. The Property Trustee shall be
entitled to conclusively rely upon any order, direction or request of the
Clearing Agency or its authorized representative which is given or made pursuant
to this Article 5 if such order, direction or request is given or made in
accordance with the Applicable Procedures.
(c) Every Preferred Security authenticated and delivered upon
registration of transfer of, or in exchange for or in lieu of, a Global
Certificate or any portion thereof, whether pursuant to this Article 5 or
otherwise, shall be authenticated and delivered in the form of, and shall be, a
Global Certificate, unless such Preferred Security is registered in the name of
a Person other than the Clearing Agency for such Global Certificate or a nominee
thereof.
(d) The Clearing Agency or its nominee, as registered owner of a Global
Certificate, shall be the holder of such Global Certificate for all purposes
under this Trust Agreement and the Preferred Securities, and owners of
beneficial interests in a Global Certificate shall hold such interests pursuant
to the Applicable Procedures. Accordingly, any such Owner's beneficial interest
in a Global Certificate will be shown only on, and the transfer of such interest
shall be effected only through, records maintained by the Clearing Agency or its
nominee or its participants and such owners of beneficial interests in a Global
Certificate will not be considered the owners or holders of such Global
Certificate for any purpose of this Trust Agreement or the Preferred Securities.
(e) A single Common Securities Certificate representing the Common
Securities shall initially be issued to the Depositor in the form of a
definitive Common Securities Certificate.
SECTION 5.12. NOTICES TO CLEARING AGENCY. To the extent that a notice
or other communication to the Owners is required under this Trust Agreement,
unless and until Definitive Preferred Securities Certificates shall have been
issued to Owners pursuant to Section 5.13, the Trustees shall give all such
notices and communications specified herein to be given to Owners to the
Clearing Agency, and shall have no obligations to provide notices directly to
the Owners.
SECTION 5.13. DEFINITIVE PREFERRED SECURITIES CERTIFICATES.
Notwithstanding any other provision in this Trust Agreement, no Global
Certificate may be exchanged in whole or in part for Preferred Securities
registered, and no transfer of a Global Certificate in whole or in part may be
registered, in the name of any Person other than the Clearing Agency for such
Global Certificate or a nominee thereof unless (i) such Clearing Agency (A) has
notified the Trust and the Depositor that it is
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unwilling or unable to continue as Clearing Agency for such Global Certificate
or (B) has ceased to be a clearing agency registered as such under the
Securities Exchange Act of 1934, as amended, and in either case the Trust and
the Depositor thereupon fail to appoint a successor Clearing Agency, (ii) the
Trust and the Depositor, at their option, notify the Property Trustee in writing
that it elects to cause the issuance of the Preferred Securities in certificated
form or (iii) there shall have occurred and be continuing an Event of Default or
any event which after notice or lapse of time or both would be an Event of
Default. In all cases, Certificated Preferred Securities delivered in exchange
for any Global Certificate or beneficial interests therein will be registered in
the names, and issued in any approved denominations, requested by or on behalf
of the Clearing Agency (in accordance with its customary procedures).
SECTION 5.14. RIGHTS OF SECURITY HOLDERS. The legal title to the Trust
Property is vested exclusively in the Property Trustee (in its capacity as such)
in accordance with Section 2.9, and the Security Holders shall not have any
right or title therein other than the undivided beneficial interest in the
assets of the Trust conferred by their Trust Securities and they shall have no
right to call for any partition or division of property, profits or rights of
the Trust except as described below. The Trust Securities shall be personal
property giving only the rights specifically set forth therein and in this Trust
Agreement. The Trust Securities shall have no preemptive or similar rights and,
when issued and delivered to Security Holders against payment of the purchase
price therefor, will be fully paid and nonassessable undivided beneficial
interests in the assets of the Trust. The Holders of the Trust Securities, in
their capacities as such, shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware.
ARTICLE 6 ACT OF SECURITY HOLDERS; MEETINGS; VOTING
SECTION 6.1. LIMITATIONS ON VOTING RIGHTS. (a) Except as provided in
this Section, in Section 8.2 and 10.2 and in the Indenture and as otherwise
required by law, no Holder of Preferred Securities shall have any right to vote
or in any manner otherwise control the administration, operation and management
of the Trust or the obligations of the parties hereto, nor shall anything herein
set forth, or contained in the terms of the Trust Securities Certificates, be
construed so as to constitute the Security Holders from time to time as partners
or members of an association.
(b) Subject to Section 8.2 hereof, if an Event of Default with respect
to the Preferred Securities has occurred and been subsequently cured, waived or
otherwise eliminated, the provisions of Section 6.1(b)(ii) hereof shall apply.
During (x) the period commencing on the date of the occurrence of an Event of
Default with respect to the Preferred Securities and ending on the date when
such Event of Default is cured, waived or otherwise eliminated, or (y) any
period not described in either the preceding sentence or the preceding clause
(x), the provisions of Section 6.1(b)(i) shall apply.
(i) The Holders of a majority in aggregate Liquidation Amount
of the Preferred Securities will have the right to direct the time,
method and place of conducting any proceeding for any remedy available
to the Property Trustee or to exercise any trust or power conferred
upon the Property Trustee under the Trust Agreement, including the
right to direct the Property Trustee to exercise the remedies available
to it as a holder of the Debentures but excluding the right to direct
the Property Trustee to consent to an amendment, modification or
termination of the Indenture (which shall be as provided below). So
long as any Debentures are held by the Property Trustee, the Trustees
shall not (A) direct the time, method and place of conducting any
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proceeding for any remedy available to the Debenture Trustee, or
executing any trust or power conferred on the Debenture Trustee with
respect to such Debentures, (B) waive any past default which is
waivable under Section 5.13 of the Indenture, (c) exercise any right to
rescind or annul a declaration that the principal of all the Debentures
shall be due and payable or (D) consent to any amendment, modification
or termination of the Indenture or the Debentures, where such consent
shall be required, without, in each case, obtaining the prior approval
of the Holders of a majority in aggregate Liquidation Amount of all
Outstanding Preferred Securities (except in the case of clause (D),
which consent, in the event that no Event of Default shall occur and be
continuing, shall be of the Holders of a majority in aggregate
Liquidation Amount of all Trust Securities, voting together as a single
class); provided, however, that where a consent under the Indenture
would require the consent of each holder of Debentures affected
thereby, no such consent shall be given by the Property Trustee without
the prior written consent of each Holder of Preferred Securities. The
Trustees shall not revoke any action previously authorized or approved
by a vote of the Holders of the Preferred Securities, except by a
subsequent vote of the Holders of the Preferred Securities. The
Property Trustee shall notify all Holders of record of the Preferred
Securities of any notice of default received from the Debenture Trustee
with respect to the Debentures. In addition to obtaining the foregoing
approvals of the Holders of the Preferred Securities, prior to taking
any of the foregoing actions, the Trustees shall, at the expense of the
Depositor, obtain an Opinion of Counsel experienced in such matters to
the effect that the Trust will not be classified as an association
taxable as a corporation or partnership for United States Federal
income tax purposes on account of such action.
(ii) Subject to Section 8.2 of this Trust Agreement and only
after the Event of Default with respect to the Preferred Securities has
been cured, waived, or otherwise eliminated the Holders of a majority
in aggregate Liquidation Amount of the Common Securities will have the
right to direct the time, method and place of conducting any proceeding
for any remedy available to the Property Trustee or to exercise any
trust or power conferred upon the Property Trustee under the Trust
Agreement, including the right to direct the Property Trustee to
exercise the remedies available to it as a holder of the Debentures but
excluding the right to direct the Property Trustee to consent to an
amendment, modification or termination of the Indenture (which shall be
as provided below). So long as any Debentures are held by the Property
Trustee, the Trustees shall not (A) direct the time, method and place
of conducting any proceeding for any remedy available to the Debenture
Trustee, or executing any trust or power conferred on the Debenture
Trustee with respect to such Debentures, (B) waive any past default
which is waivable under Section 5.13 of the Indenture, (C) exercise any
right to rescind or annul a declaration that the principal of all the
Debentures shall be due and payable or (D) consent to any amendment,
modification or termination of the Indenture or the Debentures, where
such consent shall be required, without, in each case, obtaining the
prior approval of the Holders of a majority in aggregate Liquidation
Amount of all Common Securities (except in the case of clause (D),
which consent, in the event that no Event of Default shall occur and be
continuing, shall be of the Holders of a majority in aggregate
Liquidation Amount of all Trust Securities, voting together as a single
class); provided, however, that where a consent under the Indenture
would require the consent of each holder of Debentures affected
thereby, no such consent shall be given by the Property Trustee without
the prior written consent of each Holder of Common Securities. The
Trustees shall not revoke any action previously authorized or approved
by a vote of the Holders of the Common Securities, except by a
subsequent vote of the Holders of the Common Securities. The Property
Trustee shall notify all Holders of record of the Common
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Securities of any notice of default received from the Debenture Trustee
with respect to the Debentures. In addition to obtaining the foregoing
approvals of the Holders of the Common Securities, prior to taking any
of the foregoing actions, the Trustees shall, at the expense of the
Depositor, obtain an Opinion of Counsel experienced in such matters to
the effect that the Trust will not be classified as an association
taxable as a corporation or partnership for United States Federal
income tax purposes on account of such action.
(iii) The provisions of this Section 6.1(b) and Section 6.1(a)
of this Trust Agreement shall be in lieu of Section 316(a)(1)(A) of the
Trust Indenture Act, and such Section 316(a)(1)(A) is hereby expressly
excluded from this Trust Agreement and the Preferred Securities, as
permitted by the Trust Indenture Act.
(c) If any proposed amendment to the Trust Agreement provides for, or
the Trustees otherwise propose to effect the dissolution, winding-up or
termination of the Trust, other than pursuant to the terms of this Trust
Agreement, then the Holders of Outstanding Preferred Securities as a class will
be entitled to vote on such amendment or proposal and such amendment or proposal
shall not be effective except with the approval of the Holders of a majority in
aggregate Liquidation Amount of the Outstanding Preferred Securities.
SECTION 6.2. NOTICE OF MEETINGS. Notice of all meetings of the Holders
of the Preferred Securities, stating the time, place and purpose of the meeting,
shall be given by the Property Trustee pursuant to Section 10.8 to each
Preferred Security Holder of record, at its registered address, at least 15 days
and not more than 90 days before the meeting. At any such meeting, any business
properly before the meeting may be so considered whether or not stated in the
notice of the meeting. Any adjourned meeting may be held as adjourned without
further notice.
SECTION 6.3. MEETINGS OF PREFERRED SECURITY HOLDERS. No annual meeting
of Security Holders is required to be held. The Administrative Trustees,
however, shall call a meeting of Security Holders to vote on any matter upon the
written request of the Preferred Security Holders of record of 25% of the
Preferred Securities (based upon their Liquidation Amount), and the
Administrative Trustees or the Property Trustee may, at any time in their
discretion, call a meeting of the Holders of Preferred Securities to vote on any
matters as to which such Holders are entitled to vote. Holders of record of 50%
of the Preferred Securities (based upon their Liquidation Amount), present in
person or by proxy, shall constitute a quorum at any meeting of Security
Holders.
If a quorum is present at a meeting, an affirmative vote by the Holders
of record of Preferred Securities present, in person or by proxy, holding a
majority of the Preferred Securities (based upon their Liquidation Amount) held
by Holders of record of Preferred Securities present, either in person or by
proxy, at such meeting shall constitute the action of the Security Holders,
unless this Trust Agreement requires a greater number of affirmative votes.
SECTION 6.4. VOTING RIGHTS. Security Holders shall be entitled to one
vote for each $25 of Liquidation Amount represented by their Trust Securities in
respect of any matter as to which such Security Holders are entitled to vote.
Notwithstanding that Holders of Preferred Securities are entitled to vote or
consent under any of the circumstances described above, any of the Preferred
Securities that are owned at such time by the Depositor, the Trustees or any
affiliate of any Trustee shall, for purposes of such vote or consent, be treated
as if such Preferred Securities were not outstanding.
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SECTION 6.5. PROXIES, ETC. At any meeting of Security Holders, any
Security Holders entitled to vote thereat may vote by proxy; provided that no
proxy shall be voted at any meeting unless it shall have been placed on file
with the Administrative Trustees, or with such other officer or agent of the
Trust as the Administrative Trustees may direct, for verification prior to the
time at which such vote shall be taken. Pursuant to a resolution of the Property
Trustee, proxies may be solicited in the name of the Property Trustee or one or
more officers of the Property Trustee. Only Security Holders of record shall be
entitled to vote. When Trust Securities are held jointly by several Persons, any
one of them may vote at any meeting in person or represented by proxy in respect
of such Trust Securities, but if more than one of them shall be present at such
meeting in person or by proxy, and such joint owners or their proxies so present
disagree as to any vote to be cast, such vote shall not be received in respect
of such Trust Securities. A proxy purporting to be executed by or on behalf of a
Security Holder shall be deemed valid unless challenged at or prior to its
exercise, and the burden of proving invalidity shall rest on the challenger. No
proxy shall be valid more than three years after its date of execution.
SECTION 6.6. SECURITY HOLDER ACTION BY WRITTEN CONSENT. Any action
which may be taken by Security Holders at a meeting may be taken without a
meeting if Security Holders holding a majority of all Outstanding Trust
Securities (based upon their Liquidation Amount) entitled to vote in respect of
such action (or such larger proportion thereof as shall be required by any
express provision of this Trust Agreement) shall consent to the action in
writing.
SECTION 6.7. RECORD DATE FOR VOTING AND OTHER PURPOSES. For the
purposes of determining the Security Holders who are entitled to notice of and
to vote at any meeting or by written consent, or to participate in any
Distribution on the Trust Securities in respect of which a record date is not
otherwise provided for in this Trust Agreement, or for the purpose of any other
action, the Property Trustee may from time to time fix a date, not more than 90
days prior to the date of any meeting of Security Holders or the payment of
Distributions or other action, as the case may be, as a record date for the
determination of the identity of the Security Holders of record for such
purposes.
SECTION 6.8. ACTS OF SECURITY HOLDERS. Any request, demand,
authorization, direction, notice, consent, waiver or other action provided or
permitted by this Trust Agreement to be given, made or taken by Security Holders
or Owners may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Security Holders or Owners in person
or by an agent duly appointed in writing; and, except as otherwise expressly
provided herein, such action shall become effective when such instrument or
instruments are delivered to an Administrative Trustee. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Security Holders or Owners signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Trust Agreement and (subject to Section 8.1) conclusive in favor of the
Trustees, if made in the manner provided in this Section.
The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or writing,
or
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the authority of the Person executing the same, may also be proved in any other
manner which any Trustee receiving the same deems sufficient.
The ownership of Preferred Securities shall be proved by the Securities
Register.
Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Security Holder of any Trust Security shall bind every
future Security Holder of the same Trust Security and the Security Holder of
every Trust Security issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof in respect of anything done, omitted or
suffered to be done by the Trustees or the Trust in reliance thereon, whether or
not notation of such action is made upon such Trust Security.
Without limiting the foregoing, a Security Holder entitled hereunder to
take any action hereunder with regard to any particular Trust Security may do so
with regard to all or any part of the Liquidation Amount of such Trust Security
or by one or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any part of such Liquidation Amount.
If any dispute shall arise between the Security Holders and the
Administrative Trustees or among such Security Holders or Trustees with respect
to the authenticity, validity or binding nature of any request, demand,
authorization, direction, consent, waiver or other Act of such Security Holder
or Trustee under this Article 6, then the determination of such matter by the
Property Trustee shall be conclusive with respect to such matter.
Upon the occurrence and continuation of an Event of Default, the
Holders of Preferred Securities shall rely on the enforcement by the Property
Trustee of its rights as holder of the Debentures against the Depositor. If the
Property Trustee fails to enforce its rights as holder of the Debentures after a
request therefor by a Holder of Preferred Securities, such holder may, to the
extent permitted by applicable law, proceed to enforce such rights directly
against the Depositor.
Notwithstanding the foregoing, if an Event of Default has occurred and
is continuing and such event is attributable to the failure of the Depositor to
pay interest or principal on the Debentures on the date such interest or
principal is otherwise payable (or in the case of redemption, on the Redemption
Date), then a Holder of Preferred Securities shall have the right to institute a
proceeding directly against the Depositor, for enforcement of payment to such
holder of the principal amount of or interest on Debentures having a principal
amount equal to the aggregate Liquidation Amount of the Preferred Securities of
such holder after the respective due date specified in the Debentures (a "Direct
Action"). In connection with any such Direct Action, the rights of the Depositor
will be subrogated to the rights of any Holder of the Preferred Securities to
the extent of any payment made by the Depositor to such Holder of Preferred
Securities as a result of such Direct Action.
SECTION 6.9. INSPECTION OF RECORDS. Upon reasonable notice to the
Administrative Trustees and the Property Trustee, the records of the Trust shall
be open to inspection by Security Holders during normal business hours for any
purpose reasonably related to such Security Holder's interest as a Security
Holder.
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ARTICLE 7 REPRESENTATIONS AND WARRANTIES
SECTION 7.1. REPRESENTATIONS AND WARRANTIES OF THE PROPERTY TRUSTEE AND
THE DELAWARE TRUSTEE. The Property Trustee and the Delaware Trustee, each
severally on behalf of and as to itself or himself, hereby represents and
warrants for the benefit of the Depositor and the Security Holders that (each
such representation and warranty made by the Property Trustee and the Delaware
Trustee being made only with respect to itself or himself):
(a) the Property Trustee is a national banking association
duly organized, validly existing and in good standing under the laws of
the United States;
(b) the Property Trustee has full corporate and trust power,
authority and legal right to execute, deliver and perform its
obligations under this Trust Agreement and has taken all necessary
action to authorize the execution, delivery and performance by it of
this Trust Agreement;
(c) this Trust Agreement has been duly authorized, executed
and delivered by each of the Property Trustee and the Delaware Trustee
and constitutes the valid and legally binding agreement of the Property
Trustee and the Delaware Trustee enforceable against it or him in
accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to
general equity principles; and
(d) the execution, delivery and performance by the Property
Trustee of this Trust Agreement have been duly authorized by all
necessary corporate or other action on the part of the Property Trustee
and do not require any approval of stockholders of the Property
Trustee. The execution, delivery and performance of this Trust
Agreement by the Property Trustee and the Delaware Trustee will not (i)
violate the Property Trustee's charter or by-laws or (ii) violate any
law, governmental rule or regulation of the United States or the State
of Delaware, as the case may be, governing the banking, corporate, or
trust powers of the Property Trustee or the Delaware Trustee (as
appropriate in context) or any order, judgment or decree applicable to
the Property Trustee or the Delaware Trustee.
SECTION 7.2. REPRESENTATIONS AND WARRANTIES OF DEPOSITOR. The Depositor
hereby represents and warrants for the benefit of the Security Holders that:
(a) the Trust Securities Certificates issued on the Closing
Date on behalf of the Trust have been duly authorized and will have
been duly and validly executed, issued and delivered by the Trustees
pursuant to the terms and provisions of, and in accordance with the
requirements of, this Trust Agreement and the Security Holders will be,
as of such date, entitled to the benefits of this Trust Agreement; and
(b) there are no taxes, fees or other governmental charges
payable by the Trust (or the Trustees on behalf of the Trust) under the
laws of the State of Delaware or any political subdivision thereof in
connection with the execution, delivery and performance by the Property
Trustee or the Delaware Trustee, as the case may be, of this Trust
Agreement.
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ARTICLE 8 THE TRUSTEES
SECTION 8.1. CERTAIN DUTIES AND RESPONSIBILITIES. (a) The duties and
responsibilities of the Trustees shall be as provided by this Trust Agreement
and, in the case of the Property Trustee, by the Trust Indenture Act. The
Property Trustee, before the occurrence of any Event of Default and after the
curing or waiving of all Events of Default that may have occurred, shall
undertake to perform only such duties and obligations as are specifically set
forth in this Trust Agreement and the Trust Indenture Act and no implied
covenants shall be read into this Trust Agreement against the Property Trustee.
In case an Event of Default has occurred (that has not been cured or waived
pursuant to Section 8.2) of which a Responsible Officer of the Property Trustee
has actual knowledge, the Property Trustee shall exercise such rights and powers
vested in it by this Trust Agreement and the Trust Indenture Act, and use the
same degree of care and skill in its exercise, as a prudent individual would
exercise or use under the circumstances in the conduct of his or her own
affairs. Notwithstanding the foregoing, no provision of this Trust Agreement
shall require the Trustees to expend or risk their own funds or otherwise incur
any financial liability in the performance of any of their duties hereunder, or
in the exercise of any of their rights or powers, if they shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it. Whether or not therein
expressly so provided, every provision of this Trust Agreement relating to the
conduct or affecting the liability of or affording protection to the Trustees
shall be subject to the provisions of this Section. Nothing in this Trust
Agreement shall be construed to release the Administrative Trustees or Delaware
Trustee from liability for their own grossly negligent action, their own grossly
negligent failure to act, or their own willful misconduct. To the extent that,
at law or in equity, an Administrative Trustee or Delaware Trustee has duties
(including fiduciary duties) and liabilities relating thereto to the Trust or to
the Security Holders, such Administrative Trustee or Delaware Trustee shall not
be liable to the Trust or to any Security Holder for such Administrative
Trustee's good faith reliance on the provisions of this Trust Agreement. The
provisions of this Trust Agreement, to the extent that they restrict the duties
and liabilities of the Administrative Trustees or Delaware Trustee otherwise
existing at law or in equity, are agreed by the Depositor and the Security
Holders to replace such other duties and liabilities of the Administrative
Trustees or Delaware Trustee.
(b) All payments made by the Property Trustee or a Paying Agent in
respect of the Trust Securities shall be made only from the revenue and proceeds
from the Trust Property and only to the extent that there shall be sufficient
revenue or proceeds from the Trust Property to enable the Property Trustee or a
Paying Agent to make payments in accordance with the terms hereof. Each Security
Holder, by its acceptance of a Trust Security, agrees that it will look solely
to the revenue and proceeds from the Trust Property to the extent legally
available for distribution to it as herein provided and that the Trustees are
not personally liable to it for any amount distributable in respect of any Trust
Security or for any other liability in respect of any Trust Security. This
Section 8.1(b) does not limit the liability of the Trustees expressly set forth
elsewhere in this Trust Agreement or, in the case of the Property Trustee, in
the Trust Indenture Act.
(c) No provision of this Trust Agreement shall be construed to relieve
the Property Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
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(i) the Property Trustee shall not be liable for any error of
judgment made in good faith by an authorized officer of the Property
Trustee, unless it shall be proved that the Property Trustee was
negligent in ascertaining the pertinent facts;
(ii) the Property Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of a majority in aggregate
Liquidation Amount of the Trust Securities relating to the time, method
and place of conducting any proceeding for any remedy available to the
Property Trustee, or exercising any trust or power conferred upon the
Property Trustee under this Trust Agreement;
(iii) the Property Trustee's sole duty with respect to the
custody, safekeeping and physical preservation of the Debentures and
the Payment Account shall be to deal with such property as fiduciary
assets, subject to the protections and limitations on liability
afforded to the Property Trustee under this Trust Agreement and the
Trust Indenture Act;
(iv) the Property Trustee shall not be liable for any interest
on any money received by it except as it may otherwise agree with the
Depositor and money held by the Property Trustee need not be segregated
from other funds held by it except in relation to the Payment Account
maintained by the Property Trustee pursuant to Section 3.1 and except
to the extent otherwise required by law;
(v) the Property Trustee shall not be responsible for
monitoring the compliance by the Administrative Trustees or the
Depositor with their respective duties under this Trust Agreement, nor
shall the Property Trustee be liable for the default or misconduct of
the Administrative Trustees or the Depositor; and
(vi) the Property Trustee shall have no duty or liability with
respect to the value, genuineness, existence or sufficiency of the
Debentures or the payment of any taxes or assessments thereon or in
connection therewith.
SECTION 8.2. NOTICE OF DEFAULTS. (a) Within sixty (60) days after the
occurrence of any Event of Default actually known to a Responsible Officer of
the Property Trustee, the Property Trustee shall transmit, in the manner and to
the extent provided in Section 10.8, notice of such Event of Default to the
Holders of Preferred Securities, the Administrative Trustees and the Depositor,
unless such Event of Default shall have been cured or waived; provided that,
except for a default in the payment of principal of (or premium, if any) or
interest on any of the Debentures, the Property Trustee shall be fully protected
in withholding such notice if and so long as the board of directors, the
executive committee, or a trust committee of directors and/or responsible
officers of the Property Trustee in good faith determines that the withholding
of such notice is in the interests of the Holders of the Preferred Securities.
(b) Within ten days after the receipt of notice of the Depositor's
exercise of its right to extend the interest payment period for the Debentures
pursuant to the Indenture, the Property Trustee shall transmit, in the manner
and to the extent provided in Section 10.8, notice of such exercise to the
Security Holders, unless such exercise shall have been revoked.
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(c) The Holders of a majority in Liquidation Amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default in respect of the Preferred
Securities and its consequences; provided that, if the underlying Debenture
Event of Default:
(i) is not waivable under the Indenture, the Event of Default
under this Trust Agreement shall also not be waivable; or
(ii) requires the consent or vote of greater than a majority
in principal amount of the holders of the Debentures, including the
consent or vote of all such holders, (a "Super Majority") to be waived
under the Indenture, the Event of Default under this Trust Agreement
may only be waived by the vote of the Holders of the same proportion in
Liquidation Amount of the Preferred Securities that the relevant Super
Majority represents of the aggregate principal amount of the Debentures
outstanding.
The provisions of Section 6.1(b) and this Section 8.2(c) shall be in
lieu of Section 316(a)(1)(B) of the Trust Indenture Act and such Section
316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from this
Trust Agreement and the Preferred Securities, as permitted by the Trust
Indenture Act. Upon such waiver, any such default shall cease to exist, and any
Event of Default with respect to the Preferred Securities arising therefrom
shall be deemed to have been cured, for every purpose of this Trust Agreement,
but no such waiver shall extend to any subsequent or other default or an Event
of Default with respect to the Preferred Securities or impair any right
consequent thereon. Any waiver by the Holders of the Preferred Securities of an
Event of Default with respect to the Preferred Securities shall also be deemed
to constitute a waiver by the Holders of the Common Securities of any such Event
of Default with respect to the Common Securities for all purposes of this Trust
Agreement without any further act, vote, or consent of the Holders of the Common
Securities.
(d) The Holders of a majority in Liquidation Amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences; provided that, if the underlying Debenture
Event of Default:
(i) is not waivable under the Indenture, except where the
Holders of the Common Securities are deemed to have waived such Event
of Default under the Declaration as provided below in this Section
8.2(d), the Event of Default under this Trust Agreement shall also not
be waivable; or
(ii) requires the consent or vote of a Super Majority to be
waived, except where the Holders of the Common Securities are deemed to
have waived such Event of Default under this Trust Agreement as
provided below in this Section 8.2(d), the Event of Default under this
Trust Agreement may only be waived by the vote of the Holders of the
same proportion in Liquidation Amount of the Common Securities that the
relevant Super Majority represents of the aggregate principal amount of
the Debentures outstanding;
provided further, that each Holder of Common Securities will be deemed to have
waived any such Event of Default and all Events of Default with respect to the
Common Securities and its consequences until all Events of Default with respect
to the Preferred Securities have been cured, waived or otherwise eliminated, and
until such Events of Default have been so cured, waived or otherwise eliminated,
the
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Property Trustee will be deemed to be acting solely on behalf of the Holders of
the Preferred Securities and only the Holders of the Preferred Securities will
have the right to direct the Property Trustee in accordance with the terms of
the Securities. The provisions of Section 6.1(b) and this Section 8.2(d) shall
be in lieu of Section 316(a)(1)(B) of the Trust Indenture Act and such Section
316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from this
Trust Agreement and the Preferred Securities, as permitted by the Trust
Indenture Act. Subject to the foregoing provisions of this Section 8.2(d), upon
such waiver, any such default shall cease to exist and any Event of Default with
respect to the Common Securities arising therefrom shall be deemed to have been
cured for every purpose of this Trust Agreement, but no such waiver shall extend
to any subsequent or other default or Event of Default with respect to the
Common Securities or impair any right consequent thereon.
(e) A waiver of an Event of Default under the Indenture by the Property
Trustee at the direction of the Holders of the Preferred Securities, constitutes
a waiver of the corresponding Event of Default under this Trust Agreement. The
foregoing provisions of this Section 8.2(e) shall be in lieu of Section
316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Trust Agreement and
the Preferred Securities, as permitted by the Trust Indenture Act.
SECTION 8.3. CERTAIN RIGHTS OF PROPERTY TRUSTEE. Subject to the
provisions of Section 8.1:
(a) the Property Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting in good faith upon any resolution,
Opinion of Counsel, certificate, written representation of a Holder or
transferee such as of a certificate presented for transfer, certificate of
auditors or any other certificate, statement, instrument, opinion, report,
notice, request, consent, order, appraisal, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(b) if no Event of Default has occurred and is continuing and, (i) in
performing its duties under this Trust Agreement the Property Trustee is
required to decide between alternative courses of action or (ii) in construing
any of the provisions in this Trust Agreement the Property Trustee finds the
same ambiguous or inconsistent with any other provisions contained herein or
(iii) the Property Trustee is unsure of the application of any provision of this
Trust Agreement, then, except as to any matter as to which the Holders of
Preferred Securities are entitled to vote under the terms of this Trust
Agreement, the Property Trustee shall deliver a notice to the Depositor
requesting written instructions of the Depositor as to the course of action to
be taken and the Property Trustee shall take such action, or refrain from taking
such action, as the Property Trustee shall be instructed in writing to take, or
to refrain from taking, by the Depositor; provided, however, that if the
Property Trustee does not receive such instructions of the Depositor within ten
Business Days after it has delivered such notice, or such reasonably shorter
period of time set forth in such notice (which to the extent practicable shall
not be less than two Business Days), it may, but shall be under no duty to, take
or refrain from taking such action not inconsistent with this Trust Agreement as
it shall deem advisable and in the best interests of the Security Holders, in
which event the Property Trustee shall have no liability except for its own bad
faith, negligence or willful misconduct;
(c) any direction or act of the Depositor or the Administrative
Trustees contemplated by this Trust Agreement shall be sufficiently evidenced by
an Officers' Certificate;
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(d) whenever in the administration of this Trust Agreement, the
Property Trustee shall deem it desirable that a matter be established before
undertaking, suffering or omitting any action hereunder, the Property Trustee
(unless other evidence is herein specifically prescribed) may, in the absence of
bad faith on its part, request and conclusively rely upon an Officers'
Certificate and an Opinion of Counsel which, upon receipt of such request, shall
be promptly delivered by the Depositor or the Administrative Trustees;
(e) the Property Trustee shall have no duty to accomplish any
recording, filing or registration of any instrument (including any financing or
continuation statement or any filing under tax or securities laws) or any
rerecording, refiling or reregistration thereof;
(f) the Property Trustee may consult with counsel at the Depositor's
expense (which counsel may be counsel to the Depositor or any of its Affiliates,
and may include any of its employees) and the advice of such counsel or any
Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in reliance thereon and in accordance with such advice; and the Property
Trustee shall have the right at any time to seek instructions concerning the
administration of this Trust Agreement from any court of competent jurisdiction;
(g) the Property Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Trust Agreement at the request or
direction of any of the Security Holders pursuant to this Trust Agreement,
unless such Security Holders shall have offered to the Property Trustee
reasonable security or indemnity satisfactory to it against the costs, expenses
(including attorneys' fees and expenses and the expenses of the Property
Trustee's agents, custodians or nominees) and liabilities which might be
incurred by it in compliance with such request or direction;
(h) the Property Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolutions, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
debenture, note or other evidence of indebtedness or other paper or document,
but the Property Trustee may make such further inquiry or investigation into
such facts or custodian or nominee matters as it may see fit;
(i) the Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through its
agents, custodians or nominees, attorneys or an Affiliate; provided that the
Property Trustee shall not be responsible for the negligence or recklessness on
the part of any agent, attorney, custodian or nominee appointed by it with due
care hereunder;
(j) whenever in the administration of this Trust Agreement the Property
Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder, the Property
Trustee (i) may request instructions from the Holders of the Trust Securities,
which instructions may only be given by the Holders of the same proportion in
Liquidation Amount of the Trust Securities as would be entitled to direct the
Property Trustee under the terms of the Trust Securities in respect of such
remedy, right or action, (ii) may refrain from enforcing such remedy or right or
taking such other action until such instructions are received, and (iii) shall
be fully protected in conclusively relying on or acting in accordance with such
instructions;
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(k) except as otherwise expressly provided by this Trust Agreement, the
Property Trustee shall not be under any obligation to take any action that is
discretionary under the provisions of this Trust Agreement;
(l) the Property Trustee shall not be liable for any action taken,
suffered, or omitted to be taken by it in good faith and reasonably believed by
it to be authorized or within the discretion or rights or powers conferred upon
it by this Trust Agreement; and
(m) in the event that the Property Trustee is also acting as a Paying
Agent, Conversion Agent, and/or Securities Registrar hereunder, the rights and
protections afforded to the Property Trustee pursuant to this Article 8 shall
also be afforded to such Paying Agent, Conversion Agent, and/or Securities
Registrar.
No provision of this Trust Agreement shall be deemed to impose any duty
or obligation on the Property Trustee to perform any act or acts or exercise any
right, power, duty or obligation conferred or imposed on it, in any jurisdiction
in which it shall be illegal, or in which the Property Trustee shall be
unqualified or incompetent in accordance with applicable law, to perform any
such act or acts, or to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Property Trustee shall be
construed to be a duty.
SECTION 8.4. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The recitals contained herein and in the Trust Securities Certificates shall not
be taken as the statements of the Trustees, and the Trustees do not assume any
responsibility for their correctness. The Trustees shall not be accountable for
the use or application by the Depositor of the proceeds of the Debentures.
SECTION 8.5. MAY HOLD SECURITIES. Except as provided in the definition
of the term "Outstanding" in Article 1, any Trustee or any other agent of any
Trustee or the Trust, in its individual or any other capacity, may become the
owner or pledgee of Trust Securities and, subject to Section 8.8 and 8.12, may
otherwise deal with the Trust with the same rights it would have if it were not
a Trustee or such other agent.
SECTION 8.6. COMPENSATION; INDEMNITY; FEES.
The Depositor agrees:
(a) to pay the Trustees from time to time reasonable
compensation for all services rendered by them hereunder (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein, to
reimburse the Trustees upon request for all reasonable expenses,
disbursements and advances incurred or made by the Trustees in
accordance with any provision of this Trust Agreement (including the
reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement or advance
as may be attributable to its negligence or bad faith;
(c) to the fullest extent permitted by applicable law, to
indemnify and hold harmless (i) each Trustee, (ii) any Affiliate of any
Trustee, (iii) any officer, director, shareholder, employee,
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representative or agent of any Trustee, and (iv) any employee or agent
of the Trust or its Affiliates (referred to herein as an "Indemnified
Person") from and against any loss, damage, liability, tax, penalty,
expense or claim of any kind or nature whatsoever incurred by such
Indemnified Person by reason of the creation, operation, dissolution or
termination of the Trust or in connection with the administration of
the Trust or any act or omission performed or omitted by such
Indemnified Person in good faith on behalf of the Trust and in a manner
such Indemnified Person reasonably believed to be within the scope of
authority conferred on such Indemnified Person by this Trust Agreement,
except that no Indemnified Person shall be entitled to be indemnified
in respect of any loss, damage or claim incurred by such Indemnified
Person by reason of negligence or willful misconduct with respect to
such acts or omissions;
(d) the indemnity provided to a Trustee under this Section 8.6
shall survive any Trustee's resignation or removal or termination of
this Trust Agreement;
(e) no Trustee may claim any lien or charge on any Trust
Property as a result of any amount due pursuant to this Section 8.6;
and
(f) the provisions of this Section 8.6 shall survive
termination of this Trust Agreement or the resignation of removal of
any Trustee.
SECTION 8.7. PROPERTY TRUSTEE REQUIRED; ELIGIBILITY OF TRUSTEES. (a)
There shall at all times be a Property Trustee hereunder with respect to the
Trust Securities. The Property Trustee shall be a Person that is eligible
pursuant to the Trust Indenture Act to act as such and has a combined capital
and surplus of at least $50,000,000. If any such Person publishes reports of
condition at least annually, pursuant to law or to the requirements of its
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such person shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Property Trustee with respect to the Trust
Securities shall cease to be eligible in accordance with the provisions of this
Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
(b) There shall at all times be one or more Administrative Trustees
hereunder with respect to the Trust Securities. Each Administrative Trustee
shall be either a natural person who is at least 21 years of age or a legal
entity that shall act through one or more persons authorized to bind that
entity.
(c) There shall at all times be a Delaware Trustee with respect to the
Trust Securities. The Delaware Trustee shall either be (i) a natural person who
is at least 21 years of age and a resident of the State of Delaware or (ii) a
legal entity with its principal place of business in the State of Delaware and
that otherwise meets the requirements of applicable Delaware law that shall act
through one or more persons authorized to bind such entity.
SECTION 8.8. CONFLICTING INTERESTS. If the Property Trustee has or
shall acquire a conflicting interest within the meaning of the Trust Indenture
Act, the Property Trustee shall either eliminate such interest or resign, to the
extent and in the manner provided by, and subject to the provisions of, the
Trust Indenture Act and this Trust Agreement.
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SECTION 8.9. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR. (a)
Subject to Sections 8.9(b) and 8.9(c), Trustees (the "Relevant Trustee") may be
appointed or removed without cause at any time:
(i) until the issuance of any Trust Securities, by written
instrument executed by the Depositor; and
(ii) after the issuance of any Securities, by vote of the
Holders of a majority in Liquidation Amount of the Common Securities
voting as a class.
(b) The Trustee that acts as Property Trustee shall not be removed in
accordance with Section 8.9(a) until a successor possessing the qualifications
to act as a Property Trustee under Section 8.7 (a "Successor Property Trustee")
has been appointed and has accepted such appointment by instrument executed by
such Successor Property Trustee and delivered to the Trust, the Depositor and
the removed Property Trustee.
(c) The Trustee that acts as Delaware Trustee shall not be removed in
accordance with Section 8.9(a) until a successor possessing the qualifications
to act as Delaware Trustee under Section 8.7 (a "Successor Delaware Trustee")
has been appointed and has accepted such appointment by instrument executed by
such Successor Delaware Trustee and delivered to the Trust, the Depositor and
the removed Delaware Trustee.
(d) A Trustee appointed to office shall hold office until his, her or
its successor shall have been appointed or until his, her or its death, removal,
resignation, dissolution or liquidation. Any Trustee may resign from office
(without need for prior or subsequent accounting) by an instrument in writing
signed by the Trustee and delivered to the Depositor and the Trust, which
resignation shall take effect upon such delivery or upon such later date as is
specified therein; provided, however, that:
(i) No such resignation of the Trustee that acts as the
Property Trustee shall be effective:
(a) until a Successor Property Trustee has been appointed and has
accepted such appointment by instrument executed by such Successor Property
Trustee and delivered to the Trust, the Depositor and the resigning Property
Trustee; or
(b) until the assets of the Trust have been completely liquidated and
the proceeds thereof distributed to the Holders of the Securities;
(ii) no such resignation of the Trustee that acts as the
Delaware Trustee shall be effective until a Successor Delaware Trustee
has been appointed and has accepted such appointment by instrument
executed by such Successor Delaware Trustee and delivered to the Trust,
the Depositor and the resigning Delaware Trustee; and
(iii) no appointment of a successor Property Trustee or
Delaware Trustee shall be effective until all fees, charges, and
expenses of the retiring Property Trustee or retiring Delaware Trustee,
as the case may be, have been paid.
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(e) The Holders of the Common Securities shall use their best efforts
to promptly appoint a Successor Property Trustee or Successor Delaware Trustee,
as the case may be, if the Property Trustee or the Delaware Trustee delivers an
instrument of resignation in accordance with Section 8.9(d).
(f) If no Successor Property Trustee or Successor Delaware Trustee
shall have been appointed and accepted appointment as provided in this Section
8.9 within 60 days after delivery pursuant to this Section 8.9 of an instrument
of resignation or removal, the Property Trustee or Delaware Trustee resigning or
being removed, as applicable, may petition any court of competent jurisdiction
for appointment of a Successor Property Trustee or Successor Delaware Trustee.
Such court may thereupon, after prescribing such notice, if any, as it may deem
proper and prescribe, appoint a Successor Property Trustee or Successor Delaware
Trustee, as the case may be.
(g) No Property Trustee or Delaware Trustee shall be liable for the
acts or omissions to act of any Successor Property Trustee or Successor Delaware
Trustee, as the case may be.
(h) The Property Trustee shall give notice of each resignation and each
removal of a Trustee and each appointment of a successor Trustee to all Security
Holders in the manner provided in Section 10.8 and shall give notice to the
Depositor. Each notice shall include the name of the successor Relevant Trustee
and the address of its Corporate Trust Office if it is the Property Trustee.
(i) Notwithstanding the foregoing or any other provision of this Trust
Agreement, in the event any Administrative Trustee or a Delaware Trustee who is
a natural person dies or becomes, in the opinion of the Depositor, incompetent
or incapacitated, the vacancy created by such death, incompetence or incapacity
may be filled by (a) the unanimous act of the remaining Administrative Trustees
if there are at least two of them or (b) otherwise by the Depositor (with the
successor in each case being a Person who satisfies the eligibility requirement
for Administrative Trustees or the Delaware Trustee, as the case may be, set
forth in Section 8.7).
SECTION 8.10. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. In case of the
appointment hereunder of a successor Relevant Trustee, the retiring Relevant
Trustee and each successor Relevant Trustee shall execute and deliver an
amendment hereto wherein each successor Relevant Trustee shall accept such
appointment and which (a) shall contain such provisions as shall be necessary or
desirable to transfer and confirm to, and to vest in, each successor Relevant
Trustee all the rights, powers, trusts and duties of the retiring Relevant
Trustee and (b) shall add to or change any of the provisions of this Trust
Agreement as shall be necessary to provide for or facilitate the administration
of the trusts hereunder by more than one Relevant Trustee, it being understood
that nothing herein or in such amendment shall constitute such Relevant Trustees
co-trustees and upon the execution and delivery of such amendment the
resignation or removal of the retiring Relevant Trustee shall become effective
to the extent provided therein and each such successor Relevant Trustee, without
any further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Relevant Trustee; but, on request of
the Trust or any successor Relevant Trustee, such retiring Relevant Trustee
shall duly assign, transfer and deliver to such successor Relevant Trustee all
Trust Property, all proceeds thereof and money held by such retiring Relevant
Trustee hereunder.
Upon request of any such successor Relevant Trustee, the Trust shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Relevant Trustee all such rights, powers and trusts
referred to in the first or second preceding paragraph, as the case may be.
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No successor Relevant Trustee shall accept its appointment unless at
the time of such acceptance such successor Relevant Trustee shall be qualified
and eligible under this Article.
SECTION 8.11. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS. Any Person into which the Property Trustee, the Delaware Trustee or
any Administrative Trustee that is not a natural person may be merged or
converted or with which it may be consolidated, or any Person resulting from any
merger, conversion or consolidation to which such Relevant Trustee shall be a
party, or any corporation succeeding to all or substantially all the corporate
trust business of such Relevant Trustee, shall be the successor of such Relevant
Trustee hereunder; provided that such Person shall be otherwise qualified and
eligible under this Article, without the execution or filing of any paper or any
further act on the part of any of the parties hereto.
SECTION 8.12. PREFERENTIAL COLLECTION OF CLAIMS AGAINST DEPOSITOR OR
TRUST. If and when the Property Trustee shall be or become a creditor of the
Depositor or the Trust (or any other obligor upon the Debentures or the Trust
Securities), the Property Trustee shall be subject to and shall take all actions
necessary in order to comply with the provisions of the Trust Indenture Act
regarding the collection of claims against the Depositor or Trust (or any such
other obligor).
SECTION 8.13. REPORTS BY PROPERTY TRUSTEE. (a) To the extent required
by the Trust Indenture Act, within 60 days after ____________ [MONTH, DAY] of
each year commencing with __________, 2000, the Property Trustee shall transmit
to all Security Holders in accordance with Section 10.8 and to the Depositor, a
brief report dated as of such ____________ with respect to:
(i) its eligibility under Section 8.7 or, in lieu thereof, if
to the best of its knowledge it has continued to be eligible under said
Section, a written statement to such effect;
(ii) a statement that the Property Trustee has complied with
all of its obligations under this Trust Agreement during the
twelve-month period (or, in the case of the initial report, the period
since the Closing Date) ending with such ________________ or, if the
Property Trustee has not complied in any material respects with such
obligations, a description of such noncompliance;
(iii) any change in the property and funds in its possession
as Property Trustee since the date of its last report and any action
taken by the Property Trustee in the performance of its duties
hereunder which it has not previously reported and which in its opinion
materially affects the Trust Securities; and
(iv) such other information as is required by Section 313(a)
of the Trust Indenture Act.
(b) In addition, the Property Trustee shall transmit to Security
Holders such reports concerning the Property Trustee and its actions under this
Trust Agreement as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided pursuant thereto.
(c) A copy of such report shall, at the time of such transmissions to
Holders, be filed by the Property Trustee with each national securities exchange
or self-regulatory organization upon which the Trust Securities are listed, with
the Commission and with the Depositor.
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SECTION 8.14. REPORTS TO THE PROPERTY TRUSTEE. The Depositor and the
Administrative Trustees on behalf of the Trust shall provide to the Property
Trustee such documents, reports and information as are required by Section 314
of the Trust Indenture Act (if any) and the compliance certificate required by
Section 314(a) of the Trust Indenture Act in the form, in the manner and at the
times required by Section 314 of the Trust Indenture Act.
SECTION 8.15. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT. Each of
the Depositor and the Administrative Trustees on behalf of the Trust shall
provide to the Property Trustee such evidence of compliance with any conditions
precedent, if any, provided for in this Trust Agreement that relate to any of
the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) of the Trust Indenture Act shall be given in the form of an Officers'
Certificate.
SECTION 8.16. NUMBER OF TRUSTEES. (a) The number of Trustees shall be
five; provided that the Holder of all of the Common Securities by written
instrument may increase or decrease the number of Administrative Trustees.
Provided that the Property Trustee meets the applicable requirements, the
Property Trustee and the Delaware Trustee may be the same Person.
(b) If a Trustee ceases to hold office for any reason and the number of
Administrative Trustees is not reduced pursuant to Section 8.16(a), or if the
number of Trustees is increased pursuant to Section 8.16(a), a vacancy shall
occur.
(c) The death, resignation, retirement, removal, bankruptcy,
incompetence or incapacity to perform the duties of a Trustee shall not operate
to dissolve, terminate or annul the Trust. Whenever a vacancy in the number of
Administrative Trustees shall occur, until such vacancy is filled by the
appointment of an Administrative Trustee in accordance with Section 8.9, the
Administrative Trustees in office, regardless of their number (and
notwithstanding any other provision of this Agreement), shall have all the
powers granted to the Administrative Trustees and shall discharge all the duties
imposed upon the Administrative Trustees by this Trust Agreement.
SECTION 8.17. DELEGATION OF POWER. (a) Any Administrative Trustee may,
by power of attorney consistent with applicable law, delegate to any other
natural person over the age of 21 his or her power for the purpose of executing
any documents contemplated in Section 2.7(a), including any registration
statement or amendment thereof filed with the Commission, or making any other
governmental filing.
(b) The Administrative Trustees shall have power to delegate from time
to time to such of their number or to the Depositor the doing of such things and
the execution of such instruments either in the name of the Trust or the names
of the Administrative Trustees or otherwise as the Administrative Trustees may
deem expedient, to the extent such delegation is not prohibited by applicable
law or contrary to the provisions of the Trust, as set forth herein.
ARTICLE 9 DISSOLUTION, LIQUIDATION AND MERGER
SECTION 9.1. DISSOLUTION UPON EXPIRATION DATE. Unless earlier
dissolved, the Trust shall automatically dissolve on __________ __, 2044 (the
"Expiration Date").
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SECTION 9.2. EARLY DISSOLUTION. The first to occur of any of the
following events is an "Early Dissolution Event":
(a) the occurrence of a Bankruptcy Event in respect of, or
the dissolution or liquidation of, the Depositor;
(b) the occurrence of a Special Event except in the case of a
Tax Event following which the Depositor has elected (i) to pay any
Additional Sums (in accordance with Section 4.4) such that the net
amount received by Holders of Preferred Securities in respect of
Distributions are not reduced as a result of such Tax Event and the
Depositor has not revoked any such election or failed to make such
payments or (ii) to redeem all or some of the Debentures pursuant to
Section 4.4(a);
(c) the redemption, conversion or exchange of all of the
Trust Securities;
(d) an order for dissolution of the Trust shall have been
entered by a court of competent jurisdiction; and
(e) receipt by the Property Trustee of written notice from the
Depositor at any time (which direction is optional and wholly within
the discretion of the Depositor) of its intention to dissolve the Trust
and distribute the Debentures in exchange for the Preferred Securities.
SECTION 9.3. DISSOLUTION. The respective obligations and
responsibilities of the Trustees and the Trust created and continued hereby
shall terminate upon the latest to occur of the following: (a) the distribution
by the Property Trustee to Security Holders upon the liquidation of the Trust
pursuant to Section 9.4, or upon the redemption of all of the Trust Securities
pursuant to Section 4.2, of all amounts required to be distributed hereunder
upon the final payment of the Trust Securities; (b) the payment of all expenses
owed by the Trust; (c) the discharge of all administrative duties of the
Administrative Trustees, including the performance of any tax reporting
obligations with respect to the Trust or the Security Holders and (d) the filing
of a certificate of cancellation by the Trustees in accordance with Section 3810
of the Delaware Business Trust Act.
SECTION 9.4. LIQUIDATION. (a) If an Early Dissolution Event specified
in clause (a), (b), (d) or (e) of Section 9.2 occurs or upon the Expiration
Date, the Trust shall be liquidated by the Trustees as expeditiously as the
Trustees determine to be possible by distributing, after satisfaction of
liabilities to creditors of the Trust as provided by applicable law, to each
Security Holder an aggregate principal amount of Debentures equal to the
aggregate Liquidation Amount of Trust Securities held by such Holder, subject to
Section 9.4(d). Notice of liquidation shall be given by the Property Trustee by
first-class mail, postage prepaid, mailed not later than 30 nor more than 60
days prior to the Liquidation Date to each Holder of Trust Securities at such
Holder's address as it appears in the Securities Register. All notices of
liquidation shall:
(i) state the Liquidation Date;
(ii) state that, from and after the Liquidation Date, the
Trust Securities will no longer be deemed to be Outstanding and any
Trust Securities Certificates not surrendered for exchange
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will be deemed to represent an aggregate principal amount of Debentures
equal to the aggregate Liquidation Amount of Preferred Securities held
by such Holder; and
(iii) provide such information with respect to the mechanics
by which Holders may exchange Trust Securities Certificates for
Debentures, or, if Section 9.4(d) applies, receive a Liquidation
Distribution, as the Administrative Trustees or the Property Trustee
shall deem appropriate.
(b) Except where Section 9.2(c) or 9.4(d) applies, in order to effect
the liquidation of the Trust and distribution of the Debentures to Security
Holders, the Property Trustee shall establish a record date for such
distribution (which shall be not more than 45 days prior to the Liquidation Date
and, unless the Property Trustee determines otherwise, shall be the date which
is the fifteenth day (whether or not a Business Day) next preceding the
Liquidation Date) and, either itself acting as exchange agent or through the
appointment of a separate exchange agent, shall establish such procedures as it
shall deem appropriate to effect the distribution of Debentures in exchange for
the Outstanding Trust Securities Certificates.
(c) Except where Section 9.2(c) or 9.4(d) applies, after the
Liquidation Date, (i) the Trust Securities will no longer be deemed to be
Outstanding, (ii) the Clearing Agency or its nominee, as the record holder of
such Trust Securities, will receive a registered global certificate or
certificates representing the Debentures to be delivered upon such distribution
and (iii) any Trust Securities Certificates not held by the Clearing Agency will
be deemed to represent an aggregate principal amount of Debentures equal to the
aggregate Liquidation Amount of Preferred Securities held by such Holders, and
bearing accrued and unpaid interest in an amount equal to the accrued and unpaid
Distributions on such Trust Securities until such certificates are presented to
the Property Trustee for transfer or reissuance.
(d) In the event that, notwithstanding the other provisions of this
Section 9.4, whether because of an order for dissolution entered by a court of
competent jurisdiction or otherwise, distribution of the Debentures in the
manner provided herein is determined by the Property Trustee not to be
practicable, the Trust Property shall be liquidated, and the Trust shall be
wound-up or terminated, by the Property Trustee in such manner as the Property
Trustee determines, and an Administrative Trustee shall prepare, execute and
file the certificate of cancellation with the Secretary of State of the State of
Delaware. In such event, Security Holders will be entitled to receive out of the
assets of the Trust available for distribution to Security Holders, after
satisfaction of liabilities to creditors of the Trust as provided by applicable
law, an amount equal to the Liquidation Amount per Trust Security plus accrued
and unpaid Distributions thereon to the date of payment (such amount being the
"Liquidation Distribution"). If, upon any such winding-up or termination, the
Liquidation Distribution can be paid only in part because the Trust has
insufficient assets available to pay in full the aggregate Liquidation
Distribution, then, subject to the next succeeding sentence, the amounts payable
by the Trust on the Trust Securities shall be paid on a PRO RATA basis (based
upon Liquidation Amounts). The Holder of the Common Securities will be entitled
to receive Liquidation Distributions upon any such winding-up or termination PRO
RATA (determined as aforesaid) with Holders of Preferred Securities, except
that, if a Debenture Event of Default has occurred and is continuing, the
Preferred Securities shall have a priority over the Common Securities.
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SECTION 9.5. MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF
THE TRUST. The Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, except pursuant to this Section 9.5
or Section 9.4. At the request of the Depositor, with the consent of the
Administrative Trustees and without the consent of the Property Trustee, the
Delaware Trustee or the Holders of the Preferred Securities, the Trust may merge
with or into, consolidate, amalgamate, be replaced by or convey, transfer or
lease its properties and assets substantially as an entirety to a trust
organized as such under the laws of any State; provided, that (i) such successor
entity either (a) 9.6. expressly assumes all of the obligations of the Trust
with respect to the Preferred Securities or (b) substitutes for the Preferred
Securities other securities having substantially the same terms as the Preferred
Securities (the "Successor Securities") so long as the Successor Securities rank
the same as the Preferred Securities rank in priority with respect to
Distributions and payments upon liquidation, redemption and otherwise, (ii) the
Depositor expressly appoints a trustee of such successor entity possessing the
same powers and duties as the Property Trustee as the holder of the Debentures,
(iii) the Successor Securities are listed, or any Successor Securities will be
listed upon notification of issuance, on any national securities exchange or
other organization on which the Preferred Securities are then listed, if any,
(iv) such merger, consolidation, amalgamation, replacement, conveyance, transfer
or lease does not cause the Preferred Securities (including any Successor
Securities) to be downgraded by any nationally recognized statistical rating
organization, (v) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights, preferences
and privileges of the Holders of the Preferred Securities (including any
Successor Securities) in any material respect, (vi) such successor entity has a
purpose substantially identical to that of the Trust, (vii) prior to such
merger, consolidation, amalgamation, replacement, conveyance, transfer or lease
the Depositor has received an Opinion of Counsel to the effect that (a) such
merger, consolidation, amalgamation, replacement, conveyance, transfer or lease
does not adversely affect the rights, preferences and privileges of the Holders
of the Preferred Securities (including any Successor Securities) in any material
respect (other than with respect to any dilution of the Holder's interest in the
new entity), (b) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease neither the Trust nor such successor
entity will be required to register as an investment company under the 1940 Act,
and (c) following such merger, consolidation, amalgamation or replacement, the
Trust or such successor entity will be treated as a grantor trust for United
States Federal income tax purposes and (viii) the Depositor or any permitted
successor or assignee owns, directly or indirectly, all of the common securities
of such successor entity and guarantees the obligations of such successor entity
under the Successor Securities at least to the extent provided by the Guarantee.
Notwithstanding the foregoing, the Trust shall not, except with the consent of
Holders of 100% in aggregate Liquidation Amount of the Preferred Securities,
consolidate, amalgamate, merge with or into, be replaced by or convey, transfer
or lease its properties and assets substantially as an entirety to any other
entity or permit any other entity to consolidate, amalgamate, merge with or
into, or replace it if such consolidation, amalgamation, merger, replacement,
conveyance, transfer or lease would cause the Trust or the successor entity to
be classified as other than a grantor trust for United States Federal income tax
purposes.
ARTICLE 10 MISCELLANEOUS PROVISIONS
SECTION 10.1. LIMITATION OF RIGHTS OF SECURITY HOLDERS. Other than as
set forth in Section 9.1, the death, incapacity, dissolution, bankruptcy or
termination of any Person having an interest, beneficial or otherwise, in Trust
Securities shall not operate to dissolve the Trust or terminate this Trust
Agreement, nor entitle the legal representatives or heirs of such Person or any
Security Holder
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for such Person to claim an accounting, take any action or bring any proceeding
in any court for a partition or winding-up of the arrangements contemplated
hereby, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.
SECTION 10.2. AMENDMENT. (a) This Trust Agreement may be amended from
time to time by the Trustees and the Depositor, without the consent of any
Security Holders, (i) to cure any ambiguity, correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to make any
other provisions with respect to matters or questions arising under this Trust
Agreement, which shall not be inconsistent with the other provisions of this
Trust Agreement, (ii) to modify, eliminate or add to any provisions of this
Trust Agreement to such extent as shall be necessary to ensure that the Trust
will be classified for United States Federal income tax purposes as a grantor
trust at all times that any Trust Securities are Outstanding or to ensure that
the Trust will not be required to register as an "investment company" under the
1940 Act, or to ensure that the Trust will not be classified as other than a
grantor trust for United States Federal income tax purposes, or (iii) to comply
with the requirements of the Commission in order to effect or maintain the
qualification of this Trust Agreement under the Trust Indenture Act; provided,
however, that in the case of clause (i), such action shall not adversely affect
in any material respect the interests of any Security Holder, and any such
amendments of this Trust Agreement shall become effective when notice thereof is
given to the Security Holders.
(b) Except as provided in Section 10.2(c) hereof, any provision of this
Trust Agreement may be amended by the Trustees and the Depositor with (i) the
consent of Holders representing not less than a majority (based upon Liquidation
Amounts) of the Trust Securities then Outstanding, acting as a single class, and
(ii) receipt by the Trustees of an Opinion of Counsel to the effect that such
amendment or the exercise of any power granted to the Trustees in accordance
with such amendment will not affect the Trustee's status as a grantor trust for
United States Federal income tax purposes or the Trust's exemption from the
status of an "investment company" under the 1940 Act; provided, however, if any
amendment or proposal that would adversely affect the powers, preferences or
special rights of the Trust Securities, whether by way of amendment or
otherwise, would adversely affect only the Preferred Securities or only the
Common Securities, then only the affected class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of a majority in Liquidation Amount of such class of
Trust Securities.
(c) In addition to and notwithstanding any other provision in this
Trust Agreement, without the consent of each affected Security Holder (such
consent being obtained in accordance with Section 6.3 or 6.6 hereof), this Trust
Agreement may not be amended to (i) change the amount or timing of any
Distribution on the Trust Securities or otherwise adversely affect the amount of
any Distribution required to be made in respect of the Trust Securities as of a
specified date or (ii) restrict the right of a Security Holder to institute suit
for the enforcement of any such payment on or after such date; notwithstanding
any other provision herein, without the unanimous consent of the Security
Holders (such consent being obtained in accordance with Section 6.3 or 6.6
hereof), this paragraph (c) of this Section 10.2 may not be amended.
(d) Notwithstanding any other provisions of this Trust Agreement, no
Trustee shall enter into or consent to any amendment to this Trust Agreement
which would cause the Trust to fail or cease to qualify for the exemption from
the status of an "investment company" under the 1940 Act or be classified as
other than a grantor trust for United States Federal income tax purposes.
49
<PAGE> 56
(e) Notwithstanding anything in this Trust Agreement to the contrary,
without the consent of the Depositor, this Trust Agreement may not be amended in
a manner which imposes any additional obligation on the Depositor.
(f) In the event that any amendment to this Trust Agreement is made,
the Administrative Trustees shall promptly provide to the Depositor a copy of
such amendment.
(g) Neither the Property Trustee nor the Delaware Trustee shall be
required to enter into any amendment to this Trust Agreement which affects its
own rights, duties or immunities under this Trust Agreement. The Property
Trustee shall be entitled to receive an Opinion of Counsel and an Officers'
Certificate stating that any amendment to this Trust Agreement is in compliance
with this Trust Agreement.
SECTION 10.3. SEPARABILITY. In case any provision in this Trust
Agreement or in the Trust Securities Certificates shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
SECTION 10.4. GOVERNING LAW. THIS TRUST AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF EACH OF THE SECURITY HOLDERS, THE TRUST AND TRUSTEES WITH RESPECT
TO THIS TRUST AGREEMENT IN THE TRUST SECURITIES SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO ITS
CONFLICT OF LAWS PRINCIPLES AND EXCLUDING SECTIONS 3540 AND 3561 OF TITLE 12
THEREOF.
SECTION 10.5. PAYMENTS DUE ON NON-BUSINESS DAY. If the date fixed for
any payment on any Trust Security shall be a day which is not a Business Day,
then such payment need not be made on such date but may be made on the next
succeeding day which is a Business Day except as otherwise provided in Section
4.1(a) and Section 4.2(d)), with the same force and effect as though made on the
date fixed for such payment, and no interest shall accrue thereon for the period
after such date.
SECTION 10.6. SUCCESSORS. This Trust Agreement shall be binding upon
and shall inure to the benefit of any successor to the Depositor, the Trust or
the Relevant Trustee, including any successor by operation of law. Except in
connection with a transaction that is permitted under Article 8 of the Indenture
and pursuant to which the assignee agrees in writing to perform the Depositor's
obligations hereunder, the Depositor shall not assign its obligations hereunder.
SECTION 10.7. HEADINGS. The Article and Section headings are for
convenience only and shall not affect the construction of this Trust Agreement.
SECTION 10.8. REPORTS, NOTICES AND DEMANDS. Any report, notice, demand
or other communications which by any provision of this Trust Agreement is
required or permitted to be given or served to or upon any Security Holder or
the Depositor may be given or served in writing by deposit thereof, first-class
postage prepaid, in the United States mail, hand delivery or facsimile
transmission, in each case, addressed, (a) in the case of a Holder of Preferred
Securities, to such Holder as such Holder's name and address may appear on the
Securities Register; and (b) in the case of the Holder of the Common Securities,
to Dayton Superior Corporation, 7777 Washington Village Drive, Suite 130,
Dayton, Ohio 45459.
50
<PAGE> 57
Any notice, demand or other communication which by any provision of
this Trust Agreement is required or permitted to be given or served to or upon
the Trust, the Property Trustee, the Delaware Trustee or the Administrative
Trustees shall be given in writing addressed (until another address is published
by the Trust) as follows: (a) with respect to the Property Trustee, to Firstar
Bank, N.A., Corporate Trust, 425 Walnut Street, M/L 5125, Cincinnati, Ohio
45201-1118, (b) with respect to the Delaware Trustee, to Mark A. Ferrucci, The
Corporation Trust Company, Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware 19801, with a copy of any such notice to the Property
Trustee at its address above, and (c) with respect to the Administrative
Trustees, to them at the address for notices to the Depositor, marked
"Attention: Mr. John A. Ciccarelli." Such notice, demand or other communication
to or upon the Trust or the Property Trustee shall be deemed to have been
sufficiently given or made only upon actual receipt of the writing by the Trust
or the Property Trustee.
SECTION 10.9. AGREEMENT NOT TO PETITION. Each of the Trustees and the
Depositor agrees for the benefit of the Security Holders that, until at least
one year and one day after the Trust has been dissolved in accordance with
Article 9, it shall not file, or join in the filing of, a petition against the
Trust under any bankruptcy, insolvency, reorganization or other similar law
(including, without limitation, the United States Bankruptcy Code)
(collectively, "Bankruptcy Laws") or otherwise join in the commencement of any
proceeding against the Trust under any Bankruptcy Law. In the event the
Depositor takes action in violation of this Section 10.9, the Property Trustee
agrees, for the benefit of Security Holders, that, at the expense of the
Depositor, it shall file an answer with the bankruptcy court or otherwise
properly contest the filing of such petition by the Depositor against the Trust
or the commencement of such action and raise the defense that the Depositor has
agreed in writing not to take such action and should be stopped and precluded
therefrom and such other defenses, if any, as counsel for the Trustee or the
Trust may assert. The provisions of this Section 10.9 shall survive the
dissolution of this Trust Agreement.
SECTION 10.10. TRUST INDENTURE ACT; CONFLICT WITH TRUST INDENTURE ACT.
(a) This Trust Agreement is subject to the provisions of the Trust Indenture Act
that are required to be part of this Trust Agreement and shall, to the extent
applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is the trustee
for the purposes of the Trust Indenture Act.
(c) If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Trust Agreement by any
of the provisions of the Trust Indenture Act, such required provision shall
control. If any provision of this Trust Agreement modifies or excludes any
provision of the Trust Indenture Act which may be so modified or excluded, the
latter provision shall be deemed to apply to this Trust Agreement as so modified
or to be excluded, as the case may be.
(d) The application of the Trust Indenture Act to this Trust Agreement
shall not affect the nature of the Trust Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.
SECTION 10.11. ACCEPTANCE OF TERMS OF TRUST AGREEMENT, GUARANTEE AND
INDENTURE. THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST
THEREIN BY OR ON BEHALF OF A SECURITY HOLDER OR BENEFICIAL OWNER, WITHOUT ANY
SIGNATURE OR FURTHER MANIFESTATION OF ASSENT, SHALL
51
<PAGE> 58
CONSTITUTE THE UNCONDITIONAL ACCEPTANCE BY THE SECURITY HOLDER AND ALL OTHERS
HAVING A BENEFICIAL INTEREST IN SUCH TRUST SECURITY OF ALL THE TERMS AND
PROVISIONS OF THIS TRUST AGREEMENT AND AGREEMENT TO SUBORDINATION PROVISIONS AND
OTHER TERMS OF THE GUARANTEE AND THE INDENTURE, AND SHALL CONSTITUTE THE
AGREEMENT OF THE TRUST, SUCH SECURITY HOLDER AND SUCH OTHERS THAT THE TERMS AND
PROVISIONS OF THIS TRUST AGREEMENT SHALL BE BINDING, OPERATIVE AND EFFECTIVE AS
THE AGREEMENT OF THE TRUST AND SUCH SECURITY HOLDER AND SUCH OTHERS.
SECTION 10.12. COUNTERPARTS. This Trust Agreement may contain more than
one counterpart of the signature page and this Trust Agreement may be executed
by the affixing of the signature of each of the Trustees to one of such
counterpart signature pages. All of such counterpart signature pages shall be
read as though one, and they shall have the same force and effect as though all
of the signers had signed a single signature page.
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be duly executed as of the day and year first above written.
DAYTON SUPERIOR CORPORATION,
as Depositor
By:________________________________
Name:
Title:
FIRSTAR BANK, N.A.,
as Property Trustee
By:________________________________
Name:
Title:
__________________________________,
MARK A. FERRUCCI,
as Delaware Trustee
___________________________________
JOHN A. CICCARELLI,
as Administrative Trustee
52
<PAGE> 59
___________________________________
ALAN F. MCILROY,
as Administrative Trustee
___________________________________
JOHN M. RUTHERFORD,
as Administrative Trustee
53
<PAGE> 60
EXHIBIT A -- Certificate of Trust of Dayton Superior Capital Trust
CERTIFICATE OF TRUST
OF
DAYTON SUPERIOR CAPITAL TRUST
THIS Certificate of Trust of Dayton Superior Capital Trust (the
"Trust"), dated as of ___________________, 1999, is being duly executed and
filed by the undersigned, as trustee, to form a business trust under the
Delaware Business Trust Act (12 DEL. C. Section 3801 ET SEQ.).
1. NAME. The name of the business trust formed hereby is Dayton
Superior Capital Trust.
2. DELAWARE TRUSTEE. The name and business address of the trustee of
the Trust with a principal place of business in the State of Delaware is Mark A.
Ferrucci, The Corporation Trust Company, Corporation Trust Center, 1209 Orange
Street, Wilmington, Delaware 19801.
3. EFFECTIVE DATE. This Certificate of Trust shall be effective upon
filing.
IN WITNESS WHEREOF, the undersigned, being the trustee of the Trust,
has executed this Certificate of Trust as of the date first written above.
_________________________________________________,
MARK A. FERRUCCI, not in his individual capacity
but solely as trustee of the Trust
54
<PAGE> 61
EXHIBIT B -- Form of Certificate Depositary Agreement
55
<PAGE> 62
EXHIBIT C -- Form of Common Securities of Dayton Superior Capital Trust
THE SECURITIES EVIDENCED HEREBY AND THE Common Stock ISSUABLE UPON
THEIR CONVERSION AND THE DEBENTURES THAT MAY BE ISSUED IN EXCHANGE THEREFOR HAVE
NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OR PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, IN EACH CASE, IN COMPLIANCE WITH ALL APPLICABLE SECURITIES LAWS
OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.
THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT TO AN ENTITY WHOLLY OWNED
BY DAYTON SUPERIOR CORPORATION OR TO CERTAIN SUCCESSORS OF DAYTON SUPERIOR
CORPORATION.
Certificate Number ____ Number of Common Securities _____
Certificate Evidencing Common Securities
of
Dayton Superior Capital Trust
Common Securities (Liquidation Amount $25 per Common Security)
Dayton Superior Capital Trust, a statutory business trust created under
the laws of the State of Delaware (the "Trust"), hereby certifies that Dayton
Superior Corporation (the "Holder") is the registered owner of ______________
common securities of the Trust representing undivided beneficial interests in
the assets of the Trust (the "Common Securities"). Except as set forth in
Section 5.10 of the Trust Agreement (as defined below), the Common Securities
are not transferable and any attempted transfer hereof shall be void. The
designations, rights, privileges, restrictions, preferences and other terms and
provisions of the Common Securities are set forth in, and this certificate and
the Common Securities represented hereby are issued and shall in all respects be
subject to the terms and provisions of, the Trust Agreement of the Trust dated
as of ______________, 1999, as the same may be amended from time to time (the
"Trust Agreement") including the designation of the terms of the Common
Securities as set forth therein. The Holder is entitled to the benefits of the
Common Securities Guarantee Agreement entered into by Dayton Superior
Corporation, an Ohio corporation, and Firstar Bank, N.A., as Guarantee Trustee,
dated as of ______________, 1999 (the "Guarantee"), to the extent provided
therein. The Trust will furnish a copy of the Trust Agreement and the Guarantee
to the Holder without charge upon written request to the Trust at its principal
place of business or registered office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
56
<PAGE> 63
IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has
executed this certificate this ______ day of ________________, 1999.
DAYTON SUPERIOR CAPITAL TRUST
By:________________________________
Name:
Title:
As Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Common Securities referred to in the
within-mentioned Trust Agreement.
Dated:_______________
FIRSTAR BANK, N.A.,
as Property Trustee
By:________________________________
Name:
Title:
Authorized Signatory
57
<PAGE> 64
EXHIBIT D -- Form of Preferred Securities of Dayton Superior Capital Trust
This Preferred Security is a Book-Entry Preferred Securities
Certificate within the meaning of the Trust Agreement hereinafter referred to
and is registered in the name of The Depository Trust Company ("DTC") or a
nominee of DTC. This Preferred Security is exchangeable for Preferred Securities
registered in the name of a person other than DTC or its nominee only in the
limited circumstances described in the Trust Agreement and no transfer of this
Preferred Security (other than a transfer of this Preferred Security as a whole
by DTC to a nominee of DTC or by a nominee of DTC to DTC or another nominee of
DTC) may be registered except in limited circumstances.
Unless this certificate is presented by an authorized representative of
DTC, to Issuer or its agent for registration of transfer, exchange or payment,
and any certificate issued is registered in the name of __________________ or in
such other name as is requested by an authorized representative of DTC (and any
payment is made to __________________ or to such other entity as is requested by
an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, __________________, has an interest herein.
Certificate Number ____Number of Preferred Securities ______
CUSIP NO. ____________
CERTIFICATE EVIDENCING PREFERRED SECURITIES
OF
DAYTON SUPERIOR CAPITAL TRUST
____% Convertible Preferred Securities
(Liquidation Amount $25 per Preferred Security)
Dayton Superior Capital Trust, a statutory business trust created under
the laws of the State of Delaware (the "Trust"), hereby certifies that
__________________ (the "Holder") is the registered owner of _______ preferred
securities of the Trust representing an undivided beneficial interest in the
assets of the Trust and designated the Dayton Superior Capital Trust ____%
Convertible Preferred Securities (Liquidation Amount $25 per Preferred Security)
(the "Preferred Securities"). Except to the extent set forth in the Trust
Agreement (as defined below), the Preferred Securities are transferable on the
books and records of the Trust, in person or by a duly authorized attorney, upon
surrender of this certificate duly endorsed and in proper form for transfer as
provided in Section 5.4 of the Trust Agreement (as defined below). The
designations, rights, privileges, restrictions, preferences and other terms and
provisions of the Preferred Securities are set forth in, and this certificate
and the Preferred Securities represented hereby are issued and shall in all
respects be subject to the terms and provisions of, the Trust Agreement of the
Trust dated as of _______________, 1999 as the same may be amended from time to
time (the "Trust Agreement") including the designation of the terms of Preferred
Securities as set forth therein. The Holder is entitled to the benefits of the
Guarantee Agreement entered into by Dayton Superior Corporation, an Ohio
corporation, and Firstar Bank, N.A., as Guarantee Trustee, dated as of
______________, 1999 (the "Guarantee"), to the extent provided therein. The
Trust will furnish a copy of the Trust Agreement and the Guarantee to the Holder
without charge upon written request to the Trust at its principal place of
business or registered office.
58
<PAGE> 65
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has
executed this certificate this _____ day of ______________, 1999.
DAYTON SUPERIOR CAPITAL TRUST
By:________________________________
Name:
Title:
Authorized Signatory
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Preferred Securities referred to in the
within-mentioned Trust Agreement.
Dated:__________________
FIRSTAR BANK, N.A.,
as Property Trustee
By:________________________________
Name:
Title:
Authorized Signatory
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Preferred Security to:
______________________________________________
______________________________________________
______________________________________________
(Insert assignee's social security or tax identification number)
59
<PAGE> 66
______________________________________________
______________________________________________
______________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
______________________________________________
______________________________________________
______________________________________________
agent to transfer this Preferred Securities Certificate on the books of the
Trust. The agent may substitute another to act for him or her.
Date:________________
Signature:_________________________
(Sign exactly as your name appears on the other side of this Preferred
Securities Certificate)
60
<PAGE> 67
TO BE ATTACHED TO GLOBAL CERTIFICATE
SCHEDULE A
The initial Liquidation Amount of this Global Certificate shall be
$__________. The following increases or decreases in the Liquidation Amount of
this Global Certificate have been made:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Amount of increase in
Liquidation Amount of Liquidation Amount of
this Global Certificate Amount of decrease in this Global Certificate Signature of authorized
including upon exercise Liquidation Amount of following such decrease officer of Trustee or
Date Made of over-allotment option this Global Certificate or increase Securities Custodian
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
61
<PAGE> 68
EXHIBIT E -- Notice of Conversion
NOTICE OF CONVERSION
To: Firstar Bank, N.A., as Property Trustee of Dayton Superior Capital Trust
The undersigned owner of these Preferred Securities hereby irrevocably
exercises the option to convert these Preferred Securities, or the portion below
designated, into Common Shares of Dayton Superior Corporation (the "Common
Stock") in accordance with the terms of the Trust Agreement (as amended from
time to time, the "Trust Agreement"), dated as of _____________, 1999, by John
A. Ciccarelli, Alan F. McIlroy, and John M. Rutherford as Administrative
Trustees, Mark A. Ferrucci, as Delaware Trustee, Firstar Bank, N.A., as Property
Trustee, Dayton Superior Corporation, as Depositor, and by the Holders, from
time to time, of undivided beneficial interests in the assets of the Trust to be
issued pursuant to the Trust Agreement. Pursuant to the aforementioned exercise
of the option to convert these Preferred Securities, the undersigned hereby
directs the Conversion Agent (as that term is defined in the Trust Agreement) to
(i) exchange such Preferred Securities for a portion of the Debentures (as that
term is defined in the Trust Agreement) held by the Trust (at the rate of
exchange specified in the terms of the Preferred Securities set forth in the
Trust Agreement) and (ii) immediately convert such Debentures on behalf of the
undersigned, into Common Stock (at the conversion rate specified in the terms of
the Preferred Securities set forth in the Trust Agreement).
The undersigned does also hereby direct the Conversion Agent that the
shares issuable and deliverable upon conversion, together with any check in
payment for fractional shares, be issued in the name of and delivered to the
undersigned, unless a different name has been indicated in the assignment below.
If shares are to be issued in the name of a person other than the undersigned,
the undersigned will pay all transfer taxes payable with respect thereto.
Date:___________________
in whole _____
in part _____
Number of Preferred Securities to be converted:________________________
If a name or names other than the undersigned, please indicate in the
spaces below the name or names in which the shares of Common Stock are to be
issued, along with the address or addresses of such person or persons
_______________________
_______________________
_______________________
_______________________
_______________________ Signature (for conversion only)
62
<PAGE> 69
Please Print or Typewrite Name and Address, Including Zip Code, and Social
Security or Other Identifying Number
_______________________
_______________________ Signature Guarantee: *_______________________
_______________________* (Signature must be guaranteed by an institution which
is a member of the following recognized Signature Guaranty Programs: (i) The
Securities Transfer Agent Medallion Program (STAMP); (ii) The New York Stock
Exchange Medallion Program (MSP); (iii) The Stock Exchange Medallion Program
(SEMP); or (iv) in such other guarantee programs acceptable to the Trustee.
63
<PAGE> 1
Exhibit 4.6
-----------
-------------------------------------------------------
DAYTON SUPERIOR CORPORATION
to
FIRSTAR BANK, N.A.,
as Trustee
-----------------------
JUNIOR CONVERTIBLE SUBORDINATED INDENTURE
DATED AS OF ____________, 1999
-----------------------
____% CONVERTIBLE SUBORDINATED DEBENTURES
DUE ____________, 2029
-------------------------------------------------------
<PAGE> 2
Reconciliation and tie between the Trust Indenture Act of 1939
(including cross-references to provisions of Sections 310 to and including 317
which, pursuant to Section 318(c) of the Trust Indenture Act of 1939, as amended
by the Trust Reform Act of 1990, are a part of and govern the Junior Convertible
Subordinated Indenture whether or not physically contained therein) and the
Junior Convertible Subordinated Indenture, dated as of ___________, 1999.
<TABLE>
<CAPTION>
TRUST INDENTURE INDENTURE
ACT SECTION SECTION
- --------------- -------
<S> <C>
Section 310(a)(1), (2) and (5)..........................................................6.9
(a)(3)...............................................................Not Applicable
(a)(4)...............................................................Not Applicable
(b).......................................................................6.8, 6.10
(c)..................................................................Not Applicable
Section 311(a).........................................................................6.13
(b)............................................................................6.13
(b)(2).......................................................................7.3(a)
Section 312(a)..........................................................................7.1
(b)..................................................................7.2(a), 7.2(b)
(c)..........................................................................7.2(c)
Section 313(a)...............................................................7.3(a), 7.3(b)
(b)..........................................................................7.3(a)
(c)..........................................................................7.3(a)
(d)..........................................................................7.3(c)
Section 314(a)(1), (2),(3) and (4)......................................................7.4
(b)..................................................................Not Applicable
(c)(1)..........................................................................1.2
(c)(2)..........................................................................1.2
(c)(3)...............................................................Not Applicable
(d)..................................................................Not Applicable
(e).............................................................................1.2
(f)..................................................................Not Applicable
Section 315(a).......................................................................6.1(a)
(b).............................................................................6.2
(c)..........................................................................6.1(b)
(d)..........................................................................6.1(c)
(d)(1)....................................................................6.1(a)(i)
(d)(2)...................................................................6.1(c)(ii)
(d)(3)..................................................................6.1(c)(iii)
(e)............................................................................5.14
Section 316(a).........................................................................5.12
(a)(1)(B)......................................................................5.13
(a)(2)...............................................................Not Applicable
(b).............................................................................5.8
(c)..........................................................................1.4(f)
Section 317(a)(1).......................................................................5.3
</TABLE>
a
<PAGE> 3
(a)(2).............................................................5.4
(b)...............................................................10.3
Section 318(a).............................................................1.7
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Convertible Subordinated Indenture.
b
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.1 DEFINITIONS.......................................................
SECTION 1.2 COMPLIANCE CERTIFICATE AND OPINIONS...............................
SECTION 1.3 FORMS OF DOCUMENTS DELIVERED TO TRUSTEE...........................
SECTION 1.4 ACTS OF HOLDERS...................................................
SECTION 1.5 NOTICES, ETC. TO TRUSTEE AND COMPANY..............................
SECTION 1.6 NOTICE TO HOLDERS; WAIVER.........................................
SECTION 1.7 CONFLICT WITH TRUST INDENTURE ACT.................................
SECTION 1.8 EFFECT OF HEADINGS AND TABLE OF CONTENTS..........................
SECTION 1.9 SUCCESSORS AND ASSIGNS............................................
SECTION 1.10 SEPARABILITY CLAUSE...............................................
SECTION 1.11 BENEFITS OF INDENTURE.............................................
SECTION 1.12 GOVERNING LAW.....................................................
SECTION 1.13 NON-BUSINESS DAYS.................................................
ARTICLE 2
DEBENTURE FORM
SECTION 2.1 FORMS GENERALLY...................................................
SECTION 2.2 FORM OF FACE OF DEBENTURE.........................................
SECTION 2.3 FORM OF REVERSE OF DEBENTURE......................................
SECTION 2.4 ADDITIONAL PROVISIONS REQUIRED IN GLOBAL
DEBENTURE......................................................
SECTION 2.5 FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION...................
SECTION 2.6 INITIAL ISSUANCE TO PROPERTY TRUSTEE..............................
ARTICLE 3
THE DEBENTURES
SECTION 3.1 AMOUNT OF DEBENTURES..............................................
SECTION 3.2 DENOMINATIONS.....................................................
SECTION 3.3 EXECUTION, AUTHENTICATION, DELIVERY AND DATING....................
SECTION 3.4 TEMPORARY DEBENTURES..............................................
SECTION 3.5 REGISTRATION, TRANSFER AND EXCHANGE...............................
SECTION 3.6 MUTILATED, DESTROYED, LOST AND STOLEN
DEBENTURES.....................................................
SECTION 3.7 PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED....................
SECTION 3.8 PERSONS DEEMED OWNERS.............................................
SECTION 3.9 CANCELLATION......................................................
SECTION 3.10 COMPUTATION OF INTEREST...........................................
SECTION 3.11 DEFERRALS OF INTEREST PAYMENT DATES...............................
SECTION 3.12 RIGHT OF SET-OFF..................................................
SECTION 3.13 AGREED TAX TREATMENT..............................................
SECTION 3.14 CUSIP NUMBERS.....................................................
</TABLE>
i
<PAGE> 5
<TABLE>
<CAPTION>
<S> <C>
SECTION 3.15 GLOBAL SECURITY........................................................
ARTICLE 4
SATISFACTION AND DISCHARGE
SECTION 4.1 SATISFACTION AND DISCHARGE OF INDENTURE................................
SECTION 4.2 APPLICATION OF TRUST MONEY.............................................
ARTICLE 5
REMEDIES
SECTION 5.1 DEBENTURE EVENTS OF DEFAULT............................................
SECTION 5.2 ACCELERATION OF MATURITY; RESCISSION AND
ANNULMENT...........................................................
SECTION 5.3 COLLECTION OF INDEBTEDNESS AND SUITS FOR
ENFORCEMENT BY TRUSTEE..............................................
SECTION 5.4 TRUSTEE MAY FILE PROOFS OF CLAIM.......................................
SECTION 5.5 TRUSTEE MAY ENFORCE CLAIM WITHOUT POSSESSION OF
DEBENTURES.........................................................
SECTION 5.6 APPLICATION OF MONEY COLLECTED.........................................
SECTION 5.7 LIMITATION ON SUITS....................................................
SECTION 5.8 UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE
PRINCIPAL, PREMIUM AND INTEREST.....................................
SECTION 5.9 RESTORATION OF RIGHTS AND REMEDIES.....................................
SECTION 5.10 RIGHTS AND REMEDIES CUMULATIVE.........................................
SECTION 5.11 DELAY OR OMISSION NOT WAIVER...........................................
SECTION 5.12 CONTROL BY HOLDERS.....................................................
SECTION 5.13 WAIVER OF PAST DEFAULTS................................................
SECTION 5.14 UNDERTAKING FOR COSTS..................................................
SECTION 5.15 WAIVER OF USURY, STAY, OR EXTENSION LAWS...............................
ARTICLE 6
THE TRUSTEE
SECTION 6.1 CERTAIN DUTIES AND RESPONSIBILITIES....................................
SECTION 6.2 NOTICE OF DEFAULTS.....................................................
SECTION 6.3 CERTAIN RIGHTS OF TRUSTEE..............................................
SECTION 6.4 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF
DEBENTURES..........................................................
SECTION 6.5 MAY HOLD DEBENTURES....................................................
SECTION 6.6 MONEY HELD IN TRUST....................................................
SECTION 6.7 COMPENSATION AND REIMBURSEMENT.........................................
SECTION 6.8 DISQUALIFICATION; CONFLICTING INTERESTS................................
SECTION 6.9 CORPORATE TRUSTEE REQUIRED; ELIGIBILITY................................
SECTION 6.10 RESIGNATION AND REMOVAL; APPOINTMENT OF
SUCCESSOR..........................................................
SECTION 6.11 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.................................
SECTION 6.12 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION
TO BUSINESS........................................................
</TABLE>
ii
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<TABLE>
<CAPTION>
<S> <C>
SECTION 6.13 PREFERENTIAL COLLECTION OF CLAIMS AGAINST
COMPANY............................................................
SECTION 6.14 APPOINTMENT OF AUTHENTICATING AGENT....................................
ARTICLE 7
HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 7.1 COMPANY TO FURNISH NAMES AND ADDRESSES OF
HOLDERS.............................................................
SECTION 7.2 PRESERVATION OF INFORMATION: COMMUNICATIONS TO
HOLDERS.............................................................
SECTION 7.3 REPORTS BY TRUSTEE.....................................................
SECTION 7.4 REPORTS BY COMPANY.....................................................
ARTICLE 8
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 8.1 COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN
TERMS...............................................................
SECTION 8.2 SUCCESSOR CORPORATION SUBSTITUTED......................................
ARTICLE 9
SUPPLEMENTAL INDENTURES
SECTION 9.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF
HOLDERS.............................................................
SECTION 9.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF
HOLDERS.............................................................
SECTION 9.3 EXECUTION OF SUPPLEMENTAL INDENTURES...................................
SECTION 9.4 EFFECT OF SUPPLEMENTAL INDENTURES......................................
SECTION 9.5 CONFORMITY WITH TRUST INDENTURE ACT....................................
SECTION 9.6 REFERENCE IN DEBENTURES TO SUPPLEMENTAL
INDENTURES..........................................................
ARTICLE 10
COVENANTS
SECTION 10.1 PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.............................
SECTION 10.2 MAINTENANCE OF OFFICE OR AGENCY........................................
SECTION 10.3 MONEY FOR DEBENTURE PAYMENTS TO BE HELD IN
TRUST..............................................................
SECTION 10.4 PAYMENT OF TAXES AND OTHER CLAIMS......................................
SECTION 10.5 STATEMENT AS TO COMPLIANCE.............................................
SECTION 10.6 WAIVER OF CERTAIN COVENANTS............................................
SECTION 10.7 ADDITIONAL SUMS........................................................
SECTION 10.8 ADDITIONAL COVENANTS...................................................
SECTION 10.9 PAYMENT OF EXPENSES OF THE TRUST.......................................
ARTICLE 11
REDEMPTION OR EXCHANGE OF DEBENTURES
SECTION 11.1 ELECTION TO REDEEM; NOTICE TO TRUSTEE..................................
</TABLE>
iii
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<TABLE>
<CAPTION>
<S> <C>
SECTION 11.2 SELECTION OF DEBENTURES TO BE REDEEMED.................................
SECTION 11.3 NOTICE OF REDEMPTION...................................................
SECTION 11.4 DEPOSIT OF REDEMPTION PRICE............................................
SECTION 11.5 DEBENTURES PAYABLE ON REDEMPTION DATE..................................
SECTION 11.6 DEBENTURES REDEEMED IN PART............................................
SECTION 11.7 MANDATORY REDEMPTION...................................................
SECTION 11.8 OPTIONAL REDEMPTION....................................................
SECTION 11.9 EXCHANGE OF TRUST SECURITIES FOR DEBENTURES............................
ARTICLE 12
SUBORDINATION OF DEBENTURES
SECTION 12.1 DEBENTURES SUBORDINATE TO SENIOR DEBT..................................
SECTION 12.2 PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC.........................
SECTION 12.3 PRIOR PAYMENT TO SENIOR DEBT UPON ACCELERATION
OF DEBENTURES......................................................
SECTION 12.4 NO PAYMENT WHEN SENIOR DEBT IN DEFAULT.................................
SECTION 12.5 PAYMENT PERMITTED IF NO DEFAULT........................................
SECTION 12.6 SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR DEBT........................
SECTION 12.7 PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS............................
SECTION 12.8 TRUSTEE TO EFFECTUATE SUBORDINATION....................................
SECTION 12.9 NO WAIVER OF SUBORDINATION PROVISIONS..................................
SECTION 12.10 NOTICE TO TRUSTEE......................................................
SECTION 12.11 RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF
LIQUIDATING AGENT.................................................
SECTION 12.12 TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR DEBT.......................
SECTION 12.13 RIGHTS OF TRUSTEE AS HOLDER OF SENIOR DEBT;
PRESERVATION OF TRUSTEE'S RIGHTS..................................
SECTION 12.14 ARTICLE APPLICABLE TO PAYING AGENTS....................................
SECTION 12.15 CERTAIN CONVERSIONS OR EXCHANGES DEEMED
PAYMENT...........................................................
ARTICLE 13
CONVERSION OF DEBENTURES
SECTION 13.1 CONVERSION RIGHTS...................................................
SECTION 13.2 CONVERSION PROCEDURES...............................................
SECTION 13.3 EXPIRATION OF CONVERSION RIGHTS.....................................
SECTION 13.4 CONVERSION PRICE ADJUSTMENTS........................................
SECTION 13.5 FUNDAMENTAL CHANGE..................................................
SECTION 13.6 NOTICE OF ADJUSTMENTS OF CONVERSION PRICE...........................
SECTION 13.7 PRIOR NOTICE OF CERTAIN EVENTS......................................
SECTION 13.8 CERTAIN ADDITIONAL RIGHTS...........................................
SECTION 13.9 RESTRICTIONS ON CLASS A COMMON STOCK
ISSUABLE UPON CONVERSION.........................................
SECTION 13.10 TRUSTEE NOT RESPONSIBLE FOR DETERMINING
CONVERSION PRICE OR ADJUSTMENTS...................................
</TABLE>
iv
<PAGE> 8
JUNIOR CONVERTIBLE SUBORDINATED INDENTURE, dated as of ________, 1999
between DAYTON SUPERIOR CORPORATION, an Ohio corporation (the "COMPANY") having
its principal office at 7777 Washington Village Drive, Suite 130, Dayton, Ohio
45459, and FIRSTAR BANK, N.A., a national banking association ("BANK"), as
Trustee (the "TRUSTEE").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this Indenture to
provide for the issuance of its __% Convertible Subordinated Debentures (the
"DEBENTURES") of substantially the tenor hereinafter provided which evidence
loans made to the Company of the proceeds from the issuance by Dayton Superior
Capital Trust, a Delaware business trust (the "TRUST"), of preferred trust
interests in the Trust (the "PREFERRED SECURITIES") and common interests in the
Trust (the "COMMON SECURITIES"), and to provide the terms and conditions upon
which the Debentures are to be authenticated, issued and delivered.
All things necessary to make the Debentures, when executed by the
Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company, and to make this Indenture a
valid agreement of the Company, in accordance with their and its terms, have
been done.
NOW THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Debentures by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Debentures, as follows:
ARTICLE 1 DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.1 DEFINITIONS. For all purpose of this Indenture, except as
otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(c) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles,
and the term "GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" with respect to any
computation required or permitted hereunder shall mean such accounting
principles which are generally accepted at the date or time of such computation;
and
(d) the words "HEREIN" and "HEREUNDER" and other words of similar
import refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision.
"ACT," when used with respect to any Holder, has the meaning specified
in Section 1.4.
<PAGE> 9
"ADDITIONAL INTEREST" means the interest, if any, that shall accrue on
any interest on the Debentures that is in arrears for more than one interest
payment period or not paid during any Extension Period, which in either case (to
the extent permitted by law) shall accrue at the stated rate per annum specified
or determined as specified in such Debenture and compounded quarterly.
"ADDITIONAL SUMS" has the meaning specified in Section 10.7.
"ADDITIONAL TAXES" means the sum of any additional taxes, duties and
other governmental charges to which the Trust has become subject from time to
time as a result of a Tax Event.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person; PROVIDED, HOWEVER, that an Affiliate of the
Company shall be deemed not to include the Trust to which Debentures have been
issued. For the purposes of this definition, "CONTROL" when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "CONTROLLING" and
"CONTROLLED" have meanings correlative to the foregoing.
"APPLICABLE PRICE" means (c) in the case of a Non-Stock Fundamental
Change in which the holders of Common Stock receive only cash, the amount of
cash received by the holder of one share of Common Stock and (ii) in the event
of any other Non-Stock Fundamental Change or any Common Stock Fundamental
Change, the average of the Closing Prices for Common Stock during the ten
trading days prior to and including the record date for the determination of the
holders of Common Stock entitled to receive such securities, cash, or other
property in connection with such Non-Stock Fundamental Change or Common Stock
Fundamental Change or, if there is no such record date, the date upon which the
holders of Common Stock shall have the right to receive such securities, cash,
or other property, in each case as adjusted in good faith by the Company to
appropriately reflect any of the events referred to in Section 13.4.
"AUTHENTICATING AGENT" means any Person authorized by the Trustee
pursuant to Section 6.14 to act on behalf of the Trustee to authenticate
Debentures.
"BOARD OF DIRECTORS" means either the board of directors of the Company
or any committee of that board duly authorized to act hereunder.
"BOARD RESOLUTION" means a copy of the resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors, or such committee of the Board of Directors or officers
of the Company to which authority to act on behalf of the Board of Directors has
been delegated, and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"BUSINESS DAY" means any day other than a Saturday or Sunday or a day
on which banking institutions in the City of New York are authorized or required
by law or executive order to remain closed or a day on which the Corporate Trust
Office of the Trustee, or the principal office of the Property Trustee under the
Trust Agreement, is closed for business.
2
<PAGE> 10
"CLOSING PRICE" means on any day the reported last sale price on such
day or, in case no sale takes place on such day, the average of the reported
closing bid and asked prices in each case on the NYSE Consolidated Transactions
Tape, the Nasdaq National Market or, if the stock is not listed or admitted to
trading on such Exchanges, on any other principal national securities exchange
on which such stock is listed or admitted to trading or, if not listed or
admitted to trading on any national securities exchange, the average of the
closing bid and asked prices as furnished by any NYSE member firm, selected by
the Trustee for that purpose.
"COMMISSION" means the Securities and Exchange Commission, as from time
to time constituted, created under the Securities Exchange Act of 1934, or if at
any time after the execution of this instrument such Commission is not existing
and performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties on such date.
"COMMON SECURITIES" has the meaning specified in the first recital of
this Indenture.
"COMMON STOCK" means the Class A Common Shares, without par value, of
the Depositor.
"COMMON STOCK FUNDAMENTAL CHANGE" means any Fundamental Change in which
more than 50% of the value (as determined in good faith by the Board of
Directors) of the consideration received by holders of Common Stock consists of
common stock that for each of the ten consecutive trading days prior to the
record date for the determination of the holders of Common Stock entitled to
receive such common stock or, if there is no such record date, the date on which
the holders of Common Stock shall have the right to receive such common stock,
has been admitted for listing or admitted for listing subject to notice of
issuance on a national securities exchange or quoted on the Nasdaq National
Market; PROVIDED, HOWEVER, that a Fundamental Change shall not be a Common Stock
Fundamental Change unless either (i) the Company continues to exist after the
occurrence of such Fundamental Change and the outstanding Preferred Securities
continue to exist as outstanding Preferred Securities or (ii) not later than the
occurrence of such Fundamental Change, the outstanding Preferred Securities are
converted into or exchanged for shares of convertible preferred stock of an
entity succeeding to the business of the Company or a subsidiary thereof, which
convertible preferred stock has powers, preferences, and relative,
participating, optional, or other rights, and qualifications, limitations, and
restrictions, substantially similar to those of the Preferred Securities.
"COMPANY" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"COMPANY REQUEST" and "COMPANY ORDER" means, respectively, the written
request or order signed in the name of the Company by its Chairman of the Board,
its Vice Chairman, its President or a Vice President, and by its Treasurer, an
Assistant Treasurer, its Controller, its Secretary or an Assistant Secretary,
and delivered to the Trustee.
"CONVERSION AGENT" has the meaning specified in Section 13.2.
"CONVERSION DATE" has the meaning specified in Section 13.2.
"CONVERSION PRICE" has the meaning specified in Section 13.1.
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<PAGE> 11
"CORPORATE TRUST OFFICE" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be administered
which office at the date hereof is located at Corporate Trust Department, 425
Walnut Street, M/L 5125, Cincinnati, Ohio 45201-1118.
"CURRENT MARKET PRICE" means for any day the last reported sale price,
regular way, on such day of Common Stock, or, if no sale takes place on such
day, the average of the reported closing bid and asked prices on such day,
regular way, in either case as reported on the NYSE Consolidated Transactions
Tape, or, if Common Stock is not listed or admitted to trading on the NYSE on
such day, on the principal national securities exchange on which Common Stock is
listed or admitted to trading, if Common Stock is listed on a national
securities exchange, or the Nasdaq National Market, or, if Common Stock is not
quoted or admitted to trading on such quotation system, on the principal
quotation system on which Common Stock may be listed or admitted to trading or
quoted, or, if not listed or admitted to trading or quoted on any national
securities exchange or quotation system, the average of the closing bid and
asked prices of Common Stock in the over-the-counter market on the day in
question as reported by the National Quotation Bureau Incorporated, or a similar
generally accepted reporting service, or, if not so available in such manner, as
furnished by any NYSE member firm selected from time to time by the Board of
Directors for that purpose or, if not so available in such manner, as otherwise
determined in good faith by the Board of Directors.
"DEBENTURES" OR "DEBENTURE" means any debt securities or debt security,
as the case may be, authenticated and delivered under this Indenture.
"DEBT" means, with respect to any Person, whether recourse is to all or
a portion of the assets of such Person and whether or not contingent, (i) every
obligation of such Person for money borrowed; (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person; (iv) every obligation of such Person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of such Person, and (vi) every
obligation of the type referred to in clauses (i) through (v) of another Person
and all dividends of another Person the payment of which, in either case, such
Person has guaranteed or is responsible for or liable, directly or indirectly,
as obligor or otherwise.
"DEFAULTED INTEREST" has the meaning specified in Section 3.7.
"DEPOSITARY" means, with respect to the Debentures issuable or issued
in whole or in part in the form of one or more Global Debentures, the Person
designated as Depositary by the Company (or any successor thereto).
"DOLLAR" means the currency of the United States of America as at the
time of payment is legal tender for the payment of public and private debts.
"DEBENTURE EVENTS OF DEFAULT" has the meaning specified in Article 5.
"EXPIRATION TIME" has the meaning specified in Section 13.4(e).
4
<PAGE> 12
"EXTENSION PERIOD" has the meaning specified in Section 3.11.
"FUNDAMENTAL CHANGE" means the occurrence of any Transaction or event
in connection with a plan pursuant to which all or substantially all of Common
Stock shall be exchanged for, converted into, acquired for, or constitute solely
the right to receive securities, cash, or other property (whether by means of an
exchange offer, liquidation, tender offer, consolidation, merger, combination,
reclassification, recapitalization, or otherwise); PROVIDED, HOWEVER, in the
case of a plan involving more than one such Transaction or event, for purposes
of adjustment of the conversion price, such Fundamental Change shall be deemed
to have occurred when substantially all of Common Stock shall be exchanged for,
converted into, or acquired for or constitute solely the right to receive
securities, cash, or other property, but the adjustment shall be based upon
consideration that a holder of Common Stock received in such Transaction or
event as a result of which more than 50% of Common Stock shall have been
exchanged for, converted into, or acquired for or constitute solely the right to
receive securities, cash, or other property.
"GLOBAL DEBENTURE" means a Debenture in the form prescribed in Section
2.4 evidencing all or part of the Debentures, issued to the Depositary or its
nominee, and registered in the name of such Depositary or its nominee.
"GUARANTEE" means the guarantee by the Company of distributions on the
Preferred Securities of the Trust to the extent provided in the Guarantee
Agreement, substantially in the form attached hereto as Annex C, as amended from
time to time.
"HOLDER" means a Person in whose name a Debenture is registered in the
Securities Register.
"INDENTURE" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.
"INTEREST PAYMENT DATE" means as to the Debentures the Stated Maturity
of an installment of interest on such Debentures.
"INTEREST RATE" means the rate of interest specified or determined as
specified in each Debenture as being the rate of interest payable on such
Debenture.
"INVESTMENT COMPANY EVENT" means, in respect of the Trust, the receipt
by the Property Trustee, on behalf of the Trust of an Opinion of Counsel,
rendered by a law firm having a national tax and securities practice (which
opinion shall not have been rescinded by such law firm), to the effect that, as
a result of the occurrence of a change in law or regulation or a change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "CHANGE IN 1940 ACT LAW"),
there is more than an insubstantial risk that the Trust is or will be considered
an "investment company" that is required to be registered under the 1940 Act,
which Change in 1940 Act Law becomes effective on or after the date of original
issuance of the Preferred Securities of the Trust.
"JUNIOR SUBORDINATED PAYMENT" has the meaning specified in Section
12.2.
5
<PAGE> 13
"MATURITY" when used with respect to the Debentures, means the date on
which the principal of the Debentures become due and payable as herein provided,
whether at the Stated Maturity or by declaration of acceleration, call or
redemption or otherwise.
"1940 ACT" means the Investment Company Act of 1940, as amended.
"NON BOOK-ENTRY PREFERRED SECURITIES" has the meaning specified in
Section 3.15.
"NON-STOCK FUNDAMENTAL CHANGE" means any Fundamental Change other than
a Common Stock Fundamental Change.
"NOTICE OF CONVERSION" means the notice given by a Holder of Preferred
Securities to the Conversion Agent directing the Conversion Agent to exchange
such Preferred Securities for Debentures and to convert such Debentures into
Class A Common Stock on behalf of such holder.
"NOTICE OF DEFAULT" has the meaning specified in Section 5.1(c).
"NYSE" means the New York Stock Exchange.
"OFFICERS' CERTIFICATE" means a certificate signed by (i) the Chairman,
Chief Executive Officer, President or a Vice President, and by (ii) the
Treasurer, an Assistant Treasurer, the Controller, the Secretary or an Assistant
Secretary of the Company, and delivered to the Trustee.
"OPINION OF COUNSEL" means a written opinion of counsel, who may be
counsel for the Company, the Trust, or the Trustee, but who may be an employee
thereof, and who shall be reasonably acceptable to the Trustee.
"OUTSTANDING" means, as of the date of determination, all Debentures
theretofore authenticated and delivered under this Indenture, except:
(i) Debentures theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Debentures for whose payment money in the necessary
amount has been theretofore irrevocably deposited with the Trustee or
any Paying Agent in trust for the Holders of such Debentures; and
(iii) Debentures in substitution for or in lieu of which other
Debentures have been authenticated and delivered or which have been
paid pursuant to Section 3.6, or which have been converted into Common
Stock pursuant to Section 13.1, unless proof satisfactory to the
Trustee is presented that any Debentures are held by Holders in whose
hands such Debentures are valid, binding and legal obligations of the
Company;
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
principal amount of Outstanding Debentures have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Debentures owned
by the Company or any other obligor upon the Debentures or any Affiliate of the
Company or such other obligor shall be disregarded and deemed not to be
outstanding,
6
<PAGE> 14
except that, in determining whether the Trustee shall be fully protected in
conclusively relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Debentures which a Responsible Officer of the
Trustee actually knows to be so owned shall be so disregarded. Debentures so
owned which have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Trustee the pledgee's right
so to act with respect to such Debentures and that the pledgee is not the
Company or any other obligor upon the Debentures or any Affiliate of the Company
or such other obligor. Upon request of the Trustee, the Company shall furnish to
the Trustee promptly an Officers' Certificate listing and identifying all
Debentures, if any, known by the Company to be owned or held by or for the
account of the Company, or any other obligor on the Debentures or any Affiliate
of the Company or such obligor, and, subject to the provisions of Section 6.1,
the Trustee shall be entitled to accept such Officers' Certificate as conclusive
evidence of the facts therein set forth and of the fact that all Debentures not
listed therein are Outstanding for the purpose of any such determination.
"PAYING AGENT" means the Trustee or any Person authorized by the
Company to pay the principal of or interest on any Debentures on behalf of the
Company.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"PREDECESSOR DEBENTURE" of any particular Debenture means every
previous Debenture evidencing all or a portion of the same debt as that
evidenced by such particular Debenture, and, for the purposes of this
definition, any Debenture authenticated and delivered under Section 3.6 in lieu
of a lost, destroyed or stolen Debenture shall be deemed to evidence the same
debt as the lost, destroyed or stolen Debenture.
"PREFERRED SECURITIES" has the meaning specified in the first recital
of this Indenture.
"PROCEEDING" has the meaning specified in Section 12.2.
"PROPERTY TRUSTEE" means, in respect of the Trust, the commercial bank
or trust company identified as the "Property Trustee" in the Trust Agreement,
solely in its capacity as Property Trustee of the Trust under the Trust
Agreement and not in its individual capacity, or its successor in interest in
such capacity, or any successor property trustee appointed as therein provided.
"PROVISIONAL REDEMPTION" has the meaning specified in Section 11.8.
"PURCHASED SHARES" has the meaning specified in Section 13.4(e).
"PURCHASER STOCK PRICE" means, with respect to any Common Stock
Fundamental Change the average of the Closing Prices for common stock received
in such Common Stock Fundamental Change for the ten consecutive trading days
prior to and including the record date for the determination of the holders of
common stock entitled to receive such common stock or if there is no such record
date, the date on which the holders of common stock shall have the right to
receive such common stock, as adjusted in good faith by the Company to
appropriately reflect any of the events referred to in Section 13.4.
"REDEMPTION DATE," when used with respect to any Debenture to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
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<PAGE> 15
"REDEMPTION PRICE" has the meaning specified in Section 11.3(b).
"REFERENCE DATE" has the meaning specified in Section 13.4(c).
"REFERENCE MARKET PRICE" initially means $______ (which is an amount
equal to _____% of the reported last sale price for Common Stock on
____________, 1999), and in the event of any adjustment of the Conversion Price
other than as a result of a Non-Stock Fundamental Change, the Reference Market
Price shall also be adjusted so that the ratio of the Reference Market Price to
the Conversion Price after giving effect to any such adjustment shall always be
the same as the ratio of the initial Reference Market Price to the initial
Conversion Price of the Debentures.
"REGULAR RECORD DATE" means for the interest payable on any Interest
Payment Date the fifteenth day (whether or not a Business Day) next preceding
such Interest Payment Date.
"RESPONSIBLE OFFICER" when used with respect to the Trustee means any
officer assigned to the Trustee's Corporate Trust Office, including any managing
director, vice president, assistant vice president, assistant treasurer,
assistant secretary or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
having direct responsibility for the administration of this Indenture, and also,
with respect to a particular matter, any other officer, to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.
"RIGHTS" has the meaning specified in Section 13.2(g).
"SECURITIES REGISTER" AND "SECURITIES REGISTRAR" have the respective
meanings specified in Section 3.5.
"SENIOR DEBT" means the principal of (and premium, if any) and
interest, if any (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company whether or
not such claim for post-petition interest is allowed in such proceeding), on
Debt of the Company, whether incurred on or prior to the date of this Indenture
or thereafter incurred, unless, in the instrument creating or evidencing the
same or pursuant to which the same is outstanding, it is provided that such
obligations are not superior in right of payment to the Debentures or to other
Debt which is PARI PASSU with, or subordinated to, the Debentures, PROVIDED,
HOWEVER, that Senior Debt shall not be deemed to include (a) any Debt of the
Company which when incurred and, without respect to any election under Section
1111(b) of the Bankruptcy Reform Act of 1978, was without recourse to the
Company, (b) any Debt of the Company to any of its Subsidiaries, (c) Debt to any
employee of the Company, (d) any liability for taxes, (e) Debt or other monetary
obligations to trade creditors created or assumed by the Company or any of its
Subsidiaries in the ordinary course of business in connection with the obtaining
of goods, materials or services and (f) the Debentures.
"SPECIAL EVENT" means a Tax Event or an Investment Company Event.
"SPECIAL RECORD DATE" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.7.
8
<PAGE> 16
"STATED MATURITY" when used with respect to the Debentures or any
installment of principal thereof or interest thereon means the date specified in
the Debentures as the fixed date on which the principal of the Debentures or
such installment of interest is due and payable.
"SUBSIDIARY" means any corporation of which at the time of
determination the Company and/or one or more Subsidiaries owns or controls
directly or indirectly more than 50% of the outstanding shares of voting stock.
For purposes of this definition, "VOTING STOCK" means stock which has voting
power for the election of directors, whether at all times or only so long as no
senior class of stock has such voting power by reason of any contingency.
"TAX EVENT" means the receipt by the Property Trustee on behalf of the
Trust of an Opinion of Counsel, rendered by a law firm having a national tax and
securities practice (which opinion shall not have been rescinded by such law
firm), to the effect that, as a result of any amendment to, or change (including
any announced prospective change) in, the laws (or any regulations thereunder)
of the United States or any political subdivision or taxing authority thereof or
therein affecting taxation, or as a result of any official administrative
pronouncement or judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or such pronouncement or
decision is announced on or after the date of issuance of the Preferred
Securities of the Trust and does not pertain to the use of the proceeds of the
issuance of the Debentures, there is more than an insubstantial risk that (i)
the Trust is, or will be within 90 days of the date thereof, subject to United
States Federal income tax with respect to income received or accrued on the
Debentures, (ii) interest payable by the Company on the Debentures is not, or
within 90 days of the date thereof, will not be, deductible, in whole or in
part, for United States Federal income tax purposes or (iii) the Trust is, or
will be within 90 days of the date thereof, subject to more than a DE MINIMIS
amount of other taxes, duties or other governmental charges.
"TRADING DAY" means (i) if the applicable security is listed or
admitted for trading on the New York Stock Exchange or another national security
exchange, a day on which the New York Stock Exchange or such other national
security exchange is open for business, or (ii) if the applicable security is
quoted on the Nasdaq National Market, a day on which trades may be made thereon,
or (iii) if the applicable security is not so listed, admitted for trading or
quoted, any day other than a Saturday or Sunday or authorized or obligated by
law or executive order to close.
"TRANSACTION" has the meaning specified in Section 13.5(a).
"TRUST" has the meaning specified in the first recital of this
Indenture.
"TRUST AGREEMENT" means the Trust Agreement substantially in the form
attached hereto as Annex A, as amended by the form of Amended and Restated Trust
Agreement substantially in the form attached hereto as Annex B, as amended from
time to time.
"TRUSTEE" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each Person who is then a Trustee hereunder if
at any time there is more than one such Person.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb), as amended and as in effect on the date as of this
Indenture.
"TRUST SECURITIES" means the Common Securities and Preferred
Securities.
"UNDERWRITERS" with respect to the Preferred Securities, means Robert
W. Baird & Co. Incorporated, Legg Mason Wood Walker, Incorporated and McDonald
Investments, Inc.
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"UNDERWRITING AGREEMENT" means the Underwriting Agreement dated
___________, 1999 by and among Dayton Superior Capital Trust, Dayton Superior
Corporation and the Underwriters.
"VICE PRESIDENT" when used with respect to the Company, means any vice
president, whether or not designated by a number or a word or words added before
or after the title "VICE PRESIDENT."
SECTION 1.2 COMPLIANCE CERTIFICATE AND OPINIONS. Upon any application
or request by the Company to the Trustee to take any action under any provision
of this Indenture, the Company shall furnish to the Trustee an Officers'
Certificate stating that all conditions precedent (including covenants,
compliance with which constitutes a condition precedent), if any, provided for
in this Indenture relating to the proposed action have been complied with and an
Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent (including covenants compliance with which constitute a
condition precedent), if any, have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished. Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than the
certificates provided pursuant to Section 10.5) shall include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein relating
thereto;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
complied with; and
(d) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
SECTION 1.3 FORMS OF DOCUMENTS DELIVERED TO TRUSTEE. In any case where
several matters are required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary that all such matters be certified by,
or covered by the opinion of, only one such Person, or that they be so certified
or covered by only one document, but one such Person may certify or give an
opinion with respect to some matters and one or more other such Persons as to
other matters, and any such Person may certify or give an opinion as to such
matters in one or several documents. Any certificate or opinion of an officer of
the Company may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless such officer
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to matters upon which his certificate
or opinion is based are erroneous. Any such certificate or Opinion of Counsel
may be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Company stating
that the information with respect to such factual matters is in the possession
of the Company, unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous.
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Where any Person is required to make, give or execute two or more applications,
requests, consents, certificates, statements, opinions or other instruments
under this Indenture, they may, but need not, be consolidated and form one
instrument.
SECTION 1.4 ACTS OF HOLDERS.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given to or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments is or are
delivered to the Trustee, and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "ACT" of the Holders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 6.1) conclusive in favor of
the Trustee and the Company and any agent of the Trustee or the Company, if made
in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a Person acting in other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority.
(c) The fact and date of the execution by any Person of any such
instrument or writing, or the authority of the Person executing the same, may
also be proved in any other manner which the Trustee deems sufficient and in
accordance with such reasonable rules as the Trustee may determine.
(d) The ownership of Debentures shall be proved by the Securities
Register.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Debenture shall bind every future
Holder of the same Debenture and the Holder of every Debenture issued upon the
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done or suffered to be done by the Trustee or the Company in reliance
thereon, whether or not notation of such action is made upon such Debenture.
(f) The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders entitled to take any action under
this Indenture by vote or consent. Except as otherwise provided herein, such
record date shall be the later of 30 days prior to the first solicitation of
such consent or vote or the date of the most recent list of Holders furnished to
the Trustee pursuant to Section 7.1 prior to such solicitation. If a record date
is fixed, those persons who were Holders at such record date (or their duly
designated proxies), and only those persons, shall be entitled to take such
action by vote or consent or to revoke any vote or consent previously given,
whether or not such persons continue to be Holders after such record date.
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(g) Without limiting the foregoing, a Holder entitled hereunder to give
or take any such action with regard to any particular Debenture may do so with
regard to all or any part of the principal amount of such Debenture or by one or
more duly appointed agents each of which may do so pursuant to such appointment
with regard to all or any different part of such principal amount.
SECTION 1.5 NOTICES, ETC. TO TRUSTEE AND COMPANY. Any request, demand,
authorization, direction, notice, consent, waiver or Act of Holders or other
document provided or permitted by this Indenture to be made upon, given or
furnished to, or filed with
(a) the Trustee by any Holder or by the Company shall be sufficient for
every purpose hereunder if made, given, furnished or filed in writing to or with
the Trustee at its Corporate Trust Office, or
(b) the Company by the Trustee or by any Holder shall be sufficient for
every purpose (except as otherwise provided in Section 5.1 hereof) hereunder if
in writing and mailed, first class, postage prepaid, to the Company addressed to
it at the address of its principal office specified in the first paragraph of
this instrument or at any other address previously furnished in writing to the
Trustee by the Company.
SECTION 1.6 NOTICE TO HOLDERS; WAIVER. Where this Indenture provides
for notice to Holders of any event, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed, first
class postage prepaid, to each Holder affected by such event, at the address of
such Holder as it appears in the Securities Register on the date such notice is
mailed, which shall be not later than the latest date, and not earlier than the
earliest date, prescribed for the giving of such notice. In any case where
notice to Holders is given by mail, neither the failure to mail such notice, nor
any defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. Where this Indenture
provides for notice in any manner, such notice may be waived in writing by the
Person entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice. Waivers of notice by Holders
shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver. In
case by reason of the suspension of regular mail service or by reason of any
other cause it shall be impracticable to give such notice by mail, then such
notification as shall be made with the approval of the Trustee shall constitute
a sufficient notification for every purpose hereunder.
SECTION 1.7 CONFLICT WITH TRUST INDENTURE ACT. If any provision of this
Indenture limits, qualifies or conflicts with a provision of the Trust Indenture
Act that is required under such act to be a part of and govern this Indenture,
the latter provision shall control. If any provision of this Indenture modifies
or excludes any provision of the Trust Indenture Act that may be so modified or
excluded, the former provision shall be deemed to apply.
SECTION 1.8 EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
SECTION 1.9 SUCCESSORS AND ASSIGNS. All covenants and agreements in
this Indenture by the Company shall bind its successors and assigns, whether so
expressed or not.
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SECTION 1.10 SEPARABILITY CLAUSE. In case any provision in this
Indenture or in the Debentures shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 1.11 BENEFITS OF INDENTURE. Nothing in this Indenture or in the
Debentures, express or implied, shall give to any Person, other than the parties
thereto, any Paying Agent and their successors and assigns and the Holders of
the Debentures, any benefit or any legal or equitable right, remedy or claim
under this Indenture.
SECTION 1.12 GOVERNING LAW. This Indenture and the Debentures shall be
governed by and construed in accordance with the laws of the State of Ohio
without regard to its principles of conflicts of laws.
SECTION 1.13 NON-BUSINESS DAYS. Except as otherwise provided in Section
11.8, in any case where any Interest Payment Date, Redemption Date, or Stated
Maturity of any Debenture shall not be a Business Day, then (notwithstanding any
other provision of this Indenture or the Debentures) payment of interest or
principal payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any such
delay) with the same force and effect as if made on the Interest Payment Date or
Redemption Date or at the Stated Maturity, PROVIDED, HOWEVER, that no interest
shall accrue for the period from and after such Interest Payment Date or
Redemption Date or Stated Maturity.
ARTICLE 2 DEBENTURE FORM
SECTION 2.1 FORMS GENERALLY. The Debentures and the Trustee's
certificate of authentication shall be in substantially the forms sets forth in
this Article and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may be required to comply
with applicable tax laws or the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Debentures,
as evidenced by their execution of the Debentures.
The definitive Debentures shall be typewritten, printed, lithographed
or engraved or produced by any combination of these methods, if required by any
securities exchange on which the Debentures may be listed, on a steel engraved
border or steel engraved borders or may be produced in any other manner
permitted by the rules of any securities exchange on which the Debentures may be
listed, all as determined by the officers executing such Debentures, as
evidenced by their execution of such Debentures.
SECTION 2.2 FORM OF FACE OF DEBENTURE.
____% Convertible Subordinated Debenture due __________ __, 2029
No. 1 $__________
Dayton Superior Corporation, a corporation organized and existing under
the laws of Ohio (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
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principal sum of _______________ on __________ __, 2029 and to pay interest on
said principal sum from __________ __, 1999 or from the most recent interest
payment date (each such date, an "INTEREST PAYMENT DATE") on which interest has
been paid or duly provided for, quarterly plus Additional Interest, if any until
the principal hereof is paid or duly provided for or made available for payment
subject to deferral as set forth herein in arrears on (September 30, December
31, March 31, and June 30) of each year, commencing September 30, 1999 at the
rate of __% per annum, until the principal hereof shall have become due and
payable.
Reference is hereby made to the further provisions of this Debenture
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this
Debenture shall not be entitled to any benefit under the Indenture or be valid
or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
Dated: DAYTON SUPERIOR CORPORATION
By:_________________________
Name:
Title:
SECTION 2.3 FORM OF REVERSE OF DEBENTURE. This Debenture is one of a
duly authorized issue of Debentures of the Company (the "DEBENTURES") limited to
the aggregate principal amount of $__,000,000 ($__,000,000 if the Underwriters'
over-allotment option is exercised in full), issued and to be issued under a
Junior Convertible Subordinated Indenture, dated as of ____________, 1999 (the
"INDENTURE"), between the Company and Firstar Bank, N.A., as Trustee (herein
called the "TRUSTEE," which term includes any successor trustee under the
Indenture), to which the Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Trustee, the Company and the
Holders of the Debentures, and of the terms upon which the Debentures are, and
are to be, authenticated and delivered. All terms used in this Debenture that
are defined in the Indenture shall have the meanings assigned to them in the
Indenture.
The amount of interest payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months. For periods less than a full
month, interest shall be computed on the actual number of elapsed days over 360
days. In the event that any date on which interest is payable on this Debenture
is not a Business Day, then payment of the interest on such date will be made on
the next succeeding day which is a Business Day (and without any interest or
other payment in respect of any such delay) with the same force and effect as if
made on the date the payment was originally payable. The interest installment so
payable, and punctually paid or duly provided for, on any Interest Payment Date
will, as provided in the Indenture, be paid to the Person in whose name this
Debenture (or one or more Predecessor Debentures, as defined in the Indenture)
is registered at the close of business on the Regular Record Date, for such
interest installment which shall be the date which is the Business Day
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next preceding such Interest Payment Date. Any such interest installment not so
punctually paid or duly provided for shall forthwith cease to be payable to the
Holder on such Regular Record Date and may either be paid to the Person in whose
name this Debenture (or one or more Predecessor Debentures) is registered at the
close of business on a Special Record Date for the payment of such Defaulted
Interest to be fixed by the Trustee, notice whereof shall be given to Holders of
Debentures not less than 10 days prior to such Special Record Date, or be paid
at any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Debentures may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in the
Indenture.
The Company shall have the right at any time during the term of this
Debenture, from time to time, to extend the interest payment period of such
Debenture for up to 20 consecutive quarters with respect to each deferral period
(each such deferral period, an "EXTENSION PERIOD"), during which periods the
Company shall have the right not to make payments of interest on any Interest
Payment Date, and at the end of which the Company shall pay all interest then
accrued and unpaid (together with Additional Interest, if any, thereon to the
extent permitted by applicable law); PROVIDED that during any such Extension
Period, the Company will not, and will not permit any Subsidiary to (a) declare
or pay any dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any shares of the Company's capital stock
or (b) make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities (including guarantees of indebtedness
for money borrowed) of the Company that rank PARI PASSU with or junior to the
Debentures (other than (i) any dividend, redemption, liquidation, interest,
principal or guarantee payment by the Company where the payment is made by way
of securities (including capital stock) that rank PARI PASSU with or junior to
the securities on which such dividend, redemption, interest, principal or
guarantee payment is being made, (ii) redemptions or purchases of any rights
pursuant to a stockholder rights agreement and the declaration of a dividend of
such rights or the issuance of preferred stock under such plan in the future,
(iii) payments under the Guarantee, (iv) purchases of Common Stock related to
the issuance of Common Stock under any of the Company's benefit plans for its
directors, officers or employees, (v) as a result of a reclassification of the
Company's capital stock or the exchange or conversion of one series or class of
the Company's capital stock for another series or class of the Company's capital
stock and (vi) the purchase of fractional interests in shares of the Company's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged). Prior to the termination of
any such Extension Period, the Company may further extend the interest payment
period, PROVIDED that no Extension Period shall exceed 20 consecutive quarters
or extend beyond the Stated Maturity of this Debenture. Upon the termination of
any such Extension Period and upon the payment of all accrued and unpaid
interest and any Additional Interest then due, the Company may elect to begin a
new Extension Period, subject to the above requirements. No interest shall be
due and payable during an Extension Period except at the end thereof. The
Company shall give the Trustee, the Property Trustee and the Administrative
Trustees notice of its selection of an Extension Period at least one Business
Day prior to the earlier of (i) the record date for the date the distributions
on the Preferred Securities (or if no Preferred Securities are outstanding, for
the date interest on the Debentures) would have been payable except for the
election to begin such Extension Period or (ii) the date the Property Trustee of
the Dayton Superior Capital Trust is (or if no Preferred Securities are
outstanding, the Debenture Trustee is) required to give notice to NYSE or other
applicable self-regulatory organizations or to holders of such Preferred
Securities (or, if no Preferred Securities are outstanding, to the Holders of
such Debentures) of the record date.
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Payment of the principal of (and premium, if any) and interest on this
Debenture will be made to the Depositary Trust Company or its nominee and in
such coin or currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts PROVIDED, HOWEVER, that
at the option of the Company payment of interest may be made (a) by check mailed
to the address of the Person entitled thereto as such address shall appear in
the Securities Register or (b) by wire transfer in immediately available funds
at such place and to such account as may be designated by the Person entitled
thereto as specified in the Securities Register.
The indebtedness evidenced by this Debenture is, to the extent provided
in the Indenture, subordinate and subject in right of payments to the prior
payment in full of all Senior Debt (as defined in the Indenture), and this
Debenture is issued subject to the provisions of the Indenture with respect
thereto. Each Holder of this Debenture, by accepting the same, (a) agrees to and
shall be bound by such provisions, (b) authorizes and directs the Trustee on his
behalf to take such actions as may be necessary or appropriate to effectuate the
subordination so provided and (c) appoints the Trustee his attorney-in-fact for
any and all such purposes. Each Holder hereof, by his acceptance hereof, waives
all notice of the acceptance of the subordination provisions contained herein
and in the Indenture by each holder of Senior Debt, whether now outstanding or
hereafter incurred, and waives reliance by each such holder upon said
provisions.
At any time on or after ___________ __, 2002, the Company may, at its
option, subject to the terms and conditions of Article 11 of the Indenture,
redeem this Debenture in whole at any time or in part from time to time, at the
Redemption Prices set forth in Section 11.8 of the Indenture.
In the event of redemption of this Debenture in part only, a new
Debenture or Debentures for the unredeemed portion hereof will be issued in the
name of the Holder hereof upon the cancellation hereof.
If a Special Event shall occur and be continuing, this Debenture shall
be exchangeable for Preferred Securities in accordance with Section 11.9 of the
Indenture or, in certain circumstances, redeemable by the Company in accordance
with Section 11.8 of the Indenture.
Subject to the terms and conditions set forth in Article 13 of the
Indenture, this Debenture is convertible, at the option of the Holder, hereof
into shares of Common Stock.
If a Debenture Event of Default shall occur and be continuing, the
principal of the Debentures may be declared due and payable in the manner, with
the effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions for satisfaction, discharge and
defeasance of the entire indebtedness of this Debenture upon compliance by the
Company with certain conditions set forth in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Debentures to be affected under the
Indenture at any time by the Company and the Trustee with the consent of the
Holders of a majority in principal amount of the Debentures. The Indenture also
contains provisions permitting Holders of specified percentages in principal
amount of the Debentures at the time Outstanding, on behalf of the Holders of
all Debentures, to waive compliance by the Company with
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<PAGE> 24
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver shall be conclusive
and binding upon the Holder of this Debenture and upon all future Holders of
this Debenture and of any Debenture issued upon the registration of transfer
hereof or in exchange therefor or in lieu hereof, whether or not notation of
such consent or waiver is made upon this Debenture.
As provided in and subject to the provisions of the Indenture, if a
Debenture Event of Default shall occur and be continuing, then and in every such
case the Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Debentures may declare the principal amount of all the Debentures to
be due and payable immediately, by a notice in writing to the Company (and to
the Trustee if given by Holders), PROVIDED that, if a Debenture Event of Default
shall occur and be continuing, the Trustee or the Holders of not less than 25%
in principal amount of the Outstanding Debentures fail to declare the principal
of all the Debentures to be immediately due and payable, the holders of at least
25% in aggregate liquidation amount of the Preferred Securities then outstanding
shall have such right by a notice in writing to the Company and the Trustee; and
upon any such declaration such principal amount (or specified amount) of and the
accrued interest (including any Additional Interest) on all the Debentures shall
become immediately due and payable, PROVIDED that the payment of principal and
interest (including any Additional Interest) on such Debentures shall remain
subordinated to the extent provided in Article 12 of the Indenture.
No reference herein to the Indenture and no provision of this Debenture
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Debenture at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Debenture is registrable in the Securities
Register, upon surrender of this Debenture for registration of transfer at the
office or agency of the Company maintained under Section 10.2 of the Indenture
duly endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Securities Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Debentures, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees. No
service charge shall be made for any such registration of transfer or exchange,
but the Company may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith.
Prior to due presentment of this Debenture for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Debenture is registered as the owner
hereof for all purposes, whether or not this Debenture be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Debentures are issuable only in registered form without coupons in
denominations of $25 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Debentures are
exchangeable for a like aggregate principal amount of Debentures of a different
authorized denomination, as requested by the Holder surrendering the same.
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The Company and, by its acceptance of this Debenture or a beneficial
interest therein, the Holder of, and any Person that acquires a beneficial
interest in, this Debenture agree that for United States Federal, state and
local tax purposes it is intended that this Debenture constitute indebtedness.
THE INDENTURE AND THIS DEBENTURE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF OHIO WITHOUT
REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF.
ASSIGNMENT FORM
To assign this Debenture, fill in the form below:
(I) or (we) assign and transfer this Security to
- ------------------------------------------------------------------------------
(Insert assignee's social security or tax I.D. no.)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint _____________________________________________ agent to
transfer this Debenture on the books of the Company. The agent may substitute
another to act for him.
Your Signature:______________________________________________________
(Sign exactly as your name appears on the other side of this Security)
Date:_____________________
Signature Guarantee: *_______________________________________________
In connection with any transfer of any of the Debentures evidenced by this
certificate, the undersigned confirms that such Debentures are being:
______________* Signature must be guaranteed by an institution which
is a member of one of the following recognized
Signature Guaranty Programs: (i) The Securities
Transfer Agent Medallion Program (STAMP); (ii) The
New York Stock Exchange Medallion Program (MSP);
(iii) The Stock Exchange Medallion Program (SEMP); or
(iv) in such other guarantee programs acceptable to
the Trustee.
CHECK ONE BOX BELOW
(1) [ ] exchanged for the undersigned's own account without
transfer; or
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(2) [ ] transferred pursuant to an available exemption from the
registration requirements of the Securities Act of 1933; or
(3) [ ] transferred pursuant to an effective Registration Statement
under the Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Debentures evidenced by this certificate in the name of any person other
than the registered Holder thereof; PROVIDED, HOWEVER, that if box (3) is
checked, the Trustee may require, prior to registering any such transfer of the
Securities such legal opinions, certifications and other information as the
Company has reasonably requested in writing and directed the Trustee to require
confirmation that such transfer is being made pursuant to an exemption from, or
in a transaction not subject to, the registration requirements of the Securities
Act of 1933.
_____________________________________Signature
Signature Guarantee:*
_____________________________________Signature must be guaranteed Signature
_____________________________________
Dated:______________ _____________________NOTICE: To be executed
by an executive officer
______________________ * Signature must be guaranteed by an
institution which is a member of one of the
following recognized Signature Guaranty
Programs: (i) The Securities Transfer Agent
Medallion Program (STAMP); (ii) The New York
Stock Exchange Medallion Program (MSP);
(iii) The Stock Exchange Medallion Program
(SEMP); or (iv) in such other guarantee
programs acceptable to the Trustee.
NOTICE OF CONVERSION
To: Dayton Superior Corporation
The undersigned owner of this Debenture hereby irrevocably exercises
the option to convert this Debenture, or the portion below designated, into
Common Shares of DAYTON SUPERIOR CORPORATION in accordance with the terms of the
Indenture referred to in this Debenture, and directs that the shares issuable
and deliverable upon conversion, together with any check in payment for
fractional shares, be issued in the name of and delivered to the undersigned,
unless a different name has been indicated in the assignment below. If shares
are to be issued in the name of a person other than the undersigned, the
undersigned will pay all transfer taxes payable with respect thereto.
Date:________________, ____
in whole -- Portions of Debenture to be in part converted ($50 or integral
multiples -- thereof):
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$____________________
_______________________________
Signature (for conversion only)
Please Print or Typewrite Name and Address, Including Zip Code, and Social
Security or Other Identifying Number
__________________________
__________________________
__________________________
Signature Guarantee:*__________________________________
_________________* Signature must be guaranteed by an institution which
is a member of one of the following recognized
Signature Guaranty Programs: (i) The Securities
Transfer Agent Medallion Program (STAMP); (ii) The
New York Stock Exchange Medallion Program (MSP);
(iii) The Stock Exchange Medallion Program (SEMP); or
(iv) in such other guarantee programs acceptable to
the Trustee.
SECTION 2.4 ADDITIONAL PROVISIONS REQUIRED IN GLOBAL DEBENTURE. Any
Global Debenture issued hereunder shall, in addition to the provisions contained
in Sections 2.2 and 2.3 bear a legend in substantially the following form:
"This Debenture is a Global Debenture within the meaning of the Indenture
hereinafter referred to and is registered in the name of a Depositary or a
nominee of a Depositary. This Debenture is exchangeable for Debentures
registered in the name of a person other than the Depositary or its nominee only
in the limited circumstances described in the Indenture and may not be
transferred except as a whole by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary."
SECTION 2.5 FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION. The form
of Trustee's Certificate of Authentication shall be as follows:*
"This is one of the Debentures designated therein referred to in the within
mentioned Indenture.
_________________________, as Trustee
By:__________________________________
Authorized Signatory
- --------------
*Or in the form provided in Section 6.14 in the event that a separate
Authenticating Agent is appointed pursuant thereto.
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Dated:_____________________"
SECTION 2.6 INITIAL ISSUANCE TO PROPERTY TRUSTEE. The Debentures
initially issued to the Property Trustee of the Trust shall be in the form of
one or more individual certificates in definitive, fully registered form without
distribution coupons.
ARTICLE 3 THE DEBENTURES
SECTION 3.1 AMOUNT OF DEBENTURES. The aggregate principal amount of
Debentures which may be authenticated and delivered under this Indenture is
$__,000,000 ($__,000,000 if the Underwriters' over-allotment option is exercised
in full) for Debentures authenticated and delivered upon registration of,
transfer of, or in exchange for, or in lieu of, other Debentures pursuant to
Sections 3.4, 3.5 or 3.6.
SECTION 3.2 DENOMINATIONS. The Debentures shall be in registered form
without coupons and shall be issuable in denominations of $25 and any integral
multiple thereof.
SECTION 3.3 EXECUTION, AUTHENTICATION, DELIVERY AND DATING. The
Debentures shall be executed on behalf of the Company by its President or one of
its Vice Presidents under its corporate seal reproduced or impressed thereon and
attested by its Secretary or one of its Assistant Secretaries. The signature of
any of these officers on the Debentures may be manual or facsimile.
Debentures bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Debentures or did not
hold such offices at the date of such Debentures. Upon the execution and
delivery of this Indenture, or from time to time thereafter, Debentures may be
executed by the Company and delivered to the Trustee for authentication, and the
Trustee shall thereupon authenticate and deliver said Securities to or upon
Company Order without any further action by the Company. Debentures may be
authenticated on original issuance from time to time and delivered pursuant to
such procedures acceptable to the Trustee ("PROCEDURES") as may be specified
from time to time by Company Order. Procedures may authorize authentication and
delivery pursuant to instructions of the Company or a duly authorized agent,
which instructions shall be promptly confirmed in writing.
Each Debenture shall be dated the date of its authentication.
No Debenture shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose, unless there appears on such Debenture a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by the manual signature of one of its authorized
officers, and such certificate upon any Debenture shall be conclusive evidence,
and the only evidence, that such Debenture has been duly authenticated and
delivered hereunder.
SECTION 3.4 TEMPORARY DEBENTURES. Pending the preparation of definitive
Debentures, the Company may execute, and upon Company Order the Trustee shall
authenticate and deliver, temporary Debentures which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any denomination,
substantially of the tenor of the definitive Debentures in lieu of which
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<PAGE> 29
they are issued and with such appropriate insertions, omissions, substitutions
and other variations as the officers executing such Debentures may determine, as
evidenced by their execution of such Debentures.
If temporary Debentures are issued, the Company will cause definitive
Debentures to be prepared without unreasonable delay. After the preparation of
definitive Debentures, the temporary Debentures shall be exchangeable for
definitive Debentures upon surrender of the temporary Debentures at the office
or agency of the Company designated for the purpose without charge to the
Holder. Upon surrender for cancellation of any one or more temporary Debentures,
the Company shall execute and the Trustee shall authenticate and deliver in
exchange therefor a like principal amount of definitive Debentures of authorized
denominations. Until so exchanged, the temporary Debentures shall in all
respects be entitled to the same benefits under this Indenture as definitive
Debentures.
SECTION 3.5 REGISTRATION, TRANSFER AND EXCHANGE. The Company shall
cause to be kept at the Corporate Trust Office of the Trustee a register in
which, subject to such reasonable regulations as it may prescribe, the Company
shall provide for the registration of Debentures and of transfers of Debentures.
Such register is herein sometimes referred to as the "SECURITIES REGISTER." The
Trustee is hereby appointed "SECURITIES REGISTRAR" for the purpose of
registering Debentures and transfers of Debentures as herein provided.
Upon surrender for registration or transfer of any Debenture at the
office or agency of the Company designated for that purpose the Company shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Debentures of any
authorized denominations, of a like aggregate principal amount.
At the option of the Holder, Debentures may be exchanged for other
Debentures of any authorized denominations, of a like aggregate principal
amount, upon surrender of the Debentures to be exchanged at such office or
agency. Whenever any Debentures are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Debentures
which the Holder making the exchange is entitled to receive.
All Debentures issued upon any transfer or exchange of Debentures shall
be the valid obligations of the Company, evidencing the same debt, and entitled
to the same benefits under this Indenture, as the Debentures surrendered upon
such transfer or exchange.
Every Debenture presented or surrendered for transfer or exchange shall
(if so required by the Company or the Securities Registrar) be duly endorsed, or
be accompanied by a written instrument of transfer in form satisfactory to the
Company and the Securities Registrar, duly executed by the Holder thereof or his
attorney duly authorized in writing.
No service charge shall be made to a Holder for any transfer or
exchange of Debentures, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Debentures.
Notwithstanding any of the foregoing, the Global Debenture shall be
exchangeable pursuant to this Section 3.5 for Debentures registered in the names
of Persons other than the Depositary for such Debenture or its nominee only if
(a) such Depositary notifies the Company that it is unwilling or unable to
continue as Depositary for the Global Debenture, and the Company shall not have
appointed a
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<PAGE> 30
successor depositary within 90 days after such notice, (b) at any time such
Depositary ceases to be a clearing agency registered under the Securities
Exchange Act of 1934, as amended, and the Company shall not have appointed a
successor depositary within 90 days, (c) the Company executes and delivers to
the Trustee a Company Order that the Global Debenture shall be so exchangeable
or (d) there shall have occurred and be continuing a Debenture Event of Default.
The Global Debenture shall be exchangeable for Debentures registered in such
names as such Depositary shall direct.
Notwithstanding any other provisions in this Indenture, the Global
Debenture may not be transferred except as a whole by the Depositary with
respect to the Global Debenture to a nominee of such Depositary or by a nominee
of such Depositary to such Depositary or another nominee of such Depositary.
Neither the Company nor the Trustee shall be required, pursuant to the
provisions of this Section, (a) to issue, transfer or exchange any Debenture
during a period beginning at the opening of business 15 days before the day of
selection for redemption of Debentures pursuant to Article 11 and ending at the
close of business on the day of mailing of notice of redemption or (b) to
transfer or exchange any Debenture so selected for redemption in whole or in
part, except, in the case of any Debenture to be redeemed in part, any portion
thereof not to be redeemed.
Upon any distribution of the Debentures to the holders of the Preferred
Securities in accordance with the Trust Agreement, the Company and the Trustee
shall enter into a supplemental indenture pursuant to Section 9.1(h) to provide
for transfer procedures with respect to the Debentures substantially similar to
those contained in the Trust Agreement to the extent applicable in the
circumstances existing at the time of such distribution.
SECTION 3.6 MUTILATED, DESTROYED, LOST AND STOLEN DEBENTURES. If any
mutilated Debenture is surrendered to the Trustee together with such security or
indemnity as may be required by the Company or the Trustee to save each of them
harmless, the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor a new Debenture and bearing a number not
contemporaneously outstanding.
If there shall be delivered to the Company and to the Trustee (a)
evidence to their satisfaction of the destruction, loss or theft of any
Debenture, and (b) such security or indemnity as may be required by them to save
each of them harmless, then, in the absence of actual notice to the Company or
the Trustee that such Debenture has been acquired by a bona fide purchaser, the
Company shall execute and upon the receipt of a Company Order requesting
authentication its request the Trustee shall authenticate and deliver, in lieu
of any such destroyed, lost or stolen Debenture, a new Debenture bearing a
number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Debenture has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Debenture, pay such Debenture.
Upon the issuance of any new Debenture under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
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<PAGE> 31
Every new Debenture issued pursuant to this Section in lieu of any
destroyed, lost or stolen Debenture shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Debenture shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Debentures duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Debentures.
SECTION 3.7 PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED. Interest on
any Debenture which is payable, and is punctually paid or duly provided for, on
any Interest Payment Date, shall be paid to the Person in whose name that
Debenture (or one or more Predecessor Debentures) is registered at the close of
business on the Regular Record Date, except that interest payable on the Stated
Maturity of the Debentures shall be paid to the Person to whom principal is
paid.
Any interest on the Debentures which is payable, but is not timely paid
or duly provided for, on an Interest Payment Date ("DEFAULTED INTEREST"), shall
forthwith cease to be payable to the registered Holder on the Regular Record
Date by virtue of having been such Holder, and such Defaulted Interest may be
paid by the Company, at its election in each case, as provided in clause (a) or
(b) below:
(a) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Debentures (or their respective Predecessors
Debentures) are registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest, which shall be fixed in the following
manner. The Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on the Debentures and the date of the
proposed payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the proposed payment, such
money when deposited to be held in trust for the benefit of the Persons entitled
to such Defaulted Interest as in this Clause provided. Thereupon the Trustee
shall fix a Special Record Date for the payment of such Defaulted Interest which
shall be not more than 15 days and not less than 10 days prior to the date of
the proposed payment and not less than 10 days after the receipt by the Trustee
of the notice of the proposed payment. The Trustee shall promptly notify the
Company of such Special Record Date and, in the name and at the expense of the
Company, shall cause notice of the proposed payment of such Defaulted Interest
and the Special Record Date therefor to be mailed, first class, postage prepaid,
to each Holder of the Debentures at the address of such Holder as it appears in
the Securities Register not less than 10 days prior to such Special Record Date.
Notice of the proposed payment of such Defaulted Interest and the Special Record
Date therefor having been mailed as aforesaid, such Defaulted Interest shall be
paid to the Persons in whose names the Debentures (or their respective
Predecessor Debentures) are registered on such Special Record Date and shall no
longer be payable pursuant to the following clause (b).
(b) The Company may make payment of any Defaulted Interest in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Debentures may be listed and, upon such notice as may be required
by such exchange (or by the Trustee if the Debentures are not listed), if, after
notice given by the Company to the Trustee of the proposed payment pursuant to
this Clause, such payment shall be deemed practicable by the Trustee.
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Subject to the foregoing provisions of this Section, each Debenture
delivered under this Indenture upon transfer of or in exchange for or in lieu of
any other Debenture shall carry the rights to interest accrued and unpaid, and
to accrue, which were carried by such other Debenture.
SECTION 3.8 PERSONS DEEMED OWNERS. The Company, the Trustee, the Paying
Agent and any agent of the Company or the Trustee or the Paying Agent may treat
the Person in whose name any Debenture is registered as the owner of such
Debenture for the purpose of receiving payment of principal of and (subject to
Section 3.7) interest or premium on such Debenture and for all other purposes
whatsoever, whether or not such Debenture be overdue, and neither the Company,
the Trustee nor any agent of the Company or the Trustee shall be affected by
notice to the contrary.
SECTION 3.9 CANCELLATION. All Debentures surrendered for payment,
redemption, conversion transfer or exchange shall, if surrendered to any Person
other than the Trustee, be delivered to the Trustee, and any such Debentures and
Debentures surrendered directly to the Trustee for any such purpose shall be
promptly canceled by it. The Company may at any time deliver or cause to be
delivered to the Trustee for cancellation any Debentures previously
authenticated and delivered hereunder which the Company may have acquired in any
manner whatsoever, and all Debentures so delivered shall be promptly canceled by
the Trustee. No Debentures shall be authenticated in lieu of or in exchange for
any Debentures canceled as provided in this Section, except as expressly
permitted by this Indenture. All canceled Debentures shall be destroyed by the
Trustee and upon written request, the Trustee shall deliver to the Company a
certificate of such destruction.
SECTION 3.10 COMPUTATION OF INTEREST. Interest on the Debentures shall
be computed on the basis of a 360-day year of twelve 30-day months.
SECTION 3.11 DEFERRALS OF INTEREST PAYMENT DATES. The Company shall
have the right, at any time during the term of the Debentures, so long as no
Debenture Event of Default has occurred and is continuing, from time to time to
extend the interest payment period for the Debentures for up to 20 consecutive
quarters with respect to each deferral period (each, an "EXTENSION PERIOD")
during which periods the Company shall have the right to not make payments of
interest on any Interest Payment Date, and at the end of such Extension Period
the Company shall pay all interest then accrued and unpaid thereon (together
with Additional Interest thereon, if any, at the rate specified for the
Debentures, to the extent permitted by applicable law), PROVIDED, HOWEVER, that
during any such Extension Period, the Company shall not, and shall cause any
Subsidiary not to, (a) declare or pay any dividends or distributions on, or
redeem, purchase, acquire or make a liquidation payment with respect to, any
shares of the Company's capital stock or (b) make any payment of principal,
interest or premium, if any, on or repay, repurchase or redeem any debt
securities (including guarantees of indebtedness for money borrowed) of the
Company that rank PARI PASSU with or junior to the Debentures (other than (i)
any dividend, redemption, liquidation, interest, principal or guarantee payment
by the Company where the payment is made by way of securities (including capital
stock) that rank PARI PASSU with or junior to the securities on which such
dividend, redemption, interest, principal or guarantee payment is being made,
(ii) redemptions or purchases of any rights pursuant to a stockholder rights
agreement and the declaration of a dividend of such rights or the issuance of
preferred stock under such stockholder rights agreement in the future, (iii)
payments under the Guarantee, (iv) purchases of Common Stock related to the
issuance of Common Stock under any of the Company's benefit plans for its
directors, officers or employees, (v) as a result of a reclassification of the
Company's capital stock or the exchange or conversion of one series or class of
the Company's capital stock for another series or class of the
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<PAGE> 33
Company's capital stock and (vi) the purchase of fractional interests in shares
of the Company's capital stock pursuant to the conversion or exchange provisions
of such capital stock or the security being converted or exchanged). Prior to
the termination of any such Extension Period, the Company may further extend the
interest payment period, PROVIDED that no such Extension Period shall exceed 20
consecutive quarters or extend beyond the Stated Maturity of the Debentures.
Upon termination of any Extension Period and upon the payment of all accrued and
unpaid interest and any Additional Interest then due, the Company may select a
new Extension Period, subject to the above requirements. No interest, including
Additional Interest, if any, shall be due and payable during an Extension
Period, except at the end thereof. The Company shall give the Trustee, the
Property Trustee and the Administrative Trustees written notice of its selection
of such Extension Period at least one Business Day prior to the earlier of (i)
the record date for the date the distributions on the Preferred Securities of
the Trust (or if no, Preferred Securities are outstanding, for the date interest
on the Debentures) would have been payable except for the election to begin such
Extension Period and (ii) the date the Property Trustee (or, if no Preferred
Securities are outstanding, the Trustee) is required to give notice to NYSE or
other applicable self-regulatory organization or to holders of such Preferred
Securities (or, if no Preferred Securities are outstanding, to the Holders of
such Debentures) of such record date, but in any event not less than one
Business Day prior to such record date. Such notice shall specify the period
selected.
The Trustee shall promptly give notice of the Company's selection of
such Extension Period to the Holders of the outstanding Debentures and Preferred
Securities.
SECTION 3.12 RIGHT OF SET-OFF. Notwithstanding anything to the contrary
in the Indenture, the Company shall have the right to set-off any payment it is
otherwise required to make thereunder in respect of the Debenture to the extent
the Company has theretofore made, or is concurrently on the date of such payment
making, a payment relating to the Debentures under the Guarantee.
SECTION 3.13 AGREED TAX TREATMENT. Each Debenture issued hereunder
shall provide that the Company and, by its acceptance of a Debenture or a
beneficial interest therein, the Holder of, and any Person that acquires a
beneficial interest in, such Debenture agree that for United States Federal,
state and local tax purposes it is intended that such Debenture constitute
indebtedness.
SECTION 3.14 CUSIP NUMBERS. The Company in issuing the Debentures may
use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall
use such "CUSIP" number in notices of redemption as a convenience to Holders;
PROVIDED that any such notice may state that no representation is made as to the
correctness of such number either as printed on the Debentures or as contained
in any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Debentures, and any such redemption shall
not be affected by any defect in or omission of such numbers.
SECTION 3.15 GLOBAL SECURITY.
(a) In connection with distribution of Debentures to holders of the
Preferred Securities in connection with the involuntary or voluntary dissolution
of the Trust, including a dissolution following the occurrence of a Special
Event,
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(i) the Debentures in certificated form may be presented to
the Trustee by the Property Trustee in exchange for a global
certificate in an aggregate principal amount equal to the aggregate
principal amount of all outstanding Debentures (a "GLOBAL DEBENTURE"),
to be registered in the name of the Depositary, or its nominee, and
delivered by the Trustee to the Depositary, or its custodian, for
crediting to the accounts of its participants pursuant to the
procedures of the Depositary. The Company upon any such presentation
shall execute a Global Debenture in such aggregate principal amount and
deliver the same to the Trustee for authentication and delivery in
accordance with this Indenture; and
(ii) if any Preferred Securities are held in non book-entry
certificated form, the Debentures in certificated form may be presented
to the Trustee by the Property Trustee and any Preferred Security
certificate which represents Preferred Securities other than Preferred
Securities held by the Depositary or its nominee ("NON BOOK-ENTRY
PREFERRED SECURITIES") will be deemed to represent beneficial interests
in Debentures presented to the Trustee by the Property Trustee having
an aggregate principal amount equal to the aggregate liquidation amount
of the Non Book-Entry Preferred Securities until such Preferred
Security certificates are presented to the Securities Registrar for
transfer or reissuance at which time such Non-Book Entry Preferred
Security certificates will be canceled and a Debenture, registered in
the name of the holder of the Preferred Security certificate or the
transferee of the holder of such Preferred Security certificate, as the
case may be, with an aggregate principal amount equal to the aggregate
liquidation amount of the Preferred Security certificate canceled, will
be executed by the Company and delivered to the Trustee for
authentication and delivery in accordance with this Indenture. On issue
of such Debentures, Debentures with an equivalent aggregate principal
amount that were presented by the Property Trustee to the Trustee will
be deemed to have been canceled.
(b) A Global Debenture may be transferred, in whole but not in part,
only to another nominee of the Depositary, or to a nominee of such successor
Depositary.
(c) If (a) the Depositary notifies the Company that it is unwilling or
unable to continue as a depositary for such Global Debenture and no successor
depositary shall have been appointed within 90 days by the Company, (b) the
Depositary, at any time, ceases to be a clearing agency registered under the
Exchange Act at which time the Depositary is required to be so registered to act
as such depositary and no successor depositary shall have been appointed within
90 days by the Company, (c) the Company, in its sole discretion, determines that
such Global Debenture shall be so exchangeable or (d) there shall have occurred
and be continuing a Debenture Event of Default with respect to such Debentures,
as the case may be, the Company will execute, and, subject to Article 3 of this
Indenture, the Trustee, upon written notice from the Company and receipt of a
Company Order, will authenticate and deliver the Debentures in definitive
registered form without coupons, in authorized denominations, and in an
aggregate principal amount equal to the principal amount of the Global Debenture
in exchange for such Global Debenture. In addition, upon a Debenture Event of
Default that has occurred and is continuing or in the event the Company
determines that the Debenture shall no longer be represented by a Global
Debenture, the Company will execute, and subject to Section 3.5 of this
Indenture, the Trustee, upon receipt of an Officers' Certificate evidencing such
determination by the Company and a Company Order, will authenticate and make
available for delivery, the Debentures in definitive registered form without
coupons, in authorized denominations, and in an aggregate principal amount equal
to the principal amount of the Global Debenture in exchange for such Global
Debenture. Upon the exchange of the
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Global Debenture for such Debentures in definitive registered form without
coupons, in authorized denominations, the Global Debenture shall be canceled by
the Trustee. Such Debentures in definitive registered form issued in exchange
for the Global Debenture shall be registered in such names and in such
authorized denominations as the Depositary, pursuant to instructions from its
direct or indirect participants or otherwise, shall instruct the Trustee in
writing. The Trustee shall deliver such Debentures to the Depositary for
delivery to the Persons in whose names such Debentures are so registered.
ARTICLE 4 SATISFACTION AND DISCHARGE
SECTION 4.1 SATISFACTION AND DISCHARGE OF INDENTURE. This Indenture
shall cease to be of further effect (except as to (i) any surviving rights of
transfer, substitution and exchange of Debentures, (ii) rights hereunder of
Holders to receive payments of principal of (and premium, if any) and interest
(including Additional Interest, if any) on the Debentures and other rights,
duties and obligations of the Holders as beneficiaries hereof with respect to
the amounts, if any, so deposited with the Trustee and (iii) the rights and
obligations of the Trustee hereunder), and the Trustee, on demand of and at the
expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(a) either
(i) all Debentures theretofore authenticated and delivered
(other than (i) Debentures which have been destroyed, lost or stolen
and which have been replaced or paid as provided in Section 3.6 and
(ii) Debentures for whose payment money has theretofore been deposited
in trust or segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust, as provided in
Section 10.3) have been delivered to the Trustee for cancellation; or
(ii) all such Debentures not theretofore delivered to the
Trustee for cancellation:
(A) have become due and payable, or
(B) will become due and payable at their Stated
Maturity within one year of the date of deposit or are to be
called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of written notice
of redemption to the Trustee in the name, and at the expense,
of the Company, and the Company has deposited or caused to be
deposited with the Trustee as trust funds in trust for such
purpose an amount in the currency or currencies in which the
Debentures are payable sufficient (without regard to
investment of such amount deposited) to pay and discharge the
entire indebtedness on the Debentures not theretofore
delivered to the Trustee for cancellation, for principal (and
premium, if any) and interest (including any Additional
Interest) to the date of such deposit or to the Stated
Maturity; or
(c) have been redeemed or tendered for conversion; or
(b) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
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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, if money shall
have been deposited with the Trustee pursuant to subclause (ii) of clause (a) of
this Section, the obligations of the Trustee under Section 4.2 and the last
paragraph of Section 10.3 shall survive.
SECTION 4.2 APPLICATION OF TRUST MONEY. Subject to the provisions of
the last paragraph of Section 10.3, all money deposited with the Trustee
pursuant to Section 4.1 shall be held in trust and applied by it, in accordance
with the provisions of the Debentures and this Indenture, to the payment, either
directly or through any Paying Agent (including the Company acting as its own
Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of
the principal (and premium, if any) and interest for whose payment such money or
obligations have been deposited with or received by the Trustee; PROVIDED,
HOWEVER, such moneys need not be segregated from other funds except to the
extent required by law.
ARTICLE 5 REMEDIES
SECTION 5.1 DEBENTURE EVENTS OF DEFAULT. "DEBENTURE EVENT OF DEFAULT,"
wherever used herein with respect to the Debentures, means any one of the
following events that has occurred and is continuing (whatever the reason for
such Debenture Event of Default and whether it shall be voluntary or involuntary
or be effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body):
(a) default in the payment of any interest upon the Debenture,
including any Additional Interest in respect thereof, when it becomes due and
payable, and continuance of such default for a period of 30 days (subject to the
deferral of any due date in the case of an Extension Period);
(b) default in the payment of the principal of (or premium, if any, on)
the Debentures when due whether at Stated Maturity, upon redemption by
declaration or otherwise;
(c) failure on the part of the Company duly to observe or perform in
any material respect any other of the covenants or agreements on the part of the
Company contained in the Debentures or contained in this Indenture (other than a
covenant or agreement which has been expressly included in this Indenture solely
for the benefit of the Company) and continuance for such failure for a period of
90 days after the date on which written notice of such failure, requiring the
same to be remedied and stating that such notice is a "NOTICE OF DEFAULT"
hereunder, shall have been given to the Company by the Trustee, by registered or
certified mail, or to the Company and the Trustee by a Holder or Holders of at
least 25% in aggregate principal amount of the Debentures at the time
Outstanding or the holder or holders of at least 25% in aggregate liquidation
amount of the Preferred Securities;
(d) failure by the Company to issue Common Stock upon an appropriate
election by the Holder or Holders of the Debentures to convert the Debentures
into shares of Common Stock;
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(e) the entry of a decree or order by a court having jurisdiction in
the premises adjudging the Company as bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement, adjudication or
composition of or in respect of the Company under any applicable Federal or
State bankruptcy, insolvency, reorganization or other similar law, or appointing
a receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Company or of any substantial part of its property or ordering
the winding up or liquidation of its affairs, and the continuance of any such
decree or order unstayed and in effect for a period of 60 consecutive days; or
(f) the institution by the Company of proceedings to be adjudicated as
bankrupt or insolvent, or the consent by it to the institution of bankruptcy or
insolvency proceedings against it, or the filing by it of a petition or answer
or consent seeking reorganization or relief under any applicable Federal or
State bankruptcy, insolvency, reorganization or other similar law, or the
consent by it to the filing of any such petition or to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Company or of any substantial part of its property or the
making by it of an assignment for the benefit of creditors, or the admission by
it in writing of its inability to pay its debts generally as they become due and
its willingness to be adjudicated as bankrupt, or the taking of corporate action
by the Company in furtherance of any such action.
SECTION 5.2 ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If a
Debenture Event of Default occurs and is continuing, then and in every such case
the Trustee or the Holders of not less than 25% in aggregate principal amount of
the Outstanding Debentures may declare the principal amount of all the
Debentures to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by Holders), PROVIDED that, if a Debenture
Event of Default occurs and is continuing, the Trustee or the Holders of not
less than 25% in aggregate principal amount of the Outstanding Debentures fail
to declare the principal of all the Debentures to be immediately due and
payable, the holders of at least 25% in aggregate liquidation amount of the
Preferred Securities then outstanding shall have such right by a notice in
writing to the Company and the Trustee, and upon any such declaration such
principal amount (or specified amount) of and the accrued interest (including
any Additional Interest) on all the Debentures shall become immediately due and
payable, PROVIDED that the payment of principal and interest (including any
Additional Interest) on the Debentures shall remain subordinated to the extent
provided in Article 12.
At any time after such a declaration of acceleration with respect to
Debentures has been made and before a judgment or decree for payment of the
money due has been obtained by the Trustee as hereinafter in this Article
provided, the Holders of a majority in aggregate principal amount of the
Outstanding Debentures, by written notice to the Company and the Trustee may
rescind and annul such declaration and its consequences if:
(a) the Company has paid or deposited with the Trustee a sum sufficient
to pay:
(i) all overdue installments of interest (including any
Additional Interest) on the Debentures;
(ii) the principal of (and premium, if any, on) the Debentures
which have become due otherwise than by such declaration of
acceleration and interest thereon at the rate borne by the Debentures;
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(iii) to the extent that payment of such interest is lawful,
interest (including any Additional Interest) upon overdue installments
of interest at the rate borne by the Debentures; and
(iv) all sums paid or advanced by the Trustee hereunder and
the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel; or
(b) all Debenture Events of Default that shall have occurred and been
continuing with respect to Debentures, other than the non-payment of the
principal of the Debentures which has become due solely by such acceleration,
have been cured or waived as provided in Section 5.13. If the holders of a
majority in aggregate principal amount of the Outstanding Debentures fail to
rescind and annul such declaration and its consequences, the holders of a
majority in liquidation amount of the Preferred Securities then outstanding
shall have such right.
SECTION 5.3 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE. The Company covenants that if:
(a) default is made in the payment of any installment of interest
(including any Additional Interest) on the Debentures when such interest becomes
due and payable and such default continues for a period of 30 days, or
(b) default is made in the payment of the principal of (and premium, if
any, on) the Debentures whether at the Stated Maturity thereof upon redemption
by declaration or otherwise, the Company will, upon demand of the Trustee, pay
to it, for the benefit of the Holders of the Debentures, the whole amount then
due and payable on the Debentures for principal (and premium, if any) and
interest (including any Additional Interest), including, to the extent that
payment of such interest shall be lawful, interest on any overdue principal (and
premium, if any) and on any overdue installments of interest (including any
Additional Interest) at the rate borne by the Debentures, and, in addition
thereto, all amounts owing the Trustee under Section 6.7.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, and may
prosecute such proceeding to judgement or final decree, and may enforce the same
against the Company or any other obligor upon the Debentures and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon the Debentures, wherever
situated.
If a Debenture Event of Default occurs and is continuing, the Trustee
may in its discretion proceed to protect and enforce its rights and the rights
of the Holders of the Debentures by such appropriate judicial proceedings as the
Trustee shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy.
SECTION 5.4 TRUSTEE MAY FILE PROOFS OF CLAIM. In case of the pendency
of any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding relative to
the Company or any other obligor upon the Debentures or the property of the
Company or of such other obligor or their creditors:
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(a) the Trustee (irrespective of whether the principal of the
Debentures shall then be due and payable as therein expressed or by declaration
or otherwise and irrespective of whether the Trustee shall have made any demand
on the Company for the payment of overdue principal (or premium, if any) or
interest (including any Additional Interest)) shall be entitled and empowered,
by intervention in such proceeding or otherwise,
(i) to file and prove a claim (including a claim for
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel) for the whole amount of principal (and
premium, if any) and interest (including any Additional Interest) owing
and unpaid in respect to the Debentures and to file such other papers
or documents as may be necessary or advisable and to take any and all
actions as are authorized under the Trust Indenture Act in order to
have the claims of the Holders and any predecessor to the Trustee under
Section 6.7 and, of the Holders allowed in any such judicial
proceedings; and
(ii) in particular, to collect and receive any moneys or other
property payable or deliverable on any such claims and to distribute
the same in accordance with Section 5.6; and
(b) any custodian, receiver, assignee, trustee, liquidator,
sequestrator (or other similar official) in any such judicial proceeding is
hereby authorized by each Holder to make such payments to the Trustee for
distribution in accordance with Section 5.6, and in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay to
the Trustee any amount due to it and any predecessor Trustee under Section 6.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Debentures
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding; PROVIDED, HOWEVER,
that the Trustee may, on behalf of the Holders, vote for the election of a
trustee in bankruptcy or similar official and be a member of a creditors' or
other similar committee.
SECTION 5.5 TRUSTEE MAY ENFORCE CLAIM WITHOUT POSSESSION OF DEBENTURES.
All rights of action and claims under this Indenture or the Debentures may be
prosecuted and enforced by the Trustee without the possession of any of the
Debentures or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgement shall, after
provision for the payment of all the amounts owing the Trustee and any
predecessor Trustee under Section 6.7, its agents and counsel, be for the
ratable benefit of the Holders of the Debentures in respect of which such
judgement has been recovered.
SECTION 5.6 APPLICATION OF MONEY COLLECTED. Any money or property
collected or to be applied by the Trustee with respect to the Debentures
pursuant to this Article shall be applied in the following order, at the date or
dates fixed by the Trustee and, in case of the distribution of such money or
property on account of principal (or premium, if any) or interest (including any
Additional Interest), upon presentation of the Debentures and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
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FIRST: to the payment of all amounts due the Trustee and any
predecessor Trustee under Section 6.7,
SECOND: to the payment of the amounts then due and unpaid upon the
Debentures for principal (and premium, if any) and interest (including any
Additional Interest), in respect of which or for the benefit of which such money
has been collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Debentures for principal (and
premium, if any) and interest (including any Additional Interest), respectively;
and
THIRD: the balance, if any, to the Person or Persons entitled thereto.
SECTION 5.7 LIMITATION ON SUITS. No Holder of the Debentures, including
a holder of Preferred Securities acting to enforce the rights of the Property
Trustee as a Holder of the Debentures pursuant to Section 5.8 of the Trust
Agreement, shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Indenture or for the appointment of a receiver,
assignee, trustee, liquidator, sequestrator (or other similar official) or for
any other remedy hereunder, unless:
(a) such Holder has previously given written notice to the Trustee of a
continuing Debenture Event of Default;
(b) if the Trust is not the sole holder of the Outstanding Debentures,
the Holders of not less than 25% in principal amount of the Outstanding
Debentures shall have made written request to the Trustee to institute
proceedings in respect of such Debenture Event of Default in its own name as
Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(e) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Debentures;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of the Debentures, or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and ratable
benefit of all such Holders.
SECTION 5.8 UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL,
PREMIUM AND INTEREST. Notwithstanding any other provision in this Indenture, the
Holder of any Debenture shall have the right which is absolute and unconditional
to receive payment of the principal of (and premium, if any) and (subject to
Section 3.7) interest (including any Additional Interest) on such Debenture on
the Maturity or to convert such Debenture in accordance with Article 13 and to
institute suit for the enforcement of any such payment and right to convert, and
such right shall not be impaired without the consent of such Holder. For so long
as any Preferred Securities remain Outstanding, to the
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fullest extent permitted by law and subject to the terms of this Indenture and
the Trust Agreement, upon a Debenture Event of Default that has occurred and is
continuing specified in Sections 5.1(a) or 5.1(b), any holder of Preferred
Securities shall have the right to institute a proceeding directly against the
Company, for enforcement of payment to such holder of the principal amount of
(or premium, if any) or interest on Debentures having a principal amount equal
to the liquidation amount of the Preferred Securities of such holder (a "DIRECT
ACTION"). Notwithstanding any payment made to such holder of Preferred
Securities by the Company in connection with a Direct Action, the Company shall
remain obligated to pay the principal of (or premium, if any) or interest on the
Debentures held by the Trust or the Property Trustee. In connection with any
such Direct Action, the rights of the Company will be subrogated to the rights
of any holder of the Preferred Securities to the extent of any payment made by
the Company to such holder of Preferred Securities as a result of such Direct
Action. Except as set forth in this Section, the holders of Preferred Securities
shall have no right to execute any right or remedy available to the Holders of
or in respect of, the Debentures.
SECTION 5.9 RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or any
Holder has instituted any proceeding to enforce any right or remedy under this
Indenture and such proceeding has been discontinued or abandoned for any reason,
or has been determined adversely to the Trustee or to such Holder, then and in
every such case the Company, the Trustee and the Holder shall, subject to any
determination in such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Trustee and the Holders shall continue as though no such proceeding had been
instituted.
SECTION 5.10 RIGHTS AND REMEDIES CUMULATIVE. Except as otherwise
provided in the last paragraph of Section 3.6, no right or remedy herein
conferred upon or reserved to the Trustee or to the Holders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 5.11 DELAY OR OMISSION NOT WAIVER. No delay or omission of the
Trustee or of any Holder of the Debentures to exercise any right or remedy
accruing upon any Debenture Event of Default that shall have occurred and be
continuing shall impair any such right or remedy, or constitute a waiver of any
such Debenture Event of Default or an acquiescence therein.
Every right and remedy given by this Article or by law to the Trustee
or to the Holders may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the Holders, as the case may be.
SECTION 5.12 CONTROL BY HOLDERS. The Holders of a majority in aggregate
principal amount of the Outstanding Debentures shall have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Trustee or exercising any trust or power conferred on the Trustee, with
respect to the Debentures, PROVIDED that:
(a) such direction shall not be in conflict with any rule of law or
with this Indenture,
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(b) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction, and
(c) subject to the provisions of Section 6.1, the Trustee shall have
the right to decline to follow such direction if the Trustee in good faith
shall, by a Responsible Officer or Officers of the Trustee, determine that the
proceeding so directed would be unjustly prejudicial to the Holders not joining
in any such direction or would involve the Trustee in personal liability.
Upon receipt by the Trustee of any written notice directing the time,
method or place of conducting any such proceeding or exercising any such trust
or power, with respect to the Debentures and, if all or part of the Debentures
is represented by a Global Security, a record date shall be established for
determining Holders of Outstanding Debentures entitled to join in such notice,
which record date shall be at the close of business on the day the Trustee
receives such notice. The Holders on such record date, or their duly designated
proxies, and only such Persons, shall be entitled to join in such notice,
whether or not such Holders remain Holders after such record date, PROVIDED,
that, unless the Holders of a majority in principal amount of the Outstanding
Debentures shall have joined in such notice prior to the day which is 90 days
after such record date, such notice shall automatically and without further
action by any Holder be canceled and of no further effect. Nothing in this
paragraph shall prevent a Holder, or a proxy of a Holder, from giving, after
expiration of such 90-day period, a new notice identical to a notice which has
been canceled pursuant to the proviso to the preceding sentence, in which event
a new record date shall be established pursuant to the provisions of this
Section 5.12.
SECTION 5.13 WAIVER OF PAST DEFAULTS. Subject to Section 9.2 hereof,
the Holders of not less than a majority in aggregate principal amount of the
Outstanding Debentures affected by any past default may on behalf of the Holders
of all the Debentures waive any past default hereunder with respect to
Debentures and its consequences, except a default:
(a) in the payment of the principal of (or premium, if any) or interest
(including any Additional Interest) on the Debentures (unless such default has
been cured or waived and a sum sufficient to pay all matured installments of
interest and principal due otherwise than by acceleration has been deposited
with the Trustee), or
(b) in respect of a covenant or provision hereof which under Article 9
cannot be modified or amended without the consent of the Holder of each
Outstanding Debenture;
PROVIDED, HOWEVER, that if the Debentures are held by the Trust or a trustee of
the Trust, such waiver shall not be effective until the holders of a majority in
liquidation amount of Trust Securities shall have consented to such waiver;
PROVIDED, FURTHER, that if the consent of the Holder of each outstanding
Debenture is required, such waiver shall not be effective until each holder of
the Trust Securities shall have consented to such waiver.
Upon any such waiver, such default shall cease to exist, and any
Debenture Event of Default arising therefrom shall be deemed to have been cured,
for every purpose of this Indenture, but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon. If the
Holders of a majority in aggregate principal amount of the Outstanding
Debentures fail to waive such Debenture Event of Default, the holders of a
majority in aggregate liquidation amount of Preferred Securities shall have such
right. No such rescission shall affect any subsequent default or impair any
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right consequent thereon. The provisions of this Section 5.13 shall be in lieu
of Section 316(a)(1)(B) of the Trust Indenture Act, and such Section
316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from this
Indenture and the Debentures, as permitted by the Trust Indenture Act.
SECTION 5.14 UNDERTAKING FOR COSTS. All parties to this Indenture
agree, and each Holder of any Debenture by his acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken or omitted by it as Trustee the filing
by any party litigant in such suit of an undertaking to pay the costs of such
suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees and expenses, against any party litigant in
such suit, having due regard to the merits and good faith of the claims or
defenses made by such party litigant; but the provisions of this Section shall
not apply to any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than 10% in principal
amount of the Outstanding Debentures, or to any suit instituted by any Holder
for the enforcement of the payment of the principal of (or premium, if any) or
interest (including any Additional Interest) on the Debentures on or after the
Maturity of the Debentures or to convert a Debenture in accordance with Article
13. The provisions of this Section 5.14 shall be in lieu of Section 315(e) of
the Trust Indenture Act, and such Section 315(e) of the Trust Indenture Act is
hereby expressly excluded from this Indenture and the Debentures, as permitted
by the Trust Indenture Act.
SECTION 5.15 WAIVER OF USURY, STAY, OR EXTENSION LAWS. The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any usury, stay or extension law wherever enacted, now
or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE 6 THE TRUSTEE
SECTION 6.1 CERTAIN DUTIES AND RESPONSIBILITIES.
(a) Except during the continuance of a Debenture Event of Default,
(i) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture, but in the case of any such certificates or opinions
which by any provisions hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to examine
the same to determine whether or not they conform to the requirements
of this Indenture.
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(b) In case a Debenture Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of his own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct except that:
(i) this Subsection shall not be construed to limit the effect
of Subsection (a) of this Section;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance
with the direction of Holders pursuant to Section 5.12 relating to the
time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Indenture.
(d) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if there shall be reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(e) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
SECTION 6.2 NOTICE OF DEFAULTS. Within 90 days after actual knowledge
by a Responsible Officer of the Trustee of the occurrence of any default
hereunder, the Trustee shall transmit by mail to all Holders of Debentures, as
their names and addresses appear in the Securities Register, notice of such
default hereunder known to the Trustee, unless such default shall have been
cured or waived; PROVIDED, HOWEVER, that, except in the case of a default in the
payment of the principal of (or premium, if any) or interest (including any
Additional Interest) on Debenture, the Trustee shall be fully protected in
withholding such notice if and so long as the board of directors, the executive
committee or a trust committee of directors and/or Responsible Officers of the
Trustee in good faith determines that the withholding of such notice is in the
interests of the Holders of Debentures; and PROVIDED, FURTHER, that, except in
the case of any default of the character specified in Section 5.1(c), no such
notice to Holders of the Debentures shall be given until at least 30 days after
the occurrence thereof For the purpose of this Section, the term "DEFAULT" means
any event which is, or after notice or lapse of time or both would become, a
Debenture Event of Default.
SECTION 6.3 CERTAIN RIGHTS OF TRUSTEE. Subject to the provisions of
Section 6.1:
(a) the Trustee may conclusively rely and shall be fully protected in
acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request,
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direction, consent, order, bond, debenture, Debenture or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
conclusively rely upon an Officers' Certificate and an Opinion of Counsel;
(d) the Trustee may consult with counsel and the advice of such counsel
or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;
(f) the Trustee is not required to expend or risk its own funds or
otherwise incur personal financial liability in the performance of its duties if
the Trustee reasonably believes that repayment or adequate indemnity is not
reasonably assured to it;
(g) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, indenture,
Debenture or other paper or document, but the Trustee in its discretion may make
such inquiry or investigation into such facts or matters as it may see fit, and,
if the Trustee shall determine to make such inquiry or investigation, it shall
be entitled to examine the books, records and premises of the Company,
personally or by agent or attorney;
(h) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents, attorneys,
custodians or nominees and the Trustee shall not be responsible for any
misconduct or negligence on any part of any agent, custodian, nominee or
attorney appointed with due care by it hereunder; and
(i) in the event that the Trustee is also acting as a Paying Agent,
Authenticating Agent, Conversion Agent, and/or Securities Registrar hereunder,
the rights and protections afforded to the Trustee pursuant to this Article 6
shall also be afforded to such Paying Agent, Authenticating Agent, Conversion
Agent, and/or Securities Registrar.
SECTION 6.4 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF DEBENTURES. The
recitals contained herein and in the Debentures, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company,
and the Trustee assumes no responsibility for their correctness. The Trustee
makes no representations as to the validity or sufficiency of this Indenture or
of
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the Debentures. The Trustee shall not be accountable for the use or application
by the Company of the Debentures or the proceeds thereof.
SECTION 6.5 MAY HOLD DEBENTURES. The Trustee, any Paying Agent,
Securities Registrar or any other agent of the Company, in its individual or any
other capacity, may become the owner or pledgee of Debentures and, subject to
Sections 6.8 and 6.13, may otherwise deal with the Company with the same rights
it would have if it were not Trustee, Paying Agent, Securities Registrar or such
other agent.
SECTION 6.6 MONEY HELD IN TRUST. Money held by the Trustee in trust
hereunder need not be segregated from other funds except to the extent required
by law. The Trustee shall be under no liability of interest on any money
received by it hereunder except as otherwise agreed with the Company.
SECTION 6.7 COMPENSATION AND REIMBURSEMENT. The Company agrees:
(a) to pay to the Trustee from time to time reasonable compensation for
all services rendered by it hereunder in such amounts as the Company and the
Trustee shall agree from time to time (which compensation shall not be limited
by any provision of law in regard to the compensation of a trustee of an express
trust);
(b) to reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the reasonable
compensation and the expenses and disbursements of its agents and counsel); and
(c) to indemnify the Trustee and its officers, directors and employees
for, and to hold it harmless against, any loss, liability or expense (including
the reasonable compensation and the expenses and disbursements of its agents and
counsel) incurred without negligence or bad faith, arising out of or in
connection with the acceptance or administration of this trust or the
performance of its duties hereunder, including the costs and expenses of
defending itself against any claim or liability in connection with the exercise
or performance of any of its powers or duties hereunder. This Indemnification
shall survive the termination of this Agreement or the earlier resignation or
removal of the Trustee.
To secure the Company's payment obligations in this Section, the
Company and the Holders agree that the Trustee shall have a lien prior to the
Debentures on all money or property held or collected by the Trustee except
assets held in trust to pay principal and premium, if any, or interest on
particular Debentures pursuant to Section 4.1(a)(ii)(B), or pursuant to any
redemption pursuant to Article 11 hereof if monies have been deposited for such
redemption and notice has been given and the Redemption Date has passed. Such
lien shall survive the satisfaction and discharge of this Indenture or the
earlier resignation or removal of the Trustee.
When the Trustee incurs expenses or renders services after a Debenture
Event of Default specified in Section 5.1(e) or (f) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Reform Act of 1978 or a successor statute.
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SECTION 6.8 DISQUALIFICATION; CONFLICTING INTERESTS. The Trustee shall
be subject to the provisions of Section 310(b) of the Trust Indenture Act.
Nothing herein shall prevent the Trustee from filing with the Commission the
application referred to in the second to last paragraph of Section 310(b) of the
Trustee Indenture Act. The Trust Agreement and the Guarantee shall be deemed to
be specifically described in this Indenture for the purposes of clause (i) of
the first proviso contained in Section 310(b) of the Trust Indenture Act.
SECTION 6.9 CORPORATE TRUSTEE REQUIRED; ELIGIBILITY. There shall at all
times be a Trustee hereunder which shall be:
(a) a corporation organized and doing business under the laws of the
United States of America or of any State, Territory or the District of Columbia,
authorized under such laws to exercise corporate trust powers and subject to
supervision or examination by Federal, State, Territorial or District of
Columbia authority, or
(b) a corporation or other Person organized and doing business under
the laws of a foreign government that is permitted to act as Trustee pursuant to
a rule, regulation or order of the Commission, authorized under such laws to
exercise corporate trust powers, and subject to supervision or examination by
authority of such foreign government or a political subdivision thereof
substantially equivalent to supervision or examination applicable to United
States institutional trustees,
in either case having a combined capital and surplus of at least $50,000,000,
subject to supervision or examination by Federal or State authority. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then,
to the purposes of this Section, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect hereinafter specified
in this Article. Neither the Company nor any Person directly or indirectly
controlling, controlled by or under common control with the Company shall serve
as Trustee hereunder.
SECTION 6.10 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 6.11.
(b) The Trustee may resign at any time by giving written notice thereof
to the Company. If an instrument of acceptance by a successor Trustee shall not
have been delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of a
majority in principal amount of the Outstanding Debentures, delivered to the
Trustee and to the Company.
(d) If at any time:
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(i) the Trustee shall fail to comply with Section 6.8 after
written request therefor by the Company or by any Holder who has been a
bona fide Holder of a Debenture for at least six months, or
(ii) the Trustee shall cease to be eligible under Section 6.9
and shall fail to resign after written request therefor by the Company
or by any such Holder, or
(iii) the Trustee shall become incapable of acting or shall be
adjudged as bankrupt or insolvent or a receiver of the Trustee or of
its property shall be appointed or any public officer shall take charge
or control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation, then, in any such case,
(A) the Company by Board Resolution may remove the Trustee, or (B)
subject to Section 5.14, any Holder who has been a bona fide Holder of
a Debenture for at least six months may, on behalf of himself and all
other similarly situated Holders, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause with
respect to the Debentures, the Company, by a Board Resolution, shall promptly
appoint a successor Trustee. If, within one year after such resignation, removal
or incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Debentures shall be appointed by Act of the Holders of a majority
in principal amount of the Outstanding Debentures delivered to the Company and
the retiring Trustee, the successor Trustee so appointed shall, forthwith upon
its acceptance of such appointment, become the successor Trustee and supersede
the successor Trustee appointed by the Company. If no successor Trustee shall
have been so appointed by the Company or the Holders and accepted appointment in
the manner hereinafter provided, any Holder who has been a bona fide Holder of a
Debenture for at least six months may, subject to Section 5.14, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each removal
of the Trustee and each appointment of a successor Trustee by mailing written
notice of such event by first-class mail, postage prepaid, to the Holders of the
Debentures as their name and addresses appear in the Securities Register. Each
notice shall include the name of the successor Trustee and the address of its
Corporate Trust Office.
SECTION 6.11 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(a) In case of the appointment hereunder of a successor Trustee, every
such successor Trustee so appointed shall execute, acknowledge and deliver to
the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee, but, on the written request of the Company or
the Successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor, Trustee all
the rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder.
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(b) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all rights, power and trusts referred to in
paragraph (a) of this Section.
(c) No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and eligible
under this Article.
SECTION 6.12 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS. Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
PROVIDED such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Debentures shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Debentures so authenticated, and in case any
Debentures shall not have been authenticated, any successor to the Trustee may
authenticate such Debentures either in the name of any predecessor Trustee or in
the name of such successor Trustee, and in all cases the certificate of
authentication shall have the full force which it is provided anywhere in the
Debentures or in this Indenture that the certificate of the Trustee shall have.
SECTION 6.13 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. If and
when the Trustee shall be or become a creditor of the Company (or any other
obligor upon the Debentures), the Trustee shall be subject to the provisions of
the Trust Indenture Act regarding the collection of claims against the Company
(or any such other obligor).
SECTION 6.14 APPOINTMENT OF AUTHENTICATING AGENT. The Trustee may
appoint an Authenticating Agent or Agents, as described and with the powers and
obligations conferred by this Section 6.14 ("AUTHENTICATING AGENT OR AGENTS"),
with respect to the Debentures which shall be authorized to act on behalf of the
Trustee to authenticate the Debentures issued upon exchange, registration of
transfer or partial redemption thereof, and Debentures so authenticated shall be
entitled to the benefits of this Indenture and shall be valid and obligatory for
all purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Debentures by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be a corporation organized and doing business
under the laws of the United States of America, or of any State, Territory or
the District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $50,000,000 and
subject to supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time an
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.
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Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to all or substantially all of
the corporate trust business of an Authenticating Agent shall be the successor
Authenticating Agent hereunder, PROVIDED such corporation shall be otherwise
eligible under this Section, without the execution or filing of any paper or any
further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall give notice of such
appointment in the manner provided in Section 1.6 to all Holders of the
Debentures. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers and duties
of its predecessor hereunder, with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be appointed
unless eligible under the provision of this Section.
The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 6.7.
If an appointment is made pursuant to this Section, the Debentures may
have endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternative certificate of authentication in the following
form:
This is one of the Debentures referred to in the within mentioned
indenture.
________________________________
________________________________
As Trustee
By:_____________________________
As Authenticating Agent
By:_____________________________
Authorized Officer
ARTICLE 7 HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 7.1 COMPANY TO FURNISH NAMES AND ADDRESSES OF HOLDERS. The
Company will furnish or cause to be furnished to the Trustee (unless the Trustee
is acting as the Securities Registrar):
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(a) quarterly at least five Business Days before each Interest Payment
Date, a list, in such form as the Trustee may reasonably require, of the names
and addresses of the Holders as of each such date; and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished.
SECTION 7.2 PRESERVATION OF INFORMATION: COMMUNICATIONS TO HOLDERS.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 7.1 and the names and
addresses of Holders received by the Trustee in its capacity as Securities
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 7.1 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Debentures, and the
corresponding rights and privileges of the Trustee, shall be as provided in the
Trust Indenture Act.
(c) Every Holder of Debentures, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any agent of either of them shall be held accountable by reason of the
disclosure of information as to the names and addresses of the Holders made
pursuant to the Trust Indenture Act.
SECTION 7.3 REPORTS BY TRUSTEE.
(a) The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act, at the times and in the manner provided pursuant thereto.
(b) Reports so required to be transmitted at stated intervals of not
more than 12 months shall be transmitted within 60 days after ___________ in
each calendar year, commencing with ___________, _____.
(c) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Trustee with each stock exchange or self regulatory
organization of which the Trustee has received notice by the Company upon which
the Debentures are listed and also with the Commission. The Company will notify
the Trustee in writing whenever the Debentures are listed on any stock exchange
or self-regulatory organization.
SECTION 7.4 REPORTS BY COMPANY. The Company shall file with the Trustee
and with the Commission, and transmit to Holders, such information, documents
and other reports, and such summaries thereof, as may be required pursuant to
the Trust Indenture Act at the times and in the manner provided in the Trust
Indenture Act, PROVIDED that any such information, documents or reports required
to be filed with the Commission pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 shall be filed with the Trustee within 15 days
after the same is required to be filed
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with the Commission. Notwithstanding that the Company may not be required to
remain subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Company shall continue to file with the
Commission and provide the Trustee and Holders with the annual reports and the
information, documents and other reports which are specified in Sections 13 and
15(d) of the Securities Exchange Act of 1934. The Company also shall comply with
the other provisions of Trust Indenture Act Section 314(a).
ARTICLE 8 CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 8.1 COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS. The
Company shall not consolidate with or merge into any other Person or convey,
transfer or lease its properties and assets substantially as an entirety to any
Person, and no Person shall consolidate with or merge into the Company or
convey, transfer or lease its properties and assets substantially as an entirety
to the Company, unless:
(a) in case the Company shall consolidate with or merge into another
Person or convey, transfer or lease its properties and assets substantially as
an entirety to any Person, the Person formed by such consolidation or into which
the Company is merged or the Person which acquires by conveyance or transfer, or
which leases, the properties and assets of the Company substantially as an
entirety shall be a Person organized and existing under the laws of the United
States of America or any State or the District of Columbia, and shall expressly
assume, by an indenture supplemental hereto, executed and delivered to the
Trustee, in form satisfactory to the Trustee, the due and punctual payment of
the principal of (and premium, if any) and interest (including any Additional
Interest) on all the Debentures and the performance of every covenant of this
Indenture on the part of the Company to be performed or observed and shall have
provided for conversion rights in accordance with Article 13;
(b) immediately after giving effect to such transaction, no Debenture
Event of Default, and no event which, after notice or lapse of time, or both,
would become a Debenture Event of Default, shall have happened and be
continuing;
(c) such consolidation, merger, conveyance, transfer or lease is
permitted under the Trust Agreement and Guarantee and does not give rise to any
breach or violation of the Trust Agreement or Guarantee; and
(d) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel each stating that such consolidation, merger,
conveyance, transfer or lease and any such supplemental indenture complies with
this Article and that all conditions precedent herein provided for relating to
such transaction have been complied with, and the Trustee, subject to Section
6.1, may rely upon such Officers' Certificate and Opinion of Counsel as
conclusive evidence that such transaction complies with this Section 8.1.
SECTION 8.2 SUCCESSOR CORPORATION SUBSTITUTED. Upon any consolidation
or merger by the Company with or into any other corporation, or any conveyance,
transfer or lease by the Company of its properties and assets substantially as
an entirety to any Person in accordance with Section 8.1, the successor
corporation formed by such consolidation or into which the Company is merged or
to which such conveyance, transfer or lease is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if
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such successor corporation had been named as the Company herein; and in the
event of any such conveyance, transfer or lease the Company shall be discharged
from all obligations and covenants under the Indenture and the Debentures and
may be dissolved and liquidated.
Such successor corporation may cause to be signed, and may issue either
in its own name or in the name of the Company, any or all of the Debentures
issuable hereunder which theretofore shall not have been signed by the Company
and delivered to the Trustee, and, upon the Company Order of such successor
corporation instead of the Company and subject to all the terms, conditions and
limitations in this Indenture prescribed, the Trustee shall authenticate and
shall deliver any Debentures which previously shall have been signed and
delivered by the officers of the Company to the Trustee for authentication
pursuant to a Company Order such provisions and any Debentures which such
successor corporation thereafter shall cause to be signed and delivered to the
Trustee on its behalf for the purpose pursuant to such provisions. All the
Debentures so issued shall in all respects have the same legal rank and benefit
under this Indenture as the Debentures theretofore or thereafter issued in
accordance with the terms of this Indenture as though all of such Debentures had
been issued at the date of the execution hereof.
In case of any such consolidation, merger, sale, conveyance or lease,
such changes in phraseology and form may be made in the Debentures thereafter to
be issued as may be appropriate.
ARTICLE 9 SUPPLEMENTAL INDENTURES
SECTION 9.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS. Without
the consent of or notice to any Holder, the Company, when authorized by a Board
Resolution, and the Trustee, at any time and from time to time, may enter into
one or more indentures supplemental hereto, in form satisfactory to the Trustee,
for any of the following purposes:
(a) to evidence the succession of another Person to the Company, and
the assumption by any such successor of the covenants of the Company herein and
in the Debentures contained;
(b) to convey, transfer, assign, mortgage or pledge any property to or
with the Trustee or to surrender any right or power herein conferred upon the
Company;
(c) to add to covenants of the Company for the benefit of the Holders
of the Debentures or to surrender any right or power herein conferred upon the
Company;
(d) to make provision with respect to the conversion rights of Holders
pursuant to the requirements of Article 13;
(e) to add any additional Debenture Events of Default;
(f) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to make any
other provisions with respect to matters or questions arising under this
Indenture, PROVIDED that such action pursuant to this clause shall not
materially adversely affect the interest of the Holders of Debentures and for so
long as any of the Preferred Securities shall remain outstanding, the holders of
such Preferred Securities;
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<PAGE> 54
(g) to evidence and provide for the acceptance of appointment hereunder
by successor Trustee and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the administration
of the Trust hereunder by more than one Trustee, pursuant to the requirements of
Section 6.11(b);
(h) to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust Indenture
Act; or
(i) to make provision for transfer procedures, certification,
book-entry provisions, the form of restricted securities legends, if any, to be
placed on Debentures, and all other matters required pursuant to Section 3.5 or
otherwise necessary, desirable or appropriate in connection with the issuance of
Debentures to holders of Preferred Securities in the event of a distribution of
Debentures by the Trust if a Special Event occurs and is continuing.
SECTION 9.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS. With the
consent of the Holders of not less than a majority in principal amount of the
Outstanding Debentures, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board Resolution, and the Trustee may
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders of the Debentures under this Indenture; PROVIDED, HOWEVER, that no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Debenture affected thereby,
(a) except to the extent permitted by Section 3.11 with respect to the
extension of the interest payment period of the Debentures, change the Stated
Maturity of the principal of, or any installment of interest (including any
Additional Interest) on, the Debentures, or reduce the principal amount thereof
or the rate of interest thereon or reduce any premium payable upon the
redemption thereof, or change the place of payment where, or the coin or
currency in which, any Debenture or interest thereon is payable, or impair the
right to institute suit for the enforcement of any such payment on or after the
Maturity thereof (or, in the case of redemption, on or after the date fixed for
redemption thereof);
(b) adversely affect any right to convert or exchange any Debenture or
modify the provisions of this Indenture with respect to the subordination of the
Debentures in a manner adverse to such Holder;
(c) reduce the percentage in principal amount of the Outstanding
Debentures, the consent of whose Holders is required for any such supplemental
indenture, or the consent of whose Holders is required for any waiver (of
compliance with certain provisions of this Indenture or certain defaults
hereunder and their consequences) provided for in this Indenture;
(d) modify any of the provisions of this Section, Section 4.1, Section
5.8, Section 5.13 or Section 10.6, except to increase any such percentage or to
provide that certain other provisions of this Indenture cannot be modified or
waived without the consent of the Holder of each Debenture affected thereby, or
the consent of the holders of all the Preferred Securities as the case may be;
or
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(e) modify the provisions in Article 12 of this Indenture with respect
to the subordination of Outstanding Debentures in a manner adverse to the
Holders thereof;
PROVIDED that, so long as any Preferred Securities remain outstanding (i) no
such modification may be made that adversely affects the holders of such
Preferred Securities in any material respect, no termination of this Indenture
shall occur, and no waiver of any Debenture Event of Default or compliance with
any covenant under this Indenture shall be effective, without the prior consent
of the holders of at least a majority of the aggregate liquidation amount of
such Preferred Securities then outstanding unless and until the principal (and
premium, if any) of the Debentures and all accrued and unpaid interest
(including any Additional Interest) thereon have been paid in full and (ii)
where a consent under this Indenture would require the consent of each Holder of
Debentures, no such consent will be given by the Property Trustee without the
prior consent of each holder of the Preferred Securities.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 9.3 EXECUTION OF SUPPLEMENTAL INDENTURES. In executing or
accepting the additional trusts created by any supplemental indenture permitted
by this Article or the modifications thereby of the trust created by this
Indenture, the Trustee shall be entitled to receive, and (subject to Section
6.1) shall be fully protected in conclusively relying upon, an Officers'
Certificate and an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture, and that
all conditions precedent have been complied with. The Trustee may, but shall not
be obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
SECTION 9.4 EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution of
any supplemental indenture under this Article, this Indenture shall be modified
in accordance therewith, and such supplemental indenture shall form a part of
this Indenture for all purposes, and every Holder of the Debentures theretofore
or thereafter authenticated and delivered hereunder shall be bound thereby.
SECTION 9.5 CONFORMITY WITH TRUST INDENTURE ACT. Every supplemental
indenture executed pursuant to this Article shall conform to the requirements of
the Trust Indenture Act as then in effect.
SECTION 9.6 REFERENCE IN DEBENTURES TO SUPPLEMENTAL INDENTURES.
Debentures authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article may, and shall if required by the Trustee,
bear a notation in form approved by the Trustee as to any matter provided for in
such supplemental indenture. If the Company shall so determine, new Debentures
so modified as to conform, in the opinion of the Trustee and the Board of
Directors, to any such supplemental indenture may be prepared and executed by
the Company and authenticated and delivered by the Trustee in exchange for
Outstanding Debentures presented to the Trustee.
ARTICLE 10 COVENANTS
SECTION 10.1 PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The Company
covenants and agrees for the benefit of the Debentures that it will duly and
punctually pay the principal
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of (and premium, if any) and interest on the Debentures in accordance with the
terms of the Debentures and this Indenture.
SECTION 10.2 MAINTENANCE OF OFFICE OR AGENCY. The Company will maintain
in the United States, an office or agency where Debentures may be presented or
surrendered for payment and an office or agency where Debentures may be
surrendered for transfer or exchange and where notices and demands to or upon
the Company in respect of the Debentures and this Indenture may be served. The
Company initially appoints the Trustee, acting through its Corporate Trust
Office, as its agent for said purposes. The Company will give prompt written
notice to the Trustee of any change in the location of any such office or
agency. If at any time the Company shall fail to maintain such office or agency
or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and the Company hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices and
demands.
The Company may also from time to time designate one or more other
offices or agencies where the Debentures may be presented or surrendered for any
or all of such purposes, and may from time to time rescind such designations;
PROVIDED, HOWEVER, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
United States for such purposes. The Company will give prompt written notice to
the Trustee of any such designation and any change in the location of any such
office or agency.
SECTION 10.3 MONEY FOR DEBENTURE PAYMENTS TO BE HELD IN TRUST. If the
Company shall at any time act as its own Paying Agent with respect to the
Debentures, it will, on or before each due date of the principal of (or premium,
if any) or interest on any of the Debentures, segregate and hold in trust for
the benefit of the Persons entitled thereto a sum sufficient to pay the
principal (or premium, if any) or interest so becoming due until such sums shall
be paid to such Persons or otherwise disposed of as herein provided, and will
promptly notify the Trustee of its failure so to act. Whenever the Company shall
have one or more Paying Agents, it will, on or before each due date of the
principal of or interest on the Debentures, deposit with a Paying Agent a sum
sufficient to pay the principal (or premium, if any) or interest so becoming
due, such sum to be held in trust for the benefit of the Persons entitled to
such principal and premium (if any) or interest, and (unless such Paying Agent
is the Trustee) the Company will promptly notify the Trustee of its failure so
to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
(a) hold all sums held by it for the payment of the principal of (or
premium, if any) or interest on Debentures in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(b) give the Trustee notice of any default by the Company (or any other
obligor upon the Debentures) in the making of any payment of principal (or
premium, if any) or interest;
(c) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held in
trust by such Paying Agent; and
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(d) comply with the provisions of the Trust Indenture Act applicable to
it as a Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent, and, upon such payment by the Company or any Paying Agent to
the Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of (or premium, if
any) or interest on any Debenture and remaining unclaimed for two years after
such principal (or premium, if any) or interest has become due and payable shall
(unless otherwise required by mandatory provision of applicable escheat or
abandoned or unclaimed property law) be paid on Company Request, after all
payments owing the Trustee have been paid, to the Company, or (if then held by
the Company) shall (unless otherwise required by mandatory provision of
applicable escheat or abandoned or unclaimed property law) be discharged from
such trust; and the Holder of such Debenture shall thereafter, as an unsecured
general creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease.
SECTION 10.4 PAYMENT OF TAXES AND OTHER CLAIMS. The Company will pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent, (a) all taxes, assessments and governmental charges levied or
imposed upon the Company or any Subsidiary or upon the income, profits or
property of the Company or any Subsidiary, and (b) all lawful claims for labor,
materials and supplies which, if unpaid, might by law become a lien upon the
property of the Company or any Subsidiary; PROVIDED, HOWEVER, that the Company
shall not be required to pay or discharge or cause to be paid or discharged any
such tax, assessment, charge or claim whose amount, applicability or validity is
being contested in good faith by appropriate proceedings.
SECTION 10.5 STATEMENT AS TO COMPLIANCE. The Company shall deliver to
the Trustee, within 120 days after the end of each calendar year of the Company
an Officers' Certificate (signed by at least one of the officers referred to in
Section 314(a)(4) of the Trust Indenture Act) covering the preceding calendar
year, stating whether or not to the best knowledge of the signers thereof the
Company is in default in the performance, observance or fulfillment of or
compliance with any of the terms, provisions, covenants and conditions of this
Indenture, and if the Company shall be in default, specifying all such defaults
and the nature and status thereof of which they may have knowledge. For the
purpose of this Section 10.5, compliance shall be determined without regard to
any grace period or requirement of notice provided pursuant to the terms of this
Indenture.
SECTION 10.6 WAIVER OF CERTAIN COVENANTS. The Company may omit in any
particular instance to comply with any covenant or condition set forth in this
Article 10, if before or after the time for such compliance the Holders of at
least a majority in principal amount of the Outstanding Debentures, by Act of
such Holders, either waive such compliance in such instance or generally waive
compliance with such covenant or condition, but no such waiver shall extend to
or affect such covenant or condition except to the extent so expressly waived,
and, until such waiver shall become effective, the obligations of the Company in
respect of any such covenant or condition shall remain in full force and effect.
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SECTION 10.7 ADDITIONAL SUMS. In the event that (a) the Property
Trustee is the Holder of all of the Outstanding Debentures, (b) a Tax Event in
respect of the Trust shall have occurred and be continuing and (c) the Company
shall not have (i) redeemed the Debentures pursuant to Section 11.7 or 11.8 or
(ii) dissolved the Trust pursuant to Section 9.2(b) of the Trust Agreement, the
Company shall pay to the Trust (and its permitted successors or assigns under
the Trust Agreement) for so long as the Trust (or its permitted successor or
assignee) is the registered Holder of the Debentures, such additional amounts as
may be necessary in order that the amount of distributions (including any
Additional Amounts (as defined in the Trust Agreement)) then due and payable by
the Trust on the Preferred Securities and Common Securities that at any time
remain outstanding in accord with the terms thereof shall not be reduced as a
result of any Additional Taxes (the "ADDITIONAL SUMS"). Whenever in this
Indenture or the Debentures there is a reference in any context to the payment
of principal of (or premium, if any) or interest on the Debentures, such mention
shall be deemed to include mention of the payments of the Additional Sums
provided for in this paragraph to the extent that, in such context, Additional
Sums are, were or would be payable in respect thereof pursuant to the provisions
of this paragraph and express mention of the payment of Additional Sums (if
applicable) in any provisions hereof shall not be construed as excluding
Additional Sums in those provisions hereof where such express mention is not
made, PROVIDED, however, that the extension of an interest payment period
pursuant to Section 3.11 or the Debentures shall not extend the payment of any
Additional Sums that may be due and payable during such interest payment period.
SECTION 10.8 ADDITIONAL COVENANTS. The Company covenants and agrees
with each Holder of Debentures that so long as the Debentures are outstanding,
if (i) there shall have occurred any event of which the Company has actual
knowledge that (A) with the giving of notice or the lapse of time or both, would
constitute a Debenture Event of Default hereunder and (B) in respect of which
the Company shall not have taken reasonable steps to cure, (ii) the Company
shall be in default with respect to its payment of any obligations under the
Guarantee or (iii) the Company shall have given notice of its selection of an
Extension Period as provided herein and shall not have rescinded such notice, or
such period, or any extension thereof, shall be continuing, then the Company
shall not, and shall cause any Subsidiary not to, (x) declare or pay any
dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any shares of the Company's capital stock
or (y) make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities (including guarantees of indebtedness
for money borrowed) of the Company that rank PARI PASSU with or junior to the
Debentures (other than (1) any dividend, redemption, liquidation, interest,
principal or guarantee payment by the Company where the payment is made by way
of securities (including capital stock) that rank PARI PASSU with or junior to
the securities on which such dividend, redemption, interest, principal or
guarantee payment is being made, (2) redemptions or purchases of any rights
pursuant to a stockholder rights agreement and the declaration of a dividend of
such rights or the issuance of preferred stock under such plans in the future,
(3) payments under the Guarantee, (4) purchases of Common Stock related to the
issuance of Common Stock under any of the Company's benefit plans for its
directors, officers or employees, (5) as a result of a reclassification of the
Company's capital stock or the exchange or conversion of one series or class of
the Company's capital stock for another series or class of the Company's capital
stock and (6) the purchase of fractional interests in shares of the Company's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged).
The Company also covenants with each Holder of the Debentures (i) that
for so long as Preferred Securities are outstanding not to convert the
Debentures except pursuant to a notice of conversion
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delivered to the Conversion Agent by a holder of Preferred Securities and (ii)
to maintain directly or indirectly 100% ownership of the Common Securities of
the Trust; PROVIDED, HOWEVER, that any permitted successor of the Company
hereunder may succeed to the Company's ownership of such Common Securities,
(iii) not to voluntarily terminate, wind-up, liquidate or dissolve the Trust,
except (a) in connection with a distribution of the Debentures to the holders of
Preferred Securities in dissolution of the Trust or (b) in connection with
certain mergers, consolidations or amalgamations permitted by the Trust
Agreement and (iv) to use its reasonable efforts, consistent with the terms and
provisions of the Trust Agreement to cause the Trust to remain a business trust
and not to be classified as an association taxable as a corporation or a
partnership for United States Federal income tax purposes.
SECTION 10.9 PAYMENT OF EXPENSES OF THE TRUST. In connection with the
offering, sale and issuance of the Debentures to the Property Trustee and in
connection with the sale of the Preferred Securities by the Trust, the Company
shall:
(a) pay for all costs, fees and expenses relating to the offering, sale
and issuance of the Securities (as defined in the Purchase Agreement), including
commissions, discounts and expenses payable pursuant to the Purchase Agreement
and compensation of the Trustee under the Indenture in accordance with the
provisions of Section 6.7 of the Indenture;
(b) be responsible for and pay for all debts and obligations (other
than with respect to the Preferred Securities) of the Trust, pay for all costs
and expenses of the Trust (including, but not limited to, costs and expenses
relating to the organization of the Trust, the offering, sale and issuance of
the Preferred Securities (including commissions, discounts and expenses in
connection therewith), the fees and expenses of the Property Trustee and the
Delaware Trustee, the costs and expenses relating to the operation of the Trust,
including without limitation, costs and expenses of accountants, attorneys,
statistical or bookkeeping services, expenses for printing and engraving and
computing or accounting equipment, paying agent(s), registrar(s), transfer
agent(s), duplicating, travel and telephone and other telecommunications
expenses and costs and expenses incurred in connection with the acquisition,
financing, and disposition of Trust assets); and
(c) pay any and all taxes (other than United States withholding taxes
attributable to the Trust or its assets) and all liabilities, costs and expenses
with respect to such taxes of the Trust.
ARTICLE 11 REDEMPTION OR EXCHANGE OF DEBENTURES
SECTION 11.1 ELECTION TO REDEEM; NOTICE TO TRUSTEE. The election of the
Company to redeem any Debentures shall be evidenced by or pursuant to a Board
Resolution. In case of any redemption at the election of the Company, the
Company shall, not less than 45 days prior to the date fixed for redemption
(unless a shorter notice shall be satisfactory to the Trustee), notify the
Trustee in writing of such date and of the principal amount of Debentures to be
redeemed.
SECTION 11.2 SELECTION OF DEBENTURES TO BE REDEEMED. If less than all
the Debentures are to be redeemed, the particular Debentures to be redeemed
shall be selected not more than 45 days prior to the Redemption Date by the
Trustee from the Outstanding Debentures not previously called for redemption, by
lot or by such other method as the Trustee shall deem fair and appropriate and
which may provide for the selection for redemption of a portion of the principal
amount of the Debentures Outstanding, PROVIDED that the unredeemed portion of
the principal amount of the
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Debentures be in an authorized denomination (which shall not be less than the
minimum authorized denomination) for the Debentures.
The Trustee shall promptly notify the Company in writing of the
Debentures selected for partial redemption and the principal amount thereof to
be redeemed. For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Debentures shall relate,
in the case of any Debenture redeemed or to be redeemed only in part, to the
portion of the principal amount of such Debenture which has been or is to be
redeemed. If the Company shall so direct, Debentures registered in the name of
the Company, any Affiliate or any Subsidiary thereof shall not be included in
the Debentures selected for redemption.
SECTION 11.3 NOTICE OF REDEMPTION. Notice of redemption shall be given
by first-class mail, postage prepaid, mailed not later than the thirtieth (30th)
day, and not earlier than the sixtieth (60th) day, prior to the date fixed for
redemption, to each Holder of Debentures to be redeemed, at the address of such
Holder as it appears in the Securities Register.
With respect to Debentures to be redeemed, each notice of redemption
shall state:
(a) the Redemption Date;
(b) the redemption price at which the Debentures are to be redeemed
(the "REDEMPTION PRICE");
(c) if less than all Outstanding Debentures are to be redeemed, the
identification (and, in the case of partial redemption, the respective principal
amounts) of the particular Debentures to be redeemed (including, if relevant,
the CUSIP or ISIN number);
(d) that on the Redemption Date the Redemption Price will become due
and payable upon each such Debenture or portion thereof, and that upon deposit
with the Paying Agent interest thereon, if any, shall cease to accrue on and
after the Redemption Date;
(e) the place or places where the Debentures are to be surrendered for
payment of the redemption price at which the Debentures are to be redeemed;
(f) that a Holder of Debentures who desires to convert Debentures
called for redemption must satisfy the requirements for conversion contained in
the Debentures, the then existing Conversion Price, and the date and time when
the option to convert shall expire; and
(g) the record date for the determination of holders entitled to
receive payment of the Redemption Price, as provided in Section 11.5.
Notice of redemption of Debentures to be redeemed at the election of
the Company shall be given by the Company or, at the Company's written request,
by the Trustee in the name and at the expense of the Company and shall be
irrevocable. The notice if mailed in the manner herein provided shall be
conclusively presumed to have been duly given, whether or not the Holder
receives such notice. In any case, a failure to give such notice by mail or any
defect in the notice to the Holder of any
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Debenture designated for redemption as a whole or in part shall not affect the
validity of the proceedings for the redemption of any other Debenture.
SECTION 11.4 DEPOSIT OF REDEMPTION PRICE. Prior to 12:00 noon, New York
time, on the Redemption Date specified in the notice of redemption given as
provided in Section 11.3, the Company will deposit with the Trustee or with one
or more Paying Agents (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust as provided in Section 4.2) an amount of money
sufficient to redeem on the Redemption Date all the Debentures so called for
redemption at the applicable Redemption Price.
If any Debenture called for redemption has been converted, any money
deposited with the Trustee or with any Paying Agent or so segregated and held in
trust for the redemption of such Debenture shall (subject to any right of the
Holder of such Debenture or any Predecessor Debenture to receive interest as
provided in the last paragraph of Section 3.7) be paid to the Company upon
Company Request or, if then held by the Company, shall be discharged from such
trust.
SECTION 11.5 DEBENTURES PAYABLE ON REDEMPTION DATE. If notice of
redemption has been given as provided in Section 11.3, the Debentures so to be
redeemed shall, on the Redemption Date, become due and payable at the Redemption
Price therein specified, including any accrued interest (and any Additional
Interest) thereon, and from and after such date (unless the Company shall
default in the payment of the Redemption Price or any accrued interest on
(including any Additional Interest)) such Debentures shall cease to bear
interest. Upon surrender of any such Debenture for redemption in accordance with
said notice, such Debenture shall be paid by the Company at the Redemption
Price, including any accrued interest (and any Additional Interest) to the
Redemption Date, PROVIDED, HOWEVER, that installments of interest on Debentures
whose Stated Maturity is on or prior to the Redemption Date shall be payable to
the Holders of such Debentures, or one of more Predecessor Debentures,
registered as such at the close of business on the relevant Regular Record Dates
or Special Record Dates, as the case may be, according to their terms and the
provisions of Section 3.7. In the event that any date on which any Redemption
Price is payable is not a Business Day, then payment of the Redemption Price
payable on such date will be made on the next succeeding day which is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, with the same
force and effect as if made on such date. Payment of the Redemption Price shall
be made to the Holders of such Debentures as they appear on the Securities
Register for the Debentures on the relevant record date, which shall be the date
which is the fifteenth (15th) day (whether or not a Business Day) preceding such
Redemption Date.
If any Debenture called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and any premium shall, until
paid, bear interest from the Redemption Date at the rate prescribed therefor in
the Debenture.
SECTION 11.6 DEBENTURES REDEEMED IN PART. In the event of any
redemption in part, the Company shall not be required to (i) issue, register the
transfer of or exchange any Debenture during a period beginning at 9:00 a.m.
(New York time) 15 Business Days before any selection for redemption of
Debentures and ending at 5:00 p.m. (New York time) on the earliest date in which
the relevant notice of redemption is deemed to have been given to all Holders of
Debentures to be so
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redeemed and (ii) register the transfer of or exchange any Debentures so
selected for redemption, in whole or in part, except for the unredeemed portion
of any Debentures being redeemed in part.
Any Debenture which is to be redeemed only in part shall be surrendered
at the place of payment therefor (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder thereof
or his attorney duly authorized in writing), and the Company shall execute, and
the Trustee shall authenticate and make available for delivery to the Holder of
such Debenture without service charge, a new Debenture or Debentures, of any
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Debenture so surrendered. Each Debenture shall be subject to partial
redemption only in the amount of $25 or integral multiples thereof.
The Debentures are not entitled to the benefit of any sinking or like
fund.
SECTION 11.7 MANDATORY REDEMPTION. Upon (i) repayment at maturity or
(ii) as a result of acceleration upon the occurrence and continuation of a
Debenture Event of Default, the Company shall redeem the Outstanding Debentures,
in whole but not in part, at a redemption price equal to 100% of the principal
amount of such Debentures plus any accrued and unpaid interest, including any
Additional Interest, to the date fixed for redemption.
SECTION 11.8 OPTIONAL REDEMPTION. Except as set forth below, on and
after __________ __, 2002, and subject to the next succeeding sentence, the
Company shall have the right, at any time and from time to time, to redeem the
Debentures, in whole or in part, upon notice given as set forth in Section 11.3
during the twelve month periods beginning on _________ __ in each of the
following years at the indicated Redemption Price (expressed as a percentage of
the principal amount of the Debentures being redeemed), together with any
accrued but unpaid interest on the portion being redeemed:
Redemption Price
Year ((%) of principal amount)
2002
2003
2004
2005
2006
2007
2008
2009 and thereafter 100%
The Company may not redeem the Debentures in part unless all accrued
and unpaid interest has been paid in full on all outstanding Debentures for all
quarterly interest periods terminating on or prior to the giving of notice of
the Redemption Date.
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If a Tax Event shall occur and be continuing, the Company shall have
the right, upon not less than 30 nor more than 60 days' notice, to redeem the
Debentures in whole or in part, for cash upon the later of (i) 90 days following
the occurrence of such Tax Event or (ii) __________ __, ____, at a Redemption
Price equal to the principal amount of such Debentures plus any accrued and
unpaid interest, including Additional Interest, to the date fixed for such
redemption.
The Company also may redeem the Debentures (a "Provisional
Redemption"), in whole or in part, upon notice given as set forth in Section
11.3 at any time on or after ___________, 2001 and prior to ____________, 2002,
at a Redemption Price equal to _____% of the principal amount of the Debentures
being redeemed, plus any accrued and unpaid interest, if the Current Market
Price of the Common Stock shall have exceeded 150% of the Conversion Price then
in effect for at least 20 Trading Days within any period of 30 consecutive
Trading Days ending not more than five Trading Days prior to the date of mailing
of the notice given as set forth in Section 11.3.
SECTION 11.9 EXCHANGE OF TRUST SECURITIES FOR DEBENTURES.
(a) At any time, the Company shall have the right to dissolve the Trust
and cause the Debentures to be distributed to the holders of the Preferred
Securities in dissolution of the Trust after satisfaction of liabilities to
creditors of the Trust as provided by applicable law.
(b) If a Special Event in respect of the Trust shall occur and be
continuing, the Company shall give the Property Trustee notice of the same. If a
Special Event in respect of the Trust shall occur and be continuing, the Trust
Agreement requires the Property Trustee to direct the Conversion Agent (as
defined in the Trust Agreement) to exchange all outstanding Trust Securities for
the Debentures having a principal amount equal to the aggregate liquidation
amount of the Trust Securities to be exchanged with accrued interest in an
amount equal to any unpaid distributions (including any Additional Amounts) on
the Trust Securities PROVIDED that, in the case of a Tax Event that shall have
occurred and be continuing, the Company shall have the right to direct the
Property Trustee that less than all, or none, of the Trust Securities be so
exchanged (i) if and for so long as the Company shall have elected to pay any
Additional Sums such that the amounts received by holders of the Trust
Securities that remain outstanding are not reduced as a result of such Tax
Event, and shall not have revoked any such election or failed to make such
payments or (ii) if the Company shall instead elect to redeem the Debentures, in
whole or in part, in the manner set forth in Section 11.8.
ARTICLE 12 SUBORDINATION OF DEBENTURES
SECTION 12.1 DEBENTURES SUBORDINATE TO SENIOR DEBT. The Company
covenants and agrees, and each Holder of a Debenture, by its acceptance thereof,
likewise covenants and agrees, that, to the extent and in the manner hereinafter
set forth in this Article, the payment of the principal of (and premium, if any)
and interest (including any Additional Interest) on each and all of the
Debentures are hereby expressly made junior and subordinate and subject in right
of payment to the prior payment in full of all amounts then due and payable in
respect of all Senior Debt (whether outstanding on the date hereof or hereafter
created, incurred, assumed or guaranteed), and that the subordination is for the
benefit of the holders of Senior Debt. Notwithstanding the foregoing, any and
all amounts payable to the Trustee pursuant to Section 6.7 are not subject to
the provisions of Article 12.
SECTION 12.2 PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC. Upon any
payment or distribution of assets of the Company to creditors upon any
liquidation, dissolution, winding up, reorganization, assignment for the benefit
of creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceeding in connection with any insolvency or
bankruptcy proceeding of the Company (each such event, if any, herein sometimes
referred to as a "PROCEEDING"), then the holders of Senior Debt shall be
entitled to receive payment in full of principal of (and premium, if any) and
interest (including interest after the commencement of any such proceeding at
the rate specified in the applicable Senior Debt), if any, on such Senior Debt,
or provision shall be made for such payment in cash or cash equivalents or
otherwise in a manner satisfactory to the
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holders of Senior Debt, before the Holders of the Debentures, are entitled to
receive or retain any payment or distribution of any kind or character, whether
in cash, property or Debentures (including any payment or distribution which may
be payable or deliverable by reason of the payment of any other Debt of the
Company (including the Debentures) subordinated to the payment of the
Debentures, but not including any payments that are made from funds on deposit
pursuant to Section 4.1(a)(ii)(B) or funds on deposit for the redemption of
Debentures for which notice of Redemption has been given and the applicable
Redemption Date has passed, such payment or distribution being hereinafter
referred to as a "JUNIOR SUBORDINATED PAYMENT"), in respect of principal of (or
premium, if any) or interest (including any Additional Interest, if any) on the
Debentures or on account of the purchase or other acquisition of Debentures by
the Company or any Subsidiary and to that end the holders of Senior Debt shall
be entitled to receive, for application to the payment thereof any payment or
distribution of any kind of character, whether in cash, property or Debentures,
including any Junior Subordinated Payment, which may be payable or deliverable
in respect of the Debentures in any such Proceeding.
In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or the Holder of any Debenture shall have received any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or Debentures, including any Junior Subordinated
Payment, before all Senior Debt is paid in full or payment thereof is provided
for in cash or cash equivalents or otherwise in a manner satisfactory to the
holders of Senior Debt, and if such fact shall, at or prior to the time of such
payment or distribution, have been made known to the Trustee or, as the case may
be, such Holder, then and in such event such payment or distribution shall be
paid over or delivered forthwith to the trustee in bankruptcy, receiver,
liquidating trustee, custodian, assignee, agent or other Person making payment
or distribution of assets of the Company for application to the payment of all
Senior Debt remaining unpaid, to the extent necessary to pay all Senior Debt in
full, after giving effect to any concurrent payment or distribution to or for
the holders of Senior Debt.
For the purposes of this Article only, the words "any payment or
distribution of any kind or character, whether in cash, property or securities"
shall not be deemed to include shares of stock of the Company, as reorganized or
readjusted, or securities of the Company or any other corporation provided for
by a plan of reorganization or readjustment which securities are subordinated in
right of payment to all then outstanding Senior Debt to substantially the same
extent as the Debentures are so subordinated as provided in this Article. The
consolidation of the Company with, or the merger of the Company into, another
Person or the liquidation or dissolution of the Company following the sale of
all or substantially all of its properties and assets as an entirety to another
Person or the liquidation or dissolution of the Company following the sale of
all or substantially all of its properties and assets as an entirety to another
Person upon the terms and conditions set forth in Article 8 shall not be deemed
a Proceeding for the purposes of this Section, if the Person formed by such
consolidation or into which the Company is merged or the Person which acquires
by sale such properties and assets as an entirety, as the case may be, shall, as
a part of such consolidation, merger, or sale comply with the conditions set
forth in Article 8.
SECTION 12.3 PRIOR PAYMENT TO SENIOR DEBT UPON ACCELERATION OF
DEBENTURES. In the event that the Debentures are declared due and payable before
their Maturity, then and in such event the holders of the Senior Debt
outstanding at the time the Debentures so become due and payable shall be
entitled to receive payment in full of all amounts due on or in respect of such
Senior Debt (including any amounts due upon acceleration), or provision shall be
made for such payment in cash or cash equivalents or otherwise in a manner
satisfactory to the holders of Senior Debt, before the Holders of the Debentures
are entitled to receive any payment or distribution of any kind or character,
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whether in cash, properties or securities (including any Junior Subordinated
Payment) by the Company on account of the principal of (or premium, if any) or
interest (including any Additional Interest) on the Debentures or on account of
the purchase or other acquisition of Debentures by the Company or any
Subsidiary.
In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of the Debentures prohibited by
the foregoing provisions of this Section, and if such fact shall, at or prior to
the time of such payment, have been made known, as set forth in Section 12.10,
to a Responsible Officer of the Trustee or, as the case may be, such Holder,
then and in such event such payment shall be paid over and delivered forthwith
to the Company.
The provisions of this Section shall not apply to any payment with
respect to which Section 12.2 would be applicable.
SECTION 12.4 NO PAYMENT WHEN SENIOR DEBT IN DEFAULT.
(a) In the event and during the continuation of any default in the
payment of principal of (or premium, if any) or interest on any Senior Debt, or
in the event that any event of default with respect to any Senior Debt shall
have occurred and be continuing and shall have resulted in such Senior Debt
becoming or being declared due and payable prior to the date on which it would
otherwise have become due and payable, unless and until such event of default
shall have been cured or waived or shall have ceased to exist and such
acceleration shall have been rescinded or annulled, or (b) in the event any
judicial proceeding shall be pending with respect to any such default in payment
or such event or default, then no payment or distribution of any kind or
character, whether in cash, properties or Debentures (including any Junior
Subordinated Payment) shall be made by the Company on account of principal of
(or premium, if any) or interest (including any Additional Interest), if any, on
the Debentures or on account of the purchase or other acquisition of Debentures
by the Company or any Subsidiary other than payments made from funds on deposit
pursuant to Section 4.1(a)(ii)(B) or from funds on deposit for the redemption of
Debentures for which notice of redemption has been given and the Redemption Date
has passed.
In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of the Debentures prohibited by
the foregoing provisions of this Section, and if such fact shall, at or prior to
the time of such payment, have been made known as set forth in Section 12.10, to
a Responsible Officer of the Trustee or, as the case may be, such Holder, then
and in such event such payment shall be paid over and delivered forthwith to the
Company.
The provisions of this Section shall not apply to any payment with
respect to which Section 12.2 would be applicable.
SECTION 12.5 PAYMENT PERMITTED IF NO DEFAULT. Nothing contained in this
Article or elsewhere in this Indenture or in any of the Debentures shall prevent
(a) the Company, at any time except during the pendency of any Proceeding
referred to in Section 12.2 or under the conditions described in Sections 12.3
and 12.4, from making payments at any time of principal of (or premium, if any)
or interest on the Debentures, or (b) the application by the Trustee of any
money deposited with it hereunder to the payment of or on account of the
principal of (or premium, if any) or interest (including any Additional
Interest) on the Debentures or the retention of such payment by the Holders, if,
at the
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time of such application by the Trustee, a Responsible Officer of the Trustee
did not have actual knowledge that such payment would have been prohibited by
the provisions of this Article.
SECTION 12.6 SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR DEBT. Subject
to the payment in full of all Senior Debt, or the provision for such payment in
cash or cash equivalents or otherwise in a manner satisfactory to the holders of
Senior Debt, the Holders of the Debentures shall be subrogated to the extent of
the payments or distributions made to the holders of such Senior Debt pursuant
to the provisions of this Article (equally and ratably with the holders of all
indebtedness of the Company which by its express terms is subordinated to Senior
Debt of the Company to substantially the same extent as the Debentures are
subordinated to the Senior Debt and is entitled to like rights of subrogation by
reason of any payments or distributions made to holders of such Senior Debt) to
the rights of the holders of such Senior Debt to receive payments and
distributions of cash, property and securities applicable to the Senior Debt
until the principal of (and premium, if any) and interest on the Debentures
shall be paid in full. For purposes of such subrogation, no payments or
distributions to the holders of the Senior Debt of any cash, property or
securities to which the Holders of the Debentures or the Trustee would be
entitled except for the provisions of this Article, and no payments pursuant to
the provisions of this Article to the holders of Senior Debt by Holders of the
Debentures or the Trustee, shall, as among the Company, its creditors other than
holders of Senior Debt, and the Holders of the Debentures, be deemed to be a
payment or distribution by the Company to or on account of the Senior Debt.
SECTION 12.7 PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS. The
provisions of this Article are and are intended solely for the purpose of
defining the relative rights of the Holders of the Debentures on the one hand
and the holders of Senior Debt on the other hand. Nothing contained in this
Article or elsewhere in this Indenture or in the Debentures is intended to or
shall (a) impair, as between the Company and the Holders of the Debentures, the
obligations of the Company, which are absolute and unconditional, to pay to the
Holders of the Debentures the principal of (and premium, if any) and interest
(including any Additional Interest) on the Debentures as and when the same shall
become due and payable in accordance with their terms, or (b) affect the
relative rights against the Company of the Holders of the Debentures and
creditors of the Company other than their rights in relation to the holders of
Senior Debt, or (c) prevent the Trustee or the Holder of any Debenture from
exercising all remedies otherwise permitted by applicable law upon default under
this Indenture including, without limitation, filing and voting claims in any
Proceeding, subject to the rights, if any, under this Article of the holders of
Senior Debt to receive cash, property and securities otherwise payable or
deliverable to the Trustee or such Holder.
SECTION 12.8 TRUSTEE TO EFFECTUATE SUBORDINATION. Each Holder of a
Debenture by his or her acceptance thereof authorizes and directs the Trustee on
his or her behalf to take such action as may be necessary or appropriate to
acknowledge or effectuate the subordination provided in this Article and
appoints the Trustee his or her attorney-in-fact for any and all such purposes.
SECTION 12.9 NO WAIVER OF SUBORDINATION PROVISIONS. No right of any
present or future holder of any Senior Debt to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or by any act or failure to act, in
good faith, by any such holder, or by any noncompliance by the Company with the
terms, provisions and covenants of this Indenture, regardless of any knowledge
thereof that any such holder may have or be otherwise charged with.
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SECTION 12.10 NOTICE TO TRUSTEE. The Company shall give prompt written
notice to the Trustee of any fact known to the Company which would prohibit the
making of any payment to or by the Trustee in respect of the Debentures.
Notwithstanding the provisions of this Article or any other provision of this
Indenture, the Trustee shall not be charged with knowledge of the existence of
any facts which would prohibit the making of any payment to or by the Trustee in
respect of the Debentures, unless and until the Trustee shall have received
written notice thereof from the Company or a person representing itself as a
holder of Senior Debt or from any trustee, agent or representative therefor
(whether or not the facts contained in such notice are true).
SECTION 12.11 RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING
AGENT. Upon any payment or distribution of assets of the Company referred to in
this Article, the Trustee, subject to the provisions of Article 6, and the
Holders of the Debentures shall be entitled to conclusively rely upon any order
or decree entered by any court of competent jurisdiction in which a Proceeding
is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee for the benefit of creditors, agent or other Person
making such payment or distribution, delivered to the Trustee or to the Holders
of Debentures, for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of the Senior Debt and
other indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article.
SECTION 12.12 TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR DEBT. With
respect to the holders of the Senior Debt of the Company, the Trustee undertakes
to perform or observe only such of its obligations and covenants as are set
forth in this Article 12, and no implied covenants or obligations with respect
to the holders of such Senior Debt shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of such Senior Debt and, subject to the provisions of Section 6.3, the
Trustee shall not be liable to the holder of any Senior Debt if it shall pay
over or deliver to Holders, the Company, or any other person, money or assets to
which any holder of such Senior Debt shall be entitled to by virtue of this
Article 12 or otherwise.
SECTION 12.13 RIGHTS OF TRUSTEE AS HOLDER OF SENIOR DEBT; PRESERVATION
OF TRUSTEE'S RIGHTS. The Trustee in its individual capacity shall be entitled to
all the rights set forth in this Article with respect to any Senior Debt which
may at any time be held by it, to the same extent as any other holder of Senior
Debt, and, subject to the requirements of the Trust Indenture Act, nothing in
this Indenture shall deprive the Trustee of any of its rights as such holder.
SECTION 12.14 ARTICLE APPLICABLE TO PAYING AGENTS. In case at any time
any Paying Agent other than the Trustee shall have been appointed by the Company
and be then acting hereunder, the term "TRUSTEE" as used in this Article shall
in such case (unless the context otherwise requires) be construed as extending
to and including such Paying Agent within its meaning as fully for all intent
and purposes as if such Paying Agent were named in this Article in addition to
or in place of the Trustee.
SECTION 12.15 CERTAIN CONVERSIONS OR EXCHANGES DEEMED PAYMENT. For the
purpose of this Article only, (a) the issuance and delivery of junior securities
upon conversion or exchange of Debentures shall not be deemed to constitute a
payment or distribution on account of the principal of (or premium, if any) or
interest (including any Additional Interest) on the Debentures or on account of
the purchase or other acquisition of Debentures, and (b) the payment, issuance
or delivery of
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cash (including any payments for fractional shares), property or securities
(other than junior securities) upon conversion or exchange of a Debenture shall
be deemed to constitute payment on account of the principal of such security.
For the purpose of this Section, the term "JUNIOR SECURITIES" means (i) shares
of any stock of any class of the Company and (ii) securities of the Company
which are subordinated in right of payment to all Senior Debt which may be
outstanding at the time of issuance or delivery of such securities to
substantially the same extent as, or to a greater extent than, the Debentures
are so subordinated as provided in this Article.
ARTICLE 13 CONVERSION OF DEBENTURES
SECTION 13.1 CONVERSION RIGHTS. Subject to and upon compliance with the
provisions of this Article, the Debentures are convertible, at the option of the
Holder, at any time prior to the redemption or maturity, into fully paid and
nonassessable shares of Common Stock at an initial conversion rate of ______
shares of Common Stock for each $25 in aggregate principal amount of Debentures
(equal to a conversion price of approximately $_____ per share of Common Stock),
subject to adjustment as described in this Article 13 (as adjusted, the
"CONVERSION PRICE"). A Holder of Debentures may convert any portion of the
principal amount of the Debentures into that number of fully paid and
nonassessable shares of Common Stock (calculated as to each conversion to the
nearest 1/100th of a share) obtained by dividing the principal amount of the
Debentures to be converted by the Conversion Price. In case a Debenture or
portion thereof is called for redemption, such conversion right in respect of
the Debenture or portion so called shall expire at the close of business on the
Redemption Date, unless the Company defaults in making the payment due upon
redemption.
SECTION 13.2 CONVERSION PROCEDURES.
(a) In order to convert all or a portion of the Debentures, the Holder
thereof shall deliver to the Property Trustee, as conversion agent or to such
other agent appointed for such purposes (the "CONVERSION AGENT") an irrevocable
Notice of Conversion setting forth the principal amount of Debentures to be
converted, together with the name or names, if other than the Holder, in which
the shares of Common Stock should be issued upon conversion and, if such
Debentures are definitive Debentures, surrender to the Conversion Agent the
Debentures to be converted, duly endorsed or assigned to the Company or in
blank. In addition, a holder of Preferred Securities may exercise its right
under the Trust Agreement to convert such Preferred Securities into Common Stock
by delivering to the Conversion Agent an irrevocable Notice of Conversion
setting forth the information called for by the preceding sentence and directing
the Conversion Agent (i) to exchange such Preferred Security for a portion of
the Debentures held by the Trust (at an exchange rate of $25 principal amount of
Debentures for each Preferred Security) and (ii) to immediately convert such
Debentures, on behalf of such holder, into Common Stock pursuant to this Article
13 and, if such Preferred Securities are in definitive form, surrendering such
Preferred Securities, duly endorsed or assigned to the Company or in blank. So
long as any Preferred Securities are outstanding, the Trust shall not convert
any Debentures except pursuant to a Notice of Conversion delivered to the
Conversion Agent by a holder of Preferred Securities.
If a Notice of Conversion is delivered on or after the Regular Record
Date and prior to the subsequent Interest Payment Date, the Holder of record on
the Regular Record Date will be entitled to receive the interest paid on the
subsequent Interest Payment Date on the portion of Debentures to be converted
notwithstanding the conversion thereof prior to such Interest Payment Date.
Except as otherwise provided in the immediately preceding sentence, in the case
of any Debenture which is
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converted, interest whose Stated Maturity is on or after the date of conversion
of such Debenture shall not be payable, and the Company shall not make nor be
required to make any other payment, adjustment or allowance with respect to
accrued but unpaid interest on the Debentures being converted, which shall be
deemed to be paid in full. Debentures submitted for conversion prior to the
expiration of conversion rights as provided in Section 13.3 shall be deemed to
have been effected immediately prior to the close of business on the day on
which the Notice of Conversion was received (the "CONVERSION DATE") by the
Conversion Agent from the Holder or from a holder of the Preferred Securities
effecting a conversion thereof pursuant to its conversion rights under the Trust
Agreement, as the case may be. The Person or Persons entitled to receive Common
Stock issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such Common Stock as of the Conversion Date and such
Person or Persons will cease to be a record Holder or record Holders of the
Debentures on that date. As promptly as practicable on or after the Conversion
Date, the Company shall issue and deliver at the office of the Conversion Agent,
unless otherwise directed by the Holder or holder in the Notice of Conversion, a
certificate or certificates for the number of full shares of Common Stock
issuable upon such conversion, together with the cash payment, if any, in lieu
of any fraction of any share to the Person or Persons entitled to receive the
same. The Conversion Agent shall deliver such certificate or certificates to
such Person or Persons.
(b) The Company's delivery upon conversion of the fixed number of
shares of Common Stock into which the Debentures are convertible (together with
the cash payment, if any, in lieu of fractional shares) shall be deemed to
satisfy the Company's obligation to pay the principal amount at Maturity of the
portion of Debentures so converted and any unpaid interest (including Additional
Interest) accrued on such Debentures at the time of such conversion.
(c) No fractional shares of Common Stock will be issued as a result of
conversion, but in lieu thereof, the Company shall pay to the Conversion Agent a
cash adjustment in an amount equal to the same fraction of the Current Market
Price with respect to such fractional interest on the date on which the
Debentures or Preferred Securities, as the case may be, were duly surrendered to
the Conversion Agent for conversion, and the Conversion Agent in turn will make
such payment, if any, to the Holder of the Securities or the holder of the
Preferred Securities so converted.
(d) In the event of the conversion of any Debenture in part only, a new
Debenture or Debentures for the unconverted portion thereof will be issued in
the name of the Holder thereof upon the cancellation of the Debenture converted
in part in accordance with Section 3.5.
(e) In effecting the conversion transactions described in this Section,
the Conversion Agent is acting as agent of the holders of Preferred Securities
(in the exchange of Preferred Securities for Debentures) and as agent of the
Holders of Debentures (in the conversion of Debentures into Common Stock), as
the case may be, directing it to effect such conversion transactions. The
Conversion Agent is hereby authorized (i) to exchange Debentures held by the
Trust from time to time for Preferred Securities in connection with the
conversion of such Preferred Securities in accordance with this Article 13 and
(ii) to convert all or a portion of the Debentures into Common Stock and
thereupon to deliver such shares of Common Stock in accordance with the
provisions of this Article 13 and to deliver to the Trust a new Debenture or
Debentures for any resulting unconverted principal amount.
(f) Except as provided in Section 2.6, all shares of Common Stock
delivered upon any conversion of Debentures shall bear a legend substantially in
the form of the legend set forth in Exhibit C
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to the Trust Agreement. Neither the Trustee nor the Conversion Agent shall have
any responsibility for the inclusion or content of any such legend on such
Common Stock.
(g) The Company shall at all times reserve and keep available out of
its authorized and unissued Common Stock, solely for issuance upon the
conversion of the Debentures, such number of shares of Common Stock as shall
from time to time be issuable upon the conversion of all the Debentures then
outstanding. Notwithstanding the foregoing, the Company shall be entitled to
deliver upon conversion of Debentures shares of Common Stock reacquired and held
in the treasury of the Company (in lieu of the issuance of authorized and
unissued shares of Common Stock) so long as any such treasury shares are free
and clear of all liens, charges, security interests or encumbrances. Whenever
the Company issues shares of Common Stock upon conversion of Debentures, and the
Company has in effect at such time a stock purchase rights agreement under which
holders of Common Stock are issued rights ("RIGHTS") entitling the holders under
certain circumstances to purchase an additional share or shares of stock, the
Company will issue, together with each such share of Common Stock, such number
of Rights (which number may be a fraction) as shall at that time be issuable
with a share of Common Stock pursuant to such stock purchase rights agreement.
Any shares of Common Stock issued upon conversion of the Debentures shall be
duly authorized, validly issued and fully paid and nonassessable. The Conversion
Agent shall deliver the shares of Common Stock received upon conversion of the
Debentures to the converting Holder free and clear of all liens, charges,
security interests and encumbrances, except for United States withholding taxes.
The Company shall use its best efforts to obtain and keep in force such
governmental or regulatory permits or other authorizations as may be required by
law, and shall comply with all applicable requirements as to registration or
qualification of Common Stock (and all requirements to list Common Stock
issuable upon conversion of Debentures that are at the time applicable), in
order to enable the Company to lawfully issue Common Stock upon conversion of
the Debentures and to lawfully deliver Common Stock to each Holder upon
conversion of the Debentures.
(h) The Company will pay any and all taxes that may be payable in
respect of the issue or delivery of shares of Common Stock on conversion of
Debentures. The Company shall not, however, be required to pay any tax which may
be payable in respect of any transfer involved in the issue and delivery of
shares of Common Stock in a name other than that in which the Debentures so
converted were registered, and no such issue or delivery shall be made unless
and until the Person requesting such issue has paid to the Conversion Agent the
amount of any such tax, or has established to the satisfaction of the Conversion
Agent that such tax has been paid.
(i) Nothing in this Article 13 shall limit the requirement of the
Company to withhold taxes pursuant to the terms of the Debentures or as set
forth in this Agreement or otherwise require the Trustee or the Company to pay
any amounts on account of such withholdings.
SECTION 13.3 EXPIRATION OF CONVERSION RIGHTS. The conversion rights of
Holders of Debentures shall expire at the close of business on the date set for
redemption of the Debentures upon the redemption or Stated Maturity of the
Debentures.
SECTION 13.4 CONVERSION PRICE ADJUSTMENTS. The conversion price shall
be subject to adjustment (without duplication) from time to time as follows:
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(a) In case the Company shall, while any of the Debentures are
outstanding, (i) pay a dividend or make a distribution with respect to its
Common Stock exclusively in shares of Common Stock, (ii) subdivide its
outstanding shares of Common Stock, (iii) combine its outstanding shares of
Common Stock into a smaller number of shares or (iv) issue by reclassification
of its shares of Common Stock any shares of capital stock of the Company, the
conversion privilege and the Conversion Price in effect immediately prior to
such action shall be adjusted so that the Holder of any Debentures thereafter
surrendered for conversion shall be entitled to receive the number of shares of
capital stock of the Company which he would have owned immediately following
such action had such Debentures been converted immediately prior thereto. An
adjustment made pursuant to this subsection (a) shall become effective
immediately after the record date in the case of a dividend or other
distribution and shall become effective immediately after the effective date in
case of a subdivision, combination or reclassification (or immediately after the
record date if a record date shall have been established for such event). If, as
a result of an adjustment made pursuant to this subsection (a), the Holder of
any Debenture thereafter surrendered for conversion shall become entitled to
receive shares of two or more classes or series of capital stock of the Company,
the Board of Directors (whose determination shall be conclusive and shall be
described in a Board Resolution filed with the Trustee) shall determine the
allocation of the adjusted Conversion Price between or among shares of such
classes or series of capital stock. In the event that such dividend,
distribution, subdivision, combination or issuance is not so paid or made, the
Conversion Price shall again be adjusted to be the Conversion Price which would
then be in effect if such record date had not been fixed.
(b) In case the Company shall, while any of the Debentures are
Outstanding, issue rights or warrants to all holders of its Common Stock
entitling them (for a period expiring within 45 days after the record date for
the determination of stockholders entitled to receive such rights or warrants)
to subscribe for or purchase shares of Common Stock at a price per share less
than the Current Market Price per share of Common Stock on such record date, the
Conversion Price for the Debentures shall be adjusted so that the same shall
equal the price determined by multiplying the Conversion Price in effect
immediately prior to the date of issuance of such rights or warrants by a
fraction of which the numerator shall be the number of shares of Common Stock
outstanding on the date of issuance of such rights or warrants plus the number
of shares which the aggregate offering price of the total number of shares so
offered for subscription or purchase would purchase at such Current Market
Price, and of which the denominator shall be the number of shares of Common
Stock outstanding on the date of issuance of such rights or warrants plus the
number of additional shares of Common Stock offered for subscription or
purchase. Such adjustment shall become effective immediately after the record
date for the determination of stockholders entitled to receive such rights or
warrants. For the purposes of this subsection, the number of shares of Common
Stock at any time outstanding shall not include shares held in the treasury of
the Company. The Company shall not issue any rights or warrants in respect of
shares of Common Stock held in the treasury of the Company. In case any rights
or warrants referred to in this subsection in respect of which an adjustment
shall have been made shall expire unexercised within 45 days after the same
shall have been distributed or issued by the Company, the Conversion Price shall
be readjusted at the time of such expiration to the Conversion Price that would
have been in effect if no adjustment had been made on account of the
distribution or issuance of such expired rights or warrants.
(c) Subject to the last sentence of this subparagraph, in case the
Company shall, by dividend or otherwise, distribute to all holders of its Common
Stock evidences of its indebtedness, shares of any class or series of capital
stock, cash or assets (including securities, but excluding any rights or
warrants referred to in subparagraph (b), any dividend or distribution paid
exclusively in cash and any dividend or
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distribution referred to in subparagraph (a) of this Section 13.4), the
Conversion Price shall be reduced so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the effectiveness of the Conversion Price reduction contemplated by this
subparagraph (c) by a fraction of which the numerator shall be the Current
Market Price per share of Common Stock on the date fixed for the payment of such
distribution (the "REFERENCE DATE") less the fair market value (as determined in
good faith by the Board of Directors, whose determination shall be conclusive
and described in a resolution of the Board of Directors), on the Reference Date,
of the portion of the evidences of indebtedness, shares of capital stock, cash
and assets so distributed applicable to one share of Common Stock and the
denominator shall be such Current Market Price per share of Common Stock, such
reduction to become effective immediately prior to the opening of business on
the day following the Reference Date. In the event that such dividend or
distribution is not so paid or made, the Conversion Price shall again be
adjusted to be the Conversion Price which would then be in effect if such
dividend or distribution had not occurred. For purposes of this subparagraph
(c), any dividend or distribution that includes shares of Common Stock or rights
or warrants to subscribe for or purchase shares of Common Stock shall be deemed
instead to be (i) a dividend or distribution of the evidences of indebtedness,
shares of capital stock, cash or assets other than such shares of Common Stock
or such rights or warrants (making any Conversion Price reduction required by
this subparagraph (c)) immediately followed by (ii) a dividend or distribution
of such shares of Common Stock or such rights or warrants (making any further
conversion price reduction required by subparagraph (a) or (b)), except (A) the
Reference Date of such dividend or distribution as defined in this subparagraph
shall be substituted as (x) "the record date in the case of a dividend or other
distribution," and (y) "the record date for the determination of stockholders
entitled to receive such rights or warrants" and (z) "the date fixed for such
determination" within the meaning of subparagraphs (a) and (b) and (B) any
shares of Common Stock included in such dividend or distribution shall not be
deemed outstanding for purposes of computing any adjustment of the conversion
price in subparagraph (a).
(d) In case the Company shall pay or make a dividend or other
distribution on its Common Stock exclusively in cash (excluding (i) all cash
dividends, if the amount thereof does not exceed the per share amount of the
immediately preceding regular cash dividend (as adjusted to reflect any of the
events referred to in subparagraphs (a), (b), (c), (d) or (e) of this Section)
and (ii) all cash dividends, if the annualized amount thereof per share of
Common Stock does not exceed 12.5% of the Current Market Price per share of
Common Stock on the trading day immediately preceding the date of declaration of
such dividend), the Conversion Price shall be reduced so that the same shall
equal the price determined by multiplying the Conversion Price in effect
immediately prior to the effectiveness of the Conversion Price reduction
contemplated by this subparagraph (d) by a fraction of which the numerator shall
be the Current Market Price per share of Common Stock on the date fixed for the
payment of such distribution less the amount of cash so distributed (excluding
that portion of such distribution that does not exceed 12.5% of the Current
Market Price per share, determined as provided above) applicable to one share of
Common Stock and the denominator shall be such Current Market Price per share of
Common Stock, such reduction to become effective immediately prior to the
opening of business on the day following the date fixed for the payment of such
distribution; PROVIDED, HOWEVER, that in the event the portion of the cash so
distributed applicable to one share of Common Stock is equal to or greater than
the Current Market Price per share of Common Stock on the record date mentioned
above (excluding that portion of such distribution that does not exceed 12.5% of
the Current Market Price per share, determined as provided above), in lieu of
the foregoing adjustment, adequate provision shall be made so that each Holder
of shares of Debentures shall have the right to receive upon conversion the
amount of cash such Holder would have received had such Holder converted each
share of the Debentures immediately prior
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to the record date for the distribution of the cash (less that portion of such
distribution that does not exceed 12.5% of the Current Market Price per share,
determined as provided above). In the event that such dividend or distribution
is not so paid or made, the Conversion Price shall again be adjusted to be the
conversion price which would then be in effect if such record date had not been
fixed.
(e) In case a tender or exchange offer (other than an odd-lot offer)
made by the Company or any Subsidiary of the Company for all or any portion of
Common Stock shall expire and such tender or exchange offer shall involve the
payment by the Company or such Subsidiary of consideration per share of Common
Stock having a fair market value (as determined in good faith by the Board of
Directors, whose determination shall be conclusive and described in a resolution
of the Board of Directors) at the last time (the "EXPIRATION TIME") tenders or
exchanges may be made pursuant to such tender or exchange offer (as it shall
have been amended) that exceeds 110% of the Current Market Price per share of
Common Stock on the trading day next succeeding the Expiration Time, the
Conversion Price shall be reduced so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the effectiveness of the Conversion Price reduction contemplated by this
subparagraph (e) by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding (including any tendered or exchanged shares)
at the Expiration Time (including the Purchased Shares) (as defined below)
multiplied by the Current Market Price per share of Common Stock on the Trading
Day next succeeding the Expiration Time and the denominator shall be the sum of
(x) the fair market value (determined as aforesaid) of the aggregate
consideration payable to stockholders based on the acceptance (up to any maximum
specified in the terms of the tender or exchange offer) of all shares validly
tendered or exchanged and not withdrawn as of the Expiration Time (the shares
deemed so accepted, up to any such maximum, being referred to as the "PURCHASED
SHARES") (excluding that portion of such consideration that does not exceed 110%
of the Current Market Price per share) and (y) the product of the number of
shares of Common Stock outstanding (less any Purchased Shares) at the Expiration
Time and the Current Market Price per share of Common Stock on the trading day
next succeeding the Expiration Time, such reduction to become effective
immediately prior to the opening of business on the day following the Expiration
Time. In the event that such tender or exchange offer is not so made, the
Conversion Price shall again be adjusted to be the Conversion Price which would
then be in effect if such record date had not been fixed.
(f) If the distribution date for the Rights of the Company provided in
the Stockholder Rights Agreement occurs prior to the Conversion Date, and a
Holder of the Debentures who converts such Debentures after such distribution
date is not entitled to receive the Rights that would otherwise be attached (but
for the date of conversion) to the shares of Common Stock received upon such
conversion, then an adjustment shall be made to the Conversion Price pursuant to
clause (ii) of Section 13.4(a) as if the Rights were being distributed to Common
Stockholders of the Company immediately prior to such conversion. If such an
adjustment is made and the Rights are later redeemed, invalidated or terminated,
then a corresponding reversing adjustment shall be made to the Conversion Price,
on an equitable basis, to take account of such event.
(g) The Company shall have the right to reduce from time to time the
Conversion Price by any amount selected by the Company for any period of at
least 30 days, PROVIDED, that Company shall give at least 15 days' written
notice of such reduction to the Trustee and the Property Trustee. The Company
may, at its option, make such reductions in the Conversion Price, in addition to
those set forth above in Section 13.4(a), as the Board of Directors deems
advisable to avoid or diminish any income tax
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to holders of Common Stock resulting from any dividend or distribution of stock
(or rights to acquire stock) or from any event treated as such for United States
Federal income tax purposes.
(h) Notwithstanding anything to the contrary in this Section 13.4, no
adjustment of the Conversion Price will be made upon the issuance of any shares
of Common Stock (or securities convertible or exchangeable for Common Stock),
except as specifically provided above, including pursuant to any present or
future plan providing for the reinvestment of dividends or interest payable on
securities of the Company and the investment of additional optional amounts in
shares of Common Stock under any such plan, or the issuance of any shares of
Common Stock or options or rights to purchase such shares pursuant to any
present or future employee benefit plan or program of the Company or pursuant to
any option, warrant, right, or exercisable, exchangeable or convertible security
which does not constitute an issuance to all holders of Common Stock of rights
or warrants entitling holders of such rights or warrants to subscribe for or
purchase Common Stock at less than the Current Market Price. Further, such
issuances shall not be deemed to constitute an issuance of Common Stock or
exercisable, exchangeable or convertible securities by the Company to which any
of the adjustment provisions described above applies. There shall also be no
adjustment of the Conversion Price in case of the issuance of any stock (or
securities convertible into or exchangeable for stock) of the Company except as
specifically described in this Article 13. No adjustment in the Conversion Price
will be required unless such adjustment would require an increase or decrease of
at least 1% of the Conversion Price, but any adjustment that would otherwise be
required to be made shall be carried forward and taken into account in a
subsequent adjustment.
(i) If any action would require adjustment of the Conversion Price
pursuant to more than one of the provisions described above, only one adjustment
shall be made and such adjustment shall be the amount of adjustment that has the
highest absolute value to the Holder of the Debentures.
SECTION 13.5 FUNDAMENTAL CHANGE.
(a) In the event that the Company is a party to any transaction
(including, without limitation, a merger other than a merger that does not
result in a reclassification, conversion, exchange or cancellation of Common
Stock), consolidation, sale of all or substantially all of the assets of the
Company, recapitalization or reclassification of Common Stock (other than a
change in par value, or from par value to no par value, or from no par value to
par value or as a result of a subdivision or combination of Common Stock) or any
compulsory share exchange (each of the foregoing being referred to as a
"TRANSACTION"), in each case, as a result of which shares of Common Stock shall
be converted into the right to receive, or shall be exchanged for, (i) in the
case of any Transaction other than a Transaction involving a Common Stock
Fundamental Change (and subject to funds being legally available for such
purpose under applicable law and the time of such conversion), securities, cash
or other property, each Debenture shall thereafter be convertible into the kind
and, in the case of a Transaction which does not involve a Fundamental Change,
amount of securities, cash and other property receivable upon the consummation
of such Transaction by a holder of that number of shares of Common Stock into
which a Debenture was convertible immediately prior to such Transaction, or (ii)
in the case of a Transaction involving a Common Stock Fundamental Change, common
stock, each Debenture shall thereafter be convertible (in the manner described
herein) into common stock of the kind received by holders of Common Stock (but
in each case after giving effect to any adjustment discussed in paragraphs (b)
and (c) relating to a Fundamental Change if such Transaction constitutes a
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Fundamental Change). The holders of Debentures or Preferred Securities will have
no voting rights with respect to any Transaction.
(b) If any Fundamental Change occurs, then the Conversion Price in
effect will be adjusted immediately after such Fundamental Change as described
in paragraph (c) below. In addition, in the event of a Common Stock Fundamental
Change, each Debenture shall be convertible solely into common stock of the kind
received by holders of Common Stock as a result of such Common Stock Fundamental
Change.
(c) The Conversion Price in the case of any Transaction involving a
Fundamental Change will be adjusted immediately after such Fundamental Change:
(i) in the case of a Non-Stock Fundamental Change, the
Conversion Price of the Debentures will thereupon become the lower of
(A) the Conversion Price in effect immediately prior to such Non-Stock
Fundamental Change, but after giving effect to any other prior
adjustments effected pursuant to the preceding paragraphs, and (B) the
result obtained by multiplying the greater of the Applicable Price or
the then applicable Reference Market Price by a fraction of which the
numerator will be $25 and the denominator will be (x) the amount of the
Redemption Price for one Debenture if the Redemption Date were the date
of such Non-Stock Fundamental Change (or, for the period commencing on
the first date of original issuance of the Debentures and through
_________ __, ____, and the twelve-month periods commencing __________
__, ____, __________ __, ____ and __________ __, ____, the product of
______%, ______%, ______% and ______%, respectively, multiplied by $25)
plus (y) any then-accrued and unpaid interest on one Debenture; and
(ii) in the case of a Common Stock Fundamental Change, the
Conversion Price of the Debentures in effect immediately prior to such
Common Stock Fundamental Change, but after giving effect to any other
prior adjustments effected pursuant to the preceding paragraphs, will
thereupon be adjusted by multiplying such Conversion Price by a
fraction of which the numerator will be the Purchaser Stock Price and
the denominator will be the Applicable Price; PROVIDED, HOWEVER, that
in the event of a Common Stock Fundamental Change in which (A) 100% of
the value of the consideration received by a holder of common stock is
common stock of the successor, acquiror, or other third party (and
cash, if any, is paid only with respect to any fractional interests in
such common stock resulting from such Common Stock Fundamental Change)
and (B) all of common stock will have been exchanged for, converted
into, or acquired for common stock (and cash with respect to fractional
interests) of the successor, acquiror, or other third party, the
Conversion Price of the Debentures in effect immediately prior to such
Common Stock Fundamental Change will thereupon be adjusted by
multiplying such Conversion Price by a fraction of which the numerator
will be one and the denominator will be the number of shares of common
stock of the successor, acquiror, or other third party received by a
holder of one share of common stock as a result of such Common Stock
Fundamental Change.
SECTION 13.6 NOTICE OF ADJUSTMENTS OF CONVERSION PRICE. Whenever the
Conversion Price is adjusted as herein provided:
(a) the Company shall compute the adjusted conversion price and shall
prepare a certificate signed by the Chief Financial Officer or the Treasurer of
the Company setting forth the adjusted
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conversion price and showing in reasonable detail the facts upon which such
adjustment is based, and such certificate shall forthwith be filed with the
Trustee, the Conversion Agent and the transfer agent for the Preferred
Securities and the Debentures; and
(b) a notice stating the Conversion Price has been adjusted and setting
forth the adjusted Conversion Price shall as soon as practicable be mailed by
the Company to all record holders of Preferred Securities and the Debentures at
their last addresses as they appear upon the stock transfer books of the Company
and the Trust and the Securities Registrar.
SECTION 13.7 PRIOR NOTICE OF CERTAIN EVENTS. In case:
(a) the Company shall (i) declare any dividend (or any other
distribution) on its Common Stock, other than (A) a dividend payable in shares
of Common Stock or (B) a dividend payable in cash that would not require an
adjustment pursuant to Section 13.4(c) or (d) or (ii) authorize a tender or
exchange offer that would require an adjustment pursuant to Section 13.4(e);
(b) the Company shall authorize the granting to all holders of Common
Stock of rights or warrants to subscribe for or purchase any shares of stock of
any class or series or of any other rights or warrants;
(c) of any reclassification of Common Stock (other than a subdivision
or combination of the outstanding Common Stock, or a change in par value, or
from par value to no par value, or from no par value to par value), or of any
consolidation or merger to which the Company is a party and for which approval
of stockholders of the Company shall be required, or of the sale or transfer of
all or substantially all of the assets of the Company or of any compulsory share
exchange whereby Common Stock is converted into other securities, cash or other
property; or
(d) of the voluntary or involuntary dissolution, liquidation or winding
up of the Company;
then the Company shall (A) if any Preferred Securities are outstanding under the
Trust Agreement, cause to be filed with the transfer agent for the Preferred
Securities, and shall cause to be mailed to the holders of record of the
Preferred Securities, at their last addresses as they shall appear upon the
stock transfer books of the Trust or (B) shall cause to be mailed to all Holders
at their last addresses as they shall appear in the Security Register, at least
15 days prior to the applicable record or effective date hereinafter specified,
a notice stating (x) the date on which a record (if any) is to be taken for the
purpose of such dividend, distribution, rights or warrants or, if a record is
not to be taken, the date as of which the holders of Common Stock of record to
be entitled to such dividend, distribution, rights or warrants are to be
determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer, share exchange, dissolution, liquidation or winding up
is expected to become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding up (but no failure to mail such notice or
any defect therein or in the mailing thereof shall affect the validity of the
corporate action required to be specified in such notice).
SECTION 13.8 CERTAIN ADDITIONAL RIGHTS. In case the Company shall, by
dividend or otherwise, declare or make a distribution on its Common Stock
referred to in Section 13.4(c) or 13.4(d)
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(including, without limitation, dividends or distributions referred to in the
last sentence of Section 13.4(c)), the Holders of the Debentures, upon the
conversion thereof subsequent to the close of business on the date fixed for the
determination of stockholders entitled to receive such distribution and prior to
the effectiveness of the Conversion Price adjustment in respect of such
distribution, shall also be entitled to receive for each share of Common Stock
into which the Debentures are converted, the portion of the shares of Common
Stock, rights, warrants, evidences of indebtedness, shares of capital stock,
cash and assets so distributed applicable to one share of Common Stock;
PROVIDED, HOWEVER, that, at the election of the Company (whose election shall be
evidenced by a resolution of the Board of Directors) with respect to all Holders
so converting, the Company may, in lieu of distributing to such Holder any
portion of such distribution not consisting of cash or securities of the
Company, pay such Holder an amount in cash equal to the fair market value
thereof (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the Board of
Directors). If any conversion of Debentures described in the immediately
preceding sentence occurs prior to the payment date for a distribution to
holders of Common Stock which the Holder of Debentures so converted is entitled
to receive in accordance with the immediately preceding sentence, the Company
may elect (such election to be evidenced by a resolution of the Board of
Directors) to distribute to such Holder a due bill for the shares of Common
Stock, rights, warrants, evidences of indebtedness, shares of capital stock,
cash or assets to which such Holder is so entitled, PROVIDED, that such due bill
(i) meets any applicable requirements of the principal national securities
exchange or other market on which Common Stock is then traded and (ii) requires
payment or delivery of such shares of Common Stock, rights, warrants, evidences
of indebtedness, shares of capital stock, cash or assets no later than the date
of payment or delivery thereof to holders of shares of Common Stock receiving
such distribution.
SECTION 13.9 RESTRICTIONS ON CLASS A COMMON STOCK ISSUABLE UPON
CONVERSION.
(a) Shares of Common Stock to be issued upon conversion of a Debenture
in respect of Preferred Securities shall bear such restrictive legends as the
Company may provide in accordance with applicable law.
(b) If shares of Common Stock to be issued upon conversion of a
Debenture in respect of Preferred Securities are to be registered in a name
other than that of the Holder of such Preferred Security, then the Person in
whose name such shares of Common Stock are to be registered must deliver to the
Conversion Agent a certificate satisfactory to the Company and signed by such
Person, as to compliance with the restrictions on transfer applicable to such
Preferred Security. Neither the Trustee nor any Conversion Agent or Registrar
shall be required to register in a name other than that of the Holder shares of
Common Stock issued upon conversion of any such Debenture in respect of such
Preferred Securities not so accompanied by a properly completed certificate.
SECTION 13.10 TRUSTEE NOT RESPONSIBLE FOR DETERMINING CONVERSION PRICE
OR ADJUSTMENTS.
Neither the Trustee nor any Conversion Agent shall at any time be under
any duty or responsibility to any Holder of any Debenture or to any holder of a
Preferred Security to determine whether any facts exist which may require any
adjustment of the Conversion Price, or with respect to the nature or extent of
any such adjustment when made, or with respect to the method employed, or herein
or in any supplemental indenture provided to be employed, in making the same.
Neither the Trustee nor any
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Conversion Agent shall be accountable with respect to the validity or value (or
the kind of account) of any shares of Common Stock or of any securities or
property, which may at any time be issued or delivered upon the conversion of
any Debenture; and neither the Trustee nor any Conversion Agent makes any
representation with respect thereto. Neither the Trustee nor any Conversion
Agent shall be responsible for any failure of the Company to make any cash
payment or to issue, transfer or deliver any shares of Common Stock or stock
certificates or other securities or property upon the surrender of any Debenture
for the purpose of conversion, or, except as expressly herein provided, to
comply with any of the covenants of the Company contained in Article 10 or this
Article 13.
* * * *
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
DAYTON SUPERIOR CORPORATION
By:_______________________________
Name:
Title:
FIRSTAR BANK, N.A.,
as Trustee
By:_______________________________
Name:
Title:
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<PAGE> 1
Exhibit 4.9
-----------
----------------------------------------
GUARANTEE AGREEMENT
Dayton Superior Corporation
and
Firstar Bank, N.A.
Relating to the Preferred Securities of
Dayton Superior Capital Trust
Dated as of _______________, 1999
----------------------------------------
<PAGE> 2
CROSS REFERENCE TABLE*
SECTION OF TRUST SECTION OF
INDENTURE ACT OF GUARANTEE
1939, AS AMENDED AGREEMENT
- ---------------- ----------
310(a)..................................................................4.1(a)
310(b).............................................................4.1(c), 2.8
310(c)............................................................Inapplicable
311(a)..................................................................2.2(b)
311(b)..................................................................2.2(b)
311(c)............................................................Inapplicable
312(a)..................................................................2.2(a)
312(b)..................................................................2.2(b)
313........................................................................2.3
314(a).....................................................................2.4
314(b)............................................................Inapplicable
314(c).....................................................................2.5
314(d)............................................................Inapplicable
314(e)...........................................................1.1, 2.5, 3.2
314(f).....................................................................3.2
315(a)..................................................................3.1(d)
315(b).....................................................................2.7
315(c).....................................................................3.1
315(d)..................................................................3.1(d)
316(a)...........................................................1.1, 2.6, 5.4
316(b).....................................................................5.3
317(a)............................................................Inapplicable
317(b)............................................................Inapplicable
318(a)..................................................................2.1(b)
318(b).....................................................................2.1
318(c)..................................................................2.1(a)
--------------------
* This Cross-Reference Table does not constitute part of the Guarantee
Agreement and shall not affect the interpretation of any of its terms or
provisions.
a
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1
DEFINITIONS.................................................................
SECTION 1.1 DEFINITIONS....................................................
ARTICLE 2
TRUST INDENTURE ACT.........................................................
SECTION 2.1 TRUST INDENTURE ACT; APPLICATION...............................
SECTION 2.2 LIST OF HOLDERS................................................
SECTION 2.3 REPORTS BY THE GUARANTEE TRUSTEE...............................
SECTION 2.4 PERIODIC REPORTS TO GUARANTEE TRUSTEE..........................
SECTION 2.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT...............
SECTION 2.6 EVENTS OF DEFAULT; WAIVER......................................
SECTION 2.7 EVENT OF DEFAULT; NOTICE.......................................
SECTION 2.8 CONFLICTING INTERESTS..........................................
ARTICLE 3
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE..........................
SECTION 3.1 POWERS AND DUTIES OF THE GUARANTEE TRUSTEE.....................
SECTION 3.2 CERTAIN RIGHTS OF GUARANTEE TRUSTEE............................
SECTION 3.3 INDEMNITY......................................................
ARTICLE 4
GUARANTEE TRUSTEE...........................................................
SECTION 4.1 GUARANTEE TRUSTEE; ELIGIBILITY.................................
SECTION 4.2 APPOINTMENT, REMOVAL AND RESIGNATION OF THE GUARANTEE
TRUSTEE.....................................................................
ARTICLE 5
GUARANTEE...................................................................
SECTION 5.1 GUARANTEE......................................................
SECTION 5.2 WAIVER OF NOTICE AND DEMAND....................................
SECTION 5.3 OBLIGATIONS NOT AFFECTED.......................................
SECTION 5.4 RIGHTS OF HOLDERS..............................................
SECTION 5.5 GUARANTEE OF PAYMENT...........................................
SECTION 5.6 SUBROGATION....................................................
SECTION 5.7 INDEPENDENT OBLIGATIONS........................................
ARTICLE 6
COVENANTS AND SUBORDINATION.................................................
SECTION 6.1 SUBORDINATION..................................................
SECTION 6.2 CERTAIN COVENANTS OF THE GUARANTOR.............................
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
ARTICLE 7
TERMINATION.................................................................
SECTION 7.1 TERMINATION.....................................................
ARTICLE 8
MISCELLANEOUS...............................................................
SECTION 8.1 SUCCESSORS AND ASSIGNS.........................................
SECTION 8.2 AMENDMENTS.....................................................
SECTION 8.3 NOTICES........................................................
SECTION 8.4 BENEFIT........................................................
SECTION 8.5 INTERPRETATION.................................................
SECTION 8.6 GOVERNING LAW..................................................
</TABLE>
ii
<PAGE> 5
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT, dated as of _____________, 1999, is executed
and delivered by DAYTON SUPERIOR CORPORATION, an Ohio corporation (the
"Guarantor"), and FIRSTAR BANK, N.A., a national banking association, as trustee
(the "Guarantee Trustee"), for the benefit of the Holders (as defined herein)
from time to time of the Preferred Securities (as defined herein) of Dayton
Superior Capital Trust, a Delaware statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Trust Agreement (the
"Trust Agreement"), dated as of ________, 1999, among the Trustees named
therein, the Guarantor, as Depositor, and the Holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer is
issuing __,000,000 (__,000,000 if the over-allotment option is exercised in
full) of its __% Convertible Trust Preferred Securities (liquidation preference
$25 per preferred security) (the "Preferred Securities") representing preferred
undivided beneficial interests in the assets of the Issuer and having the terms
set forth in the Trust Agreement;
WHEREAS, the Preferred Securities will be issued by the Issuer and the
proceeds thereof, together with the proceeds from the issuance of the Issuer's
Common Securities (as defined herein), will be used to purchase the Debentures
(as defined in the Trust Agreement) of the Guarantor which will be deposited
with Firstar Bank, N.A., as Property Trustee under the Trust Agreement, as trust
assets;
WHEREAS, as incentive for the Holders to purchase Preferred Securities,
the Guarantor desires irrevocably and unconditionally to agree, to the extent
set forth herein, to pay to the Holders of the Preferred Securities the
Guarantee Payments (as defined herein) and to make certain other payments on the
terms and conditions set forth herein; and
WHEREAS, the Guarantor is also executing and delivering a guarantee
agreement (the "Common Securities Guarantee") in substantially identical terms
to this Guarantee for the benefit of the holders of the Common Securities (as
defined herein), except that if an event of default (as defined in the Indenture
(as defined herein)), has occurred and is continuing, the rights of holders of
the Common Securities to receive Guarantee Payments (as defined in the Common
Securities Guarantee) under the Common Securities Guarantee shall be
subordinated to the rights of Holders of Preferred Securities to receive
Guarantee Payments (as defined herein) under this Guarantee.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Guarantee Agreement for
the benefit of the Holders from time to time of the Preferred Securities.
<PAGE> 6
ARTICLE 1
DEFINITIONS
SECTION 1.1 DEFINITIONS. As used in this Guarantee Agreement, the terms
set forth below shall, unless the context otherwise requires, have the following
meanings. Capitalized or otherwise defined terms used but not otherwise defined
herein shall have the meanings assigned to such terms in the Trust Agreement as
in effect on the date hereof.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct common control with such
specified Person, provided, however, that an Affiliate of the Guarantor shall
not be deemed to include the Issuer. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Common Securities" means the securities representing common beneficial
interests in the assets of the Issuer.
"Common Shares" means the Common Shares without par value, of the
Guarantor.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Guarantee Agreement; provided, however,
that except with respect to a default in payment of any Guarantee Payments, the
Guarantor shall have received written notice of default and shall not have cured
such default within 60 days after receipt of such notice.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent not
paid or made by or on behalf of the Issuer: (i) any accumulated and unpaid
Distributions (as defined in the Trust Agreement) required to be paid on the
Preferred Securities, to the extent the Issuer shall have funds on hand
available therefor at such time, (ii) the redemption price, including all
accrued and unpaid Distributions to the date of redemption (the "Redemption
Price"), with respect to the Preferred Securities called for redemption by the
Issuer to the extent the Issuer shall have funds on hand available therefor, and
(iii) upon a voluntary or involuntary dissolution of the Issuer, unless
Debentures are distributed to the Holders, the lesser of (a) the aggregate of
the liquidation preference of $25 per Preferred Security plus accrued and unpaid
Distributions on the Preferred Securities to the date of payment to the extent
the Issuer shall have funds on hand available to make such payment or (b) the
amount of assets of the Issuer remaining available for distribution to Holders
in dissolution of the Issuer (in either case, the "Stockholder Distribution").
"Guarantee Trustee" means Firstar Bank, N.A., until a Successor
Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Guarantee Agreement and thereafter means each such
Successor Guarantee Trustee.
"Holder" means any holder, as registered on the books and records of
the Issuer, of any Preferred Securities; provided, however, that in determining
whether the holders of the requisite percentage of Preferred Securities have
given any request, notice, consent or waiver hereunder, "Holder" shall not
include the Guarantor, the Guarantee Trustee or any Affiliate of the Guarantor
or the Guarantee Trustee.
2
<PAGE> 7
"Indenture" means the Junior Convertible Subordinated Indenture, dated
as of ________, 1999, as supplemented and amended between the Guarantor and
Firstar Bank, N.A., as trustee.
"Issuer" means Dayton Superior Capital Trust.
"List of Holders" has the meaning specified in Section 2.2 (a).
"Majority in Liquidation Preference of the Securities" means, except as
provided by the Trust Indenture Act, a vote by the Holder(s), voting separately
as a class, of more than 50% of the liquidation preference of all the
outstanding Preferred Securities issued by the Issuer.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by (i) the Chairman, Chief Executive Officer, President or a
Vice President, and by (ii) the Treasurer, an Assistant Treasurer, the
Controller, the Secretary or an Assistant Secretary of such Person, and
delivered to the Guarantee Trustee. Any Officers' Certificate delivered with
respect to compliance with a condition or covenant provided for in this
Guarantee Agreement shall include:
(a) a statement that each officer signing the Officers' Certificate has
read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers' Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Responsible Officer" means, with respect to the Guarantee Trustee, any
officer assigned to the Trustee's Corporate Trust Office, including any managing
director, vice president, assistant vice president, assistant treasurer,
assistant secretary or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
having direct responsibility for the administration of this Guarantee Agreement,
and also, with respect to a particular matter, any other officer, to whom such
matter is referred because of such officer's knowledge of and familiarity with
the particular subject.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
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ARTICLE 2
TRUST INDENTURE ACT
SECTION 2.1 TRUST INDENTURE ACT; APPLICATION.
(a) This Guarantee Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Guarantee Agreement and
shall, to the extent applicable, be governed by such provisions.
(b) If and to the extent that any provision of this Guarantee Agreement
limits, qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
SECTION 2.2 LIST OF HOLDERS.
(a) The Guarantor shall furnish or cause to be furnished to the
Guarantee Trustee (unless the Guarantee Trustee is acting as Securities
Registrar with respect to the Debentures under the Indenture) (i) semi-annually,
on or before January 15 and July 15 of each year, a list, in such form as the
Guarantee Trustee may reasonably require, of the names and addresses of the
Holders ("List of Holders") as of a date not more than 15 days prior to the
delivery thereof, and (ii) at such other times as the Guarantee Trustee may
request in writing, within 30 days after the receipt by the Guarantor of any
such written request, a List of Holders as of a date not more than 15 days prior
to the time such list is furnished, in each case to the extent such information
is in the possession or control of the Guarantor and is not identical to a
previously supplied list of Holders or has not otherwise been received by the
Guarantee Trustee. Notwithstanding the foregoing, the Guarantor shall not be
obligated to provide such List of Holders at any time the Preferred Securities
are represented by one or more Global Certificates (as defined in the
Indenture). The Guarantee Trustee may destroy any List of Holders previously
given to it on receipt of a new List of Holders.
(b) The Guarantee Trustee shall comply with its obligations under
Section 311(a), Section 311(b) and Section 312(b) of the Trust Indenture Act.
SECTION 2.3 REPORTS BY THE GUARANTEE TRUSTEE. Within 60 days after
___________, in each calendar year, commencing with ___________, 2000, the
Guarantee Trustee shall provide to the Holders such reports as are required by
Section 313 of the Trust Indenture Act, if any, in the form and in the manner
provided by Section 313 of the Trust Indenture Act. The Guarantee Trustee shall
also comply with the requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 PERIODIC REPORTS TO GUARANTEE TRUSTEE. The Guarantor shall
provide to the Guarantee Trustee, the Securities and Exchange Commission and the
Holders such documents, reports and information, if any, as required by Section
314 of the Trust Indenture Act and the compliance certificate required by
Section 314 of the Trust Indenture Act in the form, in the manner and at the
times required by Section 314 of the Trust Indenture Act; and such compliance
certificate of the Guarantor shall be delivered on or before 120 days after the
end of each calendar year.
SECTION 2.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT. The
Guarantor shall provide to the Guarantee Trustee such evidence of compliance
with such conditions
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precedent, if any, provided for in this Guarantee Agreement that relate to any
of the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) may be given in the form of an Officers' Certificate.
SECTION 2.6 EVENTS OF DEFAULT; WAIVER. The Holders of a Majority in
Liquidation Preference of the Securities may, by vote, on behalf of the Holders,
waive any past Event of Default and its consequences. Upon such waiver, any such
Event of Default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured, for every purpose of this
Guarantee Agreement, but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent therefrom.
SECTION 2.7 EVENT OF DEFAULT; NOTICE.
(a) The Guarantee Trustee shall, within 90 days after the occurrence of
an Event of Default, transmit by mail, first class postage prepaid, to the
Holders, notices of all Events of Default actually known to a Responsible
Officer of the Guarantee Trustee, unless such defaults have been cured before
the giving of such notice, provided, that, except in the case of a default in
the payment of a Guarantee Payment, the Guarantee Trustee shall be fully
protected in withholding such notice if and so long as the Board of Directors,
the executive committee or a trust committee of directors and/or Responsible
Officers of the Guarantee Trustee in good faith determines that the withholding
of such notice is in the interests of the Holders.
(b) The Guarantee Trustee shall not be deemed to have actual knowledge
of any Event of Default unless the Guarantee Trustee shall have received written
notice, or a Responsible Officer charged with the administration of the Trust
Agreement shall have obtained written notice, of such Event of Default.
SECTION 2.8 CONFLICTING INTERESTS. The Trust Agreement and the
Indenture shall be deemed to be specifically described in this Guarantee
Agreement for the purposes of clause (i) of the first proviso contained in
Section 310(b) of the Trust Indenture Act.
ARTICLE 3
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
SECTION 3.1 POWERS AND DUTIES OF THE GUARANTEE TRUSTEE.
(a) This Guarantee Agreement shall be held by the Guarantee Trustee for
the benefit of the Holders, and the Guarantee Trustee shall not transfer this
Guarantee Agreement to any Person except a Holder exercising his or her rights
pursuant to Section 5.4(iv) or to a Successor Guarantee Trustee on acceptance by
such Successor Guarantee Trustee of its appointment to act as Successor
Guarantee Trustee. The right, title and interest of the Guarantee Trustee shall
automatically vest in any Successor Guarantee Trustee, upon acceptance by such
Successor Guarantee Trustee of its appointment hereunder, and such vesting and
cessation of title shall be effective whether or not conveyancing documents have
been executed and delivered pursuant to the appointment of such Successor
Guarantee Trustee.
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(b) If an Event of Default actually known to a Responsible Officer of
the Guarantee Trustee has occurred and is continuing, the Guarantee Trustee
shall enforce this Guarantee Agreement for the benefit of the Holders.
(c) The Guarantee Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Guarantee Agreement, and no implied covenants shall be read into this
Guarantee Agreement against the Guarantee Trustee. In case an Event of Default
has occurred (that has not been cured or waived pursuant to Section 2.6) and is
actually known to the Responsible Officer of the Guarantee Trustee, the
Guarantee Trustee shall exercise such of the rights and powers vested in it by
this Guarantee Agreement, and use the same degree of care and skill in its
exercise thereof, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(d) No provision of this Guarantee Agreement shall be construed to
relieve the Guarantee Trustee from liability for its own negligent action, its
own negligent failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after
the curing or waiving of all such Events of Default that may have
occurred;
(A) the duties and obligations of the Guarantee
Trustee shall be determined solely by the express provisions
of this Guarantee Agreement, and the Guarantee Trustee shall
not be liable except for the performance of such duties and
obligations as are specifically set forth in this Guarantee
Agreement, and no implied covenants or obligations shall be
read into this Guarantee Agreement against the Guarantee
Trustee; and
(B) in the absence of bad faith on the part of the
Guarantee Trustee, the Guarantee Trustee may conclusively
rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or
opinions furnished to the Guarantee Trustee and conforming to
the requirements of this Guarantee Agreement; but in the case
of any such certificates or opinions that by any provision
hereof or of the Trust Indenture Act are specifically required
to be furnished to the Guarantee Trustee, the Guarantee
Trustee shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this
Guarantee Agreement;
(ii) the Guarantee Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer of the
Guarantee Trustee, unless it shall be proved that the Guarantee Trustee
was negligent in ascertaining the pertinent facts upon which such
judgment was made;
(iii) the Guarantee Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a
Majority in Liquidation Preference of the Securities relating to the
time, method and place of conducting any proceeding for any remedy
available to the Guarantee Trustee, or exercising any trust or power
conferred upon the Guarantee Trustee under this Guarantee Agreement;
and
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(iv) no provision of this Guarantee Agreement shall require
the Guarantee Trustee to expend or risk its own funds or otherwise
incur personal financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers, if the
Guarantee Trustee shall have reasonable grounds for believing that the
repayment of such funds or liability is not reasonably assured to it
under the terms of this Guarantee Agreement or indemnity satisfactory
to it against such risk or liability is not reasonably assured to it.
SECTION 3.2 CERTAIN RIGHTS OF GUARANTEE TRUSTEE.
(a) Subject to the provisions of Section 3.1:
(i) The Guarantee Trustee may conclusively rely and shall be
fully protected in acting or refraining from acting upon any
resolution, certificate, statement, proxy, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed, sent or presented by the
proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by
this Guarantee Agreement shall be sufficiently evidenced by an
Officers' Certificate unless otherwise prescribed herein.
(iii) Whenever, in the administration of this Guarantee
Agreement, the Guarantee Trustee shall deem it desirable that a matter
be proved or established before taking, suffering or omitting to take
any action hereunder, the Guarantee Trustee (unless other evidence is
herein specifically prescribed) may, in the absence of bad faith on its
part, request and conclusively rely upon an Officers' Certificate
which, upon receipt of such request from the Guarantee Trustee, shall
be promptly delivered by the Guarantor.
(iv) The Guarantee Trustee may consult with legal counsel, and
the written advice or opinion of such legal counsel with respect to
legal matters shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted to be taken by it
hereunder in good faith and in accordance with such advice or opinion.
Such legal counsel may be legal counsel to the Guarantor or any of its
Affiliates and may be one of its employees. The Guarantee Trustee shall
have the right at any time to seek instructions concerning the
administration of this Guarantee Agreement from any court of competent
jurisdiction.
(v) The Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Guarantee
Agreement at the request or direction of any Holder, unless such Holder
shall have provided to the Guarantee Trustee and its officers,
directors and agents such adequate security and indemnity as would
satisfy a reasonable person in the position of the Guarantee Trustee,
against the costs, expenses (including attorneys' fees and expenses)
and liabilities that might be incurred by it in complying with such
request or direction, including such reasonable advances as may be
requested by the Guarantee Trustee; provided that, nothing contained in
this Section 3.2(a)(v) shall be taken to relieve the Guarantee Trustee,
upon the occurrence of an Event of Default, of its obligation to
exercise the rights and powers vested in it by this Guarantee Agreement
and use the same degree of care and skill in the exercise thereof as
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a prudent person would exercise or use under the circumstances in the
conduct of his or her own affairs.
(vi) The Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Guarantee Trustee, in
its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit.
(vii) The Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through its agents, custodians, nominees or attorneys or any
Affiliate, and the Guarantee Trustee shall not be responsible for any
misconduct or negligence on the part of any such agent or attorney
appointed with due care by it hereunder.
(viii) Whenever in the administration of this Guarantee
Agreement the Guarantee Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or taking
any other action hereunder, the Guarantee Trustee (A) may request
written instructions from the Holders of a Majority in Liquidation
Preference of the Securities, (B) may refrain from enforcing such
remedy or right or taking such other action until such instructions are
received, and (c) shall be fully protected in acting in accordance with
such instructions.
(b) No provision of this Guarantee Agreement shall be deemed to impose
any duty or obligation on the Guarantee Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it in any
jurisdiction in which it shall be illegal, or in which the Guarantee Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Guarantee Trustee
shall be construed to be a duty to act in accordance with such power and
authority.
SECTION 3.3 INDEMNITY. The Guarantor agrees to indemnify the Guarantee
Trustee for, and to hold it harmless against, any loss, liability or expense
incurred without negligence or bad faith on the part of the Guarantee Trustee,
arising out of or in connection with the acceptance or administration of this
Guarantee Agreement, including the reasonable costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The Guarantee Trustee will
not claim or exact any lien or charge on any Guarantee Payment as a result of
any amount due to it under this Guarantee Agreement. Guarantor's indemnification
obligations set forth in this Section 3.3 shall survive termination of this
Guarantee Agreement or resignation or removal of the Guarantee Trustee.
ARTICLE 4
GUARANTEE TRUSTEE
SECTION 4.1 GUARANTEE TRUSTEE; ELIGIBILITY.
(a) There shall at all times be a Guarantee Trustee which shall:
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(i) not be an Affiliate of the Guarantor; and
(ii) be a Person that is eligible pursuant to the Trust
Indenture Act to act as such and has a combined capital and surplus of
at least $50,000,000, and shall be a corporation meeting the
requirements of Section 310(a) of the Trust Indenture Act. If such
corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the supervising or examining
authority, then, for the purposes of this Section and to the extent
permitted by the Trust Indenture Act, the combined capital and surplus
of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Guarantee Trustee shall cease to be eligible to
so act under Section 4.1(a), the Guarantee Trustee shall immediately resign in
the manner and with the effect set out in Section 4.2(c).
(c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Guarantee Trustee and Guarantor shall in all respects comply with the provisions
of Section 310(b) of the Trust Indenture Act.
SECTION 4.2 APPOINTMENT, REMOVAL AND RESIGNATION OF THE GUARANTEE
TRUSTEE.
(a) Subject to Section 4.2(b), the Guarantee Trustee may be appointed
or removed without cause at any time by the Guarantor.
(b) The Guarantee Trustee shall not be removed until a Successor
Guarantee Trustee has been appointed and has accepted such appointment by
written instrument executed by such Successor Guarantee Trustee and delivered to
the Guarantor.
(c) The Guarantee Trustee appointed hereunder shall hold office until a
Successor Guarantee Trustee shall have been appointed or until its removal or
resignation. The Guarantee Trustee may resign from office (without need for
prior or subsequent accounting) by an instrument in writing executed by the
Guarantee Trustee and delivered to the Guarantor, which resignation shall not
take effect until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by an instrument in writing executed by such Successor
Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee
Trustee.
(d) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 4.2 within 60 days after
delivery to the Guarantor of an instrument of resignation, the resigning
Guarantee Trustee may petition, at the expense of the Guarantor, any court of
competent jurisdiction for appointment of a Successor Guarantee Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Guarantee Trustee.
(e) No Guarantee Trustee shall be liable for the acts or omissions of
any successor Guarantor Trustee.
(f) Upon the removal or resignation of the Guarantee Trustee, the
Guarantor shall pay all amounts due and owing to such Guarantee Trustee.
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ARTICLE 5
GUARANTEE
SECTION 5.1 GUARANTEE. The Guarantor irrevocably and unconditionally
agrees to pay in full to the Holders the Guarantee Payments (without duplication
of amounts theretofore paid by or on behalf of the Issuer), as and when due,
regardless of any defense, right of set-off or counterclaim which the Issuer may
have or assert other than the defense of payment. The Guarantor's obligation to
make a Guarantee Payment may be satisfied by direct payment of the required
amounts by the Guarantor to the Holders or by causing the Issuer to pay such
amounts to the Holders.
SECTION 5.2 WAIVER OF NOTICE AND DEMAND. The Guarantor hereby waives
notice of acceptance of the Guarantee Agreement and of any liability to which it
applies or may apply, presentment, demand for payment, any right to require a
proceeding first against the Guarantee Trustee, Issuer or any other Person
before proceeding against the Guarantor, protest, notice of nonpayment, notice
of dishonor, notice of redemption and all other notices and demands.
SECTION 5.3 OBLIGATIONS NOT AFFECTED. The obligations, covenants,
agreements and duties of the Guarantor under this Guarantee Agreement shall in
no way be affected or impaired by reason of the happening from time to time of
any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be performed
or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions (other than an extension of time for payment of
Distributions that results from the extension of any interest payment period on
the Debentures as so provided in the Indenture), Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Preferred
Securities or the extension of time for the performance of any other obligation
under, arising out of, or in connection with, the Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Preferred Securities, or
any action on the part of the Issuer granting indulgence or extension of any
kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Issuer or any of the assets of the
Issuer;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby or
hereby incurred; or
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(g) any other circumstance whatsoever that might otherwise constitute a
legal or equitable discharge or defense of a guarantor, it being the intent of
this Section 5.3 that the obligations of the Guarantor hereunder shall be
absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders or the Guarantee Trustee to
give notice to, or obtain the consent of, the Guarantor with respect to the
happening of any of the foregoing.
SECTION 5.4 RIGHTS OF HOLDERS. The Guarantor expressly acknowledges
that: (i) this Guarantee Agreement will be deposited with the Guarantee Trustee
to be held for the benefit of the Holders; (ii) the Guarantee Trustee has the
right to enforce this Guarantee Agreement on behalf of the Holders; (iii) the
Holders of a Majority in Liquidation Preference of the Securities have the right
to direct the time, method and place of conducting any proceeding for any remedy
available to the Guarantee Trustee in respect of this Guarantee Agreement or to
direct the exercise of any trust or power conferred upon the Guarantee Trustee
under this Guarantee Agreement; and (iv) if the Guarantee Trustee fails to
enforce the Guarantee, any Holder may institute a legal proceeding directly
against the Guarantor to enforce its rights under this Guarantee Agreement,
without first instituting a legal proceeding against the Guarantee Trustee, the
Issuer or any other Person.
SECTION 5.5 GUARANTEE OF PAYMENT. This Guarantee Agreement creates a
guarantee of payment and not of collection. This Guarantee Agreement will not be
discharged except by payment of the Guarantee Payments in full (without
duplication of amounts theretofore paid by the Issuer) or upon distribution of
Debentures to Holders as provided in the Trust Agreement.
SECTION 5.6 SUBROGATION. The Guarantor shall be subrogated to all (if
any) rights of the Holders against the Issuer in respect of any amounts paid to
the Holders by the Guarantor under this Guarantee Agreement and shall have the
right to waive payment by the Issuer pursuant to Section 5.1; provided, however,
that the Guarantor shall not (except to the extent required by mandatory
provisions of law) be entitled to enforce or exercise any rights which it may
acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Guarantee Agreement,
if, at the time of any such payment, any amounts are due and unpaid under this
Guarantee Agreement. If any amount shall be paid to the Guarantor in violation
of the preceding sentence, the Guarantor agrees to hold such amount in trust for
the Holders and to pay over such amount to the Holders.
SECTION 5.7 INDEPENDENT OBLIGATIONS. The Guarantor acknowledges that
its obligations hereunder are independent of the obligations of the Issuer with
respect to the Preferred Securities and that the Guarantor shall be liable as
principal and as debtor hereunder to make Guarantee Payments pursuant to the
terms of this Guarantee Agreement notwithstanding the occurrence of any event
referred to in subsections (a) through (g), inclusive, of Section 5.3 hereof.
ARTICLE 6
COVENANTS AND SUBORDINATION
SECTION 6.1 SUBORDINATION. The Guarantee Agreement will constitute an
unsecured obligation of the Guarantor and will rank subordinate and junior in
right of payment to all liabilities of the Guarantor and PARI PASSU with the
most senior preferred stock of the Guarantor, if any, now or
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hereafter issued by the Company and with any guarantee now or hereafter entered
into by the Company in respect of any preferred or preference stock of any
affiliate of the Guarantor.
SECTION 6.2 CERTAIN COVENANTS OF THE GUARANTOR.
(a) Guarantor covenants and agrees that if and so long as (i) the
Issuer is the holder of all the Debentures, (ii) a Tax Event (as defined in the
Trust Agreement) in respect of the Issuer has occurred and is continuing and
(iii) the Guarantor has elected, and has not revoked such election, to pay
Additional Sums (as defined in the Trust Agreement) in respect of the Preferred
Securities and Common Securities, the Guarantor will pay to the Issuer such
Additional Sums.
(b) The Guarantor covenants and agrees that it will not, and will not
cause any subsidiary of the Guarantor to, (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Guarantor's capital stock or (ii) make any payment
of principal, interest or premium, if any, on or repay or repurchase or redeem
any debt securities (including guarantees of indebtedness for money borrowed) of
the Guarantor that rank PARI PASSU with or junior to the Debentures (other than
(a) any dividend, redemption, liquidation, interest, principal or guarantee
payment by the Guarantor where the payment is made by way of securities
(including capital stock) that rank PARI PASSU with or junior to the securities
on which such dividend, redemption, interest, principal or guarantee payment is
being made, (b) redemptions or purchases of any rights pursuant to a stockholder
rights agreement, and the declaration of a dividend of such rights or the
issuance of preferred stock under such a plan in the future, (c) payments under
this Agreement, (d) purchases of Common Shares related to the issuance of Common
Shares under any of the Guarantor's benefit plans for its directors, officers or
employees, (e) as a result of a reclassification of the Guarantor's capital
stock or the exchange or conversion of one series or class of the Guarantor's
capital stock for another series or class of the Guarantor's capital stock and
(f) the purchase of fractional interests in shares of the Guarantor's capital
stock pursuant to the conversion or exchange provisions of such capital stock or
the security being converted or exchanged) if at such time (i) there shall have
occurred any event of which the Guarantor has actual knowledge that (a) with the
giving of notice or the lapse of time, or both, would constitute an "Event of
Default" under the Indenture with respect to the Debentures and (b) in respect
of which the Guarantor shall not have taken reasonable steps to cure, (ii) the
Guarantor shall be in default with respect to its payment of any obligations
under the Guarantee or (iii) the Guarantor shall have given notice of its
selection of an Extension Period (as defined in the Indenture) with respect to
the Debentures and shall not have rescinded such notice, or such Extension
Period, or any extension thereof, shall be continuing.
(c) The Guarantor covenants and agrees (i) to maintain directly or
indirectly 100% ownership of the Common Securities, provided that certain
successors which are permitted by the Indenture may succeed to the Guarantor's
ownership of the Common Securities, (ii) not to voluntarily dissolve the Issuer,
except (a) in connection with a distribution of the Debentures to the holders of
the Preferred Securities in dissolution of the Issuer or (b) in connection with
certain mergers, consolidations or amalgamations permitted by the Trust
Agreement, (iii) to use its reasonable efforts, consistent with the terms and
provisions of the Trust Agreement, to cause the Issuer to remain classified as a
grantor trust and not as an association taxable as a corporation or a
partnership for United States Federal income tax purposes, (iv) for so long as
Preferred Securities are outstanding, not to convert Debentures except pursuant
to a notice of conversion delivered to the Conversion Agent (as defined in the
Trust Agreement) by a Holder, (v) to maintain the reservation for issuance of
the number of Common Shares that would be
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required from time to time upon the conversion of all the Debentures then
outstanding, (vi) to deliver shares of Common Shares upon an election by the
Holders to convert such Preferred Securities into Common Shares and (vii) to
honor all obligations described herein relating to the conversion or exchange of
the Preferred Securities into or for Common Shares or Debentures.
ARTICLE 7
TERMINATION
SECTION 7.1 TERMINATION. This Guarantee Agreement shall terminate and
be of no further force and effect upon (i) full payment of the Redemption Price
of all Preferred Securities, (ii) the distribution of Debentures to the Holders
in exchange for all of the Preferred Securities, (iii) full payment of the
amounts payable in accordance with the Trust Agreement upon dissolution of the
Issuer or (iv) upon the distribution, if any, of Common Shares to the holders of
the Preferred Securities in respect of the conversion of all such holders'
Preferred Securities into Common Shares. Notwithstanding the foregoing, this
Guarantee Agreement will continue to be effective or will be reinstated, as the
case may be, if at any time any Holder must restore payment of any sums paid
with respect to Preferred Securities or this Guarantee Agreement.
ARTICLE 8
MISCELLANEOUS
SECTION 8.1 SUCCESSORS AND ASSIGNS. All guarantees and agreements
contained in this Guarantee Agreement shall bind the successors, assigns,
receivers, trustees and representatives of the Guarantor and shall inure to the
benefit of the Holders of the Preferred Securities then outstanding. Except in
connection with a consolidation, merger or sale involving the Guarantor that is
permitted under Article 8 of the Indenture and pursuant to which the assignee
agrees in writing to perform the Guarantor's obligations hereunder, the
Guarantor shall not assign its obligations hereunder.
SECTION 8.2 AMENDMENTS. Except with respect to any changes which do not
adversely affect the rights of the Holders in any material respect (in which
case no consent of the Holders will be required), this Guarantee Agreement may
only be amended with the prior approval of the Holders of not less than a
Majority in Liquidation Preference of the Securities. The provisions of Article
6 of the Trust Agreement concerning meetings of the Holders shall apply to the
giving of such approval. The Guarantor shall furnish the Guarantee Trustee with
an Officers' Certificate and an Opinion of Counsel to the effect that any
amendment of this Agreement is authorized and permitted.
SECTION 8.3 NOTICES. Any notice, request or other communication
required or permitted to be given hereunder shall be in writing, duly signed by
the party giving such notice, and delivered, telecopied or mailed by first class
mail as follows:
(a) if given to the Guarantor, to the address set forth below or such
other address as the Guarantor may give notice of to the Holders:
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Dayton Superior Corporation
7777 Washington Village Drive, Suite 130
Dayton, Ohio 45459
Phone No.: (937) 428-6360
Facsimile No.: (937) 428-9115
Attention: Mr. John A. Ciccarelli
(b) if given to the Issuer, in care of the Guarantee Trustee, at the
Issuer's (and the Guarantee Trustee's) address set forth below or such other
address as the Guarantee Trustee on behalf of the Issuer may give notice of to
the Holders:
Dayton Superior Capital Trust
7777 Washington Village Drive, Suite 130
Dayton, Ohio 45459
Phone No.: (937) 428-6360
Facsimile No.: (937) 428-9115
Attention: Mr. John A. Ciccarelli
with a copy to:
Firstar Bank, N.A.
Corporate Trust
425 Walnut Street, M/L 5125
Cincinnati, Ohio 45201-1118
Phone No.: (513) 762-8870
Facsimile No.: (___) ___-____
Attention: Mr. Brian Gardner
(c) if given to any Holder, at the address set forth on the books and
records of the Issuer.
All notices hereunder shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
SECTION 8.4 BENEFIT. This Guarantee Agreement is solely for the benefit
of the Holders and is not separately transferable from the Preferred Securities.
SECTION 8.5 INTERPRETATION. In this Guarantee Agreement, unless the
context otherwise requires:
(a) capitalized terms used in this Guarantee Agreement but not defined
in the preamble hereto have the respective meanings assigned to them in Section
1.1;
(b) a term defined anywhere in this Guarantee Agreement has the same
meaning throughout;
14
<PAGE> 19
(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented or amended
from time to time;
(d) all references in this Guarantee Agreement to Articles and Sections
are to Articles and Sections of this Guarantee Agreement unless otherwise
specified;
(e) a term defined in the Trust Indenture Act has the same meaning when
used in this Guarantee Agreement unless otherwise defined in this Guarantee
Agreement or unless the context otherwise requires;
(f) a reference to the singular includes the plural and vice versa; and
(g) the masculine, feminine or neuter genders used herein shall include
the masculine, feminine and neuter genders.
SECTION 8.6 GOVERNING LAW. THIS GUARANTEE AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
OHIO WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
* * * * * *
THIS GUARANTEE AGREEMENT is executed as of the day and year first above
written.
DAYTON SUPERIOR CORPORATION
By:_____________________________________
Name:
Title:
FIRSTAR BANK, N.A.,
as Guarantee Trustee
By:_____________________________________
Name:
Title:
15
<PAGE> 1
Exhibit 12.1
<TABLE>
<CAPTION>
Three Fiscal Months
Ended Years Ended December 31,
---------------------------- ----------------------------------------------------------
April 2, 1999 April 2, 1998 1998 1997 1996 1995 1994
-------------- ------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Income before income taxes
and extraordinary item $ (646) $(1,740) $18,320 $12,230 $8,154 $4,395 $ (587)
Interest expense 2,975 2,993 11,703 5,556 4,829 4,231 6,017
33% of lease expense 425 424 1,397 910 627 425 384
------ ------- ------- ------- ------ ------ ------
2,754 1,677 31,420 18,696 13,610 9,051 5,814
------ ------- ------- ------- ------ ------ ------
Interest expense 2,975 2,993 11,703 5,556 4,829 4,231 6,017
33% of lease expense 425 424 1,397 910 627 425 384
------ ------- ------- ------- ------ ------ ------
3,400 3,417 13,100 6,466 5,456 4,656 6,401
------ ------- ------- ------- ------ ------ ------
Fixed charge coverage ratio 0.8 0.5 2.4 2.9 2.5 1.9 0.9
====== ======= ======= ======= ====== ====== ======
</TABLE>
<PAGE> 1
EXHIBIT 23.1
------------
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the inclusion of or
incorporation by reference in this registration statement of our report dated
January 26, 1999 (except with respect to the matter discussed in Note 12, as to
which the date is February 17, 1999), included in Dayton Superior Corporation's
Form 10-K for the year ended December 31, 1998, and to all references to our
Firm included in this registration statement.
ARTHUR ANDERSEN LLP
Dayton, Ohio
August 5, 1999
<PAGE> 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 /
--------------------------------------------------
FIRSTAR 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)
BRIAN J. GARDNER
VICE PRESIDENT & TRUST OFFICER
Firstar Bank, National Association
425 Walnut Street
Cincinnati, Ohio 45202
(513) 762-8870
(Name, address, and telephone number of agent for services)
-----------------------------------------------------------
DAYTON SUPERIOR CORPORATION
---------------------------
(Exact name of obligor as specified in its charter)
OHIO 31-0676346
---- ----------
(State of Incorporation) (IRS Employer Identification No.)
7777 WASHINGTON VILLAGE DRIVE, SUITE 130 DAYTON, OH 45459
------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
<TABLE>
<CAPTION>
<S> <C>
GUARANTEE OF CONVERTIBLE TRUST PREFERRED SECURITIES OF DAYTON SUPERIOR CAPITAL TRUST
-----------------------------------------------------------------------
</TABLE>
% CONVERTIBLE SUBORDINATED DEBENTURES
(Title of the Indenture securities)
----------------------------------------------------------------------
DAYTON SUPERIOR CAPITAL TRUST
(Exact name of obligor as specified in its charter)
DELAWARE PENDING
-------------------- -------------------------------
(State of Formation) (IRS Employer Identification No)
7777 WASHINGTON VILLAGE DRIVE, SUITE 130 DAYTON, OH 45459
---------------------------------------------------------
CONVERTIBLE TRUST PREFERRED SECURITIES OF DAYTON SUPERIOR CAPITAL TRUST
-----------------------------------------------------------------------
(Title of Indenture Securities)
1
<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.- 15. N/A
16. List of Exhibits. List below all exhibits filed as part of this
----------------- statement of eligibility.
1. Office of the Comptroller of the Currency Amendment Letter
2. A copy of the Articles of Association of Firstar Bank,
National Association, as now in effect
3. A copy of the certificate of authority of The First National
Bank of Cincinnati (now Firstar Bank, National Association) to
commence business dated September 1, 1922.
4. A copy of the authorization of The First National Bank of
Cincinnati (now Firstar Bank, National Association) to
exercise corporate trust powers.
5. A copy of existing By-Laws to Star Bank, National Association
(now Firstar Bank, National Association)
6. The consent of the Trustee required by section 321 (b) of the
Trust Indenture Act of 1939.
7. A copy of the latest report of condition of Firstar Bank,
National Association, published pursuant to law or the
requirements of its supervising or examining authority.
2
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of
1939, the Trustee, Firstar 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 ______ DAY OF
AUGUST, 1999.
FIRSTAR BANK, NATIONAL ASSOCIATION
By: /S/ BRIAN J. GARDNER
--------------------
BRIAN J. GARDNER
VICE PRESIDENT & TRUST OFFICER
3
<PAGE> 4
EXHIBIT 1
---------
Comptroller of the Currency
Administrator of National Banks
Central District Office
One Financial Place, Suite 2700
440 South LaSalle Street
Chicago, Illinois 60605
February 11, 1999
Mr. Richard J. Hidy
Vise president and
Deputy General Counsel
StarBanc Corporation
425 Walnut Street
P.O. Box 1038, ML 9140
Cincinnati, OH 45201-1038
Dear Mr. Hidy:
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 FEBRUARY 12, 1999, the title
of STAR BANK, NATIONAL ASSOCIATION, CINCINNATI, OHIO, Charter No. 24, was
changed to "FIRSTAR BANK, NATIONAL ASSOCIATION."
As a result of the Garn-St. Germain Depository Institutions Act of 1982, the OCC
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 and state law.
Sincerely,
/S/ David J. Rogers
National Bank Examiner
4
<PAGE> 5
EXHIBIT 2
---------
FIRSTAR BANK, NATIONAL ASSOCIATION
----------------------------------
CHARTER NO. 24
--------------
ARTICLES OF ASSOCIATION
-----------------------
FIRST: The title of this Association shall be "Firstar Bank, National
Association".
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 thereof by the Bylaws, but of
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 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 stack 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 authorize and issue debt
obligations, whether or not subordinated, without the approval of the
shareholders.
5
<PAGE> 6
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.
SEVENTH: 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.
EIGHTH: The corporate existence of this Association shall continue until
terminated in accordance with the laws of the United States.
NINTH: The Board of Directors of this Association, the Chairman of the Board,
the President, or any three of more shareholders owning, in the aggregate, not
less than 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.
TENTH: 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. And, provided further, that no director, officer or employee shall
be so indemnified or reimbursed for expenses, penalties or other payments
incurred in an administrative proceeding or action instituted by an appropriate
bank regulatory agency where said proceeding or action results in a final order
6
<PAGE> 7
TENTH (continued) assessing civil money penalties or requiring affirmative
action by an individual or individuals in the form of payments to this
Association. 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 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.
ELEVENTH: 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.
7
<PAGE> 8
EXHIBIT 3
---------
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, 1922 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 &
seal of office this first day of
September, 1922
(Signed) D. R. Crissinger
------------------
Comptroller of the Currency
8
<PAGE> 9
EXHIBIT 4
---------
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)
9
<PAGE> 10
EXHIBIT 5
---------
BY-LAWS
-------
STAR BANK, N.A.
---------------
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 of his shares equal, or to distribute them on
the same principle among as many candidates as he shall think fit.
10
<PAGE> 11
SECTION 6. WAIVER AND CONSENT
- ---------- ------------------
The shareholders may act without notice and/or a meeting by a unanimous written
consent by all shareholders.
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
11
<PAGE> 12
SECTION 7. ELECTION-AGE LIMITATION (continued)
- ---------- -----------------------
a Director until he reaches his seventy-fifth (75th) birthday.
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
- ---------- ---------------------
The Chairman of the Board 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, unless the Board of Directors shall have
designated the President to be the Chief Executive Officer, the Chairman of the
Board shall be the Chairman 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.
12
<PAGE> 13
SECTION 3. CHAIRMAN OF THE BOARD (continued)
- ---------- ---------------------
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.
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.
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.
13
<PAGE> 14
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.
ARTICLE IV
----------
COMMITTEES
----------
SECTION 1 EXECUTIVE COMMITTEE
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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
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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
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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
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<PAGE> 15
SECTION 3. COMMITTEE ON AUDIT (continued)
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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
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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
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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 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
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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
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The Chairman may appoint, from time to time, other committees for such purposes
and with such powers as he or the Board may direct.
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<PAGE> 16
ARTICLE V
---------
SEAL
----
SECTION 1 IMPRESSION
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The following is an impression of the seal of this Association.
February 27, 1992
RESOLVED, That Article I, Section 1, Article II, Section 2 and Article IV,
Section 5 of the By-Laws of the Association be amended to state as follows:
ARTICLE I
SECTION 1 ANNUAL MEETING
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The annual meeting of the shareholders shall be held in the main banking house
of the Association at 11:00 a.m. on the second Tuesday in March 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.
ARTICLE II
SECTION 2. REGULAR MEETINGS
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The organizational meeting of the Board of directors shall be held on the same
date 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 June, September, and
December, at the main banking house, or, provided notice 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.
ARTICLE IV
SECTION 5. TRUST POLICY COMMITTEE
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There shall be a standing committee of this association to be known as the Trust
Policy Committee composed of officers of the Association. The Trust Policy
Committee OR SUCH OFFICERS AS MAY BE DULY DESIGNATED BY THE TRUST POLICY
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 policy committee shall be reported to the Trust
Committee.
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<PAGE> 17
EXHIBIT 6
---------
THE CONSENT OF THE TRUSTEE
REQUIRED BY 321 (b) OF THE ACT
Firstar 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.
FIRSTAR BANK, NATIONAL ASSOCIATION
AUGUST ___, 1999 BY: /S/ BRIAN J. GARDNER
---------------- ------------------------
Date BRIAN J. GARDNER
VICE PRESIDENT & TRUST OFFICER
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<PAGE> 18
EXHIBIT 7
---------
CONSOLIDATED REPORT OF CONDITION
FIRSTAR BANK, N. A.
FOR MARCH 31, 1999
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.
BALANCE SHEET
<TABLE>
<CAPTION>
Dollar Amounts in
Thousands
<S> <C>
ASSETS
1. Cash and balances due from depository institutions
a. Noninterest-bearing balances and currency and coin $818,380
b. Interest-bearing balances 21,607
2. Securities:
a. Held-to-maturity securities 131,272
b. Available-for-sale securities 2,059,697
3. Federal funds sold and securities purchased under agreements to resell in 29,425
domestic offices of the bank and of its Edge and Agreements subsidiaries, and in YBFs
a. Federal funds sold 0.00
b. Securities purchased under agreements to resell 0.00
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income 12,141,715
b. LESS: Allowance for loan and lease losses 169,731
c. LESS: Allocated transfer risk reserve
d. Loans and leases, net of unearned income, allowance, and reserve 11,971,984
5. Trading assets 0
6. Premises and fixed assets (including capitalized leases) 211,109
7. Other real estate owned 306,539
8. Investments in unconsolidated subsidiaries and associated companies 9,962
9. Customers' liability to this bank on acceptances outstanding 15,686
10. Intangible assets 0
11. Other assets 1,481,347
12. Total assets $17,057,008
</TABLE>
18
<PAGE> 19
CONSOLIDATED REPORT OF CONDITION FIRSTAR BANK, N. A.
FOR MARCH 31, 1999 CONTINUED
<TABLE>
<CAPTION>
Dollar Amounts
in Thousands
<S> <C> <C>
LIABILITIES
13. Deposits:
a. In domestic offices $12,879,866
(1) Noninterest-bearing $2,439,612
(2) 10,440,254
Interest-bearing
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs 16,488
(1) Noninterest-bearing 0
(2) Interest-bearing 16,488
14. Federal funds purchased and securities sold under agreements 1,196,022
to repurchase in domestic offices of the bank and of its Edge and
Agreement subsidiaries, and in IBFs:
a. Federal funds purchased
b. Securities sold under agreements to repurchase
15. a. Demand notes issued to the U.S. Treasury 0
b. Trading liabilities 0.00
16. Other borrowed money:
a. With original maturity of one year or less 545,244
b. With original maturity of more than one year 0
17. Mortgage indebtedness and obligations under capitalized leases
18. Bank's liability on acceptances executed and outstanding 15,686
19. Subordinated notes and debentures 363,075
20. Other liabilities 335,377
21. Total liabilities 15,351,758
22. Limited-life preferred stock and related surplus 0.00
23. Perpetual preferred stock and related surplus 0.00
24. Common Stock 18,200
25. Surplus [exclude all surplus related to preferred stock] 900,651
26. a. Undivided profits and capital reserves 773,615
b. Net unrealized holding gains (losses)on available-for-sale 12,784
securities
27. Cumulative foreign currency translation adjustments 0.00
28. Total equity capital 1,705,250
29. Total liabilities, limited-life preferred stock, and equity capital $17,057,008
</TABLE>
19
