<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 18, 1998
REGISTRATION NUMBER 333-60267
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO THE
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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AMERICAN COIN MERCHANDISING, INC. DELAWARE
D/B/A SUGARLOAF CREATIONS, INC.
AMERICAN COIN MERCHANDISING TRUST I DELAWARE
AMERICAN COIN MERCHANDISING TRUST II DELAWARE
AMERICAN COIN MERCHANDISING TRUST III DELAWARE
AMERICAN COIN MERCHANDISING TRUST IV DELAWARE
(Exact name of registrant as specified in its (State or other jurisdiction
charter) of incorporation or organization)
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AMERICAN COIN MERCHANDISING, INC. 84-1093721
D/B/A SUGARLOAF CREATIONS, INC.
AMERICAN COIN MERCHANDISING TRUST I 84-6329379
AMERICAN COIN MERCHANDISING TRUST II 84-6329380
AMERICAN COIN MERCHANDISING TRUST III 84-6329381
AMERICAN COIN MERCHANDISING TRUST IV 84-6329382
(Exact name of registrant as specified in its (I.R.S. Employer Identification Number)
charter)
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<TABLE>
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5660 CENTRAL AVENUE JEROME M. LAPIN
BOULDER, COLORADO 80301 CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE OFFICER
(303) 444-2559 AMERICAN COIN MERCHANDISING, INC.
(Address, including zip code, and telephone number, 5660 CENTRAL AVENUE
including BOULDER, COLORADO 80301
area code, of each registrant's principal executive offices) (303) 444-2559
(Name, address, including zip code, and telephone number,
including area code, of agent for service for each
registrant)
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Copies To:
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JAMES H. CARROLL, ESQ. JAMES L. CARPENTER, JR., ESQ. KENNETH M. DORAN, ESQ.
COOLEY GODWARD LLP HUTCHINSON BLACK & COOK LLC GIBSON, DUNN & CRUTCHER LLP
2595 CANYON BOULEVARD, SUITE 250 1215 SPRUCE STREET, SUITE 100 333 SOUTH GRAND AVENUE
BOULDER, COLORADO 80302 BOULDER, COLORADO 80302 LOS ANGELES, CALIFORNIA 90071
(303) 546-4000 (303) 442-6514 (213) 229-7000
FAX: (303) 546-4099 FAX: (303) 442-6593 FAX: (213) 229-7520
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the Registration Statement becomes effective.
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, please check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
---------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
SUBJECT TO COMPLETION, DATED AUGUST 18, 1998
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED , 1998)
5,000,000 TRUST PREFERRED SECURITIES
% CUMULATIVE TRUST PREFERRED SECURITIES (LIQUIDATION AMOUNT $10 PER TRUST
PREFERRED SECURITY) FULLY AND UNCONDITIONALLY GUARANTEED BY
[AMERICAN COIN LOGO]
American Coin Merchandising Trust I
---------------------
The % Cumulative Trust Preferred Securities (the "Trust Preferred
Securities") offered hereby represent undivided beneficial preferred interests
in the assets of American Coin Merchandising Trust I, a statutory business trust
created under the laws of the State of Delaware (the "Trust"). American Coin
Merchandising, Inc., a Delaware corporation (the "Company"), will be the owner
of all the beneficial interests represented by common securities of the Trust
(the "Common Securities" and, collectively with the Trust Preferred Securities,
the "Trust
(continued on page S-3)
---------------------
The Trust Preferred Securities have been approved for listing, subject to
notice of issuance, on the American Stock Exchange, Inc. Trading of the Trust
Preferred Securities on the American Stock Exchange is expected to commence
within a 30-day period after the initial delivery of the Preferred Securities.
See "Underwriting."
SEE "RISK FACTORS" BEGINNING ON PAGE S-14 OF THIS PROSPECTUS SUPPLEMENT FOR
CERTAIN INFORMATION THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE
SECURITIES OFFERED HEREBY.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
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PRICE TO UNDERWRITING DISCOUNTS PROCEEDS TO
THE PUBLIC AND COMMISSIONS(1) THE TRUST(2)
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Per Trust Preferred Security.................. $10.00 (2) $10.00
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Total(3)...................................... $50,000,000 (2) $50,000,000
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(1) See "Underwriting" for information concerning indemnification of the
Underwriters by the Trust and the Company and other matters.
(2) In view of the fact that all of the proceeds of the sale of the Trust
Preferred Securities will be used to purchase the Junior Subordinated
Debentures, the Company has agreed to pay the Underwriters as compensation
for arranging the investment therein of such proceeds, $0.40 per Trust
Preferred Security or $2,000,000 in the aggregate. See "Underwriting." The
Company also has agreed to pay the expenses of the Offering estimated to be
$550,000.
(3) The Trust has granted to the Underwriters a 30-day option to purchase up to
an additional $7,500,000 aggregate liquidation amount of Trust Preferred
Securities on the same terms as set forth above, solely to cover
over-allotments, if any. If such option is exercised in full, the total
Price to the Public and Proceeds to the Trust will be $57,500,000 and
$57,500,000, respectively, and the total compensation to be paid by the
Company to the Underwriters will be $2,300,000. See "Underwriting."
---------------------
The Trust Preferred Securities are being offered by the Underwriters named
herein, subject to prior sale, when, as and if issued by the Trust and delivered
to and accepted by the Underwriters and subject to certain prior conditions,
including the right of the Underwriters to reject any order in whole or in part.
It is expected that delivery of the Trust Preferred Securities will be made in
New York, New York in book-entry form only through the facilities of The
Depository Trust Company on or about , 1998.
EVEREN SECURITIES, INC.
PRUDENTIAL SECURITIES INCORPORATED
LADENBURG THALMANN & CO. INC.
The date of this Prospectus Supplement is , 1998
<PAGE> 3
American Coin Merchandising, Inc. logo over the caption "American Coin
Merchandising, Inc." over a photograph of one of the Company's SugarLoaf Toy
Shoppes filled with various plush toys. Under the SugarLoaf Toy Shoppe is the
caption "Toy Shoppe The Company's Most Popular Skill-Crane."
Beneath the picture is a reproduction of the chart contained on p. S-41 listing
certain of the Company's Retail Accounts.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS,
ON THE AMERICAN STOCK EXCHANGE OR OTHERWISE, WHICH STABILIZE, MAINTAIN OR
OTHERWISE AFFECT THE MARKET PRICE OF THE TRUST PREFERRED SECURITIES.
SPECIFICALLY, THE UNDERWRITERS MAY OVER-ALLOT IN CONNECTION WITH THE OFFERING
AND MAY BID FOR AND PURCHASE TRUST PREFERRED SECURITIES IN THE OPEN MARKET. FOR
A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
Sugarloaf(R), Toy Shoppe(R), Fun Shoppe(R), Treasure Shoppe(R) and A Test
of Skill(R) are all trademarks of the Company.
<PAGE> 4
Gatefold containing the Company's logo, a picture of one of the Company's
SugarLoaf Beanie Bag Shoppes over the caption "Beanie Bag Shoppe" and a picture
of one of the Company's SugarLoaf Treasure Shoppes over the caption "Treasure
Shoppe."
<PAGE> 5
Gatefold containing a map of the United States (including Alaska and Hawaii)
and Canada indicating the locations of the Company's headquarters,
Company-owned offices and franchisees' offices. Under the map is a graph in a
box with two lines, one of which shows the number of Company-owned and
franchisee owned Shoppes and the other one which shows the number of
Company-owned Shoppes from 1993 through June 30, 1998. Under the chart is the
caption "The Company's owned and operated skill-cranes have grown at an average
69.7% compounded annual growth rate between 1993 and 1997.
<PAGE> 6
(Continued from cover page)
Securities"). The Trust exists for the sole purpose of issuing the Trust
Securities and investing the proceeds thereof in an equivalent amount of %
Junior Subordinated Deferrable Interest Debentures (the "Junior Subordinated
Debentures") to be issued by the Company. The Junior Subordinated Debentures
will mature on , 2028, which date may be shortened (such date, as it
may be shortened, the "Stated Maturity") to a date not earlier than
, 2003. The Trust Preferred Securities will have a preference under
certain circumstances with respect to cash distributions and amounts payable on
liquidation, redemption or otherwise over the Common Securities, which will be
held by the Company. See "Description of the Trust Preferred
Securities -- Subordination of Common Securities of the Trust Held by the
Company."
Holders of the Trust Preferred Securities will be entitled to receive
preferential cumulative cash distributions accruing from the date of original
issuance and payable quarterly in arrears on each January 15, April 15, July 15
and October 15 (subject to possible deferral as described below), commencing
October 15, 1998, at the annual rate of % of the Liquidation Amount (as
defined herein) of $10.00 per Trust Preferred Security ("Distributions"). The
amount of each Distribution due with respect to the Trust Preferred Securities
will include amounts accrued through the date such Distribution payment is due
(each, a "Distribution Date"). The Company will have the right, so long as no
Debenture Event of Default (as defined herein) has occurred and is continuing,
to defer payments 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 period (each, an "Extension Period"), provided that no
Extension Period may extend beyond the Stated Maturity of the Junior
Subordinated Debentures. Upon the termination of any such Extension Period and
the payment of all amounts then due, the Company may elect to begin a new
Extension Period subject to the requirements set forth herein. If interest
payments on the Junior Subordinated Debentures are so deferred, Distributions on
the Trust Preferred Securities will also be deferred and the Company will not be
permitted, subject to certain exceptions described herein, to declare or pay any
cash distributions with respect to its capital stock or to make any payment with
respect to its debt securities that rank pari passu with or junior to the Junior
Subordinated Debentures. During an Extension Period, interest on the Junior
Subordinated Debentures will continue to accrue (and the amount of Distributions
to which holders of the Trust Preferred Securities are entitled will accumulate)
at the rate of % per annum, compounded quarterly, and holders of the Trust
Preferred Securities will be required to accrue income and will be required to
pay United States federal income tax on the accrued income. See "Description of
Junior Subordinated Debentures -- Option to Defer Interest Payment Period" and
"Material Federal Income Tax Consequences -- Interest Income and Original Issue
Discount."
The Company has, through the Guarantee Agreement, the Trust Agreement, the
Junior Subordinated Debentures, the Indenture and the Expense Agreement (each as
defined herein), taken together, fully, irrevocably and unconditionally
guaranteed all of the Trust's obligations under the Trust Preferred Securities.
See "Relationship Among the Trust Preferred Securities, the Junior Subordinated
Debentures and the Guarantee -- Full and Unconditional Guarantee." Under the
Guarantee (as defined herein), the Company guarantees the payment of
Distributions by the Trust and payments on liquidation of or redemption of the
Trust Preferred Securities (subordinate to the right to payment of Senior Debt
and Subordinated Debt of the Company, each as defined herein) to the extent of
funds held by the Trust. See "Description of Guarantee." If the Company does not
make required payments on the Junior Subordinated Debentures held by the Trust,
the Trust will have insufficient funds to pay Distributions on the Trust
Preferred Securities. The Guarantee does not cover payment of Distributions when
the Trust does not have sufficient funds to pay such Distributions. In such
event, a holder of the Trust Preferred Securities may institute a legal
proceeding directly against the Company pursuant to the terms of the Indenture
to enforce payment of the Junior Subordinated Debentures to the Trust. See
"Description of Junior Subordinated Debentures -- Enforcement of Certain Rights
by Holders of Trust Preferred Securities." The obligations of the Company under
the Guarantee and the Junior Subordinated Debentures are subordinate and junior
in right of payment to all Senior Debt and Subordinated Debt of the Company.
"See Description of Junior Subordinated Debentures -- Subordination."
The Trust Preferred Securities are subject to mandatory redemption, in
whole or in part, upon repayment of the Junior Subordinated Debentures at the
Stated Maturity or their earlier redemption, in each case at a
S-3
<PAGE> 7
redemption price equal to the aggregate liquidation preference ("Liquidation
Amount") of the Trust Preferred Securities plus any accumulated and unpaid
Distributions thereon to the date of redemption. The Junior Subordinated
Debentures are redeemable prior to maturity at the option of the Company (i) on
or after , 2003, in whole at any time or in part from time to time,
or (ii) at any time, in whole (but not in part), within 90 days following the
occurrence of a Tax Event or an Investment Company Event (each as defined
herein), in each case at a redemption price equal to the accrued and unpaid
interest on the Junior Subordinated Debentures to the date fixed for redemption,
plus 100% of the principal amount thereof. See "Description of the Trust
Preferred Securities -- Redemption."
The Company will have the right at any time, subject to certain
limitations, to dissolve the Trust and, after satisfaction of liabilities to
creditors of the Trust as provided by applicable law, cause a Like Amount (as
defined herein) of the Junior Subordinated Debentures to be distributed to the
holders of the Trust Securities in liquidation of the Trust. See "Description of
the Trust Preferred Securities -- Liquidation Distribution Upon Dissolution."
In the event of the dissolution of the Trust, after satisfaction of
liabilities to creditors of the Trust as required by applicable law, the holders
of Trust Preferred Securities will be entitled to receive a Liquidation Amount
of $10.00 per Trust Preferred Security plus accumulated and unpaid Distributions
thereon to the date of payment, which may be in the form of a Distribution of
such Like Amount of Junior Subordinated Debentures, subject to certain
exceptions. See "Description of the Trust Preferred Securities -- Liquidation
Distribution Upon Dissolution."
The Junior Subordinated Debentures and the Guarantee are unsecured and
subordinated to all Senior Debt and Subordinated Debt of the Company (as each
term is defined in "Description of the Junior Subordinated
Debentures -- Subordination"). The terms of the Junior Subordinated Debentures
and the Guarantee place no limitation on the amount of Senior Debt and
Subordinated Debt that the Company can issue. Currently, the Company has a $50
million reducing revolving loan agreement (the "Credit Facility") which will
increase to $60 million upon the completion of this Offering. The Company will
apply a portion of the net proceeds of this Offering to pay off the outstanding
balance under the Credit Facility, which was approximately $41.8 million as of
June 30, 1998. The Company may cause additional trust preferred securities to be
issued by trusts similar to the Trust in the future, and there is no limit on
the amount of such securities that may be issued. In that event, the Company's
obligations under the junior subordinated debentures to be issued by such other
trusts and the Company's guarantees of the payments by such trusts will be pari
passu with the Company's obligations under the Junior Subordinated Debentures
and the Guarantee, respectively.
Each of the Trust Preferred Securities and, if the Junior Subordinated
Debentures are distributed to holders of Trust Preferred Securities, the Junior
Subordinated Debentures, will be represented by one or more global certificates
registered in the name of The Depository Trust Company (the "Depositary") or its
nominee. Beneficial interests in the Trust Preferred Securities and, in such
event, the Junior Subordinated Debentures, will be shown on, and transfers
thereof will be effected only through, records maintained by participants in the
Depositary. The Depositary and the Paying Agent (as defined herein) will be
responsible for interest and dividend payments to holders of the Trust Preferred
Securities and the Junior Subordinated Debentures. Except as described herein,
the Trust Preferred Securities in certificated form will not be issued in
exchange for global certificates. See "Book-Entry Issuance."
As used herein, (i) the "Indenture" means the Junior Subordinated
Indenture, as amended and supplemented from time to time, between the Company
and Wilmington Trust Company, as Trustee (the "Indenture Trustee"), under which
the Junior Subordinated Debentures will be issued, (ii) the "Trust Agreement"
means the Amended and Restated Trust Agreement relating to the Trust among the
Company, as depositor, Wilmington Trust Company, as Property Trustee (the
"Property Trustee"), Wilmington Trust Company, as Delaware Trustee (the
"Delaware Trustee"), the Administrative Trustees named therein (collectively,
with the Property Trustee and Delaware Trustee, the "Issuer Trustees") and the
holders, from time to time, of the trust securities, (iii) the "Guarantee
Agreement" means the Guarantee Agreement relating to the guarantee between the
Company and Wilmington Trust Company, as Guarantee Trustee (the "Guarantee
Trustee"), and (iv) the "Expense Agreement" means the Agreement as to Expenses
and Liabilities between the Company and the Trust.
S-4
<PAGE> 8
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements and
related notes thereto appearing elsewhere or incorporated by reference in this
Prospectus Supplement and the accompanying Prospectus. Information contained in
this Prospectus Supplement and the accompanying Prospectus includes
"forward-looking statements" (as such term is defined in the Private Securities
Litigation Reform Act of 1995) which can be identified by the use of
forward-looking terminology such as "believes," "expects," "may," "will,"
"should," "plans" or "anticipates" or variations thereon or comparable
terminology or by a discussion of strategy. Because such statements include
risks and uncertainties, actual results could differ materially from those
expressed or implied by such forward-looking statements. This Prospectus
Supplement and the accompanying Prospectus also contain important cautionary
statements identifying factors which may affect such future results. See "Risk
Factors" for a discussion of certain of these factors and risks associated with
an investment in the securities offered hereby. Except as noted otherwise, all
information in this Prospectus Supplement assumes that the Underwriters'
over-allotment option is not exercised. Unless the context otherwise requires,
the term "Company" refers to American Coin Merchandising, Inc., a Delaware
corporation, or prior to August 31, 1995, American Coin Merchandising, Inc. and
affiliates.
THE COMPANY
The Company is the leading owner, operator and franchisor in the United
States of coin-operated skill-crane machines ("Shoppes") that dispense stuffed
animals, plush toys, watches, jewelry and other items through a national network
of more than 11,000 machines operated by the Company and its franchisees. For up
to 50c a play, customers maneuver the skill-crane into position and attempt to
retrieve the desired item in the machine's enclosed display area before play is
ended. The Shoppes are located, in order of prevalence, in supermarkets, mass
merchandisers, restaurants, bowling centers, bingo halls, bars and similar
locations ("Retail Accounts") to take advantage of the regular customer traffic
at these locations. Shoppes are currently located in Wal-Mart, Kmart,
Safeway/Vons, Kroger, AMF Bowling Centers, Fred Meyer Stores, franchised Denny's
and many other well-known Retail Accounts. The Company utilizes displays of
quality merchandise, new product introductions, including Company-designed
products, licensed products and seasonal items, and other merchandising
techniques to attract new and repeat customers. The Company has recently begun
to place complementary vending machines at existing Shoppe locations, including
kiddie rides, bulk vending (candy, gum, novelty items, etc.) and video games.
The number of Company-owned and operated Shoppes has risen from 743 to
6,166 from 1993 to 1997, representing a compound annual growth rate of 69.7%.
During the same period, operating earnings as a percentage of total revenues
increased from 5.2% to 12.4%. In 1997, the Company had record revenue and
operating earnings of $59.1 million and $7.3 million, respectively.
The Company operates four types of Shoppes: (i) the Toy Shoppe which
primarily dispenses plush toys and other toys, (ii) the Treasure Shoppe which
dispenses items such as jewelry and watches, (iii) the Beanie Bag Shoppe which
dispenses beanie-bag type stuffed toys and (iv) the Fun Shoppe which dispenses
small toys, novelty items and candy. At June 30, 1998, over 60% of the Company's
Shoppe placements have been Toy Shoppes, which the Company purchases new for an
average price of $3,600. In 1997, a Toy Shoppe averaged $12,100 in revenue and
over $4,200 in cash profit contribution (revenue minus cost of vended products,
location commissions and direct service cost).
The skill-crane industry has been in existence for over 75 years and is
highly fragmented. Based on analysis of certain industry publications, the
Company believes that there are approximately 50,000 units of prize-dispensing
equipment in operation nationwide, of which skill-cranes are the most prevalent
type, with the average skill-crane business operating 16 machines.
S-5
<PAGE> 9
BUSINESS STRATEGY
The Company plans to increase the number of Shoppes it owns and operates by
an average of at least 1,400 for 1999 and 2000 through a combination of
acquisitions and new Shoppe placements. The Company believes that the Shoppes'
potential economic return, visual appeal, product quality and the Company's high
operational standards are important factors in gaining acceptance of the
Company's Shoppes by Retail Accounts. The Company's business strategy is to
differentiate itself from traditional skill-crane operators by (i) offering
products of higher quality than the carnival-type products that have been
associated with skill-crane and other prize-dispensing equipment; (ii) utilizing
appealing merchandise displays, frequent new product introductions, including
Company-designed products, licensed products and seasonal items, and other
merchandising techniques designed to attract customers; (iii) controlling
product cost by purchasing products in large quantities directly from
manufacturers; (iv) closely monitoring Shoppe revenue per product dispensed (the
"Vend Ratio") to maintain customer satisfaction and optimize Shoppe revenue and
profitability; (v) concentrating the placement of its Shoppes in Retail
Accounts; (vi) providing major Retail Accounts with the timely installation and
operation of an integrated system of Shoppes that can exceed 1,000 machines on a
national basis; and (vii) providing comprehensive training for the Company's
field office personnel and franchisees to assure the achievement of the
Company's business objectives. The Company intends to focus on owning and
operating Shoppes and does not currently intend to grant any additional
franchises.
GROWTH STRATEGY
As of June 30, 1998, the Company owned and operated over 9,100 Shoppes from
a national network that consisted of 40 offices with operations in 40 states,
which management believes makes the Company the largest national owner and
operator of skill-crane machines. The Company believes this network is well
positioned to serve the skill-crane operations of supermarkets, mass
merchandisers, restaurants, bowling centers, bingo halls, bars, and similar
locations, which the Company estimates represent over 100,000 potential crane
locations in the United States. The Company believes that owners and operators
of these locations are becoming increasingly aware of the economic benefits of
amusement and vending machines, such as the Company's Shoppes, which can provide
retailers greater revenue and profits per square foot than alternative uses of
available floor space, with minimal expense. The Company's growth strategy
includes the following:
- Increase penetration of existing Retail Accounts. The Company and its
franchisees are designated skill-crane operators for many regional and
national Retail Accounts including Wal-Mart, Safeway/Vons, Kroger, AMF
Bowling Centers, Fred Meyer Stores and franchised Denny's. The Company
believes opportunities exist to increase penetration within its existing
Retail Accounts.
- Target marketing efforts towards new large Retail Accounts. The Company
believes the attractive economic returns its Shoppes offer and its
demonstrated success with installing and operating a significant number
of Shoppes in Retail Accounts such as Wal-Mart, Safeway/Vons, AMF Bowling
Centers and Fred Meyer Stores will allow it to successfully target new
national and regional Retail Accounts.
- Capitalize on relationships with existing Retail Accounts. The Company
believes it can capitalize on its existing relationships with Retail
Accounts to expand the number and type of amusement and vending machines
it offers at each location. The Company has introduced multiple Shoppes
at individual locations. In addition, the Company has begun to place
complementary vending machines, including kiddie rides, bulk vending and
video games at existing locations.
- Acquire franchisees and other complementary vending businesses. The
Company has completed 13 acquisitions since January 1, 1996, including
eight acquisitions since October 1, 1997, acquiring over 2,300 Shoppes,
significant franchised territories and bulk vending and kiddie ride
businesses. See "-- Recent Acquisitions." The Company plans to pursue
acquisition opportunities in order to increase the number of
Company-owned machines, to acquire franchised territories and to add
other complementary businesses to the Company's product lines.
S-6
<PAGE> 10
RECENT ACQUISITIONS
Since October 1, 1997, as part of the Company's growth strategy it has
completed the eight acquisitions described below:
- Three Rivers Toy Company. The Company's former franchisee for portions of
Pennsylvania, including 83 Shoppes, was purchased in October 1997 for
approximately $0.2 million.
- Quality Amusements Corp. and Quality Entertainment Corp. A bulk vending
and kiddie ride company with operations in Illinois, Indiana, Wisconsin,
Missouri and Iowa was purchased in November 1997 for approximately $2.0
million.
- Creative Coin of Arizona, Inc. The Company's former franchisee for
Arizona, including 146 Shoppes, was purchased in December 1997 for
approximately $1.5 million.
- Tejas Toy Corporation. The Company's former franchisee for portions of
Texas, including 250 Shoppes, was purchased in January 1998 for
approximately $2.4 million.
- McCathren Vending Co. A bulk vending company operating 4,800 pieces of
bulk vending equipment throughout Colorado, Utah and Wyoming was
purchased in March 1998 for approximately $1.2 million.
- American Coin Company of Minneapolis. A skill-crane company in Minnesota,
including 90 skill cranes, was purchased in May 1998 for approximately
$0.3 million.
- Chilton Vending Co. An owner and operator of simulator and traditional
video games, skill-cranes and redemption equipment located in portions of
Kansas and Missouri was purchased in June 1998 for approximately $4.0
million.
- Suncoast Toys, Inc., NW Toys Co. and Oregon Coin Company
("Suncoast"). The Company's franchisees for portions of Washington,
Oregon and Florida, including 1,388 Shoppes, were purchased in June 1998
for approximately $30.0 million.
RECENT DEVELOPMENTS
- Plush 4 Play Acquisition. In July 1998, the Company entered into a
definitive agreement (the "Plush 4 Play Agreement") to acquire Plush 4
Play, Inc. ("Plush 4 Play") for a base purchase price of $6.8 million and
a contingent earn-out of up to $2.7 million, subject to certain
adjustments. Plush 4 Play has skill-crane placement agreements with
several national Retail Accounts, including Shoney's, Inc. and Friendly's
Ice Cream Corporation. Presently, 614 skill-cranes are operated at such
Retail Accounts pursuant to agreements between Plush 4 Play and
independent third party operators. Plush 4 Play is a party to placement
agreements which cover an aggregate of 178 additional Retail Account
locations which do not currently have an installed skill-crane. Plush 4
Play also sells pre-packaged plush toys and animals to the skill-crane
industry. The Plush 4 Play Agreement contains certain closing conditions
which must be satisfied by Plush 4 Play and the Company before the
acquisition can occur. While the Company believes the Plush 4 Play
acquisition will close in September 1998, there can be no assurance that
the acquisition will close by such date, if at all. Pursuant to the terms
of the Plush 4 Play Agreement, the Company will (i) operate certain
skill-crane machines in certain Retail Accounts under the terms of
agreements between Plush 4 Play and such Retail Accounts prior to the
closing of the Plush 4 Play acquisition, and (ii) be assigned the rights
to place skill-crane machines in certain Retail Accounts if the Plush 4
Play acquisition does not close.
- R. & T. Marketing Acquisition. In August 1998, the Company entered into
an agreement to acquire the assets of its former franchisee, R. & T.
Marketing, Inc. ("R&T"), for approximately $2.1 million, subject to
certain adjustments. R&T is the Company's franchisee for portions of
Northern California and owns approximately 370 Shoppes.
- Increased Credit Facility. Upon the completion of this Offering, and the
application of the proceeds therefrom, the Company's Credit Facility will
increase from $50 million to up to $60 million, and the
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<PAGE> 11
Company will have up to $60 million of unused availability under the
Credit Facility, based upon certain financial ratios. See "Use of
Proceeds."
- Shelf Registration of Trust Preferred Securities. In addition to the
Offering contemplated hereby, the Company has filed with the Securities
and Exchange Commission a shelf registration statement which registers up
to an aggregate of $100 million of trust preferred securities (including
the Trust Preferred Securities offered hereby). Such additional trust
preferred securities may be offered by the Company at any time.
GENERAL
The Company was incorporated in Colorado in July 1988 and was
reincorporated in Delaware in July 1995. The Company's principal executive
offices are located at 5660 Central Avenue, Boulder, Colorado 80301 and its
telephone number is (303) 444-2559.
AMERICAN COIN MERCHANDISING TRUST I
The Trust is a statutory business trust created under Delaware law pursuant
to (i) the trust agreement of the Trust among the Company, as depositor, the
Delaware Trustee and an Administrative Trustee and (ii) the filing of a
Certificate of Trust with the Delaware Secretary of State on July 22, 1998. The
Trust's business and affairs are conducted by the Property Trustee, the Delaware
Trustee and two individual Administrative Trustees who are officers of the
Company. The Trust exists for the exclusive purposes of (i) issuing and selling
the Trust Securities, (ii) using the proceeds from the sale of the Trust
Securities to acquire the Junior Subordinated Debentures issued by the Company
and (iii) engaging in only those other activities necessary, advisable or
incidental thereto. The Junior Subordinated Debentures will be the sole assets
of the Trust and payments by the Company under the Junior Subordinate Debentures
and the Expense Agreement will be the sole revenues of the Trust. All of the
Common Securities will be owned by the Company. The Common Securities will rank
pari passu, and payments will be made thereon pro rata, with the Trust Preferred
Securities, except that upon the occurrence and during the continuance of an
event of default under the Trust Agreement resulting from an event of default
under the Indenture, the rights of the Company as holder of the Common
Securities to payment in respect of Distributions and payments upon liquidation,
redemption or otherwise will be subordinated to the rights of the holders of the
Trust Preferred Securities. See "Description of the Trust Preferred
Securities -- Subordination of Common Securities of the Trust Held by the
Company." The Company will acquire Common Securities in an aggregate liquidation
amount equal to approximately 3% of the total capital of the Trust. The Trust
has a term of 31 years, but may be terminated sooner as provided in the Trust
Agreement.
The Trust's principal offices are located at 5660 Central Avenue, Boulder,
Colorado 80301 and its telephone number is (303) 444-2559.
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<PAGE> 12
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL AND OPERATING DATA
The summary financial data set forth below with respect to the Company's
statements of earnings for each of the years in the three-year period ended
December 31, 1997 and balance sheets at December 31, 1996 and 1997, have been
derived from the financial statements of the Company included elsewhere in this
Prospectus Supplement, that have been audited by KPMG Peat Marwick LLP,
independent auditors, as indicated in their report included elsewhere in this
Prospectus Supplement. The financial data for the six months ended June 30, 1997
and 1998 have been derived from unaudited financial statements included
elsewhere in this Prospectus Supplement. The unaudited financial statements
include all adjustments, consisting only of normal recurring adjustments, that
the Company considers necessary for a fair presentation of financial position
and results of operations for these periods. Operating results for the six
months ended June 30, 1998 are not necessarily indicative of the results that
may be expected for the entire year ending December 31, 1998. The unaudited pro
forma financial data gives effect to the acquisition of Suncoast, accounted for
as a purchase, as if it had occurred on January 1, 1997 for statement of
earnings data. The unaudited pro forma data set forth below have been derived
from the Company's and Suncoast's financial statements. The summary pro forma
data is not necessarily indicative of the results that would have been achieved
had such transactions been consummated on such dates and should not be construed
as representative of future operations. Such pro forma data is subject to the
assumptions set forth in the notes to the unaudited pro forma financial
statements appearing elsewhere in this Prospectus Supplement. The information
presented below should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the historical
and pro forma financial statements, and the notes thereto, set forth elsewhere
in this Prospectus Supplement.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
------------------------------------------------ -----------------------------------
HISTORICAL PRO FORMA(1) HISTORICAL PRO FORMA(1)
-------------------------------- ------------- ------------------- -------------
1995 1996 1997 1997 1997 1998 1998
-------- -------- --------- ------------- -------- -------- -------------
(IN THOUSANDS, EXCEPT PERCENTAGES, RATIOS, PER SHARE DATA AND NUMBER OF SHOPPES)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS DATA:
Total revenue............................ $25,714 $38,267 $ 59,084 $78,966 $26,147 $39,723 $48,419
Gross profit............................. 7,959 11,325 17,611 24,468 7,796 11,802 14,547
General and administrative expense....... 4,565 7,053 10,314 14,129 4,725 7,388 10,230(2)
Operating earnings....................... 3,394 4,272 7,297 10,339 3,071 4,414 4,317(2)
Net earnings............................. 2,575(3) 2,586 4,429 4,975 1,765 2,558 1,786(2)
Basic earnings per share................. (4) 0.51 0.80 0.89 0.33 0.40 0.28(2)
Diluted earnings per share............... (4) 0.48 0.78 0.87 0.33 0.38 0.27(2)
Basic weighted average common shares..... (4) 5,092 5,565 5,565 5,323 6,463 6,463
Diluted weighted average common shares... (4) 5,417 5,694 5,694 5,350 6,664 6,664
NUMBER OF SHOPPES:
Company operations....................... 2,057 3,967 6,166 7,553 4,792 9,157
Franchise operations..................... 3,455 3,981 3,952 2,565 4,195 2,355
------- ------- -------- ------- ------- -------
Total............................. 5,512 7,948 10,118 10,118 8,987 11,512
======= ======= ======== ======= ======= =======
OTHER DATA:
EBITDA(5)................................ $ 4,324 $ 6,163 $ 10,589 $ 4,430 $ 7,205
Interest expense, net.................... 383 375 612 267 479
Depreciation and amortization............ 930 1,891 3,292 1,359 2,791
Net cash provided by operating
activities.............................. 2,862 4,216 8,351 4,132 8,552
Net cash (used in) investing
activities.............................. (5,508) (7,448) (16,079) (5,785) (47,082)
Net cash provided by financing
activities.............................. 3,879 2,413 8,886 1,708 40,291
GROWTH RATES:
Revenue growth........................... 46.0% 48.8% 54.4% * 51.9%
EBITDA growth(5)......................... 107.0 42.5 71.8 * 62.9
Operating earnings growth................ 142.3 25.9 70.8 * 43.7
MARGINS:
EBITDA margin(5)(6)...................... 16.8% 16.1% 17.9% 16.9% 18.1%
Operating earnings margin(7)............. 13.2 11.2 12.4 11.7 11.1
Net earnings margin(8)................... 10.0 6.8 7.5 6.8 6.4
RATIOS:
EBITDA to interest expense, net(5)....... 11.3x 16.4x 17.3x 16.6x 15.0x
Earnings to fixed charges(9)............. 7.6x 9.3x 9.6x 9.0x 7.7x
Pro forma earnings to fixed
charges(9)(10).......................... 1.4x 1.2x
</TABLE>
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<PAGE> 13
<TABLE>
<CAPTION>
JUNE 30, 1998
-------------------------
ACTUAL AS ADJUSTED(11)
------- ---------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Working capital............................................. $ 3,240 $ 8,895
Total assets................................................ 88,813 94,468
Total short-term debt and current portion of long-term
debt....................................................... 1,923 1,923
Total long-term debt, excluding current portion............. 45,181 3,386
Company obligated mandatorily redeemable preferred
securities of subsidiary trust holding solely junior
subordinated debentures(12)................................ -- 50,000
Total stockholders' equity.................................. 32,258 32,258
</TABLE>
- ---------------
(1) Pro forma data give effect to the Suncoast Acquisition, accounted for as a
purchase, as if it had occurred on January 1, 1997 for statement of
earnings data. See "Recent Acquisitions."
(2) Included in pro forma general and administrative expense is $567,000 of
employee bonuses, $407,000 of officers' salaries and $39,000 of additional
vacation pay paid or incurred by Suncoast to its officers and employees
prior to the acquisition on June 12, 1998 by the Company. These expenses
were incurred or accelerated due to the purchase by the Company and
management does not expect them to recur. Had such expenses not been
incurred, operating earnings would have been $5,330,000; net earnings would
have been $2,444,000; basic earnings per share would have been $0.38 a
share; and diluted earnings per share would have been $0.37 a share.
(3) During the years 1993 through August 1995, the Company and each of the
Chicago Toy Company, the Georgia Toy Company, Inland Merchandising, Inc.,
Lehigh Valley Toy Company, Performance Merchandising, Inc., Southwest Coin
Company, Sugarloaf, Ltd. and Sugarloaf Marketing Inc. (the "Affiliated
Entities") were organized as either S corporations or a partnership and the
taxable income of the Company and the Affiliated Entities was attributable
directly to their respective stockholders or partners during such periods.
Accordingly, net earnings for 1995 have been adjusted to reflect federal
and state income taxes as if such taxes had been incurred for such period
at an estimated effective rate of 38%. See Note 1 of Notes to the Company's
Financial Statements included herein.
(4) Net earnings per share and weighted average common shares are not presented
for 1995 because the Company and each of the Affiliated Entities were
organized as S corporations or a partnership. On a pro forma basis, basic
and diluted net earnings per share would have been $0.59 and $0.55 and
basic and diluted weighted average common shares would have been 4,299,000
and 4,669,000, respectively for 1995. See Note 14 of Notes to the Company's
Financial Statements included herein.
(5) EBITDA represents earnings before interest expense, income taxes and
depreciation and amortization. EBITDA is not intended to represent cash
flow from operations as defined by generally accepted accounting principles
and should not be considered as an alternative to cash flow or as a measure
of liquidity or as an alternative to net earnings as indicative of
operating performance. The Company's reported EBITDA may not be comparable
to similarly titled measures of other companies. EBITDA, EBITDA growth,
EBITDA margin and the ratio of EBITDA to interest expense, net are included
herein because management believes they are useful for measuring the
Company's ability to service its debt.
(6) EBITDA margin represents EBITDA divided by total revenue.
(7) Operating earnings margin represents operating earnings divided by total
revenue.
(8) Net earnings margin represents net earnings divided by total revenue.
(9) For purposes of calculating the ratio and pro forma ratio of earnings to
fixed charges, earnings consist of income before income taxes plus fixed
charges. Fixed charges consist of the interest expense on all indebtedness,
the estimated representative interest factor of rental expense and losses
of less than 50%-owned affiliates.
(10) The average outstanding debt balances for the year ended December 31, 1997
and the six-month period ended June 30, 1998 were approximately $7.6
million and $12.7 million, respectively, and gross interest expense was
approximately $0.6 million and $0.5 million, respectively. The pro forma
ratios assume the refinancing of this indebtedness with a corresponding
amount of Junior Subordinated Debentures on January 1, 1997.
(11) As adjusted to give effect to the issuance by the Trust of the 5,000,000
Trust Preferred Securities offered hereby and the receipt by the Company of
the proceeds, net of estimated underwriting compensation and other
estimated offering expenses, from the corresponding sale of the Junior
Subordinated Debentures to the Trust, and the application of the net
proceeds therefrom as described under "Use of Proceeds."
(12) The Trust's assets consist solely of an aggregate principal amount of
$51,546,500 of Junior Subordinated Debentures.
* Numbers are omitted as prior period has not been presented herein.
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<PAGE> 14
THE OFFERING
Issuer of Trust Preferred
Securities............... American Coin Merchandising Trust I (the "Trust")
Securities Offered......... 5,000,000 Trust Preferred Securities having a
Liquidation Amount of $10 per Trust Preferred
Security. The Trust Preferred Securities represent
preferred undivided beneficial interests in the
Trust's assets, which will consist solely of the
Junior Subordinated Debentures and payments
thereunder.
Distributions.............. The Distributions payable on each Trust Preferred
Security will be fixed at a rate per annum of
% of the Liquidation Amount of $10 per Trust
Preferred Security, will be cumulative, will accrue
from the date of issuance of the Trust Preferred
Securities, and will be payable quarterly in
arrears on each January 15, April 15, July 15 and
October 15, commencing October 15, 1998 (subject to
possible deferral as described below). The amount
of each Distribution due with respect to the Trust
Preferred Securities will include amounts accrued
through each Distribution Date. See "Description of
the Trust Preferred Securities."
Extension Periods.......... So long as no Debenture Event of Default (as
defined in "Description of the Junior Subordinated
Debentures -- Debenture Events of Default") has
occurred and is continuing, the Company will have
the right, at any time, to defer payments of
interest on the Junior Subordinated Debentures by
extending the interest payment period thereon for a
period not exceeding 20 consecutive quarters with
respect to each deferral period (each an "Extension
Period"), provided that no Extension Period may
extend beyond the Stated Maturity of the Junior
Subordinated Debentures. If interest payments are
so deferred, Distributions on the Trust Preferred
Securities will also be deferred and the Company
will not be permitted, subject to certain
exceptions described herein, to declare or pay any
cash distributions with respect to the Company's
capital stock or future debt securities that rank
pari passu with or junior to the Junior
Subordinated Debentures. During an Extension
Period, Distributions will continue to accumulate
at the rate of % compounded quarterly. Because
interest would continue to accrue and compound on
the Junior Subordinated Debentures, to the extent
permitted by applicable law, holders of the Trust
Preferred Securities will be required to accrue
income for United States federal income tax
purposes and to pay federal income tax thereon. See
"Description of the Junior Subordinated
Debentures -- Option to Defer Interest Payment
Period" and "Material Federal Income Tax
Consequences -- Interest Income and Original Issue
Discount."
Maturity................... The Junior Subordinated Debentures will mature on
, 2028, which date may be shortened
(such date, as it may be shortened, the "Stated
Maturity") to a date not earlier than ,
2003. The Company might, for example, exercise its
right to shorten the maturity of the Junior
Subordinated Debentures under the circumstances
where a Tax Event, Investment Company Event or
other undesirable event could be avoided simply by
shortening the maturity of the Junior Subordinated
Debentures. See "Description of the Junior
Subordinated Debentures -- General."
S-11
<PAGE> 15
Redemption................. The Trust Securities are subject to mandatory
redemption upon repayment of the Junior
Subordinated Debentures at their Stated Maturity or
their earlier redemption at a redemption price
equal to the aggregate Liquidation Amount of the
Trust Securities plus accumulated and unpaid
Distributions thereon to the date of redemption.
The Junior Subordinated Debentures are redeemable
prior to Stated Maturity at the option of the
Company (i) on or after , 2003 in whole
at any time or in part from time to time, or (ii)
at any time, in whole (but not in part), within 90
days following the occurrence of a Tax Event or an
Investment Company Event, in each case at a
redemption price equal to 100% of the principal
amount of the Junior Subordinated Debentures so
redeemed, together with any accrued but unpaid
interest to the date fixed for redemption. See
"Description of the Trust Preferred Securities --
Redemption" and "Description of the Junior
Subordinated Debentures -- Redemption."
Distribution of Junior
Subordinated
Debentures............... The Company has the right, subject to certain
limitations, at any time to dissolve the Trust,
and, after satisfaction of creditors of the Trust
as required by applicable law, to cause the Junior
Subordinated Debentures to be distributed to
holders of Trust Preferred Securities in
liquidation of the Trust. See "Description of the
Trust Preferred Securities -- Distribution of
Junior Subordinated Debentures."
Guarantee.................. Taken together, the Company's obligations under the
various documents described herein, including the
Guarantee Agreement, provide a full and
unconditional guarantee (the "Guarantee") of
payments by the Trust of Distributions and other
amounts due on the Trust Preferred Securities.
Under the Guarantee Agreement, the Company
guarantees the payment of Distributions by the
Trust and payments on liquidation or redemption of
the Trust Preferred Securities (subordinate to the
right to payment of Senior Debt and Subordinated
Debt of the Company) to the extent of funds held by
the Trust. If the Trust has insufficient funds to
pay Distributions on the Trust Preferred Securities
(i.e., if the Company has failed to make required
payments under the Junior Subordinated Debentures),
a holder of the Trust Preferred Securities would
have the right to institute a legal proceeding
directly against the Company to enforce payment on
the Junior Subordinated Debentures. See
"Description of the Junior Subordinated
Debentures -- Enforcement of Certain Rights by
Holders of Trust Preferred Securities," and
"-- Debenture Events of Default" and "Description
of the Guarantee."
Ranking.................... The Trust Preferred Securities will rank pari
passu, and payments thereon will be made pro rata,
with the Common Securities of the Trust held by the
Company, except as described under "Description of
the Trust Preferred Securities -- Subordination of
Common Securities of the Trust Held by the
Company." The obligations of the Company under the
Guarantee, the Junior Subordinated Debentures and
other documents described herein are unsecured and
rank subordinate and junior in right of payment to
all current and future Senior Debt and Subordinated
Debt of the Company, the amount of which is
unlimited. The Company will apply a portion of the
net proceeds of this Offering to pay off the
outstanding balance under the Credit Facility,
which was approximately $41.8 million as of June
30, 1998. The Company may cause additional
S-12
<PAGE> 16
trust preferred securities to be issued by trusts
similar to the Trust in the future, and there is no
limit on the amount of such securities that may be
issued. The Company has filed with the Securities
and Exchange Commission a shelf registration
statement which registers up to an aggregate of
$100 million of trust preferred securities,
including the Trust Preferred Securities offered
hereby. Such additional trust preferred securities
may be offered by the Company at any time. In that
event, the Company's obligations under the junior
subordinated debentures to be issued to such other
trusts and the Company's guarantees of the payments
by such trusts will rank pari passu with the
Company's obligations under the Junior Subordinated
Debentures and the Guarantee, respectively.
Voting Rights.............. The holders of the Trust Preferred Securities will
have no voting rights except in limited
circumstances. Except as provided below, the
affirmative consent of the holders of at least a
majority of the outstanding Trust Preferred
Securities will be required by the Trust for
amendments to the Trust Agreement that would affect
adversely the rights or privileges of the holders
of the Trust Preferred Securities. The Property
Trustee, the Administrative Trustees and the
Company may amend the Trust Agreement without the
consent of holders of the Trust Preferred
Securities to ensure that the Trust will be
classified for United States federal income tax
purposes as a grantor trust or to ensure that the
Trust will not be required to register as an
"investment company" under the Investment Company
Act, even if such action adversely affects the
interests of such holders. See "Description of the
Trust Preferred Securities -- Voting Rights;
Amendment of the Trust Agreement."
ERISA Considerations....... Prospective purchasers should carefully consider
the information set forth under the caption "ERISA
Considerations."
AMEX Symbol................ ACM.Pr.A
Use of Proceeds............ The proceeds to the Trust from the sale of the
Trust Preferred Securities offered hereby will be
invested by the Trust in the Junior Subordinated
Debentures of the Company. The Company will use a
portion of the approximate $47.5 million net
proceeds of the Offering to pay off the
indebtedness outstanding under the Credit Facility.
The Company will use the remaining net proceeds for
general corporate purposes. See "Use of Proceeds."
S-13
<PAGE> 17
RISK FACTORS
The following risk factors should be considered carefully in addition to
the other information contained or incorporated by reference in this Prospectus
Supplement before purchasing the Trust Preferred Securities offered hereby.
RISK FACTORS RELATING TO THE OFFERING
RANKING OF THE COMPANY'S OBLIGATIONS UNDER THE JUNIOR SUBORDINATED DEBENTURES
AND THE GUARANTEE
All obligations of the Company under the Guarantee, the Junior Subordinated
Debentures and other documents described herein are unsecured and rank
subordinate and junior in right of payment to all current and future Senior Debt
and Subordinated Debt of the Company, the amount of which is unlimited.
None of the Indenture, the Guarantee, the Guarantee Agreement or the Trust
Agreement places any limitation on the amount of secured or unsecured debt,
including Senior Debt and Subordinated Debt, that may be incurred by the
Company. Further, there is no limitation on the Company's ability to issue
additional junior subordinated debentures in connection with any further
offerings of trust preferred securities, and such additional debentures would
rank pari passu with the Junior Subordinated Debentures. See "Description of the
Junior Subordinated Debentures -- Subordination" and "Description of the
Guarantee -- Status of the Guarantee."
OPTION TO DEFER INTEREST PAYMENT PERIOD
So long as no Debenture Event of Default (as defined herein) has occurred
and is continuing, the Company has the right under the Indenture to defer
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 Extension Period, provided that no Extension Period may extend beyond the
Stated Maturity of the Junior Subordinated Debentures. As a consequence of any
such deferral, quarterly Distributions on the Trust Preferred Securities by the
Trust will be deferred (and the amount of Distributions to which holders of the
Trust Preferred Securities are entitled will accumulate additional amounts
thereon at the rate of % per annum, compounded quarterly, from the relevant
payment date for such Distributions) during any such Extension Period. During
any such Extension Period, the Company will be prohibited from making certain
payments or distributions with respect to the Company's capital stock (including
dividends on or redemptions of common or preferred stock) and from making
certain payments with respect to any future debt securities of the Company that
rank pari passu with or junior in interest to the Junior Subordinated
Debentures; however, the Company will not be restricted from (a) paying
dividends or distributions in capital stock of the Company, (b) redeeming rights
or taking certain other actions under a stockholders rights plan, (c) making
payments under the Guarantee or (d) making purchases of common stock related to
the issuance of common stock or rights under any of the Company's benefit plans
for its directors, officers, employees or consultants (in connection with an
optionee's or rightholder's use of Common Stock as consideration for the
exercise or purchase price of the related option or right). Further, during an
Extension Period, the Company would have the ability to continue to make
payments on its Senior Debt and Subordinated Debt, if any. Prior to the
termination of any Extension Period, the Company may further extend such
Extension Period provided that such extension does not cause such Extension
Period to exceed 20 consecutive quarters or to extend beyond the Stated
Maturity. Upon the termination of any Extension Period and the payment of all
interest then accrued and unpaid (together with interest thereon at the annual
rate of %, compounded quarterly), the Company may elect to begin a new
Extension Period subject to the above requirements. There is no limitation on
the number of times that the Company may elect to begin an Extension Period. As
a consequence of the Company's deferral of interest payments, holders of the
Trust Preferred Securities will not receive cash distributions during such
deferral periods (although the Distributions to which holders of the Trust
Preferred Securities are entitled will continue to accumulate until payment in
full), and the market price of the Trust Preferred Securities is likely to be
adversely affected by such deferral. A holder that disposes of such holder's
Trust Preferred Securities during an Extension Period, therefore, might not
receive the same return on such
S-14
<PAGE> 18
holder's investment as a holder that continues to hold Trust Preferred
Securities. See "Description of the Trust Preferred
Securities -- Distributions," "Description of the Junior Subordinated
Debentures -- Option to Defer Interest Payment Period" and "-- Debenture Events
of Default."
TAX CONSEQUENCES OF OPTION TO DEFER INTEREST PAYMENT PERIOD AND OF A DEFERRAL OF
INTEREST PAYMENT
Because the Company has no current plan to exercise its option to defer
payments of interest and considers the likelihood of exercising the option to be
a remote contingency as of the issue date of the Junior Subordinated Debentures,
it is the Company's position that the Junior Subordinated Debentures will be
treated as issued without "original issue discount" for United States federal
income tax purposes. As a result, holders of Trust Preferred Securities will
include interest in taxable income under their own methods of accounting (i.e.,
cash or accrual). However, if the Internal Revenue Service (the "Service") were
to successfully challenge the Company's position, or if the Company exercises
its right to defer payments of interest, the holders of Trust Preferred
Securities will be required to include their pro rata share of original issue
discount in gross income as it accrues for United States federal income tax
purposes in advance of the receipt of cash. If the tax authorities successfully
asserted that, as of the issue date of the Junior Subordinated Debentures,
exercise of the deferment option is not a remote or incidental contingency,
interest would be reportable under the contingent payment debt rules of the
Treasury Regulations as of the issue date. See "Material Federal Income Tax
Consequences -- Interest Income and Original Issue Discount." Should the Company
elect to exercise its right to defer payments of interest in the future, the
market price of the Trust Preferred Securities is likely to be adversely
affected. A holder that disposes of such holder's Trust Preferred Securities
during an Extension Period, therefore, might not receive the same return on such
holder's investment as a holder that continues to hold Trust Preferred
Securities. See "Description of the Junior Subordinated Debentures -- Option to
Defer Interest Payment Period."
POSSIBLE TAX LAW CHANGES AFFECTING THE TRUST PREFERRED SECURITIES
There can be no assurance that future legislation will not affect the
ability of the Company to deduct interest on the Junior Subordinated Debentures.
Such a change could give rise to a Tax Event (as defined below), which may
permit the Company to cause a redemption of the Trust Preferred Securities. In
addition, the Service recently asserted that interest payable on a security with
characteristics and issued in circumstances similar to the characteristics and
issuance of the Junior Subordinated Debentures was not deductible for United
States federal income tax purposes. The taxpayer in that case has filed a
petition in the United States Tax Court challenging the Service's position on
this matter. If this matter is litigated and the Tax Court sustains the
Service's position, such judicial decision could give rise to a Tax Event which
could, in certain circumstances, require the dissolution of the Trust or permit
the Company to redeem the Junior Subordinated Debentures. See "Description of
the Trust Preferred Securities -- Redemption -- Tax Event Redemption, Investment
Company Event Redemption" and "Description of the Junior Subordinated
Debentures -- Redemption."
REDEMPTION PRIOR TO STATED MATURITY
The Company may, at its option, on or after , 2003, redeem the
Junior Subordinated Debentures in whole at any time or in part from time to time
at 100% of the principal amount together with accrued but unpaid interest to the
date fixed for redemption and therefore cause a mandatory redemption of the
Trust Securities.
In addition, upon the occurrence and during the continuation of a Tax Event
or an Investment Company Event (whether occurring before or after
, 2003), the Company has the right, if certain conditions are
met, to redeem the Junior Subordinated Debentures in whole (but not in part) at
100% of the principal amount together with accrued but unpaid interest to the
date fixed for redemption within 90 days following the occurrence of such Tax
Event or Investment Company Event and therefore cause a mandatory redemption of
Trust Securities. See "Description of the Trust Preferred
Securities -- Redemption."
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A "Tax Event" means the receipt by the Company and the Trust of an opinion
of counsel experienced in such matters 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, 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 prospective change, pronouncement or decision is announced on or after the
original issuance of the Trust Preferred Securities, there is more than an
insubstantial risk that (i) the Trust is, or will be within 90 days of the date
of such opinion, subject to United States federal income tax with respect to
income received or accrued on the Junior Subordinated Debentures, (ii) interest
payable by the Company on the Junior Subordinated Debentures is not, or within
90 days of such opinion, will not be, deductible by the Company, 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 of the opinion, subject to more than a de
minimis amount of other taxes, duties or other governmental charges.
An "Investment Company Event" means the receipt by the Company and the
Trust of an opinion of counsel experienced in such matters to the effect that,
as a result of any 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, the Trust is or will be considered an
"investment company" that is required to be registered under the Investment
Company Act of 1940, as amended (the "Investment Company Act"), which change
becomes effective on or after the original issuance of the Trust Preferred
Securities.
If less than all of the Trust Securities issued by the Trust are to be
redeemed on a Redemption Date, then the aggregate Redemption Price for such
Trust Securities to be redeemed shall be allocated pro rata to the Trust
Preferred Securities and the Common Securities based upon the relative
Liquidation Amounts of such classes. The particular Trust Preferred Securities
to be redeemed shall be selected by the Property Trustee from the outstanding
Trust Preferred Securities not previously called for redemption, by such method
as the Property Trustee shall deem fair and appropriate and which may provide
for the selection for redemption of portions (equal to $10 or an integral
multiple thereof) of the Liquidation Amount of Trust Preferred Securities.
POSSIBLE DISTRIBUTION OF THE JUNIOR SUBORDINATED DEBENTURES TO HOLDERS OF TRUST
PREFERRED SECURITIES; RISK OF TAXATION UPON A DISTRIBUTION
The Company will have the right at any time, subject to certain
limitations, to dissolve the Trust and, after satisfaction of liabilities to
creditors of the Trust as required by applicable law, cause the Junior
Subordinated Debentures to be distributed to the holders of the Trust Preferred
Securities in liquidation of the Trust. Because holders of the Trust Preferred
Securities may receive Junior Subordinated Debentures in liquidation of the
Trust and because Distributions are otherwise limited to payments on the Junior
Subordinated Debentures, prospective purchasers of the Trust Preferred
Securities are also making an investment decision with regard to the Junior
Subordinated Debentures and should carefully review all the information
regarding the Junior Subordinated Debentures contained herein. See "Description
of the Trust Preferred Securities -- Liquidation Distribution Upon Dissolution"
and "Description of the Junior Subordinated Debentures." If a Tax Event were to
occur which would cause the Trust to be subject to United States federal income
tax with respect to income received or accrued on the Junior Subordinated
Debentures, a distribution of the Junior Subordinated Debentures by the Trust
could be a taxable event to the Trust and the holders of the Trust Preferred
Securities. See "Material Federal Income Tax Consequences -- Distribution of
Junior Subordinated Debentures to Holders of Trust Preferred Securities."
SHORTENING OF STATED MATURITY OF THE JUNIOR SUBORDINATED DEBENTURES
The Company will have the right at any time to shorten the maturity of the
Junior Subordinated Debentures to a date not earlier than five years from the
date of issuance and thereby cause the Trust Preferred Securities to be redeemed
on such earlier date. See "Description of the Junior Subordinated
Debentures -- Redemption."
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<PAGE> 20
LIMITATIONS ON DIRECT ACTIONS AGAINST THE COMPANY AND ON RIGHTS UNDER THE
GUARANTEE
The Guarantee guarantees to the holders of the Trust Preferred Securities
the following payments, to the extent not paid by the Trust: (i) any accumulated
and unpaid Distributions required to be paid on the Trust Preferred Securities,
to the extent that the Trust has funds on hand available therefor at such time,
(ii) the redemption price with respect to any Trust Preferred Securities called
for redemption, to the extent that the Trust has funds on hand available
therefor at such time, and (iii) upon a voluntary or involuntary dissolution,
winding-up or liquidation of the Trust (unless the Junior Subordinated
Debentures are distributed to holders of the Trust Preferred Securities), the
lesser of (a) the aggregate of the Liquidation Amount and all accumulated and
unpaid Distributions to the date of payment to the extent that the Trust has
funds on hand available therefor at such time (the "Liquidation Distribution")
and (b) the amount of assets of the Trust remaining available for distribution
to holders of the Trust Preferred Securities after satisfaction of liabilities
to creditors of the Trust as required by applicable law. The holders of not less
than a majority in aggregate Liquidation Amount of the Trust Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of the
Guarantee or to direct the exercise of any trust power conferred upon the
Guarantee Trustee under the Guarantee Agreement. Any holder of the Trust
Preferred Securities may institute a legal proceeding directly against the
Company to enforce its rights under the Guarantee without first instituting a
legal proceeding against the Trust, the Guarantee Trustee or any other person or
entity. If the Company were to default on its obligation to pay amounts payable
under the Junior Subordinated Debentures, the Trust would lack funds for the
payment of Distributions or amounts payable on redemption of the Trust Preferred
Securities or otherwise, and, in such event, holders of the Trust Preferred
Securities would not be able to rely upon the Guarantee for payment of such
amounts. Instead, in the event a Debenture Event of Default shall have occurred
and be continuing and such event is attributable to the failure of the Company
to pay interest on or principal of the Junior Subordinated Debentures on the
date on which such payment is due and payable, then a holder of Trust Preferred
Securities may institute a legal proceeding directly against the Company for
enforcement of payment to such holder of the principal of or interest on such
Junior Subordinated Debentures having a principal amount equal to the aggregate
liquidation amount of the Trust Preferred Securities of such holder (a "Direct
Action"). In connection with such Direct Action, the Company will have a right
of set-off under the Indenture to the extent of any payment made by the Company
to such holder of Trust Preferred Securities in the Direct Action. Except as
described herein, holders of Trust Preferred Securities will not be able to
exercise directly any other remedy available to the holders of the Junior
Subordinated Debentures or assert directly any other rights in respect of the
Junior Subordinated Debentures. See "Description of the Junior Subordinated
Debentures -- Enforcement of Certain Rights by Holders of Trust Preferred
Securities" and "Description of the Guarantee." The Trust Agreement provides
that each holder of Trust Preferred Securities by acceptance thereof agrees to
the provisions of the Guarantee Agreement and the Indenture.
ABILITY TO MAKE PAYMENTS ON THE TRUST PREFERRED SECURITIES AND JUNIOR
SUBORDINATED DEBENTURES
The ability of the Trust to pay amounts due on the Trust Preferred
Securities is solely dependent upon the Company making payments on the Junior
Subordinated Debentures as and when required. The Company will have significant
interest expense under the Junior Subordinated Debentures. As of June 30, 1998,
after giving effect to the Offering and the application of net proceeds
therefrom, the Company would have had no indebtedness outstanding under the
Credit Facility. In addition, the Indenture does not prohibit the Company from
incurring additional indebtedness including indebtedness secured by its assets
or properties. While the Company expects that its operating cash flow will be
sufficient to cover its expenses including interest costs, there can be no
assurance with respect thereto. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."
LIMITED COVENANTS; ABSENCE OF SINKING FUND
The covenants in the Indenture are limited. The Company is not required
under the Indenture to meet any financial tests that measure the Company's
working capital, interest coverage or net worth in order to comply with the
terms of the Indenture. There are no covenants relating to the Company in the
Trust
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<PAGE> 21
Agreement. As a result, neither the Indenture nor the Trust Agreement protects
holders of Junior Subordinated Debentures, or Trust Preferred Securities,
respectively, in the event of a material adverse change in the Company's
financial condition or results of operations, or limits the ability of the
Company to incur additional indebtedness. Therefore, the provisions of these
governing instruments should not be considered a significant factor in
evaluating whether the Company will be able to comply with its obligations under
the Junior Subordinated Debentures or the Guarantee. Further, the Junior
Subordinated Debentures do not have the benefit of any sinking fund payments by
the Company.
LIMITED VOTING RIGHTS
The holders of the Trust Preferred Securities will have no voting rights
except in limited circumstances relating only to the modification of the Trust
Preferred Securities and the exercise of the rights of the Trust as holder of
the Junior Subordinated Debentures and the Guarantee. Except as provided below,
the affirmative consent of the holders of at least a majority of the outstanding
Trust Preferred Securities will be required by the Trust for amendments to the
Trust Agreement that would affect adversely the rights or privileges of the
holders of the Trust Preferred Securities. Holders of Trust Preferred Securities
will not be entitled to vote to appoint, remove or replace the Property Trustee
or the Delaware Trustee, and such voting rights are vested exclusively in the
holder of the Common Securities except upon the occurrence of certain events
described herein. In no event will the holders of the Trust Preferred Securities
have the right to vote to appoint, remove or replace the Administrative
Trustees; such voting rights are vested exclusively in the holder of the Common
Securities. The Property Trustee, the Administrative Trustees and the Company
may amend the Trust Agreement without the consent of holders of the Trust
Preferred Securities to cure any ambiguity or make other provisions not
inconsistent with the Trust Agreement or to ensure that the Trust will be
classified for United States federal income tax purposes as a grantor trust or
to ensure that the Trust will not be required to register as an "investment
company" under the Investment Company Act, even if such action adversely affects
the interests of such holders. See "Description of the Trust Preferred
Securities -- Voting Rights; Amendment of the Trust Agreement" and " -- Removal
of Trustees."
ABSENCE OF EXISTING PUBLIC MARKET; MARKET PRICES
There is no existing market for the Trust Preferred Securities. The Trust
Preferred Securities have been approved for listing, subject to notice of
issuance, on the American Stock Exchange. There can be no assurance, however,
that an active and liquid trading market for the Trust Preferred Securities will
develop or that continued listing of the Trust Preferred Securities will be
available on the American Stock Exchange. Although the representatives of the
Underwriters have informed the Trust and the Company that the Underwriters
intend to make a market in the Trust Preferred Securities offered hereby, the
Underwriters are not obligated to do so and any such market making activity may
be terminated at any time without notice to the holders of the Trust Preferred
Securities. Future trading prices of the Trust Preferred Securities will depend
on many factors including, among other things, prevailing interest rates, the
operating results and financial condition of the Company, and the market for
similar securities. As a result of the existence of the Company's right to defer
interest payments on or shorten the Stated Maturity of the Junior Subordinated
Debentures, the market price of the Trust Preferred Securities may be more
volatile than the market prices of debt securities that are not subject to such
optional deferrals or reduction in maturity. There can be no assurance as to the
market prices for the Trust Preferred Securities or the listing, or market
prices for, the Junior Subordinated Debentures that may be distributed in
exchange for the Trust Preferred Securities if the Company exercises its right
to dissolve and liquidate the Trust. Accordingly, the Trust Preferred Securities
that an investor may purchase, or the Junior Subordinated Debentures that a
holder of the Trust Preferred Securities may receive in liquidation of the
Trust, may trade at a discount from the price that the investor paid to purchase
the Trust Preferred Securities offered hereby.
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<PAGE> 22
RISK FACTORS RELATING TO THE COMPANY
GROWTH AND MANAGEMENT OF GROWTH
The Company has recently experienced substantial growth. There can be no
assurance that the Company will continue to grow at historical rates or at all.
The Company has completed 13 acquisitions since January 1, 1996, including eight
acquisitions since October 1, 1997. The Company's ability to generate increased
revenue and achieve higher levels of profitability will depend upon its ability
and the ability of its franchisees to place additional Shoppes in Retail
Accounts as well as to maintain or increase the average financial performance of
the Shoppes. The Company's ability to place additional Shoppes depends on a
number of factors beyond the Company's control, including general business and
economic conditions. Installation of additional Shoppes will also depend, in
part, upon the Company's ability to secure additional national and regional
Retail Accounts and to obtain approval to place additional Shoppes in individual
locations of such accounts. The Company, its franchisees and their suppliers
also may be unable to place and adequately service additional Shoppes, which
could have a material adverse effect on the Company's business, financial
condition and results of operations.
In addition, the Company has limited experience with product offerings
beyond skill-cranes, and new product offerings (including kiddie rides, bulk
vending, redemption equipment and video games) may involve risks and operational
requirements different from those of the Shoppes. Accordingly, there can be no
assurance that any additional Company product offerings will meet with success
or generate significant additional revenue.
There can be no assurance that the Company will be able to manage its
expanding operations effectively or that it will be able to maintain or
accelerate its growth. The Company's growth has placed, and is expected to
continue to place, significant demands on all aspects of the Company's business,
including Shoppe servicing, merchandising, financial and administrative
personnel and systems. The Company's future operating results are substantially
dependent upon the ability of the Company's officers and key personnel to manage
anticipated growth and increased demand effectively; to attract, train and
retain additional qualified personnel; and to implement and improve technical,
service, administrative, financial control and reporting systems. Either a
deterioration in Shoppe performance or the Company's failure to manage growth
effectively could adversely and materially affect the Company's business,
financial condition and results of operations. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business --
Business Strategy" and " -- Growth Strategy."
SUBSTANTIAL INDEBTEDNESS; EFFECT OF FINANCIAL LEVERAGE
The Company intends to use a portion of the proceeds of this Offering to
repay the outstanding balance on its Credit Facility, which will result in the
Company having $60 million available under the Credit Facility. See "Use of
Proceeds." The Company intends to use funds available under the Credit Facility
for a number of purposes, including future acquisitions. The use of funds from
the Credit Facility could result in the Company incurring indebtedness that is
substantial in relation to its stockholders' equity and cash flow. If the
Company incurs substantial indebtedness, fixed charges could exceed earnings for
the foreseeable future. Substantial leverage poses the risk that the Company may
not be able to generate sufficient cash flow to service its indebtedness, or to
adequately fund its operations. There can be no assurance that the Company will
be able to increase its revenue and leverage the acquisitions it has made to
achieve sufficient cash flow to meet its potential debt service obligations. In
particular, there can be no assurance that the Company's operating cash flow
will be sufficient to meet its debt service obligations under the Credit
Facility, if drawn upon. The Company's leverage also could limit its ability to
effect future financings or may otherwise restrict the Company's operations and
growth.
INTEGRATION OF ACQUISITIONS
The Company has recently completed a number of acquisitions and intends to
continue to acquire other businesses in the future. Acquisitions have placed,
and are likely to continue to place, a significant strain on
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<PAGE> 23
the Company's managerial, operating, financial and other resources. The
Company's future performance will depend, in part, upon its ability to integrate
its acquisitions effectively, which will require that the Company implement
additional management information systems capabilities, further develop its
operating, administrative and financial and accounting systems and controls,
improve coordination among accounting, finance, marketing and operations, and
hire and train additional personnel. Failure by the Company to develop adequate
operational and control systems or to attract and retain additional qualified
management, financial, sales and marketing and customer care personnel could
materially adversely affect the Company's ability to integrate the businesses it
has acquired and continues to acquire. While the Company anticipates that it
will recognize various economies and efficiencies of scale as a result of its
acquisitions and the integration of the businesses it has acquired, the process
of consolidating the businesses and implementing integrations, even if
successful, may take a significant period of time, will place a significant
strain on the Company's resources and could subject the Company to additional
expenses during the integration process. Furthermore, the Company's performance
will depend on the internal growth generated through acquired operations. As a
result, there can be no assurance that the Company will be able to integrate the
businesses it has acquired successfully or in a timely manner in accordance with
its strategic objectives. Failure to effectively and efficiently integrate
acquired businesses could have a material adverse effect on the Company's
business, financial condition and results of operations.
TRADE RELATIONS AND DEPENDENCE ON MAJOR ACCOUNTS
The Company's largest account, Wal-Mart, accounted for approximately 33.5%
of total revenue in 1997. Although the Company has entered into a contract with
Wal-Mart (which expires on January 1, 2000), national and regional Retail
Accounts generally do not enter into long-term contracts with vendors. In
individual-location accounts, the Company and its franchisees generally place
Shoppes pursuant to oral agreements with location managers. The arrangements of
the Company and its franchisees with most of these accounts may be terminated at
any time. In addition, Wal-Mart may terminate its contract with the Company
under certain limited circumstances. The loss of the Wal-Mart account, or the
loss of a significant number of other major accounts, or a significant reduction
in the number of Shoppes placed at such accounts, for any reason, could have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Business -- Operations."
COMPETITION
The Company competes with a number of regional and local operators of
skill-crane machines. Many of these competitors are engaged in aggressive
expansion programs, and the Company has experienced and expects to continue to
experience intense competition for new locations and acquisition candidates.
There can be no assurance that the Company will be able to compete effectively
with these companies in the future. The Company's Shoppes also compete with
other vending machines and coin-operated amusement devices and seasonal and bulk
merchandise for sites within retail locations. There can be no assurance that
the Company will be able to maintain its current sites in the retail locations
or that it will be able to obtain sites in the future on attractive terms or at
all. There also are few barriers to entry in the Company's business, and it
would be possible for well-financed vending machine manufacturers or other
vending machine operators with existing relationships with Retail Accounts
targeted by the Company to compete readily with the Company in certain markets.
DEPENDENCE ON SUPPLIERS AND FOREIGN SOURCING
Substantially all of the plush toys and other products dispensed from the
Shoppes are produced by foreign manufacturers. A majority are purchased directly
by the Company from manufacturers in China. The Company purchases its other
products indirectly from vendors who obtain a significant percentage of such
products from foreign manufacturers. As a result, the Company is subject to
changes in governmental policies, the imposition of tariffs, import and export
controls, transportation delays and interruptions, political and economic
disruptions and labor strikes which could disrupt the supply of products from
such manufacturers. Among other things, the loss of China's "most favored
nation" status under U.S. tariff laws could result in a
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<PAGE> 24
substantial increase in the import duty of certain products manufactured in
China, which could result in substantially increased costs for certain products
purchased by the Company which could have a material adverse effect on the
Company's business, financial condition and results of operations. See
"Business -- Operations" and " -- Suppliers."
The Company also could be affected by labor strikes in the sea shipping,
trucking and railroad industries, all of which the Company utilizes to varying
degrees. Although the Company believes that alternative means of transportation
would be available for its products in the event of a labor strike affecting a
particular mode of transportation, such a disruption could increase the
Company's transportation costs and thereby reduce its profit margins in a
particular period.
The Company does not have a long-term supply agreement with any of its
crane suppliers. While the Company believes that it will continue to be able to
purchase skill-crane machines from existing or alternative suppliers, no
assurance can be given that skill-cranes will be available on a cost-efficient
basis or that shortages or other disruptions in the Company's sources of supply
for skill-crane machines and components would not have a material and adverse
effect on the Company's business, financial condition and results of operations.
See "Business -- Suppliers" and " -- Growth Strategy."
SEASONALITY AND VARIABILITY OF RESULTS
The financial performance of the Shoppes is substantially dependent on the
level of retail traffic at such Shoppes' particular location. Accordingly, the
business, financial condition and results of operations of the Company can be
materially and adversely affected by factors which reduce retail traffic at
Shoppe locations. These include numerous factors beyond the Company's control
such as weather, labor strikes and other disruptions of the business at Retail
Accounts and local and national business and economic conditions. The Company's
results are also linked to seasonal increases in foot-traffic at Retail
Accounts, and disruptions of past trends, including traditional increases during
holiday seasons, could decrease the Company's revenue. As a result, the
Company's operating results may vary significantly over time. Accordingly,
period-to-period comparisons of its results of operations are not necessarily
meaningful and the Company's past results should not be relied upon as an
indication of future performance.
CHANGING CONSUMER TRENDS; TECHNOLOGICAL INNOVATIONS
Consumer preferences are constantly changing and difficult to predict, and
consumer interest in the Company's Shoppes or the products dispensed could
decline suddenly or other prize-dispensing equipment or amusement devices could
replace the Shoppes in consumer preference. The Company's success will depend in
part on its ability to offer new and appealing products and on the continuing
appeal of its Shoppes' skill-crane format in both existing markets and in new
markets into which the Company may expand. There can be no assurance that the
use of skill-crane machines and the Company's operating results will not be
adversely affected by changing consumer trends.
The Company's business also is susceptible to advances in the design and
manufacture of skill-crane machines and other vending technology. The Company's
failure to anticipate or respond adequately to such technological changes could
adversely affect the Company's business and results of operations.
GOVERNMENT REGULATION
The Company's business is subject to federal, state, provincial and local
regulations relating to product labeling and safety, coin-operated games and
franchising. The Federal Hazardous Substances Act, as amended by the Child
Protection Act of 1966, the Child Protection and Toy Safety Act of 1969, the Toy
Safety Act of 1984 and the Child Safety Protection Act of 1994 require the
labeling of articles which bear or contain a hazardous substance as defined in
such statutes. In addition, the Consumer Product Safety Commission may, under
such statutes, ban from the market toys or other articles intended for use by
children which contain hazardous substances or present a public health or safety
hazard, and require the repurchase and reimbursement of certain expenses by the
manufacturer of such banned toys or articles. If plush toys or
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watches dispensed by the Company's Shoppes were to be banned, permanently or
temporarily, the Company's business, financial condition and results of
operations could be adversely affected.
The distribution and operation of skill-crane machines may be subject to
federal, state, provincial and local regulations, including gaming regulations,
which vary from jurisdiction to jurisdiction. Certain jurisdictions may require
companies and their key personnel to hold licenses, permits and approvals in
connection with the distribution or operation of skill-crane machines.
Currently, the Company has obtained all governmental licenses, permits and
approvals that it believes are necessary for the distribution and operation of
its skill-crane machines. However, no assurance can be given that such licenses,
permits or approvals will be given or renewed in the future. The Company's
franchisees are responsible for their own regulatory compliance. The rejection
or termination of the Company's or any of its franchisees' licenses, permits or
approvals may adversely affect the Company's business, financial condition and
results of operations.
Many states and local jurisdictions lack specific laws and regulations
relating to skill-crane machines, and there can be no assurance that existing
state or local laws and regulations, including gaming laws and regulations, will
not be construed or enforced in the future to prohibit the operation of Shoppes
in these jurisdictions or subject the Company and its franchisees to additional
regulations or licensing requirements. Also, there can be no assurance that new
laws and regulations that prevent or restrict the operation of Shoppes in
particular states or local jurisdictions will not be adopted. Any such actions
on the part of states or local jurisdictions could have a material adverse
effect on the Company's business, financial condition and results of operations,
and on its expansion plans.
As a franchisor, the Company is subject to various federal and state
franchise and business opportunity laws and regulations. Although the Company
does not currently intend to grant any additional franchises and it believes it
is in material compliance with such laws in the states in which the Company has
offered and sold franchises, the promulgation of new franchising laws and
regulations could adversely affect the Company's business, financial condition
and results of operations.
PRODUCT LIABILITY AND INSURANCE
The Company carries property, liability, workers' compensation and
directors and officers liability insurance policies, which it believes are
customary for businesses of its size and type. However, there can be no
assurance that the Company's insurance coverage will be adequate or that
insurance will continue to be available to the Company at reasonable rates. The
Company may be subject to claims for personal injuries resulting from the use of
its Shoppes or from products and other merchandise dispensed from the Shoppes.
To date, the Company has not experienced any material product liability claims
or costs, and it currently maintains product liability insurance which it
believes to be adequate. The Company's product liability insurance coverage is
limited, however, and there can be no assurance that such insurance would
adequately cover future product liability costs or claims.
INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS
The Company has no patents or patent applications pending and relies
primarily on a combination of trademark and unfair competition laws, trade
secrets, confidentiality procedures and agreements to protect its proprietary
rights. The Company owns a number of trademarks that have been registered with
the United States Patent and Trademark Office and in Canada, including
"SugarLoaf," "Toy Shoppe," "Treasure Shoppe" and "Fun Shoppe" and has four
trademark applications pending. In addition, the Company claims common law
trademark protection for the mark "A Test of Skill." The Company considers its
operations manual, training videos, and other related materials and portions of
its licensed methods to be proprietary and confidential, and the terms of the
Company's franchise agreements require franchisees to maintain the
confidentiality of such information and procedures and to adopt reasonable
precautions to prevent unauthorized disclosure of these secrets and information.
Despite the Company's efforts to protect its proprietary rights, unauthorized
parties may attempt to copy aspects of the Company's Shoppes and products or to
obtain and use information that the Company regards as proprietary. The Company
also may be involved from time
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to time in litigation to determine the enforceability, scope and validity of
proprietary rights. See "Business -- Intellectual Property."
DEPENDENCE ON KEY EMPLOYEES
The Company's success to date has been dependent in part upon the efforts
and abilities of Jerome M. Lapin (its President, Chief Executive Officer and
Chairman), W. John Cash (its Vice President, Chief Financial Officer and
Treasurer), Randall J. Fagundo (its Vice President of Operations and Secretary),
Abbe M. Stutsman (its Vice President of Purchasing and Product Development) and
certain other key personnel. The Company's continued success will depend upon
its ability to retain a number of its current key employees and to attract,
train and retain new key management and operational personnel. There can be no
assurance that the Company will be able to retain its existing key employees or
attract and retain qualified employees in the future. The Company does not
maintain any "key man" insurance. In addition, executives or other employees
with knowledge of the Company's operations and policies may leave the Company
and establish competitive businesses. There can be no assurance that the Company
would be able to effectively enforce non-compete provisions against these
individuals. See "Business -- Employees" and "Management."
EFFECT OF ANTI-TAKEOVER PROVISIONS
The Company's Board of Directors has the authority to issue up to 500,000
shares of Preferred Stock and to determine the price, rights, preferences and
privileges of those shares without any further vote or action by the
stockholders. Such issuance, while providing flexibility in connection with
possible acquisitions and other corporate purposes, could have the effect of
making it more difficult for a third party to acquire a majority of the
outstanding voting stock of the Company. In addition, the Company is subject to
the anti-takeover provisions of Section 203 of the Delaware General Corporation
Law, which prohibit the Company from engaging in a "business combination" with
an "interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless the
business combination is approved in a prescribed manner. The application of
Section 203 also could have the effect of delaying or preventing a change of
control of the Company. Furthermore, certain provisions of the Company's
Certificate of Incorporation may have the effect of delaying or preventing
changes in control or management of the Company.
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USE OF PROCEEDS
All of the proceeds to the Trust from the sale of the Trust Preferred
Securities offered by it hereby will be invested by the Trust in the Junior
Subordinated Debentures. The net proceeds to the Company from the sale of the
Junior Subordinated Debentures are estimated to be approximately $47.5 million
(approximately $54.7 million if the Underwriters' over-allotment option is
exercised in full) after deducting the estimated underwriting compensation and
offering expenses payable by the Company.
The net proceeds from the Offering will be used to repay the outstanding
principal amount of the Company's Credit Facility and for general corporate
purposes. The Credit Facility bears interest at the bank's prime interest rate,
or at the Company's option, an interest rate based on the current LIBOR rate,
and has a final maturity of July 13, 2001. At June 30, 1998, the amount
outstanding under the Credit Facility was approximately $41.8 million. Upon the
completion of the Offering contemplated hereby and the application of the net
proceeds therefrom, the Company will have up to $60 million of unused
availability based on certain financial ratios pursuant to the Credit Facility.
Such unused availability, together with the Company's other available cash
resources, will be used to (i) purchase additional skill-crane, bulk vending,
kiddie ride and video game equipment and (ii) fund complementary acquisitions of
other companies, technology or products. The Company does not presently have any
commitments or agreements with respect to any such acquisitions, other than the
proposed acquisitions of Plush 4 Play, Inc. and R. & T. Marketing, Inc. See
"Business -- Recent Developments." The amounts and timing of such expenditures
will depend upon the availability and terms of acquisitions and any related
financing and other factors, many of which are beyond the Company's control.
ACCOUNTING TREATMENT
For financial reporting purposes, the Trust will be treated as a subsidiary
of the Company and, accordingly, the accounts of the Trust will be included in
the consolidated financial statements of the Company. The Trust Preferred
Securities will be presented as a separate line item in the consolidated balance
sheet of the Company under the caption "Company Obligated Mandatorily Redeemable
Preferred Securities of Subsidiary Trust Holding Solely Junior Subordinated
Debentures," and appropriate disclosures about the Trust Preferred Securities,
the Guarantee and the Junior Subordinated Debentures will be included in the
notes to consolidated financial statements. Estimated underwriting compensation
and other estimated offering expenses will be capitalized as a deferred
financing cost and amortized over the life of the Junior Subordinated
Debentures. For financial reporting purposes, the Company will record
Distributions payable on the Trust Preferred Securities and amortization of
deferred financing costs as interest expense in the consolidated statements of
operations.
Future reports of the Company filed under the Exchange Act will include a
footnote to the financial statements stating that (i) the Trust is wholly owned,
(ii) the sole assets of the Trust are the Junior Subordinated Debentures
(specifying the principal amount, interest rate and maturity date of such Junior
Subordinated Debentures) and (iii) the back up obligations, in the aggregate,
constitute a full and unconditional guarantee by the Company of the obligations
of the Trust under the Trust Preferred Securities. The Trust will not provide
separate reports under the Exchange Act.
S-24
<PAGE> 28
CAPITALIZATION
The following table sets forth the capitalization of the Company as of June
30, 1998 (a) on a historical basis as reported and (b) on an as adjusted basis
to give effect to (i) the issuance by the Trust of the 5,000,000 Trust Preferred
Securities offered hereby, (ii) the receipt by the Company of the proceeds, net
of estimated underwriting compensation and other estimated offering expenses,
from the corresponding sale of the Junior Subordinated Debentures to the Trust,
and (iii) the application by the Company of the net proceeds therefrom as
described under "Use of Proceeds."
<TABLE>
<CAPTION>
JUNE 30, 1998
---------------------
ACTUAL AS ADJUSTED
------- -----------
(IN THOUSANDS, EXCEPT
SHARE DATA)
<S> <C> <C>
Short-term debt and current portion of long-term debt....... $ 1,923 $ 1,923
======= =======
Long-term debt, excluding current portion................... 45,181 3,386
Company obligated mandatorily redeemable preferred
securities of subsidiary trust holding solely junior
subordinated debentures(1)................................ -- 50,000
Stockholders' equity:
Preferred Stock, $.10 par value; 500,000 shares
authorized, none issued actual, pro forma and pro forma
as adjusted............................................ -- --
Common Stock, $.01 par value, 20,000,000 shares
authorized; issued and outstanding 6,468,903, actual
and as adjusted(2)..................................... 65 65
Additional paid-in capital................................ 21,949 21,949
Unearned stock option compensation........................ (10) (10)
Retained earnings......................................... 10,254 10,254
------- -------
Total stockholders' equity........................ 32,258 32,258
------- -------
Total capitalization.............................. $77,439 $85,644
======= =======
</TABLE>
- ---------------
(1) The subsidiary trust is the Trust, which will hold an aggregate principal
amount of approximately $51.5 million of the Junior Subordinated Debentures
as its sole asset. The Trust Preferred Securities will be issued by the
Trust. The Junior Subordinated Debentures will bear interest at the rate of
% per annum and will mature on , 2028, which date may be
shortened to a date not earlier than , 2003 if certain
conditions are met. The Junior Subordinated Debentures are redeemable prior
to maturity at the option of the Company (i) on or after , 2003,
in whole at any time or in part from time to time, or (ii) at any time, in
whole (but not in part), within 90 days following the occurrence and
continuation of a Tax Event or an Investment Company Event. See "Description
of Junior Subordinated Debentures -- Redemption." The Company will own all
of the Common Securities issued by the Trust.
(2) Excludes (i) 295,667 shares of Common Stock issuable upon exercise of stock
options at a weighted average exercise price of $7.86 per share outstanding
as of June 30, 1998 and (ii) 55,000 shares of Common Stock issuable upon
exercise of certain warrants which have an exercise price of $8.40 per
share.
S-25
<PAGE> 29
SELECTED FINANCIAL AND OPERATING DATA
The selected financial data set forth below with respect to the Company's
statements of earnings for each of the years in the three-year period ended
December 31, 1997 and balance sheets at December 31, 1996 and 1997, have been
derived from the financial statements of the Company included elsewhere in this
Prospectus Supplement, that have been audited by KPMG Peat Marwick LLP,
independent auditors, as indicated in their report included elsewhere in this
Prospectus Supplement. The statement of earnings data for the years ended
December 31, 1993 and 1994 and the balance sheet data as of December 31, 1993,
1994 and 1995, have been derived from the financial statements audited by KPMG
Peat Marwick LLP, which are not included in this Prospectus Supplement. The
financial data for the six months ended June 30, 1997 and 1998 are unaudited and
have been derived from unaudited financial statements included elsewhere in this
Prospectus Supplement. The unaudited financial statements include all
adjustments, consisting only of normal recurring adjustments, that the Company
considers necessary for a fair presentation of financial position and results of
operations for these periods. Operating results for the six months ended June
30, 1998 are not necessarily indicative of the results that may be expected for
the entire year ending December 31, 1998. The data set forth below should be
read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the financial statements, including
notes thereto, included elsewhere in this Prospectus Supplement.
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
----------------------------------------------- -----------------
1993 1994 1995 1996 1997 1997 1998
------- ------- ------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA AND NUMBER OF SHOPPES)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS DATA:
Revenue:
Vending........................................ $ 6,258 $11,651 $17,031 $30,439 $52,866 $22,648 $37,709
Franchise and other............................ 4,250 5,963 8,683 7,828 6,218 3,499 2,014
------- ------- ------- ------- ------- ------- -------
Total revenue............................ 10,508 17,614 25,714 38,267 59,084 26,147 39,723
------- ------- ------- ------- ------- ------- -------
Cost of revenue:
Vending........................................ 4,368 8,399 11,701 21,283 37,506 16,042 26,669
Franchise and other............................ 2,737 4,207 6,054 5,659 3,967 2,309 1,252
------- ------- ------- ------- ------- ------- -------
Total cost of revenue.................... 7,105 12,606 17,755 26,942 41,473 18,351 27,921
------- ------- ------- ------- ------- ------- -------
Gross profit............................. 3,403 5,008 7,959 11,325 17,611 7,796 11,802
General and administrative expense............... 2,854 3,607 4,565 7,053 10,314 4,725 7,388
------- ------- ------- ------- ------- ------- -------
Operating earnings....................... 549 1,401 3,394 4,272 7,297 3,071 4,414
Interest expense................................. 115 228 383 375 612 267 479
Minority interest................................ 89 62 80 -- -- -- --
Share of (income) loss of equity affiliate....... 24 29 27 -- -- -- --
------- ------- ------- ------- ------- ------- -------
Earnings before income taxes............. 321 1,082 2,904 3,897 6,685 2,804 3,935
Income tax expense............................... -- -- 329 1,311 2,256 1,039 1,377
------- ------- ------- ------- ------- ------- -------
Net earnings............................. $ 321 $ 1,082 $ 2,575 $ 2,586 $ 4,429 $ 1,765 $ 2,558
======= ======= ======= ======= ======= ======= =======
Basic earnings per share(1)...................... $ 0.51 $ 0.80 $ 0.33 $ 0.40
Diluted earnings per share(1).................... 0.48 0.78 0.33 0.38
Basic weighted average common shares(1).......... 5,092 5,565 5,323 6,463
Diluted weighted average common shares(1)........ 5,417 5,694 5,350 6,664
PRO FORMA INFORMATION:
Historical net earnings before income taxes.... $ 321 $ 1,082 $ 2,904
Pro forma adjustments to earnings before
taxes........................................ 1,207
-------
Pro forma earnings before taxes................ 4,111
Pro forma income tax expense................... 122 411 1,562
------- ------- -------
Pro forma net earnings(1)(2)................... $ 199 $ 671 $ 2,549
======= ======= =======
NUMBER OF SHOPPES(3):
Company operations............................... 743 1,019 2,057 3,967 6,166 4,792 9,157
Franchise operations............................. 2,148 3,008 3,455 3,981 3,952 4,195 2,355
------- ------- ------- ------- ------- ------- -------
Total.................................... 2,891 4,027 5,512 7,948 10,118 8,987 11,512
======= ======= ======= ======= ======= ======= =======
</TABLE>
S-26
<PAGE> 30
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
------------------------------------------------ ------------------
1993 1994 1995 1996 1997 1997 1998
------- ------- ------- ------- -------- ------- --------
(IN THOUSANDS, EXCEPT PERCENTAGES AND RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER DATA:
EBITDA(4)...................................... $ 878 $ 2,089 $ 4,324 $ 6,163 $ 10,589 $ 4,430 $ 7,205
Interest expense, net.......................... 115 228 383 375 612 267 479
Depreciation and amortization.................. 329 688 930 1,891 3,292 1,359 2,791
Net cash provided by operating activities...... 774 1,772 2,862 4,216 8,351 4,132 8,552
Net cash (used in) investing activities........ (1,145) (1,468) (5,508) (7,448) (16,079) (5,785) (47,082)
Net cash provided by (used in) financing
activities................................... 531 (256) 3,879 2,413 8,886 1,708 40,291
GROWTH RATES:
Revenue growth................................. 35.0% 67.6% 46.0% 48.8% 54.4% * 51.9%
EBITDA growth(4)............................... 34.9 137.9 107.0 42.5 71.8 * 62.9
Operating earnings growth...................... 19.6 155.2 142.3 25.9 70.8 * 43.7
MARGINS:
EBITDA margin(4)(5)............................ 8.4% 11.9% 16.8% 16.1% 17.9% 16.9% 18.1%
Operating earnings margin(6)................... 5.2 8.0 13.2 11.2 12.4 11.7 11.1
Net earnings margin(7)......................... 3.1 6.1 10.0 6.8 7.5 6.8 6.4
RATIOS:
EBITDA to interest expense, net(4)............. 7.6x 9.2x 11.3x 16.4x 17.3x 16.6x 15.0x
Earnings to fixed charges(8)................... 3.5x 5.1x 7.6x 9.3x 9.6x 9.0x 7.7x
Pro forma earnings to fixed charges(8)(9)...... 1.4x 1.2x
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------- JUNE 30,
1993 1994 1995 1996 1997 1998
------ ------ ------- ------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital............................................. $ 350 $ 220 $ 2,896 $ 2,914 $ 3,626 $ 3,240
Total assets................................................ 3,750 5,539 13,702 19,758 37,077 88,813
Total short-term debt and current portion of long-term
debt...................................................... 1,157 1,380 557 1,109 1,619 1,923
Total long-term debt, excluding current portion............. 1,078 1,640 1,632 5,059 1,292 45,181
Total stockholders' equity.................................. 833 1,214 9,007 11,676 30,092 32,258
</TABLE>
- ---------------
(1) Net earnings per share and weighted average common shares are not presented
for 1995 because the Company and each of the Affiliated Entities were
organized as S corporations or a partnership. On a pro forma basis, basic
and diluted net earnings per share would have been $0.59 and $0.55 and basic
and diluted weighted average common shares would have been 4,299,000 and
4,669,000, respectively, for 1995. See Note 14 of Notes to the Company's
Financial Statements included herein.
(2) During the years 1993 through August 1995, the Company and the Affiliated
Entities were organized as either S corporations or a partnership and the
taxable income of the Company and the Affiliated Entities was attributable
directly to their respective stockholders or partners during such periods.
Accordingly, net income has been adjusted to reflect federal and state
income taxes as if such taxes had been incurred for such period at an
estimated effective rate of 38%. See Note 1 of Notes to the Company's
Financial Statements included herein.
(3) Shoppes previously owned and operated by the Affiliated Entities, other than
Sugarloaf Marketing, are included in Company operations. Shoppes previously
owned and operated by Sugarloaf Marketing are included in franchise
operations on a historical basis. The number of Shoppes is as of the end of
the indicated period.
(4) EBITDA represents earnings before interest expense, income taxes and
depreciation and amortization. EBITDA is not intended to represent cash flow
from operations as defined by generally accepted accounting principles and
should not be considered as an alternative to cash flow or as a measure of
liquidity or as an alternative to net earnings as indicative of operating
performance. The Company's reported EBITDA may not be comparable to
similarly titled measures of other companies. EBITDA, EBITDA growth, EBITDA
margin and EBITDA to interest expense, net are included herein because
management believes they are useful for measuring the Company's ability to
service its debt.
(5) EBITDA margin represents EBITDA divided by total revenue.
(6) Operating earnings margin represents earnings from operations divided by
total revenue.
(7) Net earnings margin represents net earnings divided by total revenue.
S-27
<PAGE> 31
(8) For purposes of calculating the ratio and pro forma ratio of earnings to
fixed charges, earnings consist of income before income taxes, plus fixed
charges. Fixed charges consist of the interest expense on all indebtedness,
the estimated representative interest factor of rental expense and losses of
less than 50%-owned affiliates.
(9) The average outstanding debt balances for the year ended December 31, 1997
and the six-month period ended June 30, 1998 were approximately $7.6 million
and $12.7 million, respectively, and gross interest expense was
approximately $0.6 million and $0.5 million, respectively. The pro forma
ratios assume the refinancing of this indebtedness with a corresponding
amount of Junior Subordinated Debentures on January 1, 1997.
* Numbers are omitted as prior period has not been presented herein.
S-28
<PAGE> 32
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management's Discussion and Analysis of Financial Condition
and Results of Operations contains forward-looking statements which involve
risks and uncertainties. The Company's actual results could differ materially
from those anticipated in these forward-looking statements as a result of
certain factors including those set forth under "Risk Factors" and elsewhere in
this Prospectus Supplement. The information presented below should be read in
conjunction with the financial statements, including notes thereto, included
elsewhere in this Prospectus Supplement.
GENERAL
The Company and its franchisees own and operate Shoppes that dispense
stuffed animals, plush toys, watches, jewelry and other items. The Company's
Shoppes are placed in Retail Accounts and similar high traffic locations and the
Company typically pays 20-30% of gross revenue to the location owner as a
location commission. At June 30, 1998, the Company was operating in 40 states
with a national network of 40 offices and there were Company franchisees
operating in 17 territories. The Company sells both machines and products vended
in the machines to its franchisees and collects continuing royalties ranging
from 2% to 5% of its franchisees' gross machine revenue.
For the year ended December 31, 1997, over 85% of the Company's revenue and
gross profit were derived from Company-owned Shoppes. The Company's revenue and
gross profit in a particular period is directly related to the number of Shoppes
in operation during the period. Management believes that the Company's business
is somewhat seasonal, with average revenue per machine per week higher during
the Easter and Christmas periods. Vending revenue represents cash receipts from
customers using vending machines and is recognized when collected. The cost of
vending revenue is comprised of the cost of vended products, location
commissions, depreciation and direct service cost.
Franchise and other revenue represents the Company's percentage of gross
vending revenue generated by Shoppes owned and operated by franchisees, as well
as product sold to the franchisees. Initial franchise fees have not been
material, and the Company currently does not plan to expand its franchise
network. Product sold to the franchisees consists of goods to vend in Shoppes.
Equipment sales to the franchisees have been done on a pass-through basis from
the Company's main suppliers. The Company anticipates that franchise and other
revenue will continue to decline in the future as a result of the Company's
acquisition of franchises.
In 1995, the Company terminated its S corporation status. In conjunction
with its initial public offering in October 1995, the Company reorganized by
acquiring substantially all of the inventory, property and equipment and
assuming certain facilities leases and contracts of the Affiliated Entities (the
"Reorganization"). All of the Affiliated Entities previously were franchisees of
the Company and all except Sugarloaf Marketing were controlled by one or more of
Greg Theisen, Abbe Stutsman, Richard Jones and Randall Fagundo and their
respective spouses (the "Founders").
The number of Company-owned and operated Shoppes has risen from 743 to
6,166 from 1993 to 1997, representing a compound annual growth rate of 69.7%. In
1997, the Company had revenue and operating earnings of $59.1 million and $7.3
million, respectively. The Company has experienced 54.0% and 90.9% compound
annual growth rates in total revenue and operating earnings, respectively,
between 1993 and 1997.
S-29
<PAGE> 33
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998 VS. SIX MONTHS ENDED JUNE 30, 1997
Revenue
Total revenue for the first six months of 1998 increased 51.9% to $39.7
million from $26.1 million for the same period in 1997.
Vending revenue increased $15.1 million or 66.5% for the first six months
of 1998 to $37.7 million from $22.6 million for the comparable period in 1997 as
a result of a 75.5% increase in the average number of Shoppes in place during
the first six months of 1998 compared to the average number in place during the
same period in 1997. The average number of Shoppes in place during the six
months ended June 30, 1998 includes the acquisition of the operating assets
(including approximately 1,380 Shoppes) of a significant franchisee that
occurred on June 12, 1998.
Franchise and other revenue decreased $1.5 million or 42.4% to $2.0 million
for the first six months of 1998 as compared to the same period in 1997. The
decrease results from the acquisition of franchises by the Company and a
reduction in the number of machines sold to the franchisees.
Cost of Revenue and Gross Profit
The cost of vending operations for the first six months of 1998 increased
$10.6 million or 66.2% to $26.7 million from $16.0 million for the comparable
period in 1997. The vending operation's contribution to gross profit for the
first six months of 1998 increased to $11.0 million, which represents a 67.1%
increase over gross profit from vending operations realized in the same period
in 1997. Vending gross profit realized during the first six months of 1998 was
29.3% of vending revenue, as compared to 29.2% for the same period in 1997.
Gross profit on franchise and other revenue for the first six months of
1998 decreased to $762,000 or 37.8% of franchise and other revenue, which is 3.8
percentage points higher than the gross margin achieved for the same period in
1997. The increase in gross profit resulted primarily from a reduction in
equipment sales to franchisees.
Operating Expense
General and administrative expenses for the first six months of 1998
increased $2.7 million to $7.4 million or 18.6% of total revenue, as compared to
$4.7 million or 18.1% of total revenue for the comparable period in 1997. The
increase in general and administrative expense results primarily from the
additional operating and satellite offices opened by the Company during the past
year.
Operating Earnings
Operating earnings for the first six months of 1998 increased 43.7% to $4.4
million, or 11.1% of total revenue, as compared to $3.1 million, or 11.7% of
total revenue for the comparable period in 1997. The increase in operating
earnings results primarily from the 75.5% increase in the average number of
Shoppes in place during the first six months of 1998 compared to the average
number in place for the comparable period in 1997.
Non Operating Income (Expense)
Interest expense for the first six months of 1998 increased $212,000 to
$479,000 as compared to the same period in 1997, primarily as a result of the
increase in debt resulting from the acquisition of the operating assets of a
significant franchisee. The Company's interest expense is directly related to
its level of borrowings and changes in the underlying interest rates.
Net Earnings and Net Earnings Per Share
Net earnings for the first six months of 1998 increased 44.9% to $2.6
million, or 6.4% of total revenue, as compared to net earnings of $1.8 million
for the comparable period in 1997. Diluted earnings per share for the
S-30
<PAGE> 34
first six months of 1998 increased 15.2% to $0.38, as compared to $0.33 for the
comparable period in 1997. Diluted weighted average common shares for the first
six months of 1998 increased 24.6% to 6,663,652, as compared to 5,349,914 for
the comparable period in 1997.
YEAR ENDED DECEMBER 31, 1997 VS. YEAR ENDED DECEMBER 31, 1996
Revenue
The Company's total revenue increased 54.4% from $38.3 million in 1996 to
$59.1 million in 1997. Vending revenue increased $22.4 million or 73.7% in 1997
to $52.9 million, primarily as a result of a 68.2% increase in the average
number of Shoppes in use during 1997 over the average number in use during 1996.
Franchise and other revenue decreased $1.6 million or 20.6% in 1997 as
compared to 1996 due primarily to the acquisition of Company franchises.
Cost of Revenue and Gross Profit
The cost of vending operations increased $16.2 million in 1997 to $37.5
million. The vending operations' contribution to 1997 gross profit increased to
$15.4 million, which represents a 67.8% increase over gross profit from vending
operations realized in 1996. The vending gross profit achieved in 1997 was 29.1%
of vending revenue, which represents a decrease from the 30.1% of vending
revenue achieved in 1996. The decline in vending margin in 1997 results
primarily from a higher commission rate paid to locations in 1997.
Gross profit on franchise and other revenue in 1997 increased to $2.3
million, or 36.2% of franchise and other revenue, which is 8.5 percentage points
higher than the gross margin achieved in 1996. The increase in gross margin as a
percentage of franchise and other revenue resulted primarily from lower 1997
equipment sales to franchisees that are at lower margins.
Operating Expense
General and administrative expense as a percentage of revenue decreased to
17.5%, as compared to 18.4% of revenue in 1996. The $3.3 million increase in
general and administrative expense results primarily from the additional
operating and satellite offices opened by the Company during the past year.
Operating Earnings
Operating earnings in 1997 increased 70.8% to $7.3 million or 12.4% of
total revenue, which are, as a percentage of total revenue, 1.2 percentage
points higher than the operating earnings achieved in 1996. The increase in
operating earnings results primarily from the 68.2% increase in the average
number of Shoppes in place during 1997 compared to average number in place in
1996. The effect of the increase in Shoppes is offset by the 46.2% increase in
general and administrative expense experienced in 1997 compared to 1996.
Non Operating Income (Expense)
Interest expense increased $237,000 to $612,000 in 1997 as compared to
1996. The Company's interest expense is directly related to its level of
borrowings and changes in the underlying interest rates.
Net Earnings and Earnings Per Share
Net earnings for the year ended December 31, 1997 were $4.4 million, or
7.5% of total revenue, as compared to net earnings of $2.6 million during 1996.
Diluted earnings per share for 1997 increased 62.5% to $0.78, as compared to
$0.48 per share in 1996.
S-31
<PAGE> 35
YEAR ENDED DECEMBER 31, 1996 VS. YEAR ENDED DECEMBER 31, 1995
Revenue
The Company's total revenue increased 48.8% from $25.7 million in 1995 to
$38.3 million in 1996. Vending revenue increased $13.4 million or 78.7% in 1996
to $30.4 million as a result of a 95.8% increase in the average number of
Shoppes in use during 1996 over the average number in use during 1995. Franchise
and other revenue decreased $855,000 or 9.8% in 1996 as compared to 1995 due
primarily to the acquisition of Company franchises.
Cost of Revenue and Gross Profit
The cost of vending operations increased $9.6 million in 1996 to $21.3
million. The vending operations' contribution to 1996 gross profit increased to
$9.2 million, which represents a 71.8% increase over gross profit from vending
operations realized in 1995. The vending gross profit achieved in 1996 was 30.1%
of vending revenue, which represents a decrease from the 31.3% of vending
revenue achieved in 1995. The decrease in vending margin in 1996 results
primarily from a higher commission rate paid to locations. Gross profit on
franchise and other revenue in 1996 decreased to $2.2 million, or 27.7% of
franchise and other revenue, which is 2.6 percentage points lower than the gross
margin achieved in 1995. The decrease in gross margin resulted primarily from
lower margins realized on equipment sales to franchisees.
Operating Expense
General and administrative expense increased $2.5 million in 1996 to $7.1
million or 18.4% of revenue, as compared to $4.6 million or 17.8% of revenue in
1995. The increase in general and administrative expense results primarily from
the acquisition of SugarLoaf Marketing and other franchisees, additional
operating and satellite offices opened during 1996, the accelerated placement of
machines during 1996 and the additional payroll and other costs associated with
being a public company. In 1995, general and administrative expense includes
$232,000 of commissions paid to two of the Company's founders.
Operating Earnings
Operating earnings in 1996 increased to $4.3 million or 11.2% of total
revenue, which are, as a percentage of total revenue, 2 percentage points lower
than the operating earnings achieved in 1995. The decrease in operating earnings
results primarily from the additional operating and satellite offices opened
during 1996, the accelerated placement of machines during 1996 and the
additional payroll and other costs associated with being a public company.
Non Operating Income (Expense)
Interest expense decreased $8,000 to $375,000 in 1996 as compared to 1995.
The Company's interest expense is directly related to its level of borrowings
and changes in the underlying interest rates.
Net Earnings and Earnings Per Share
Net earnings for the year ended December 31, 1996 were $2.6 million, or
6.8% of total revenue. Diluted earnings per share for the year ended December
31, 1996 were $0.48. Prior to October 13, 1995, the Company had elected tax
treatment as an S corporation, while the Affiliated Entities were each organized
as S corporations, except for Southwest Coin Company which was organized as a
partnership. Accordingly, through October 12, 1995, no provisions were made for
income taxes since all income, deductions, gains, losses and credits were
reported on the tax returns of the owners.
S-32
<PAGE> 36
QUARTERLY DATA AND SEASONAL VARIATION
The Company believes that its revenue tends to be somewhat seasonal, with
revenue per machine being higher during the Christmas and Easter holiday seasons
due to higher levels of foot traffic at Shoppe locations during those periods.
However, the following table does not necessarily reflect seasonal
machine-revenue fluctuations because of the number of Shoppes added by the
Company during the periods. The following table contains selected unaudited
quarterly financial data for the last six months of 1996, 1997 and the first six
months of 1998. The unaudited information has been prepared on the same basis as
the audited financial statements appearing elsewhere in this Prospectus
Supplement and includes all normal recurring adjustments necessary to present
fairly, in all material respects, the information set forth herein.
<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------------------------------------------------
SEPT. 30, DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30,
1996 1996 1997 1997 1997 1997 1998 1998
--------- -------- -------- -------- --------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total revenue................. $9,634 $12,216 $12,357 $13,790 $14,676 $18,261 $18,761 $20,962
Total cost of revenue......... 6,743 8,489 8,551 9,800 10,342 12,780 13,294 14,627
------ ------- ------- ------- ------- ------- ------- -------
Gross profit................ 2,891 3,727 3,806 3,990 4,334 5,481 5,467 6,335
General and administrative
expenses.................... 1,827 2,023 2,296 2,429 2,523 3,066 3,526 3,862
------ ------- ------- ------- ------- ------- ------- -------
Operating earnings.......... 1,064 1,704 1,510 1,561 1,811 2,415 1,941 2,473
Interest expense.............. 136 148 111 156 217 128 118 361
------ ------- ------- ------- ------- ------- ------- -------
Earnings before income
taxes..................... 928 1,556 1,399 1,405 1,594 2,287 1,823 2,112
Provision for income taxes.... 352 422 518 521 588 627 638 739
------ ------- ------- ------- ------- ------- ------- -------
Net earnings................ $ 576 $ 1,134 $ 881 $ 884 $ 1,006 $ 1,658 $ 1,185 $ 1,373
====== ======= ======= ======= ======= ======= ======= =======
Basic earnings per share...... $ 0.11 $ 0.22 $ 0.17 $ 0.16 $ 0.18 $ 0.27 $ 0.18 $ 0.21
Diluted earnings per share.... 0.11 0.21 0.16 0.16 0.18 0.26 0.18 $ 0.21
Basic weighted average common
shares...................... 5,094 5,123 5,251 5,394 5,450 6,158 6,457 6,469
Diluted weighted average
common shares............... 5,460 5,449 5,425 5,452 5,633 6,388 6,649 6,678
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of liquidity and capital resources
historically have been cash flows from operations, borrowings under the
Company's bank credit facilities and issuances of its Common Stock. These
sources of cash flows have been offset by cash used for acquisitions, investment
in skill-crane machines and other amusement devices and payment of long-term
borrowings.
Net cash provided by operating activities was $8.4 million, $4.2 million
and $2.9 million in 1997, 1996 and 1995, respectively. Net cash provided by
operating activities was $8.6 million for the six months ended June 30, 1998.
The Company anticipates that cash will continue to be provided by operations as
additional skill-crane machines and other amusement devices are placed in
service. Cash required in the future is expected to be funded by existing cash
and cash provided by operations, borrowings under the Credit Facility, issuances
of Debt Securities or sale of equity securities.
Net cash used by investing activities was $16.1 million, $7.4 million and
$5.5 million in 1997, 1996 and 1995, respectively. Capital expenditures amounted
to $12.2 million, $6.1 million and $2.2 million in 1997, 1996 and 1995,
respectively, of which $7.2 million, $4.8 million and $1.6 million was used for
the acquisition of skill-crane machines. The acquisition of franchisees, other
than through the Reorganization in 1995, used $2.6 million, $1.2 million and
$160,000 in 1997, 1996 and 1995, respectively. Payments to the persons other
than the Founders in the Reorganization were $3.1 million in 1995. Net cash used
by investing activities was $47.1 million for the six months ended June 30, 1998
and capital expenditures during the period were $10.7 million, of which $8.7
million was used to acquire skill-crane machines and other amusement devices.
The Company also used $36.1 million to acquire the assets of certain franchisees
and other amusement vending businesses during the six months ended June 30,
1998.
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<PAGE> 37
Net cash provided by financing activities was $8.9 million, $2.4 million
and $3.9 million in 1997, 1996 and 1995 respectively. The issuance of Common
Stock primarily in connection with the Company's follow-on offering in November
1997 provided $13.9 million. The issuance of Common Stock primarily in
connection with the Company's initial public offering in October 1995 provided
$10.1 million, of which $4.5 million was used to pay distributions to the
Founders in connection with the Reorganization. Cash of $326,000 was retained by
the Affiliated Entities in the Reorganization. Net cash provided by financing
activities was $40.3 million for the six months ended June 30, 1998. Other
financing activities consist of advances and, in 1995, repayments on the Credit
Facility and other debt obligations and S-corporation distributions to owners,
and the repurchase of warrants.
Under the Credit Facility, the Company may borrow up to $50 million ($60
million after this Offering) at the bank's prime interest rate or, at the
Company's option, an interest rate based on the current LIBOR rate. The Credit
Facility is available through July 13, 2001 and at June 30, 1998 there was $41.8
million in principal outstanding. The Credit Facility provides that certain
financial ratios be maintained and places restrictions on, among other things,
the occurrence of additional debt financing and the payment of dividends.
The Company may use a portion of its capital resources to effect
acquisitions. Because the Company cannot predict the timing or nature of
acquisition opportunities, or the availability of acquisition financing, the
Company cannot determine the extent to which capital resources may be used.
Management believes the Company's financial condition is strong and that
funds generated from operations, and borrowings available under the Credit
Facility and the Company's ability to negotiate additional and enhanced credit
agreements will be sufficient to meet the Company's foreseeable operating and
capital expenditure needs.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statements of Financial Accounting Standards, No. 130, Reporting Comprehensive
Income (Statement No. 130), and No. 131, Disclosures About Segments of an
Enterprise and Related Information (Statement No. 131), effective for years
beginning after December 15, 1997. Statement No. 130 establishes standards for
reporting and display of comprehensive income and its components in a full set
of general-purpose financial statements. The Company has not yet adopted
Statement No. 130. The Company will comply with the reporting and display
requirements under this statement when required. Statement No. 131 establishes
standards for reporting information about operating segments and the methods by
which such segments were determined. The Company has not yet adopted Statement
No. 131. As the Company operates within one industry segment, the reporting of
such information is not expected to be significant.
In February 1998, FASB issued Statement of Financial Accounting Standard
No. 132, Employers' Disclosures about Pensions and Other Postretirement Benefits
(Statement No. 132), effective for fiscal years beginning after December 15,
1997. Statement No. 132 revises disclosures about pension and other
postretirement benefit plans. It does not change the measurement or recognition
of those plans. Statement No. 132 standardizes the disclosure requirements and
suggests combined formats for presentation of such disclosure. The Company has
not yet adopted Statement No. 132. The Company will comply with the reporting
requirements under this statement when required.
In June 1998, FASB issued Statement of Financial Accounting Standards No.
133, Accounting for Derivative Instruments and Hedging Activities (Statement No.
133), effective for fiscal years beginning after June 15, 1999. Statement No.
133 establishes accounting and reporting standards for derivative instruments
and requires companies to recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. The Company has not yet adopted Statement No. 133. The Company
believes the accounting and reporting standards required by this statement will
not be significant. The Company will comply with the accounting and reporting
requirements under this statement when required.
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<PAGE> 38
YEAR 2000 COMPLIANCE
Certain management information systems use two-digit data fields which
recognize dates using the assumption that the first two digits are "19" (i.e.,
the number 98 is recognized as the year 1998). The Company has conducted a
comprehensive review of its computer systems to identify systems that are not
year 2000 compliant and has developed a plan to resolve any year 2000 issues.
The Company also is in the process of verifying whether its major suppliers,
service providers and financial institutions are year 2000 compliant. The
Company will make any necessary investments in its software and hardware systems
and applications to ensure that they are year 2000 compliant. The financial
impact to the Company is not anticipated to be material in any single year.
S-35
<PAGE> 39
BUSINESS
OVERVIEW
The Company is the leading owner, operator and franchisor in the United
States of coin-operated skill-crane machines that dispense stuffed animals,
plush toys, watches, jewelry and other items through a national network of more
than 11,000 machines operated by the Company and its franchisees. For up to 50c
a play, customers maneuver the skill-crane into position and attempt to retrieve
the desired item in the machine's enclosed display area before play is ended.
The Company's Shoppes are placed in supermarkets, mass merchandisers, bowling
centers, bingo halls, bars, restaurants and similar locations to take advantage
of the regular customer traffic at these locations. The Company utilizes
appealing displays of quality merchandise, new product introductions, including
Company-designed products, licensed products and seasonal items, and other
merchandising techniques to attract new and repeat customers.
Management believes that owners and operators of national and regional
supermarket, mass merchandise and restaurant chain accounts are becoming
increasingly aware of the economic benefits of amusement and vending machines,
such as the Company's Shoppes, which can provide them greater revenue and
profits per square foot than alternative uses of available floor space with
minimal expense. The Company believes that the Shoppes' potential economic
return, visual appeal, product quality, and the Company's high operational
standards are important factors in gaining acceptance of the Company's Shoppes
by Retail Accounts.
The Company was formed in Colorado in July 1988 and was reincorporated in
Delaware in July 1995. At the time the Company was founded, certain of the
Founders owned and operated entities that operated skill-crane machines. A
wholly-owned company of one of the Founders also had licensed the rights to
operate similar businesses through license, sale and set-up agreements that were
assigned to the Company. The Company was formed to support the license, sale and
set-up agreements and to offer additional license, sale and set-up arrangements
and franchises in new territories. Shortly after the Company was formed, it
began combining the buying power of the affiliated businesses to purchase
products and skill-crane machines at lower prices. In 1990, the Company began
developing its own territories by directly owning and operating skill-crane
machines.
To continue to expand its operations, on August 31, 1995 the Company
purchased substantially all of the inventory, property and equipment and assumed
certain facilities leases and contracts of the Affiliated Entities for an
aggregate purchase price of approximately $9.0 million. All of the Affiliated
Entities previously were franchisees of the Company and all, except Sugarloaf
Marketing, were under common control with the Company.
INDUSTRY
The skill-crane industry has been in existence for over 75 years and is
highly fragmented, with the average operator owning 16 machines. Based on
analysis of certain industry publications, the Company believes that there are
approximately 50,000 units of prize-dispensing equipment in operation
nationwide, of which skill-cranes are the most prevalent type. The Company
believes that supermarkets, mass merchandisers, bowling centers, bingo halls,
bars, restaurants and similar locations represent over 100,000 viable locations
for skill-cranes in the United States. Management believes that skill-cranes in
the past have been operated principally as amusement devices, dispensing
products of minimal retail value. As a result, these machines were typically
located in arcades, amusement parks and similar venues catering to adolescents.
BUSINESS STRATEGY
The Company's business strategy is to differentiate itself from traditional
skill-crane operators and to strengthen its position as a leading owner and
operator of skill-crane machines in the U.S. The key elements of the Company's
business strategy are as follows:
Quality Products. The Company's Shoppes offer a mix of products,
including selected products of higher quality than the carnival-type
products traditionally associated with skill-crane and other prize-
S-36
<PAGE> 40
dispensing equipment. The plush toys offered in the Company's Shoppes are
made with 100% polyester fiber fill and high-grade outer covers and the
watches include dependable movements. In addition, the Company's Shoppes
offer licensed products featuring recognizable characters (such as Looney
Tunes and the Winnie-the-Pooh characters) and theme-based items (such as
Christmas and Halloween items). All products offered in the Shoppes must
adhere to the Company's safety and quality standards.
Machine Appearance, Merchandise and Merchandising Techniques. The
Company's Shoppes are distinctively marked with the SugarLoaf logo and
other signage that is readily identifiable with the Company in order to
create brand recognition. In addition, the Shoppes are well-lit and are
cleaned and serviced regularly to maintain their attractive appearance. The
Shoppes contain an appealing mix of products arranged by size, color, shape
and type. Products with higher perceived value are prominently displayed,
and the Company frequently incorporates new items into the merchandise mix
to maintain the Shoppes' fresh appearance. Management believes the Shoppes'
appearance and the Company's merchandising techniques are important factors
in gaining acceptance of the Company's Shoppes by retailers.
Product Procurement and Company-Designed Product. The Company controls
product cost by purchasing a significant portion of its products directly
from manufacturers in large quantities and acquiring merchandise that has
been discontinued or is subject to substantial "close-out" discounts. The
Company also controls product cost by pre-packing products that it
distributes to Company-owned offices and sells to its franchisees for use
in filling and merchandising the Shoppes. These pre-packed units include a
predetermined mix or "recipe" of different types, sizes, shapes and colors
of product which achieve the Company's merchandising objectives while also
controlling average product cost. The Company is able to frequently
introduce new product in its Toy Shoppes by designing a significant portion
of the product and by purchasing licensed and other product from suppliers.
Designing products at various price points furthers the Company's objective
of controlling product cost. See "-- Suppliers -- Product."
Vend Ratio and Revenue Management. The Company closely monitors the
revenue per product dispensed, or the Vend Ratio, of each of its Shoppes to
maintain customer satisfaction and to optimize Shoppe revenue and
profitability. A lower than optimal vend frequency reduces customer
satisfaction, resulting in less frequent plays and lower revenue at a given
location, while a higher than optimal vend frequency reduces profitability.
If the Vend Ratio falls outside of the Company's target range, the route
merchandiser can influence various factors affecting the Vend Ratio,
including the mix of products by size and weight, the placement of products
within the Shoppe's display area, the number of products and the density of
the products within the Shoppe. Additionally, the Company monitors each
Shoppe's average weekly revenue. If a Shoppe's weekly revenue consistently
falls below the Company's minimum weekly revenue goal, the Company will
consider relocating the Shoppe.
Location Selection. The Company concentrates its sales efforts on
placing Shoppes in Retail Accounts such as Wal-Mart and Safeway/Vons which
have good reputations for quality and attract a high level of foot traffic.
Within these accounts, the Company seeks to secure sites with the greatest
visibility and accessibility to potential customers. See
"-- Operations -- Account Acquisition, Location Selection and Shoppe
Placement."
Timely Installation and National Operations. The Company provides
Retail Accounts with an integrated system of Shoppe and vending
installation, maintenance, service and an accounting of revenue and
commissions on a local or national basis. Such services have been deployed
rapidly across the country to Retail Accounts including Wal-Mart and
Safeway/Vons.
Training. The Company employs a comprehensive training program,
including seminars and field training, for its regional managers, general
managers and franchisees. It also provides operations manuals, training
videos and other materials relating to office management and route
merchandising to assure the achievement of the Company's business
objectives. See " -- Operations -- Supervision, Training and Support."
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<PAGE> 41
GROWTH STRATEGY
As of June 30, 1998, the Company owned and operated over 9,100 Shoppes from
a national network that consisted of 40 offices with operations in 40 states,
which management believes makes the Company the largest national owner and
operator of skill-crane machines. The Company believes this network is well
positioned to serve the skill-crane operations of supermarkets, mass
merchandisers, restaurants, bowling centers, bingo halls, bars, and similar
locations, which the Company estimates represent over 100,000 potential crane
locations in the United States. The Company believes that owners and operators
of these locations are becoming increasingly aware of the economic benefits of
amusement and vending machines, such as the Company's Shoppes, which can provide
retailers greater revenue and profits per square foot than alternative uses of
available floor space, with minimal expense. The Company's growth strategy
includes the following:
- Increase penetration of existing Retail Accounts. The Company and its
franchisees are designated skill-crane operators for many regional and
national Retail Accounts including Wal-Mart, Safeway/ Vons, Kroger, AMF
Bowling Centers, Fred Meyer Stores and franchised Denny's. The Company
believes opportunities exist to increase penetration within its existing
Retail Accounts.
- Target marketing efforts towards new large Retail Accounts. The Company
believes the attractive economic returns its Shoppes offer and its
demonstrated success with installing and operating a significant number
of Shoppes in Retail Accounts such as Wal-Mart, Safeway/Vons, AMF Bowling
Centers and Fred Meyer Stores will allow it to successfully target new
national and regional Retail Accounts.
- Capitalize on relationships with existing Retail Accounts. The Company
believes it can capitalize on its existing relationships with Retail
Accounts to expand the number and type of amusement and vending machines
it offers at each location. The Company has introduced multiple Shoppes
at individual locations. In addition, the Company has begun to place
complementary vending machines, including kiddie rides, bulk vending and
video games at existing locations.
- Acquire franchisees and other complementary vending businesses. The
Company has completed 13 acquisitions since January 1, 1996, including
eight acquisitions since October 1, 1997 acquiring over 2,300 Shoppes,
significant franchised territories and bulk vending and kiddie ride
businesses. See "-- Recent Acquisitions." The Company plans to pursue
acquisition opportunities in order to increase the number of
Company-owned machines and to acquire franchised territories and to add
other complementary businesses to the Company's product lines.
The Company plans to increase the number of Shoppes it owns and operates by
an average of at least 1,400 for 1999 and 2000 through a combination of
acquisitions and new Shoppe placements. The Company believes that the Shoppes'
potential economic return, visual appeal, product quality and the Company's high
operational standards are important factors in gaining acceptance of the
Company's Shoppes by Retail Accounts. The Company operates four types of
Shoppes: (i) the Toy Shoppe which primarily dispenses plush toys and other toys,
(ii) the Treasure Shoppe which dispenses items such as jewelry and watches,
(iii) the Beanie Bag Shoppe which dispenses beanie-bag type stuffed toys and
(iv) the Fun Shoppe which dispenses small toys, novelty items and candy. Over
60% of the Company's Shoppe placements have been Toy Shoppes, which the Company
purchases new for an average price of $3,600. In 1997, a Toy Shoppe averaged
over $12,100 in revenue and over $4,200 in cash profit contribution (revenue
minus cost of vended products, location commission and direct service cost).
Historically, skill-cranes are generally available for installation within two
to four weeks of ordering from the manufacturer, and can be quickly rolled out
on a national basis over a one year period, as was done in the first year after
the signing of the Wal-Mart contract in 1996 with over 1,000 new skill-crane
placements.
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<PAGE> 42
RECENT ACQUISITIONS
Since October 1, 1997, as part of the Company's growth strategy, it has
completed the eight acquisitions described below:
- Three Rivers Toy Company. The Company's former franchisee for portions of
Pennsylvania, including 83 Shoppes, was purchased in October 1997 for
approximately $0.2 million.
- Quality Amusements Corp. and Quality Entertainment Corp. A bulk vending
and kiddie ride company with operations in Illinois, Indiana, Wisconsin,
Missouri and Iowa was purchased in November 1997 for approximately $2.0
million.
- Creative Coin of Arizona, Inc. The Company's former franchisee for
Arizona, including 146 Shoppes, was purchased in December 1997 for
approximately $1.5 million.
- Tejas Toy Corporation. The Company's former franchisee for portions of
Texas, including 250 Shoppes, was purchased in January 1998 for
approximately $2.4 million.
- McCathren Vending Co. A bulk vending company operating 4,800 pieces of
bulk vending equipment throughout Colorado, Utah and Wyoming was
purchased in March 1998 for approximately $1.2 million.
- American Coin Company of Minneapolis. A skill-crane company in Minnesota,
including 90 skill cranes, was purchased in May 1998 for approximately
$0.3 million.
- Chilton Vending Co. An owner and operator of simulator and traditional
video games, skill-cranes and redemption equipment located in portions of
Kansas and Missouri was purchased in June 1998 for approximately $4.0
million.
- Suncoast. The Company's franchisees for portions of Washington, Oregon
and Florida, including 1,388 Shoppes, were purchased in June 1998 for
approximately $30.0 million.
RECENT DEVELOPMENTS
- Plush 4 Play Acquisition. In July 1998, the Company entered into the
Plush 4 Play Agreement to acquire Plush 4 Play for a base purchase price
of $6.8 million and a contingent earn-out of up to $2.7 million, subject
to certain adjustments. Plush 4 Play has skill-crane placement agreements
with several national Retail Accounts, including Shoney's, Inc. and
Friendly's Ice Cream Corporation. Presently, 614 skill-cranes are
operated at such Retail Accounts pursuant to agreements between Plush 4
Play and independent third party operators. Plush 4 Play is a party to
placement agreements which cover an aggregate of 178 additional Retail
Account locations which do not currently have an installed skill-crane.
Plush 4 Play also sells pre-packaged plush toys and animals to the
skill-crane industry. The Plush 4 Play Agreement contains certain closing
conditions which must be satisfied by Plush 4 Play and the Company before
the acquisition can occur. While the Company believes the Plush 4 Play
acquisition will close in September 1998, there can be no assurance that
the acquisition will close by such date, if at all. Pursuant to the terms
of the Plush 4 Play Agreement, the Company will (i) operate certain
skill-crane machines in certain Retail Accounts under the terms of
agreements between Plush 4 Play and such Retail Accounts prior to the
closing of the Plush 4 Play acquisition, and (ii) be assigned the rights
to place skill-crane machines in certain Retail Accounts if the Plush 4
Play acquisition does not close.
- R. & T. Marketing Acquisition. In August 1998, the Company entered into
an agreement to acquire the assets of its former franchisee, R&T, for
approximately $2.1 million, subject to certain adjustments. R&T is the
Company's franchisee for portions of Northern California and owns
approximately 370 Shoppes.
- Increased Credit Facility. Upon the completion of this Offering and the
application of the net proceeds therefrom, the Company's Credit Facility
will increase from $50 million to up to $60 million,
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<PAGE> 43
and the Company will have up to $60 million of unused availability under the
Credit Facility, based upon certain financial ratios. See "Use of Proceeds."
- Shelf Registration of Trust Preferred Securities. In addition to the
Offering contemplated hereby, the Company has filed with the Securities
and Exchange Commission a shelf registration statement which registers up
to an aggregate of $100 million of trust preferred securities (including
the Trust Preferred Securities offered hereby). Such additional trust
preferred securities may be offered by the Company at any time.
SHOPPES
The Company has sought to position its Shoppes as an entertaining way to
"purchase" quality products. Management believes that the quality of the
Shoppes' products and the entertainment and amusement afforded by their
skill-crane format have broad appeal to adults and adolescents. While
skill-crane machines have been in operation for 75 years, the Company has
incorporated into its Shoppes several improvements and refinements. The Company
increased the size of the Shoppes to enhance their visibility and to display and
vend more products and created bright, distinctive signage which is readily
identifiable with the Company. The Company also added exterior lighting,
brightened interior lighting and selected exterior colors of the machines to
attract and focus customer attention on the products in the Shoppes. In
addition, the Company has upgraded the Shoppes' operating mechanisms to achieve
consistency of play and reliability of performance.
The SugarLoaf Toy Shoppe has been operated by the Company since its
inception. The Company introduced the SugarLoaf Fun Shoppe in 1993, the
SugarLoaf Treasure Shoppe in 1994 and the SugarLoaf Beanie Bag Shoppe in 1997.
Management believes that the introduction of new types of skill-crane machines
has enabled the Company to capitalize on its current routes and existing
relationships by placing additional machines in existing locations, thereby
increasing revenue at each location with little incremental service costs. The
introductions of SugarLoaf Treasure Shoppes, SugarLoaf Fun Shoppes and SugarLoaf
Beanie Bag Shoppes are typically made in locations where a SugarLoaf Toy Shoppe
is already located. Currently the Company operates four types of Shoppes as
described below.
The SugarLoaf Toy Shoppe. The SugarLoaf Toy Shoppe features a play price of
50c and dispenses plush toys and other toys. The estimated retail values of
products offered in the SugarLoaf Toy Shoppe generally range from $4.00 to
$30.00. As of June 30, 1998, the Company and its franchisees were operating
approximately 7,560 SugarLoaf Toy Shoppes.
The SugarLoaf Treasure Shoppe. The SugarLoaf Treasure Shoppe features a
play price of 50c and dispenses jewelry, watches, bolo ties and belt buckles.
The SugarLoaf Treasure Shoppe improves upon traditional skill-crane machines of
this type by dispensing products with estimated retail values ranging from $4.00
to $30.00 instead of carnival-type merchandise of low retail value. As of June
30, 1998, the Company and its franchisees were operating approximately 1,648
SugarLoaf Treasure Shoppes, approximately 90% of which were placed within
locations in which another Shoppe was already in operation.
The SugarLoaf Beanie Bag Shoppe. During 1997 the Company converted a
substantial portion of its SugarLoaf Fun Shoppes into SugarLoaf Beanie Bag
Shoppes and purchased additional SugarLoaf Beanie Bag Shoppes. The SugarLoaf
Beanie Bag Shoppe features a play price of 50c and dispenses beanie-bag type
stuffed toys with estimated retail values ranging from $3.00 to $6.00. As of
June 30, 1998, the Company and its franchisees were operating 1,623 SugarLoaf
Beanie Bag Shoppes.
The SugarLoaf Fun Shoppe. The SugarLoaf Fun Shoppe features a play price of
25c and dispenses small toys, novelty items and candy. The SugarLoaf Fun Shoppe
is designed to appeal primarily to adolescents and young adults. The estimated
retail values of products offered in the SugarLoaf Fun Shoppe are generally
under $5.00. Because the retail value of the products offered in the SugarLoaf
Fun Shoppe are generally lower than the products offered in the SugarLoaf Toy
Shoppe, the SugarLoaf Treasure Shoppe and the SugarLoaf Beanie Bag Shoppe, the
SugarLoaf Fun Shoppe dispenses more frequently than the Company's other
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<PAGE> 44
Shoppes, including certain SugarLoaf Fun Shoppes which operate until a player
wins a prize. As of June 30, 1998, the Company and its franchisees were
operating approximately 681 SugarLoaf Fun Shoppes.
The following chart indicates the number of Company-owned Shoppes in
operation at the indicated date:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31, JUNE 30,
1995 1996 1997 1998
---------------- ---------------- ---------------- ----------------
TYPE NUMBER PERCENT NUMBER PERCENT NUMBER PERCENT NUMBER PERCENT
---- ------ ------- ------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Toy Shoppes........................... 1,291 62.7% 2,699 68.0% 3,831 62.1% 5,922 64.7%
Treasure Shoppes...................... 357 17.4 542 13.7 1,016 16.5 1,419 15.5
Beanie Bag Shoppes.................... -- -- -- -- 1,156 18.8 1,620 17.7
Fun Shoppes........................... 409 19.9 726 18.3 163 2.6 193 2.1
----- ----- ----- ----- ----- ----- ----- -----
Total........................ 2,057 100.0% 3,967 100.0% 6,166 100.0% 9,157 100.0%
===== ===== ===== ===== ===== ===== ===== =====
</TABLE>
OPERATIONS
Management believes that the Company's operations program provides for
efficient and cost-effective purchasing and distribution of product. In
addition, the Company and its franchisees have a route-servicing system that
facilitates the development of a good working relationship with location
managers in regional and national chain accounts. The Company offers its
franchisees the same software management tools, training programs and product
and machine purchasing programs used by the Company, and they are required to
use substantially the same procedures, systems and methods the Company employs
in its own operations.
Retail Accounts. Currently, the Company's Shoppes are located, in order of
prevalence, in supermarkets, mass merchandisers, restaurants, bingo halls, bars
and similar locations. The Company is focusing on placing Shoppes in national
and regional Retail Accounts to take advantage of the regular customer traffic
at these locations. The following chart identifies some of the Company's Retail
Accounts:
RETAIL ACCOUNTS
<TABLE>
<CAPTION>
SUPERMARKETS MASS MERCHANDISERS RESTAURANTS OTHER
------------ ------------------ ----------- -----
<S> <C> <C> <C>
Kroger Wal-Mart Denny's (franchised) AMF Bowling Centers
Safeway/Vons Kmart Ponderosa Steak House Brunswick Bowling Centers
Fred Meyer Stores Bonanza Steak Houses Truckstops of America
Cub Foods Flying J Truckstop
Smith's 76 Truckstops
</TABLE>
The Company or its franchisees provide the Shoppes and pay for certain
installation costs, while the retailer provides a site within the location and
electrical power. The retailers are paid commissions based upon a percentage of
gross revenue, which for the period ended June 30, 1998 generally ranged from
20% to 30%, depending on the dollar volume, number of Shoppes installed and
total number of locations the retailer controls. Management believes that
national and regional supermarket, mass merchandise and restaurant-chain
accounts are increasingly aware of the economic benefits of amusement and
vending machines such as the Company's Shoppes, which can provide retailers
greater revenue per square foot than alternative uses of available floor space.
In individual-location accounts, the Company and its franchisees generally
place Shoppes pursuant to oral agreements with location managers. While the
Company has written agreements with certain major Retail Accounts, the Company
and its franchisees also have placed Shoppes in national and regional Retail
Accounts pursuant to oral or other agreements, which may be terminated at
anytime. Management believes that the Company and its franchisees generally have
good relations with their retail accounts.
Account Acquisition, Location Selection and Shoppe Placement. The Company
acquires new individual-location accounts for the placement of its Shoppes
through regional sales managers and field office general managers. To augment
its field office general managers' account acquisition activities, the Company
began a concerted marketing effort in August 1994 to national and regional chain
accounts and has entered into new
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<PAGE> 45
agreements with national and regional supermarket and mass merchandise chain
accounts covering the placement of Shoppes within the locations of such
accounts. In August 1996, the Company signed an agreement with Wal-Mart
appointing the Company as the principal operator of skill-crane vending machines
for Wal-Mart through January 1, 2000. At June 30, 1998, the Company had
installed more than 2,670 Shoppes in approximately 1,370 Wal-Mart stores
nationwide. The Company's largest account, Wal-Mart, accounted for approximately
33.5% of total revenue in 1997. In January 1997, the Company signed a three-year
agreement with Safeway that designated the Company and its franchisees as
Safeway's domestic skill-crane operator. At June 30, 1998, the Company and its
franchisees had installed more than 729 Shoppes in approximately 500 Safeway
stores nationwide. In September 1997, the Company signed a three-year agreement
with AMF Bowling Centers, Inc. As of June 30, 1998, the Company and its
franchisees had installed more than 480 Shoppes in approximately 160 AMF Bowling
Centers nationwide.
Once the Company enters into a national or regional chain account
agreement, it contacts each location manager to arrange for a review of the
location to confirm its suitability and to obtain the manager's agreement to the
placement of one or more Shoppes within the location. The Company and its
regional sales manager or franchisee work together to place Shoppes at national
and regional chain account locations.
For accounts other than national chain accounts, the Company's regional
sales and general managers identify viable locations, contact the location's
owner or manager to confirm the suitability of the location and obtain the
owner's or manager's agreement to the placement of the Shoppes and related
compensation arrangements. The suitability of a location is based upon a
thorough assessment by the Company, including an analysis of the surrounding
trade area in order to determine the neighborhood demographics, local
regulations, the level of overall retail activity and the cost-effectiveness of
servicing the location through existing route merchandisers. The Company also
reviews each site within the location for its visibility and accessibility to
customers.
The Company and its franchisees compete for limited sites within
supermarkets with purveyors of seasonal and specialty items and with owners and
operators of other amusement and vending machines. The Company's Shoppes also
compete with vending machine and coin-operated amusement device operators for
sites in mass merchandise and restaurant chains, bowling centers and other
locations. Competition for such sites is based primarily on the amount of
revenue to the location owner that can be generated by a particular use of a
site. Management believes that the revenue potential of the Company's Shoppes
compares favorably to that of competing uses for available sites within retail
locations.
Other Vending. The Company has introduced new types of complementary
vending and amusement machines at existing Shoppe locations which management
believes will expand the potential customers for the Company. In April 1997, the
Company signed a three-year agreement with Safeway that made the Company and its
franchisees Safeway's domestic coin-operated kiddie ride operator. As of June
30, 1998, the Company and its franchisees had approximately 975 kiddie rides in
Retail Accounts nationwide. In November 1997, the Company purchased the assets
of Quality Amusements Corp. and Quality Entertainment Corp., operators of bulk
vending machines and kiddie rides. In March 1998, the Company purchased the
assets of McCathren Vending Co., another operator of bulk vending machines. Bulk
vending refers to the sale of unsorted confections, nuts, gumballs, toys and
novelty items (in or out of capsules) selected by the customer and dispensed
through vending machines. As of June 30, 1998, the Company and its franchisees
had approximately 6,990 pieces of bulk vending equipment in operation. In June
1998, the Company acquired the assets of Chilton Vending Co., an operator of
simulator and traditional video games, skill-cranes and redemption equipment. As
of June 30, 1998, the Company had approximately 830 simulator and traditional
video games in operation. From time to time, the Company has placed, and may
continue to place in the future, other types of coin-operated vending machines
in retail accounts in order to leverage the Company's existing national
distribution and service network.
Supervision, Training and Support. The Company's area directors are
primarily responsible for training the Company's regional managers and the
regional managers are responsible for training the general managers and for
on-going support and supervision of the Company's field offices.
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<PAGE> 46
Each Company field office is managed by a general manager who is
responsible for the management of the office, including inventory management,
and training and monitoring route merchandisers. The Company has developed a
comprehensive training program for office general managers and franchisees
covering office management, new account acquisition, inventory control, route
merchandising, site selection, machine servicing and all other aspects of the
operation of the business. The general managers attend training programs and
receive ongoing field training. The Company considers its route merchandisers to
be a key element of its merchandising efforts. The Company's general managers
provide training of route merchandisers in all aspects of route management,
machine servicing, revenue collection, Vend Ratio monitoring and product
merchandising. See "-- Employees."
Route Merchandising. Frequent, regular and reliable service and support is
an important element in the operation of the Company's Shoppes. The Company's
route merchandisers and franchisee personnel are trained to perform regularly
scheduled merchandising and service procedures. A route merchandiser has a route
consisting of 10 to 33 locations, depending upon volume, which are visited and
serviced two to 10 times per week. The route merchandiser cleans and services
the Shoppe, takes inventory of the Shoppe, replaces product as needed, monitors
the Vend Ratio and arranges the product within the Shoppe in accordance with the
Company's merchandising techniques. The route merchandiser records the number of
units of product placed in the machines and the number of plays from
nonresettable meters. The meter readings are subsequently reconciled against
actual collections. All collections are delivered to and verified by a field
office for deposit.
Inventory Management and Distribution. The Company's distribution system is
designed to allow efficient and cost-effective distribution of its product to
Company field offices and franchise offices. After the product is procured from
the Company's suppliers, it is shipped to one of two distribution centers where
it is sorted and pre-packed. The Company maintains inventory for the products
offered through its Toy Shoppes in a public warehousing facility in Seattle,
Washington and in its regional distribution warehouse centers in Atlanta,
Georgia, Chicago, Illinois and Allentown, Pennsylvania. An inventory of products
offered in Treasure Shoppes and Fun Shoppes is maintained in the Company's
warehouse in Boulder, Colorado. The Company communicates appropriate product mix
requirements to the warehouses on a weekly basis. The warehouses sort the
products according to the Company's specified mix requirements and pack the
product for each type of Shoppe into pre-packed units for shipment to Company
field offices and franchises on a weekly basis.
At June 30, 1998, the Company was operating in 40 states through a national
network of 40 offices. The field offices average approximately 2,900 square feet
and comprise a small office area and a warehouse area where out-of-service
Shoppes are repaired and product inventory is maintained. Part of the route
merchandisers' daily route servicing responsibilities is to distribute product
to Shoppes. Pre-packing aids in controlling product cost and facilitates new
product introductions. Pre-packing also substantially reduces the warehouse
space required for inventory, allowing the Company-owned and franchise offices
to service a greater number of Shoppes without a commensurate increase in
warehouse space. In addition, pre-packing significantly reduces the time general
managers and franchise personnel spend on inventory management, which allows
more time for acquiring new accounts and monitoring the quality of Shoppe
merchandising in the field.
Management Information Systems. The Company's management information system
utilizes customized software for monitoring field office and franchisee Shoppe
results. The software allows the Company to monitor individual Shoppe
placements, Shoppe revenue, Vend Ratio and tax and commission payments through
reports generated at the Company field offices. The software also allows the
Company to monitor total Shoppe revenue, average Shoppe revenue, Shoppes on
location and Vend Ratio and to determine franchisee royalty payments for
franchise offices.
MERCHANDISING
Merchandising Mix. The Company offers merchandise for the Shoppes in
pre-pack bags along with bulk merchandise. The pre-pack bags include an
assortment of exclusive SugarLoaf designs, along with licensed and other
domestic goods. The merchandise variety is regularly updated, and the Company
offers at least 1,500 new items each year. Seasonal goods are placed in Shoppes
for all major holidays.
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<PAGE> 47
New Designs. The Company works with several free-lance designers and
creates at least 300 new, exclusive designs each year which can only be obtained
through the SugarLoaf Toy Shoppes. The Company also creates several theme
product collectibles and many players attempt to retrieve all of the products in
the series.
Merchandise Sourcing and Vendor Relationships. The Company purchases
product from several overseas factories and has developed good relationships
with these suppliers over the past ten years. The Company also utilizes several
domestic sources and attempts to take advantage of licensed and closeout
merchandise.
SUPPLIERS
Product. The Company maintains a purchasing and development staff at its
corporate headquarters and contracts with foreign and domestic manufacturers and
outside vendors for its supply of products. The SugarLoaf Toy Shoppes offer a
combination of Company-designed products that are manufactured to the Company's
specifications and "off the shelf" products available from foreign manufacturers
and third-party vendors. Since 1988, all Company-designed toys have been
manufactured to its specifications by foreign manufacturers. Currently, the
Company relies on multiple manufacturers in China to produce its custom designs,
each of whom has the capability to produce a range of the toys required by the
Company. Decisions regarding the choice of manufacturer are based on price,
quality of workmanship, reliability and the ability of a manufacturer to meet
the Company's delivery requirements.
Shoppes. The Company currently purchases Shoppes from three principal
approved crane manufacturers and may seek to add new suppliers. Management
believes that suitable skill-crane machines are available from a number of
domestic and foreign manufacturers.
FRANCHISE RELATIONS
As of June 30, 1998, the Company had franchise agreements in effect with
franchisees covering 16 territories in the U.S. and one territory in British
Columbia, Canada covering, in the aggregate, 2,355 Shoppes. The Company does not
currently intend to grant any additional franchises. In the event any franchisee
proposes to transfer to any third party its SugarLoaf business or any rights or
interests granted by the franchise agreement, the Company has up to 45 days to
exercise a right of first refusal to purchase such business, rights or interests
on the same terms and conditions as the franchisee's proposed transfer of such
business rights or interests.
EMPLOYEES
As of June 30, 1998, the Company had a total of 671 employees, including 56
employees at its headquarters in Boulder, Colorado. None of the Company's
employees are represented by labor unions or covered by any collective
bargaining contract. Management believes it has a good relationship with the
Company's employees.
Generally, each of the Company's field offices employs approximately 5 to
35 persons, including a general manager, an office assistant and an adequate
number of route merchandisers to properly service the Company's Shoppes. The
general manager is responsible for the daily operations of the office,
monitoring route merchandisers and acquiring new accounts. The regional managers
oversee the operations of the Company field offices and report directly to the
Company's area directors.
The Company has an incentive bonus program pursuant to which regional
managers and field office personnel may be eligible to receive incentive
compensation based on office and route profitability. Management believes that
this program rewards excellence in management, gives field office personnel an
incentive to improve operations and results in an overall reduction in the cost
of operations. In addition, regional field managers and other corporate
personnel are eligible to receive options to purchase shares of Common Stock
subject to ongoing service requirements.
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<PAGE> 48
PROPERTY
The Company's principal executive offices are located at 5660 Central
Avenue, Boulder, Colorado, where the Company, its Treasure and Fun Shoppe
fulfillment warehouse facilities and the Denver, Colorado operation occupy
approximately 28,000 square feet of office and warehouse space under a lease
that expires January 28, 2003. The Company also is a party to 43 other leases
which are used for office and warehouse space which average approximately 2,900
square feet, provide for monthly rental payments ranging from $275 to $3,930 and
expire at various times over the period August 31, 1998 to January 31, 2001. The
Company believes that its facilities are adequate for its current needs and for
the anticipated expansion of its business.
THE TRUST
The Trust is a statutory business trust created under Delaware law pursuant
to (i) the trust agreement of the Trust among the Company, as depositor, the
Delaware Trustee and an Administrative Trustee and (ii) the filing of a
Certificate of Trust with the Delaware Secretary of State on July 22, 1998. The
Trust's business and affairs are conducted by the Property Trustee, the Delaware
Trustee and two individual Administrative Trustees who are officers of the
Company. The Trust exists for the exclusive purposes of (i) issuing and selling
the Trust Securities, (ii) using the proceeds from the sale of the Trust
Securities to acquire the Junior Subordinated Debentures issued by the Company
and (iii) engaging in only those other activities necessary, advisable or
incidental thereto. The Junior Subordinated Debentures will be the sole assets
of the Trust and payments by the Company under the Junior Subordinate Debentures
and the Expense Agreement will be the sole revenues of the Trust. All of the
Common Securities will be owned by the Company. The Common Securities will rank
pari passu, and payments will be made thereon pro rata, with the Trust Preferred
Securities, except that upon the occurrence and during the continuance of an
event of default under the Trust Agreement resulting from an event of default
under the Indenture, the rights of the Company as holder of the Common
Securities to payment in respect of Distributions and payments upon liquidation,
redemption or otherwise will be subordinated to the rights of the holders of the
Trust Preferred Securities. See "Description of the Trust Preferred
Securities -- Subordination of Common Securities of the Trust Held by the
Company." The Company will acquire Common Securities in an aggregate liquidation
amount equal to approximately 3% of the total capital of the Trust. The Trust
has a term of 31 years but may be terminated sooner as provided in the Trust
Agreement.
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<PAGE> 49
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company as of June 30, 1998
were as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Jerome M. Lapin................. 68 President, Chief Executive Officer and Chairman of the
Board of Directors
W. John Cash.................... 51 Vice President, Chief Financial Officer and Treasurer
Randall J. Fagundo.............. 38 Vice President of Operations, Secretary and Director
Abbe M. Stutsman(1)............. 45 Vice President of Purchasing and Product Development and
Director
Richard D. Jones(2)............. 57 Director
J. Gregory Theisen.............. 52 Director
Jim D. Baldwin(1)............... 65 Director
John A. Sullivan(1)(2).......... 43 Director
</TABLE>
- ---------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
Jerome M. Lapin has served as President, Chief Executive Officer and a
Director since January 1994 and as Chairman of the Board since July 1995. Prior
to joining the Company, he was the Managing Director for World Hosts Pty. Ltd.,
a restaurant leasing consulting business, from July 1991 to January 1994. From
June 1989 to June 1990, Mr. Lapin was the President of Sanwa Foods, Inc., a soup
manufacturer and marketer ("Sanwa"), and from June 1990 to June 1991 he was a
consultant for Sanwa. Mr. Lapin was a co-founder of the International House of
Pancakes, Inc. in 1958.
W. John Cash has served as Vice President, Chief Financial Officer and
Treasurer since July 1995. Prior to joining the Company he was Vice President
and Chief Financial Officer of Kasler Holding Company, a diversified
construction company, from May 1991 to March 1995. From July 1984 to April 1991,
Mr. Cash served as a partner of KPMG Peat Marwick LLP.
Randall J. Fagundo, a co-founder of the Company, has served as Vice
President of Operations and Secretary since May 1991 and as a Director since
August 1988. Prior to joining the Company, he was one of the founders of
Southwest Coin Company.
Abbe M. Stutsman, a co-founder of the Company, has served as a Vice
President since January 1994 and as a Director since December 1989. Ms. Stutsman
served as the Company's Secretary from August 1988 until May 1991, Treasurer
from January 1994 until July 1995 and President from May 1991 until January
1994. Prior to joining the Company, she was the Business Manager of Colorado
Coin from April 1988 to August 1988.
Richard D. Jones, a co-founder of the Company, has served as a Director
since August 1988 and served as Chairman of the Board from August 1988 to July
1995 and as President of the Company from August 1988 to April 1991. Mr. Jones
has served as President of T.R. Baron & Associates, Inc., a marketing and
consulting business, since May 1975. Mr. Jones was a co-founder of Colorado Coin
in 1987.
J. Gregory Theisen, a co-founder of the Company, has served as a Director
since August 1988. Mr. Theisen has served as a Vice President of Lorac, Inc., an
investment consulting company, since December 1989. Mr. Theisen served as Vice
President of the Company from August 1988 to December 1993. Prior to joining the
Company, Mr. Theisen was a co-founder of Colorado Coin and served as its
Operations Manager from January 1987 to October 1988.
Jim D. Baldwin, has served as a Director since October 1995. Mr. Baldwin
served as President and Chief Executive Officer of King Soopers, a
supermarket/combination store retailer, from 1979 until his retirement in
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<PAGE> 50
February 1990. Mr. Baldwin served as a consultant with Knight, Roth and
Associates, a consulting firm, from February 1990 to July 1994. Mr. Baldwin also
serves as a director of Grease Monkey Holding Corp.
John A. Sullivan, has served as a Director since October 1995. Mr. Sullivan
has been employed by Relational Investors, LLC, an investment managing firm,
since March 1998. Mr. Sullivan was employed by Batchelder & Partners, Inc., an
investment advisory and consulting firm, from May 1996 to February 1998. Mr.
Sullivan also served as a Senior Vice President of The Seidler Companies
Incorporated ("Seidler"), the underwriter of the Company's initial public
offering, from August 1993 to April 1996. Prior to being elected Senior Vice
President at Seidler, Mr. Sullivan served as a Vice President from October 1990
to August 1993. Mr. Sullivan also serves as a director of the Farr Company.
BOARD COMMITTEES
The standing committees of the Board of Directors include an Audit
Committee and a Compensation Committee.
The Audit Committee is comprised of Messrs. Baldwin and Sullivan and Ms.
Stutsman. The functions performed by the Audit Committee include recommending to
the Board of Directors independent auditors to serve the Company for the ensuing
year, reviewing with the independent auditors and management, the scope and
results of the audit, assuring that the independent auditors act independently,
reviewing and approving any substantial change in the Company's accounting
policies and practices, reviewing with management and the independent auditors
the adequacy of the Company's system of internal controls and reviewing the
Company's annual report.
The Compensation Committee is comprised of Messrs. Jones and Sullivan. The
functions performed by the Compensation Committee include reviewing and
approving management's recommendations as to executive compensation and
reviewing, approving and administering the Company's executive compensation and
stock option plans.
COMPENSATION OF DIRECTORS
Each non-employee director of the Company, other than Messrs. Jones and
Theisen, receives $2,500 for each regular or special meeting of the Board of
Directors or committee meeting that is held on a date other than the date of a
board meeting. All Directors also receive reimbursement for their reasonable
out-of-pocket expenses related to such attendance. In the fiscal year ended
December 31, 1997, the total compensation paid to non-employee directors was
$10,000.
Each non-employee director of the Company, other than Messrs. Jones and
Theisen, are eligible to receive stock option grants under the 1995 Non-Employee
Director Stock Option Plan (the "Directors' Plan"). Only non-employee directors
of the Company or an affiliate of such directors (as defined in the Code) are
eligible to receive options under the Directors' Plan. Options granted under the
Directors' Plan are intended by the Company not to qualify as incentive stock
options under the Code.
During 1997, the Company did not grant options to non-employee directors of
the Company. As of June 30, 1998, no options had been exercised under the
Directors' Plan.
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<PAGE> 51
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table shows for the years ended December 31, 1997, 1996 and
1995, compensation awarded or paid to, or earned by, the Company's Chief
Executive Officer and its three other most highly compensated executive officers
for the year ended December 31, 1997 (the "Named Executive Officers"):
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL AWARDS
COMPENSATION ------------
------------------- SECURITIES
SALARY BONUS UNDERLYING ALL OTHER
NAME OF PRINCIPAL POSITION YEAR ($)(1) ($) OPTIONS COMPENSATION(2)
-------------------------- ---- -------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Jerome M. Lapin...................... 1997 $178,750 -- -- $10,351
President and Chief Executive 1996 155,833 -- -- 6,757
Officer 1995 156,250 -- -- 7,074
W. John Cash......................... 1997 125,547 -- 100,000 10,025
Vice President, Chief Financial 1996 112,320 -- -- 9,128
Officer and Treasurer 1995(3) 50,416 -- 20,000 1,860
Randall J. Fagundo................... 1997 125,547 -- -- 10,779
Vice President of Operations 1996 111,837 -- -- 9,550
and Secretary 1995 80,411 $ 98,469(4) -- 6,445
Abbe M. Stutsman..................... 1997 125,547 -- -- 10,385
Vice President of Purchasing and 1996 111,837 -- -- 9,824
Product Development 1995 79,167 203,870(4) -- 2,918
</TABLE>
- ---------------
(1) Includes amounts deferred pursuant to Section 401(k) of the Internal Revenue
Code of 1986, as amended.
(2) Includes value of Company provided automobile, health insurance premiums
paid by the Company and funds contributed by the Company as matching
contributions to the Named Executive Officers' 401(k) Plan accounts.
(3) Mr. Cash joined the Company in July 1995.
(4) Consists of S corporation distributions.
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<PAGE> 52
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of July 20, 1998 by (i)
each person (or group of affiliated persons) who is known by the Company to own
beneficially more than 5% of the Common Stock, (ii) each of the Company's
directors, (iii) each of the Named Executive Officers and (iv) all directors and
executive officers of the Company as a group. Except as otherwise noted, the
persons or entities in this table have sole voting and investing power with
respect to all the shares of Common Stock owned by them.
<TABLE>
<CAPTION>
NUMBER OF
SHARES PERCENT
BENEFICIALLY BENEFICIALLY
NAME OF BENEFICIAL OWNER OWNED(1) OWNED(1)
------------------------ ------------ ------------
<S> <C> <C>
Merrill Lynch Asset Management, L.P.(2)..................... 833,600 12.89%
800 Scudders Mill Road
Plainsboro, NJ 08536
Richard D. and Melinda K. Jones(3).......................... 508,623 7.86
5660 Central Avenue
Boulder, CO 80301
J. Gregory Theisen(4)....................................... 473,623 7.32
5660 Central Avenue
Boulder, CO 80301
Jerome M. Lapin(5).......................................... 460,932 7.13
5660 Central Avenue
Boulder, CO 80301
SAFECO Asset Management Company(6).......................... 412,300 6.37
601 Union Street
Seattle, WA 98101
Abbe M. Stutsman(7)......................................... 314,354 4.86
Randall J. Fagundo.......................................... 294,091 4.55
W. John Cash(8)............................................. 35,000 *
Jim D. Baldwin(9)........................................... 9,300 *
John A. Sullivan(10)........................................ 24,500 *
All directors and executive officers as a group
(8 persons) (3)-(5) and (7)-(10).......................... 2,120,423 32.45
</TABLE>
- ---------------
* Less than one percent.
(1) Percentage of beneficial ownership is based on 6,468,903 shares of Common
Stock outstanding as of July 20, 1998. Beneficial ownership is determined
in accordance with the rules of the Securities and Exchange Commission and
generally includes voting or investment power with respect to securities.
Shares of Common Stock subject to options or warrants currently exercisable
or exercisable within 60 days of July 20, 1998, are deemed outstanding for
computing the percentage of the person or entity holding such securities,
but are not outstanding for computing the percentage of any other person or
entity. Except as indicated by footnote, and subject to community property
laws where applicable, the persons named in the table above have sole
voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by them.
(2) Merrill Lynch & Co., Inc. ("ML&Co."), Merrill Lynch Group, Inc. ("ML
Group"), Princeton Services, Inc. ("PSI") and Merrill Lynch Asset
Management, L.P. ("MLAM") have together filed a Schedule 13G/A with the
Commission on July 13, 1998, pursuant to which they reported sole or shared
voting and dispositive power over 833,600 shares owned. ML&Co. may be
deemed to be the beneficial owner of certain of the securities held by or
deemed to be beneficially owned by its wholly-owned
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<PAGE> 53
subsidiary, ML Group. ML Group may be deemed to be the beneficial owner of
certain of the securities by virtue of its control of its wholly-owned
subsidiary, PSI. PSI, may be deemed to be the beneficial owner of certain
of the securities by virtue of its being the general partner of MLAM. MLAM
is a registered investment adviser and may be deemed to be the beneficial
owner of the securities by virtue of its acting as investment adviser to
one or more investment companies registered pursuant to Section 8 of the
Investment Company Act.
(3) Includes (i) 46,464 shares held by T.R. Baron and Associates, Inc. Defined
Benefit Pension Plan, of which Mr. Jones is the Trustee, and (ii) 294,080
held by Ms. Jones.
(4) Includes 12,464 shares held by Colorado Coin Company Defined Benefit Keogh
Plan of which Mr. Theisen is the Trustee.
(5) Shares of Common Stock held jointly with Mr. Lapin's spouse.
(6) SAFECO Asset Management Company is a subsidiary of SAFECO Corporation and
holds such shares on behalf of its clients, including SAFECO Common Stock
Trust, which holds 250,000 shares and SAFECO Resource Series Trust, which
holds 162,300 shares. SAFECO Asset Management Company disclaims beneficial
ownership of all shares held by SAFECO Common Stock Trust and SAFECO
Resource Series Trust.
(7) Includes 50,519 shares of Common Stock held jointly with Ms. Stutsman's
spouse.
(8) Consists of options to purchase Common Stock exercisable within 60 days of
July 20, 1998 by Mr. Cash.
(9) Includes 540 shares of Common Stock held jointly with Mr. Baldwin's spouse
and options to purchase 7,000 shares of Common Stock granted under the
Directors' Plan which are exercisable within 60 days of July 20, 1998.
(10) Includes options to purchase 35,000 shares of Common Stock granted under
the Option Plan which are exercisable within 60 days of July 20, 1998,
options to purchase 14,000 shares of Common Stock granted under the
Directors' Plan which are exercisable within 60 days of July 20, 1998 and a
warrant held by Mr. Sullivan exercisable to purchase 17,500 shares of
Common Stock.
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<PAGE> 54
DESCRIPTION OF THE TRUST PREFERRED SECURITIES
The Trust Preferred Securities will be issued pursuant to the terms of the
Trust Agreement. The Trust Agreement will be qualified as an indenture under the
Trust Indenture Act. Initially, Wilmington Trust Company will be the Delaware
Trustee and the Property Trustee. The Property Trustee is the independent
trustee whose sole responsibility is to fulfill the trustee obligations
specified in the Trust Indenture Act. The terms of the Trust Preferred
Securities will include those stated in the Trust Agreement and those made part
of the Trust Agreement by the Trust Indenture Act. This summary of certain terms
and provisions of the Trust Preferred Securities and the Trust Agreement does
not purport to be complete and is subject to, and is qualified in its entirety
by reference to, all the provisions of the Trust Agreement, including the
definitions therein of certain terms, and the Trust Indenture Act. Wherever
particular defined terms of the Trust Agreement (as amended or supplemented from
time to time) are referred to herein, such terms as defined therein are
incorporated herein by reference. The form of the Trust Agreement has been filed
as an exhibit to the Registration Statement of which this Prospectus Supplement
forms a part.
GENERAL
Pursuant to the terms of the Trust Agreement, the Administrative Trustees
on behalf of the Trust will issue the Trust Preferred Securities and the Common
Securities of the Trust (collectively, the "Trust Securities"). The Trust
Securities represent undivided beneficial interests in the assets of the Trust.
The holders of the Trust Preferred Securities will be entitled to a preference
over the Common Securities (which will be held by the Company) in certain
circumstances with respect to Distributions and amounts payable on redemption or
liquidation, as well as other benefits as described in the Trust Agreement.
The Trust Preferred Securities will rank pari passu, and payments will be
made thereon pro rata, with the Common Securities of the Trust, except as
described under "-- Subordination of Common Securities of the Trust Held by the
Company" below. Legal title to the Junior Subordinated Debentures will be held
by the Property Trustee in trust for the benefit of the holders of the Trust
Securities. The Guarantee executed by the Company for the benefit of the holders
of the Trust Preferred Securities (the "Guarantee") will be a guarantee on a
subordinated basis with respect to the Trust Preferred Securities but will not
guarantee payment of Distributions or amounts payable on redemption or on
liquidation of the Trust Preferred Securities if the Trust does not have funds
on hand available to make such payments. See "Description of Guarantee."
DISTRIBUTIONS
Payment of Distributions. Distributions on the Trust Preferred Securities
will be paid at the annual rate of % of the stated Liquidation Amount of
$10, payable quarterly in arrears on each January 15, April 15, July 15 and
October 15 to the holders of the Trust Preferred Securities on the relevant
record dates (each date on which Distributions are payable in accordance with
the foregoing, a "Distribution Date"). The amount of each Distribution due with
respect to the Trust Preferred Securities will include amounts accrued through
the Distribution Date. Distributions on the Trust Preferred Securities will be
payable to the holders thereof as they appear on the register of the Trust on
the relevant record date which will be, so long as such Securities remain in
book-entry form, one Business Day (as defined below) prior to the relevant
Distribution Date or, in the event that the Trust Preferred Securities are not
then in book-entry form, the relevant record date will be the date 15 days prior
to the relevant Distribution Date. Distributions will accrue from the date of
original issuance and will accumulate whether or not funds are available for
payment. The first Distribution Date for the Trust Preferred Securities will be
October 15, 1998.
The amount of Distributions payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months. In the event that any date on
which Distributions are payable on the Trust Preferred Securities is not a
Business Day, payment of the Distribution payable on such date will be made on
the next 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 such
payment was originally payable. As used in this Prospectus, a "Business Day"
shall mean any day other than a Saturday or a Sunday, or a day on which banking
institutions in the
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State of Colorado 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 Indenture Trustee is closed for business.
The funds of the Trust available for distribution to holders of its Trust
Preferred Securities will be limited to payments by the Company under the Junior
Subordinated Debentures in which the Trust will invest the proceeds from the
sale of its Trust Preferred Securities. See "Description of Junior Subordinated
Debentures." If the Company does not make interest payments on the Junior
Subordinated Debentures, the Property Trustee will not have funds available to
pay Distributions on the Trust Preferred Securities. The payment of
Distributions (if and to the extent the Trust has funds legally available for
the payment of such Distributions and cash sufficient to make such payments) is
guaranteed by the Company. See "Description of the Guarantee."
Extension Period. So long as no Debenture Event of Default has occurred and
is continuing, the Company has the right under the Indenture 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 such period (each, an "Extension Period"), provided that no Extension
Period may extend beyond the Stated Maturity of the Junior Subordinated
Debentures. As a consequence of any such election, quarterly Distributions on
the Trust Preferred Securities will be deferred by the Trust during any such
Extension Period. Distributions to which holders of Trust Preferred Securities
are entitled will accumulate additional amounts thereon at the rate per annum of
% thereof, compounded quarterly from the relevant Distribution Date, to the
extent permitted under applicable law. The term "Distribution," as used herein,
shall include any such additional accumulated amounts. During any such Extension
Period, the Company may not, and shall not permit any Subsidiary 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 Company's capital stock (which
includes common and preferred stock), (ii) make any payment of principal,
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Company that rank pari passu with or junior in interest to the
Junior Subordinated Debentures or make any guarantee payments with respect to
any guarantee by the Company of the debt securities of any subsidiary of the
Company if such guarantee ranks pari passu with or junior in interest to the
Junior Subordinated Debentures (other than (a) dividends or distributions in the
Company's capital stock (which includes common and preferred stock), (b) any
declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto, (c)
payments under the Guarantee and (d) purchases of common stock related to the
issuance of common stock or rights under any of the Company's benefit plans for
its directors, officers, employees or consultants (in connection with an
optionee's or rightholder's use of Common Stock as consideration for the
exercise or purchase price of the related option or right)) or (iii) redeem,
purchase or acquire less than all of the Junior Subordinated Debentures or any
of the Trust Preferred Securities. Prior to the termination of any such
Extension Period, the Company may further extend such Extension Period, provided
that such extension does not cause such Extension Period to exceed 20
consecutive quarters or extend beyond the Stated Maturity. Upon the termination
of any such Extension Period and the payment of all amounts then due, and
subject to the foregoing limitations, the Company may elect to begin a new
Extension Period. Subject to the foregoing, there is no limitation on the number
of times that the Company may elect to begin an Extension Period. The Company
has no current intention of exercising its right to defer payments of interest
by extending the interest payment period on the Junior Subordinated Debentures.
REDEMPTION
Mandatory Redemption of Trust Preferred Securities. Upon the repayment or
redemption at any time, in whole or in part, of any Junior Subordinated
Debentures, the proceeds from such repayment or redemption shall be applied by
the Property Trustee to redeem a Like Amount (as defined below) of the Trust
Securities, upon not less than 30 nor more than 60 days' notice of a date of
redemption (the "Redemption Date"), at the Redemption Price (as defined below).
See "Description of the Junior Subordinated Debentures -- Redemption." If less
than all of the Junior Subordinated Debentures are to be repaid or redeemed on a
Redemption Date, then the proceeds from such repayment or redemption shall be
allocated to the redemption of the Trust Securities on a pro rata basis. The
amount of premium, if any, paid by the Company upon the redemption of
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all or any part of the Junior Subordinated Debentures to be repaid or redeemed
on a Redemption Date shall be allocated to the redemption pro rata of the Trust
Securities.
Optional Redemption of Junior Subordinated Debentures. The Company will
have the right to redeem the Junior Subordinated Debentures (i) on or after
, 2003, in whole at any time or in part from time to time at a
redemption price equal to the accrued and unpaid interest on the Junior
Subordinated Debentures so redeemed to the date fixed for redemption, plus 100%
of the principal amount thereof, or (ii) at any time, in whole (but not in
part), upon the occurrence of a Tax Event or an Investment Company Event at a
redemption price equal to the accrued and unpaid interest on the Junior
Subordinated Debentures so redeemed to the date fixed for redemption, plus 100%
of the principal amount thereof. See "Description of the Junior Subordinated
Debentures -- Redemption."
Tax Event Redemption, Investment Company Event Redemption. If a Tax Event
or an Investment Company Event shall occur and be continuing, the Company has
the right to redeem the Junior Subordinated Debentures in whole (but not in
part) and thereby cause a mandatory redemption of the Trust Securities in whole
(but not in part) at the Redemption Price (as defined below) within 90 days
following the occurrence of such Tax Event or Investment Company Event. If a Tax
Event or an Investment Company Event has occurred and is continuing and the
Company does not elect to redeem the Junior Subordinated Debentures and thereby
cause a mandatory redemption of the Trust Securities or to dissolve the Trust
and cause the Junior Subordinated Debentures to be distributed to holders of the
Trust Securities in liquidation of the Trust as described below, such Trust
Securities will remain outstanding and Additional Sums (as defined below) may be
payable on the Junior Subordinated Debentures.
DEFINITIONS
"Additional Sums" means the additional amounts as may be necessary to be
paid by the Company with respect to the Junior Subordinated Debentures in order
that the amount of Distributions then due and payable by the Trust on the
outstanding Trust Securities of the Trust shall not be reduced as a result of
any additional taxes, duties and other governmental charges to which the Trust
has become subject as a result of a Tax Event.
"Like Amount" means (i) with respect to a redemption of Trust Securities,
Trust Securities having a Liquidation Amount (as defined below) equal to that
portion of the principal amount of Junior Subordinated Debentures to be
contemporaneously redeemed in accordance with the Indenture, allocated to the
Common Securities and to the Trust Preferred Securities based upon the relative
Liquidation Amounts of such classes and the proceeds of which will be used to
pay the Redemption Price of such Trust Securities, and (ii) with respect to a
distribution of Junior Subordinated Debentures to holders of Trust Securities in
connection with a dissolution and liquidation of the Trust, Junior Subordinated
Debentures having a principal amount equal to the Liquidation Amount of the
Trust Securities of the holder to whom such Junior Subordinated Debentures are
distributed.
"Liquidation Amount" means the stated amount of $10 per Trust Security.
"Redemption Price" means, with respect to any Trust Security, the
Liquidation Amount of such Trust Security, plus accumulated and unpaid
Distributions to the Redemption Date, plus the related amount of the premium, if
any, paid by the Depositor upon the concurrent redemption of a Like Amount of
Debentures, allocated on a pro rata basis (based on Liquidation Amounts), among
the Trust Securities.
See "Risk Factors -- Redemption Prior to Stated Maturity" for definitions
of "Tax Event" and "Investment Company Event."
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES
Subject to the Company and the Trust having received an opinion of counsel
to the effect that a proposed liquidating distribution will not be a taxable
event to the holders of the Trust Preferred Securities, the Company will have
the right at any time to dissolve the Trust and, after satisfaction of the
liabilities of creditors of the Trust as provided by applicable law, cause the
Junior Subordinated Debentures to be
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distributed to the holders of Trust Securities in liquidation of the Trust.
After the liquidation date fixed for any distribution of Junior Subordinated
Debentures for Trust Preferred Securities, (i) such Trust Preferred Securities
will no longer be deemed to be outstanding and (ii) certificates representing
Trust Preferred Securities that are not then held by the Depositary or its
nominee will be deemed to represent Junior Subordinated Debentures having a
principal amount equal to the Liquidation Amount of such Trust Preferred
Securities, and bearing accrued and unpaid interest in an amount equal to the
accrued and unpaid Distributions on the Trust Preferred Securities until such
certificates are presented to the Administrative Trustees or their agent for
transfer or exchange.
There can be no assurance as to the market prices for the Trust Preferred
Securities or the Junior Subordinated Debentures that may be distributed in
exchange for the Trust Preferred Securities if a dissolution and liquidation of
the Trust were to occur. Accordingly, the Trust Preferred Securities that an
investor may purchase, or the Junior Subordinated Debentures that the investor
may receive on dissolution and liquidation of the Trust, may trade at a discount
to the price that the investor paid to purchase the Trust Preferred Securities
offered hereby.
REDEMPTION PROCEDURES
Trust Preferred Securities redeemed on each Redemption Date shall be
redeemed at the Redemption Price with the applicable proceeds from the
contemporaneous redemption of the Junior Subordinated Debentures. Redemptions of
the Trust Preferred Securities shall be made and the Redemption Price shall be
payable on each Redemption Date only to the extent that the Trust has funds on
hand available for the payment of such Redemption Price. See " -- Subordination
of Common Securities of the Trust Held by the Company" herein and "Description
of the Guarantee."
If the Property Trustee gives a notice of redemption in respect of the
Trust Preferred Securities, then, by 12:00 noon, Eastern time on the Redemption
Date, to the extent funds are available and to the extent the Trust Preferred
Securities are no longer in book-entry form, the Property Trustee will deposit
with the Paying Agent for such Trust Preferred Securities funds sufficient to
pay the aggregate Redemption Price and will give such Paying Agent irrevocable
instructions and authority to pay the Redemption Price to the holders thereof
upon surrender of their certificates evidencing such Trust Preferred Securities.
If such Trust Preferred Securities are only in book-entry form, the Property
Trustee, to the extent funds are available, will deposit with the Depositary
funds sufficient to pay the aggregate Redemption Price and will give the
Depositary irrevocable instructions and authority to pay the Redemption Price to
the holders of such Trust Preferred Securities. Notwithstanding the foregoing,
Distributions payable on or prior to the Redemption Date shall be payable to the
holders of such Trust Preferred Securities on the relevant record dates for the
related Distribution Dates. If notice of redemption shall have been given and
funds deposited as required, then upon the date of such deposit, all rights of
the holders of the Trust Preferred Securities will cease, except the right of
the holders of the Trust Preferred Securities to receive the applicable
Redemption Price, but without interest on such Redemption Price, and such Trust
Preferred Securities will cease to be outstanding. In the event that any date
fixed for redemption of such Trust Preferred Securities is not a Business Day,
then payment of the Redemption Price payable on such date will be made on the
next succeeding 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 such payment was originally payable. In the event that payment of the
Redemption Price in respect of Trust Preferred Securities called for redemption
is improperly withheld or refused and not paid either by the Trust or by the
Company pursuant to the Guarantee, Distributions on such Trust Preferred
Securities will continue to accrue at the then applicable rate, from the
Redemption Date originally established by the Trust for such Trust Preferred
Securities to the date such Redemption Price is actually paid, in which case the
actual payment date will be the date fixed for redemption for purposes of
calculating the Redemption Price. See "Description of the Guarantee."
Subject to applicable law (including, without limitation, United States
federal securities law), and further provided that the Company is not then
exercising its right to defer interest payments on the Junior Subordinated
Debentures, the Company may at any time and from time to time purchase
outstanding Trust Preferred Securities by tender, in the open market or by
private agreement.
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Payment of the Redemption Price on the Trust Preferred Securities and any
distribution of Junior Subordinated Debentures to holders of Trust Preferred
Securities shall be made to the applicable recordholders thereof as they appear
on the register for such Trust Preferred Securities on the relevant record date,
which date shall be, so long as such securities remain in book-entry form, one
Business Day prior to the Redemption Date or Liquidation Date, as applicable. In
the event that the Trust Preferred Securities are not in book-entry form, the
relevant record date for such Trust Preferred Securities shall be the date 15
days prior to the relevant Redemption Date.
If less than all of the Trust Securities issued by the Trust are to be
redeemed on a Redemption Date, then the aggregate Redemption Price for such
Trust Securities to be redeemed shall be allocated pro rata (based on
Liquidation Amounts) to the Trust Preferred Securities and Common Securities
based upon the relative Liquidation Amounts of such classes. The particular
Trust Preferred Securities to be redeemed shall be selected by the Property
Trustee from the outstanding Trust Preferred Securities not previously called
for redemption, by such method as the Property Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of portions
(equal to $10 or an integral multiple thereof) of the Liquidation Amount of
Trust Preferred Securities. The Property Trustee shall promptly notify the
Securities Registrar (as defined below) in writing of the Trust Preferred
Securities selected for redemption and, in the case of any Trust Preferred
Securities selected for partial redemption, the Liquidation Amount thereof to be
redeemed. For all purposes of the Trust Agreement, unless the context otherwise
requires, all provisions relating to the redemption of Trust Preferred
Securities shall relate to the portion of the aggregate Liquidation Amount of
Trust Preferred Securities which has been or is to be redeemed.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each holder of Trust Securities at such
holder's registered address. Unless the Trust defaults in payment of the
applicable Redemption Price, on and after the Redemption Date, Distributions
will cease to accrue on such Trust Preferred Securities called for redemption.
SUBORDINATION OF COMMON SECURITIES OF THE TRUST HELD BY THE COMPANY
Payment of Distributions on, and the Redemption Price of, the Trust
Preferred Securities and Common Securities, as applicable, shall be made pro
rata based on the Liquidation Amounts of the Trust Preferred Securities and
Common Securities; provided, however, that if on any Distribution Date or
Redemption Date a Debenture Event of Default shall have occurred and be
continuing, no payment of any Distribution on, or applicable Redemption Price
of, any of the Common Securities, and no other payment on account of the
redemption, liquidation or other acquisition of the Common Securities, shall be
made unless payment in full in cash of all accumulated and unpaid Distributions
on all of the outstanding Trust Preferred Securities for all Distribution
periods terminating on or prior thereto, or in the case of payment of the
applicable Redemption Price, the full amount of such Redemption Price on all of
the outstanding Trust Preferred Securities then called for redemption, shall
have been made 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 the Redemption Price of, the Trust Preferred Securities then due and payable.
In the case of any Event of Default under the Trust Agreement resulting
from a Debenture Event of Default, the Company as holder of the Common
Securities will be deemed to have waived any right to act with respect to any
such Event of Default until the effect of all such Events of Default have been
cured, waived or otherwise eliminated. Until any such Events of Default have
been so cured, waived or otherwise eliminated, the Property Trustee shall act
solely on behalf of the holders of the Trust Preferred Securities and not on
behalf of the Company as holder of the Common Securities, and only the holders
of the Trust Preferred Securities will have the right to direct the Property
Trustee to act on their behalf.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
The Company will have the right at any time to dissolve the Trust, subject
to certain limitations, and, after satisfaction of liabilities to creditors of
the Trust as required by applicable law, cause the Junior Subordinated
Debentures to be distributed to the holders of the Trust Preferred Securities.
See " -- Distribution of Junior Subordinated Debentures" above. The Company
might exercise its right to dissolve the Trust under circumstances where a "Tax
Event," "Investment Company Event" or other undesirable event could be
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avoided simply by dissolving the Trust and causing the Junior Subordinated
Debentures to be distributed to holders of the Trust Preferred Securities.
In addition, pursuant to the Trust Agreement, the Trust shall automatically
dissolve upon expiration of its term and shall earlier dissolve on the first to
occur of: (i) certain events of bankruptcy, dissolution or liquidation of the
Company; (ii) the distribution of a Like Amount of the Junior Subordinated
Debentures to the holders of its Trust Securities, if the Company, as Depositor,
has delivered written direction to the Property Trustee to dissolve the Trust
(which direction is optional and, except as described above, wholly within the
discretion of the Company, as Depositor); (iii) redemption of all of the Trust
Preferred Securities as described under "-- Redemption" and (iv) the entry of an
order for the dissolution of the Trust by a court of competent jurisdiction.
If an early dissolution occurs as described in clause (i), (ii), or (iv)
above, 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 the
holders of such Trust Securities a Like Amount of the Junior Subordinated
Debentures, unless such distribution is determined by the Property Trustee not
to be practical, in which event such holders will be entitled to receive out of
the assets of the Trust available for distribution to holders, after
satisfaction of liabilities to creditors of the Trust as provided by applicable
law, an amount equal to, in the case of holders of Trust Preferred Securities,
the aggregate of the Liquidation Amount plus accrued and unpaid Distributions
thereon to the date of payment (such amount being the "Liquidation
Distribution"). If such Liquidation Distribution can be paid only in part
because the Trust has insufficient assets available to pay in full the aggregate
Liquidation Distribution, then the amounts payable directly by the Trust on the
Trust Preferred Securities shall be paid on a pro rata basis. The holder(s) of
the Common Securities will be entitled to receive distributions upon any such
liquidation on a pro rata basis with the holders of the Trust Preferred
Securities, except that if a Debenture Event of Default has occurred and is
continuing, the Trust Preferred Securities shall have a priority over the Common
Securities.
Under current United States federal income tax law and interpretations, and
assuming that the Trust is treated as a grantor trust, a distribution of the
Junior Subordinated Debentures should not be a taxable event to holders of the
Trust Preferred Securities. Should there be a change in law, a change in
distribution, a Tax Event or other circumstances, however, the distribution
could be a taxable event to the Trust and to holders of the Trust Preferred
Securities. See "Material Federal Income Tax Consequences." If the Company
elects neither to redeem the Junior Subordinated Debentures prior to maturity
nor to liquidate the Trust and distribute the Junior Subordinated Debentures to
holders of the Trust Preferred Securities, the Trust Preferred Securities will
remain outstanding until the repayment of the Junior Subordinated Debentures.
If the Company elects to dissolve the Trust and thereby causes the Junior
Subordinated Debentures to be distributed to holders of the Trust Preferred
Securities in liquidation of the Trust, the Company shall continue to have the
right to shorten the Stated Maturity of such Junior Subordinated Debentures. See
"Description of Junior Subordinated Debentures -- General."
EVENTS OF DEFAULT; NOTICE
Any one of the following events that has occurred and is continuing
constitutes an "Event of Default" under the Trust Agreement (an "Event of
Default") with respect to the Trust Preferred Securities (whatever the reason
for such Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):
(i) the occurrence of a Debenture Event of Default (see "Description
of the Junior Subordinated Debentures -- Debenture Events of Default"); or
(ii) default by the Property Trustee in the payment of any
Distribution when it becomes due and payable, and continuation of such
default for a period of 30 days; or
(iii) default by the Property Trustee in the payment of any Redemption
Price of any Trust Security when it becomes due and payable; or
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(iv) default in the performance, or breach, in any material respect,
of any covenant or warranty of the Property Trustee in the Trust Agreement
(other than a default or breach in the performance of a covenant or
warranty which is addressed in clause (ii) or (iii) above), and
continuation of such default or breach, for a period of 60 days after there
has been given, by registered or certified mail, to the defaulting Property
Trustee by the holders of at least 25% in aggregate Liquidation Amount of
the outstanding Trust Preferred Securities, a written notice specifying
such default or breach and requiring it to be remedied and stating that
such notice is a "Notice of Default" under the Trust Agreement; or
(v) the occurrence of certain events of bankruptcy, insolvency or
reorganization with respect to the Property Trustee and the failure by the
Company to appoint a successor Property Trustee within 60 days thereof.
Within five Business Days after the occurrence of any Event of Default
actually known to a Responsible Officer of the Property Trustee, the Property
Trustee shall transmit notice of such Event of Default to the holders of the
Trust Preferred Securities, the Administrative Trustees and the Company, as
Depositor, unless such Event of Default shall have been cured or waived. The
Company, as Depositor, and the Administrative Trustees are required to file
annually with the Property Trustee a certificate as to whether or not they are
in compliance with all the conditions and covenants applicable to them under the
Trust Agreement.
If a Debenture Event of Default has occurred and is continuing, the Trust
Preferred Securities shall have a preference over the Common Securities upon
dissolution of the Trust as described above. See "-- Liquidation Distribution
upon Dissolution" herein. Upon a Debenture Event of Default (other than with
respect to certain events in bankruptcy, insolvency or reorganization), unless
the principal of all the Junior Subordinated Debentures has already become due
and payable, either the Property Trustee or the holders of not less than 25% in
aggregate principal amount of the Junior Subordinated Debentures then
outstanding may declare all of the Junior Subordinated Debentures to be due and
payable immediately by giving notice in writing to the Company (and to the
Property Trustee, if notice is given by holders of the Junior Subordinated
Debentures). If the Property Trustee or the holders of the Junior Subordinated
Debentures fail to declare the principal of all of the Junior Subordinated
Debentures due and payable upon a Debenture Event of Default, the holders of at
least 25% in Liquidation Amount of the Trust Preferred Securities then
outstanding shall have the right to declare the Junior Subordinated Debentures
immediately due and payable. In either event, payment of principal and interest
on the Junior Subordinated Debentures shall remain subordinated to the extent
provided in the Indenture. In addition, holders of the Trust Preferred
Securities have the right in certain circumstances to bring a Direct Action (as
hereinafter defined). See "Description of the Junior Subordinated Debentures --
Enforcement of Certain Rights by Holders of Trust Preferred Securities."
If a Debenture Event of Default with respect to certain events in
bankruptcy, insolvency or reorganization occurs, the Junior Subordinated
Debentures shall automatically, and without any declaration or other action on
the part of the Property Trustee or the holders of the Junior Subordinated
Debentures, become immediately due and payable. In such event, payment of
principal and interest on the Junior Subordinated Debentures will also remain
subordinated to the extent provided in the Indenture.
REMOVAL OF TRUSTEES
Unless a Debenture Event of Default has occurred and is continuing, any of
the Property Trustee, the Delaware Trustee or the Administrative Trustees may be
removed at any time by the holder of the Common Securities. For example, the
holder of the Common Securities may seek to remove such trustees upon
substandard performance or non-performance of their duties or upon a significant
increase in a trustee's fee. If a Debenture Event of Default has occurred and is
continuing, the Property Trustee and the Delaware Trustee also may be removed at
such time by the holders of a majority in Liquidation Amount of the outstanding
Trust Preferred Securities. In no event will the holders of the Trust Preferred
Securities have the right to vote to appoint, remove or replace the
Administrative Trustees, which voting rights are vested exclusively in the
Company as the holder of the Common Securities. No resignation or removal of an
Issuer Trustee and no appointment of a successor trustee shall be effective
until the acceptance of appointment by the successor trustee in accordance with
the provisions of the Trust Agreement.
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CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless an Event of Default shall have occurred and be continuing, at any
time or times, for the purpose of meeting the legal requirements of the Trust
Indenture Act or of any jurisdiction in which any part of the Trust property may
at the time be located, the Company, as the holder of the Common Securities, and
the Administrative Trustees shall have power to appoint one or more persons
either to act as a co-trustee, jointly with the Property Trustee, of all or any
part of such Trust property, or to act as separate trustee of any such property,
in either case with such powers as may be provided in the instrument of
appointment, and to vest in such person or persons in such capacity any
property, title, right or power deemed necessary or desirable, subject to the
provisions of the Trust Agreement. In case a Debenture Event of Default has
occurred and is continuing, the Property Trustee alone shall have power to make
such appointment.
MERGER OR CONSOLIDATION OF TRUSTEES
Any Person (as defined in the Trust Agreement) into which the Property
Trustee and the Delaware 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 such relevant Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of such Issuer Trustee, shall be the successor of such Trustee under the Trust
Agreement, provided such corporation shall be otherwise qualified and eligible.
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 corporation or other body, except as
described below or as described in "-- Liquidation Distribution Upon
Dissolution." The Trust may, at the request of the Company, with the consent of
the Administrative Trustees and without the consent of the holders of the Trust
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;
provided, that (i) such successor entity either (a) expressly assumes all of the
obligations of the Trust with respect to the Trust Preferred Securities or (b)
substitutes for the Trust Preferred Securities other securities having
substantially the same terms as the Trust Preferred Securities (the "Successor
Securities") so long as the Successor Securities rank the same as the Trust
Preferred Securities rank in priority with respect to distributions and payments
upon liquidation, redemption and otherwise, (ii) the Company expressly appoints
a trustee of such successor entity, possessing the same powers and duties as the
Property Trustee, as the holder of the Junior Subordinated Debentures, (iii) the
Successor Securities are listed or traded, or any Successor Securities will be
listed upon notification of issuance, on any national securities exchange,
national stock market or other organization on which the Trust Preferred
Securities are then listed or traded, if any, (iv) such merger, consolidation,
amalgamation, conveyance, transfer or lease does not cause the Trust Preferred
Securities (including any Successor Securities) to be downgraded by any
nationally recognized statistical rating organization, (v) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does not
adversely affect the rights, preferences and privileges of the holders of the
Trust 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 Company 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 Trust Preferred Securities
(including any Successor Securities) in any material respect, and (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 Investment Company Act and (viii) the Company
or any permitted successor or designee owns 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 Liquidation Amount of the Trust Preferred Securities,
consolidate, amalgamate, merge with or into, or be
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replaced by or convey, transfer or loan 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 loan 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
Except as provided below and under "Description of the
Guarantee -- Amendments and Assignment" and as otherwise required by law and the
Trust Agreement, the holders of the Trust Preferred Securities will have no
voting rights.
The Trust Agreement may be amended from time to time by the Company, the
Property Trustee and the Administrative Trustees, without the consent of the
holders of the Trust Securities, (i) to cure any ambiguity, correct or
supplement any provisions in the Trust Agreement that may be inconsistent with
any other provision, or to make any other provisions with respect to matters or
questions arising under the Trust Agreement, which shall not be inconsistent
with the other provisions of the Trust Agreement, or (ii) to modify, eliminate
or add to any provisions of the 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 Investment Company Act; provided, however,
that in the case of clause (i), such action shall not adversely affect in any
material respect the interests of any holder of Trust Securities, and any such
amendments of the Trust Agreement shall become effective when notice thereof is
given to the holders of the Trust Securities. The Trust Agreement may be amended
by the Administrative Trustees and the Property Trustee with (i) the consent of
holders representing not less than a majority of the aggregate Liquidation
Amount of the outstanding Trust Securities, and (ii) receipt by such Trustees of
an Opinion of Counsel to the effect that such amendment or the exercise of any
power granted to the Issuer Trustees in accordance with such 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 registration as an "investment
company" under the Investment Company Act, provided that without the unanimous
consent of the holders of the Trust Securities to be affected thereby, the 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 holder of Trust Securities to
institute suit for the enforcement of any such payment on or after such date.
So long as any Junior Subordinated Debentures are held by the Property
Trustee, the Issuer Trustees shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Indenture Trustee, or
executing any trust or power conferred on the Indenture Trustee with respect to
the Junior Subordinated Debentures, (ii) waive any past default that is waivable
under the Indenture, (iii) exercise any right to rescind or annul a declaration
that the principal of all the Junior Subordinated Debentures shall be due and
payable or (iv) consent to any amendment, modification or termination of the
Indenture or the Junior Subordinated 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 Trust Preferred
Securities; provided, however, that where a consent under the Indenture would
require the consent of each holder of Junior Subordinated Debentures affected
thereby, no such consent shall be given by the Property Trustee without the
prior consent of each holder of the Trust Preferred Securities. The Issuer
Trustees shall not revoke any action previously authorized or approved by a vote
of the holders of the Trust Preferred Securities except by subsequent vote of
the holders of the Trust Preferred Securities. The Property Trustee shall notify
each holder of the Trust Preferred Securities of any notice of default with
respect to the Junior Subordinated Debentures. In addition to obtaining the
foregoing approvals of such holders of the Trust Preferred Securities, prior to
taking any of the foregoing actions, the Issuer Trustees shall obtain an Opinion
of Counsel experienced in such matters to the effect that such action will not
cause the Trust to fail to be classified as a grantor trust for United States
federal income tax purposes.
Any required approval of holders of the Trust Preferred Securities may be
given at a meeting of holders of Trust Preferred Securities convened for such
purpose or pursuant to written consent. The Property Trustee will
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cause a notice of any meeting at which holders of the Trust Preferred Securities
are entitled to vote, or of any matter upon which action by written consent of
such holders is to be taken, to be given to each holder of record of the Trust
Preferred Securities in the manner set forth in the Trust Agreement.
No vote or consent of the holders of the Trust Preferred Securities will be
required for the Trust to redeem and cancel the Trust Preferred Securities in
accordance with the Trust Agreement.
Notwithstanding that holders of the Trust Preferred Securities are entitled
to vote or consent under any of the circumstances described above, any of the
Trust Preferred Securities that are owned by the Company, the Issuer Trustees or
any affiliate of the Company or any Issuer Trustees, shall, for purposes of such
vote or consent, be treated as if they were not outstanding.
GLOBAL TRUST PREFERRED SECURITIES
The Trust Preferred Securities will be represented by one or more global
certificates registered in the name of the Depositary or its nominee ("Global
Trust Preferred Security"). Beneficial interests in the Global Trust Preferred
Security will be shown on, and transfers thereof will be effected only through,
records maintained by participants in the Depositary. Except as described below,
Trust Preferred Securities in certificated form will not be issued in exchange
for the Global Trust Preferred Securities. See "Book-Entry Issuance."
A Global Trust Preferred Security will be exchanged for Trust Preferred
Securities in certificated form registered in the names of persons other than
the Depositary or its nominee only if (i) the Depositary notifies the Company
that it is unwilling or unable to continue as a depositary for such Global Trust
Preferred Security and no successor depositary shall have been appointed, or if
at any time the Depositary ceases to be a clearing agency registered under the
Exchange Act, at a time when the Depositary is required to be so registered to
act as such depositary, and no successor depositary shall have been appointed,
(ii) the Company in its sole discretion determines that such Global Trust
Preferred Security shall be so exchangeable or (iii) there shall have occurred
and be continuing a Debenture Event of Default and the owners of beneficial
interests in such Global Trust Preferred Security aggregating at least a
majority in Liquidation Amount of the Trust Preferred Securities inform the
Property Trustee that the continuation of a book-entry registration system is no
longer in the best interests of the holders of Trust Preferred Securities. Any
Global Trust Preferred Security that is exchangeable pursuant to the preceding
sentence shall be exchangeable for definitive certificates registered in such
names as the Depositary shall direct. It is expected that such instructions will
be based upon directions received by the Depositary with respect to ownership of
beneficial interests in such Global Trust Preferred Security. In the event that
Trust Preferred Securities are issued in definitive form, such Trust Preferred
Securities will be in denominations of $10 and integral multiples thereof and
may be transferred or exchanged at the corporate trust office of the Property
Trustee, or the offices of a paying or transfer agent appointed by the
Administrative Trustees.
Unless and until it is exchanged in whole or in part for the individual
Trust Preferred Securities represented thereby, a Global Trust Preferred
Security may not be transferred except as a whole by the Depositary to a nominee
of such Depositary or by a nominee of the Depositary to such Depositary or
another nominee of such Depositary or by the Depositary or any nominee to a
successor Depositary or any nominee of such successor.
Payments on Global Trust Preferred Securities will be made to the
Depositary, as the record holder of the Trust Preferred Securities. In the event
the Trust Preferred Securities are issued in definitive form, Distributions will
be payable, the transfer of the Trust Preferred Securities will be registrable,
and Trust Preferred Securities will be exchangeable for Trust Preferred
Securities of other denominations of a like aggregate Liquidation Amount, at the
corporate trust office of the Property Trustee, or at the offices of any paying
agent or transfer agent appointed by the Administrative Trustees, provided that
payment of any Distribution may be made at the option of the Administrative
Trustees by check mailed to the address of the persons entitled thereto or by
wire transfer, provided that payments will be made by wire transfer if so
requested by a holder of more than $1 million aggregate Liquidation Amount. In
addition, if the Trust Preferred Securities are issued in definitive,
certificated form, the record dates for payment of Distributions
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will be the first day of the month in which the relevant Distribution Date
occurs. For a description of the terms of the depositary arrangements relating
to payments, transfer, voting rights, redemptions and other notices and other
matters, see "Book-Entry Issuance."
Upon the issuance of a Global Trust Preferred Security, and the deposit of
such Global Trust Preferred Security with or on behalf of the Depositary, the
Depositary for such Global Trust Preferred Security or its nominee will credit,
on its book-entry registration and transfer system, the respective aggregate
Liquidation Amounts of the individual Trust Preferred Securities represented by
such Global Trust Preferred Securities to the accounts of Participants (as
defined below). Such accounts shall be designated by the dealers, underwriters
or agents with respect to such Trust Preferred Securities. Ownership of
beneficial interests in a Global Trust Preferred Security will be limited to
Participants or persons that may hold interests through Participants. Ownership
of beneficial interests in such Global Trust Preferred Security will be shown
on, and the transfer of that ownership will be effected only through, records
maintained by the applicable Depositary or its nominee (with respect to
interests of Participants) and the records of Participants (with respect to
interests of persons who hold through Participants). The laws of some states
require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such limits and such laws may impair the ability
to transfer beneficial interests in a Global Trust Preferred Security.
So long as the Depositary for a Global Trust Preferred Security, or its
nominee, is the registered owner of such Global Trust Preferred Security, such
Depositary or such nominee, as the case may be, will be considered the sole
owner or holder of the Trust Preferred Securities represented by such Global
Trust Preferred Security for all purposes under the Trust Agreement governing
such Trust Preferred Securities. Except as provided herein, owners of beneficial
interests in a Global Trust Preferred Security will not be entitled to have any
of the individual Trust Preferred Securities represented by such Global Trust
Preferred Security registered in their names, will not receive or be entitled to
receive physical delivery of any such Trust Preferred Securities in definitive
form and will not be considered the owners or holders thereof under the Trust
Agreement.
None of the Company, the Property Trustee, any Paying Agent or the
Securities Registrar for such Trust Preferred Securities will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of the Global Trust
Preferred Security representing such Trust Preferred Securities or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
The Company expects that the Depositary or its nominee, upon receipt of any
payment of the Liquidation Amount or Distributions in respect of a permanent
Global Trust Preferred Security, will immediately credit Participants' accounts
with payments in amounts proportionate to their respective beneficial interest
in the aggregate Liquidation Amount of such Global Trust Preferred Security as
shown on the records of such Depositary or its nominee. The Company also expects
that payments by Participants to owners of beneficial interests in such Global
Trust Preferred Security held through such Participants will be governed by
standing instructions and customary practices, as is now the case with
securities held for the accounts of customers in bearer form or registered in
"street name." Such payments will be the responsibility of such Participants.
PAYMENT AND PAYING AGENT
Payments in respect of the Trust Preferred Securities shall be made to the
Depositary, which shall credit the relevant accounts at the Depositary on the
applicable Distribution Dates or, if any of the Trust Preferred Securities are
not held by the Depositary, such payments shall be made by check mailed to the
address of the holder entitled thereto as such address shall appear on the
Securities Register. The paying agent (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 Company. The Paying Agent
shall be permitted to resign as Paying Agent upon 30 days' written notice to the
Administrative Trustees, the Property Trustee and the Company. In the event that
the Property Trustee shall no longer be the Paying Agent, the Administrative
Trustees shall appoint a successor (which shall be a bank or trust company
acceptable to the Administrative Trustees and the Company) to act as Paying
Agent.
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REGISTRAR AND TRANSFER AGENT
The Property Trustee will act as registrar and transfer agent for the Trust
Preferred Securities. Registration of transfers of the Trust Preferred
Securities will be effected without charge to the holder, but upon payment by
the holder of any tax or other governmental charges that may be imposed in
connection with any transfer or exchange. The Trust will not be required to
register or cause to be registered the transfer of the Trust Preferred
Securities after such Trust Preferred Securities have been called for
redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than upon the occurrence and during the
continuance of an Event of Default, undertakes to perform only such duties as
are specifically set forth in the Trust Agreement and, after such Event of
Default, must exercise the same degree of care and skill as a prudent person
would exercise or use in the conduct of his or her own affairs. Subject to this
provision, the Property Trustee is under no obligation to exercise any of the
powers vested in it by the Trust Agreement at the request of any holder of Trust
Preferred Securities unless it is offered reasonable indemnity against the
costs, expenses and liabilities that might be incurred thereby. If the Property
Trustee is required to decide between alternative causes of action or to
construe ambiguous provisions in the Trust Agreement or is unsure of the
application of any provision of the Trust Agreement, and the matter is not one
on which holders of the Trust Preferred Securities are entitled under the Trust
Agreement to vote, then the Property Trustee shall take such action as is
directed by the Company and, if not so directed, shall take such action as it
deems advisable and in the best interests of the holders of the Trust Securities
and will have no liability except for its own bad faith, negligence or willful
misconduct.
MISCELLANEOUS
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate the Trust in such a way that the Trust will not be
deemed to be an "investment company" required to be registered under the
Investment Company Act or fail to be classified as a grantor trust for United
States federal income tax purposes and so that the Junior Subordinated
Debentures will be treated as indebtedness of the Company for United States
federal income tax purposes. In this connection, the Company and the
Administrative Trustees are authorized to take any action, not inconsistent with
applicable law, the certificate of trust of the Trust or the Trust Agreement,
that the Company and the Administrative Trustees determine in their discretion
to be necessary or desirable for such purposes, as long as such action does not
materially adversely affect the interests of the holders of the Trust Preferred
Securities. Holders of the Trust Preferred Securities have no preemptive or
similar rights.
The Trust may not borrow money, issue debt or mortgage or pledge any of its
assets.
The Trust Agreement is governed by Delaware law.
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DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES
Concurrently with the issuance of the Trust Preferred Securities, the Trust
will invest the proceeds thereof, together with the consideration paid by the
Company for the Common Securities, in Junior Subordinated Debentures issued by
the Company. The Junior Subordinated Debentures will be issued as unsecured debt
under the Junior Subordinated Indenture, dated as of , 1998 (the
"Indenture"), between the Company and the Indenture Trustee. The following
summary of the terms and provisions of the Junior Subordinated Debentures and
the Indenture does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, the Indenture, which has been filed
as an exhibit to the Registration Statement of which this Prospectus forms a
part, and to the Trust Indenture Act. The Indenture is qualified under the Trust
Indenture Act. Whenever particular defined terms of the Indenture are referred
to herein, such terms as defined therein are incorporated herein by reference.
GENERAL
The Junior Subordinated Debentures will bear interest at the annual rate of
% of the principal amount thereof, payable quarterly in arrears on each
January 15, April 15, July 15 and October 15 (each, an "Interest Payment Date"),
commencing October 15, 1998, to the person in whose name each Junior
Subordinated Debenture is registered, subject to certain exceptions, at the
close of business on the first day of the month in which such payment is made.
Notwithstanding the above, in the event that either the (i) Junior Subordinated
Debentures are held by the Property Trustee and the Trust Preferred Securities
are registered in book-entry only form or (ii) the Junior Subordinated
Debentures are represented by a Global Subordinated Debenture (as defined
herein), the record date for such payment shall be the Business Day next
preceding such Interest Payment Date. The amount of each interest payment due
with respect to the Junior Subordinated Debentures will include amounts accrued
through the date the interest payment is due. It is anticipated that, until the
liquidation, if any, of the Trust, each Junior Subordinated Debenture will be
held in the name of the Property Trustee, in trust for the benefit of the
holders of the Trust Preferred Securities. The amount of interest payable for
any period will be computed on the basis of a 360-day year of twelve 30-day
months. In the event that any date on which interest is payable on the Junior
Subordinated Debentures is not a Business Day, then payment of the interest
payable on such date will be made on the next Business Day (and without any
interest or other payment in respect of any such delay), in each case with the
same force and effect as if made on the date such payment was originally
payable. Accrued interest that is not paid on the applicable Interest Payment
Date will bear additional interest on the amount thereof (to the extent
permitted by law) at the rate per annum of % thereof. The term "interest"
as used herein shall include quarterly interest payments, interest on quarterly
interest payments not paid on the applicable Interest Payment Date and
Additional Sums (as defined below), as applicable.
The Junior Subordinated Debentures will mature on , 2028 (such
date, as it may be shortened as hereinafter described, the "Stated Maturity").
Such date may be shortened at any time by the Company to any date not earlier
than , 2003. The Company might exercise its right to shorten the
maturity of the Junior Subordinated Debentures under circumstances where a Tax
Event, Investment Company Event or other undesirable event could be avoided
simply by shortening the maturity of the Junior Subordinated Debentures. In the
event that the Company elects to shorten the Stated Maturity of the Junior
Subordinated Debentures, it shall give notice to the Indenture Trustee, and the
Indenture Trustee shall give notice of such shortening to the holders of the
Junior Subordinated Debentures no less than 60 days prior to the effectiveness
thereof.
The Junior Subordinated Debentures will be unsecured and will rank junior
and be subordinate in right of payment to all Senior Debt and Subordinated Debt
of the Company. The Indenture does not limit the incurrence or issuance of other
secured or unsecured debt of the Company, including Senior Debt and Subordinated
Debt, whether under the Indenture or any existing or other indenture that the
Company may enter into in the future or otherwise. See "-- Subordination" below.
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OPTION TO DEFER INTEREST PAYMENT PERIOD
So long as no Debenture Event of Default has occurred and is continuing,
the Company has the right under the Indenture at any time during the term of the
Junior Subordinated Debentures to defer the payment of interest at any time or
from time to time for a period not exceeding 20 consecutive quarters (each such
period an "Extension Period"), provided that no Extension Period may extend
beyond the Stated Maturity. At the end of such Extension Period, the Company
must pay all interest then accrued and unpaid (together with interest thereon at
the annual rate of %, compounded quarterly, to the extent permitted by
applicable law). During an Extension Period, interest will continue to accrue
and holders of Junior Subordinated Debentures will be required to accrue
interest income for United States federal income tax purposes. See "Certain
Federal Income Tax Consequences -- Interest Income and Original Issue Discount."
The default by the Company on any Senior Debt and Subordinated Debt will not
constitute a Debenture Event of Default. See "-- Debenture Events of Default"
below.
During any such Extension Period, the Company may not (i) declare or pay
any dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Company's capital stock (which
includes common and preferred stock), or (ii) make any payment of principal,
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Company (including other Junior Subordinated Debentures) that
rank pari passu with or junior in interest to the Junior Subordinated
Debentures, or make any guarantee payments with respect to any guarantee by the
Company of the debt securities of any subsidiary of the Company if such
guarantee ranks pari passu with or junior in interest to the Junior Subordinated
Debentures (other than (a) dividends or distributions in capital stock of the
Company (which includes common and preferred stock), (b) any declaration of a
dividend in connection with the implementation of a stockholders' rights plan,
or the issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under the Guarantee
and (d) purchases of common stock related to the issuance of common stock or
rights under any of the Company's benefit plans for its directors, officers or
employees (in connection with an optionee's or rightholder's use of Common Stock
as consideration for the exercise or purchase price of the related option or
right)) or (iii) redeem, purchase or acquire less than all of the Junior
Subordinated Debentures or any of the Trust Preferred Securities. Prior to the
termination of any such Extension Period, the Company may further extend such
Extension Period, provided that such extension does not cause such Extension
Period to exceed 20 consecutive quarters or extend beyond the Stated Maturity.
Upon the termination of any such Extension Period and the payment of all amounts
then due on any Interest Payment Date, 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 must
give notice to the Property Trustee, the Administrative Trustees and the
Indenture Trustee of its election of any Extension Period at least one Business
Day prior to the earlier of (i) the date the distributions on the Trust
Preferred Securities would have been payable but for the election to begin or
extend such Extension Period, (ii) the date the Administrative Trustees are
required to give notice to the American Stock Exchange, the New York Stock
Exchange, the Nasdaq Stock Market or any applicable stock exchange or automated
quotation system on which the Trust Preferred Securities are then listed or
quoted or to the holders of the Trust Preferred Securities on the record date or
(iii) the date such distributions are payable, but in any event not less than
one Business Day prior to such record date. There is no limitation on the number
of times that the Company may elect to begin an Extension Period.
Distributions on the Trust Preferred Securities will be deferred by the
Trust during any such Extension Period. See "Description of the Trust Preferred
Securities -- Distributions." For a description of certain federal income tax
consequences and special considerations applicable to any such Junior
Subordinated Debentures, see "Material Federal Income Tax Consequences."
ADDITIONAL SUMS
If the Trust is required to pay any additional taxes, duties or other
governmental charges as a result of a Tax Event, the Company will pay as
additional amounts on the Junior Subordinated Debentures such amounts
("Additional Sums") as shall be required so that the Distributions payable by
the Trust shall not be reduced as a result of any such additional taxes, duties
or other governmental charges.
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REDEMPTION
The Junior Subordinated Debentures are redeemable prior to maturity at the
option of the Company (i) on or after , 2003, in whole at any time
or in part from time to time, or (ii) at any time in whole (but not in part),
within 90 days following the occurrence of a Tax Event or an Investment Company
Event, in each case at a redemption price equal to the accrued and unpaid
interest on the Junior Subordinated Debentures so redeemed to the date fixed for
redemption, plus 100% of the principal amount thereof.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of Junior Subordinated
Debentures to be redeemed at such holder's registered address. Unless the
Company defaults in payment of the redemption price, on and after the redemption
date interest will cease to accrue on such Junior Subordinated Debentures or
portions thereof called for redemption.
The Junior Subordinated Debentures will not be subject to any sinking fund.
DISTRIBUTION UPON LIQUIDATION
As described under "Description of the Trust Preferred
Securities -- Liquidation Distribution Upon Dissolution," under certain
circumstances involving the dissolution of the Trust, the Junior Subordinated
Debentures may be distributed to the holders of the Trust Preferred Securities
in liquidation of the Trust after satisfaction of liabilities to creditors of
the Trust as provided by applicable law. If the Junior Subordinated Debentures
are distributed to the holders of Trust Preferred Securities upon the
liquidation of the Trust, the Company will use its best efforts to list the
Junior Subordinated Debentures on the American Stock Exchange or such other
stock exchanges or automated quotation system, if any, on which the Trust
Preferred Securities are then listed or quoted. There can be no assurance that
the Company will be able to cause such listing or as to the market price of any
Junior Subordinated Debentures that may be distributed to the holders of Trust
Preferred Securities.
RESTRICTIONS ON CERTAIN PAYMENTS
If at any time (i) there shall have occurred a Debenture Event of Default,
(ii) the Company shall have given notice of its election of an Extension Period
as provided in the Indenture with respect to the Junior Subordinated Debentures
and shall not have rescinded such notice, or such Extension Period, or any
extension thereof, shall be continuing or (iii) while the Junior Subordinated
Debentures are held by the Trust, the Company shall be in default with respect
to its payment of any obligation under the Guarantee, then the Company will not
(1) declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of the Company's
capital stock, (2) make any payment of principal, interest or premium, if any,
on or repay, repurchase or redeem any debt securities of the Company (including
other Junior Subordinated Debt) that rank pari passu with or junior in interest
to the Junior Subordinated Debentures or make any guarantee payments with
respect to any guarantee by the Company of the debt securities of any subsidiary
of the Company if such guarantee ranks pari passu with or junior in interest to
the Junior Subordinated Debentures (other than (a) dividends or distributions in
capital stock of the Company, (b) any declaration of a dividend in connection
with the implementation of a stockholders' rights plan, or the issuance of stock
under any such plan in the future or the redemption or repurchase of any such
rights pursuant thereto, (c) payments under the Guarantee and (d) purchases of
common stock related to issuances of common stock or rights under any of the
Company's benefit plans for its directors, officers, employees or consultants
(in connection with an optionee's or rightholder's use of Common Stock as
consideration for the exercise or purchase price of the related option or
right)) or (3) redeem, purchase or acquire less than all of the Junior
Subordinated Debentures or any of the Trust Preferred Securities.
SUBORDINATION
The Indenture provides that the Junior Subordinated Debentures are
subordinated and junior in right of payment to all Senior Debt and Subordinated
Debt whether now existing or hereafter incurred. Senior Debt and Subordinated
Debt may include indebtedness of the Company which is subordinated to other
indebtedness of the Company but nevertheless senior to the Junior Subordinated
Debentures. No payment of principal
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of (including redemption payments, if any), premium, if any, or interest on, the
Junior Subordinated Debentures may be made if any event of default with respect
to any Senior Debt and Subordinated Debt shall have occurred and be continuing
and the Company and the Trustee receive notice of such default from any person
permitted to give such notice. Upon any payment by the Company or distribution
of assets of the Company to creditors upon any dissolution, winding-up,
liquidation or reorganization of the Company, whether voluntary or involuntary
or in bankruptcy, insolvency, receivership or other proceedings, all amounts due
on all Senior Debt and Subordinated Debt must be paid in full before the holders
of the Junior Subordinated Debentures are entitled to receive or retain any
payment. Upon payment in full of all amounts due on the Senior Debt and
Subordinated Debt then outstanding, the rights of the holders of the Junior
Subordinated Debentures will be subrogated to the rights of the holders of
Senior Debt and Subordinated Debt to receive payments or distributions
applicable to such Senior Debt and Subordinated Debt until all amounts owing on
the Junior Subordinated Debentures are paid in full.
In the event of the acceleration of the maturity of any Junior Subordinated
Debentures by reason of a Debenture Event of Default, the holders of all Senior
Debt and Subordinated Debt outstanding at the time of such acceleration will
first be entitled to receive payment in full of all amounts due thereon
(including any amounts due upon acceleration) before the holders of Junior
Subordinated Debentures will be entitled to receive or retain any payment in
respect of the Junior Subordinated Debentures.
"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; (vi) all
indebtedness of such Person whether incurred on or prior to the date of the
Indenture or thereafter incurred, for claims in respect of derivative products
including interest rate, foreign exchange rate and commodity forward contracts,
options and swaps and similar arrangements; and (vii) every obligation of the
type referred to in clauses (i) through (vi) of another Person and all dividends
of another Person the payment of which, in either case, such Person has
guaranteed or is responsible or liable for, directly or indirectly, as obligor
or otherwise.
"Senior Debt and Subordinated 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 the 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 Junior Subordinated
Debentures or to other Debt which is pari passu with, or subordinated to, the
Junior Subordinated Debentures; provided, however, that Senior Debt and
Subordinated Debt shall not be deemed to include (i) any Debt of the Company
which when incurred and without respect to any election under Section 1111(b) of
the United States Bankruptcy Code of 1978, as amended, was without recourse to
the Company, (ii) any Debt of the Company to any of its subsidiaries, (iii) Debt
to any employee of the Company and (iv) any other debt securities issued
pursuant to the Indenture.
The Indenture places no limitation on the amount of additional Senior Debt
and Subordinated Debt that may be incurred by the Company. The Company expects
from time to time to incur additional indebtedness constituting Senior Debt and
Subordinated Debt.
REGISTRATION, DENOMINATION AND TRANSFER
The Junior Subordinated Debentures will initially be registered in the name
of the Property Trustee. If the Junior Subordinated Debentures are distributed
to holders of Trust Preferred Securities, it is anticipated that the depository
arrangements for the Junior Subordinated Debentures will be substantially
identical to
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those in effect for the Trust Preferred Securities. See "Description of the
Trust Preferred Securities -- Global Trust Preferred Securities" and "Book-Entry
Issuance."
Although the Depositary has agreed to the procedures described above, it is
under no obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. If the Depositary is at any time
unwilling or unable to continue as depositary and a successor depositary is not
appointed by the Company within 90 days of receipt of notice from the Depositary
to such effect, the Company will cause the Junior Subordinated Debentures to be
issued in definitive form.
Payments on Junior Subordinated Debentures represented by a global
certificate will be made to Cede & Co., the nominee for the Depositary as the
registered holder of the Junior Subordinated Debentures, as described under
"Description of the Trust Preferred Securities -- Global Trust Preferred
Securities." If Junior Subordinated Debentures are issued in certificated form,
principal and interest will be payable, the transfer of the Junior Subordinated
Debentures will be registrable, and Junior Subordinated Debentures will be
exchangeable for Junior Subordinated Debentures of other authorized
denominations of a like aggregate principal amount, at the corporate trust
office of the Indenture Trustee in Wilmington, Delaware or at the offices of any
paying agent or transfer agent appointed by the Company, provided that payment
of interest may be made at the option of the Company by check mailed to the
address of the persons entitled thereto.
Junior Subordinated Debentures will be exchangeable for other Junior
Subordinated Debentures of like tenor, of any authorized denominations and of a
like aggregate principal amount.
Junior Subordinated Debentures may be presented for exchange as provided
above, and may be presented for registration of transfer (with the form of
transfer endorsed thereon, or a satisfactory written instrument of transfer,
duly executed), at the office of the securities registrar (the "Securities
Registrar") appointed under the Indenture or at the office of any transfer agent
designated by the Company for such purpose without service charge and upon
payment of any taxes and other governmental charges as described in the
Indenture. The Company will appoint the Indenture Trustee as Securities
Registrar under the Indenture. The Company may at any time designate additional
transfer agents with respect to the Junior Subordinated Debentures.
In the event of any redemption, neither the Company nor the Indenture
Trustee shall be required to (i) issue, register the transfer of or exchange
Junior Subordinated Debentures during a period beginning at the opening of
business 15 days before the day of selection for redemption of the Junior
Subordinated Debentures to be redeemed and ending at the close of business on
the date of mailing of the relevant notice of redemption or (ii) transfer or
exchange any Junior Subordinated Debentures so selected for redemption, except
in the case of any Junior Subordinated Debentures being redeemed in part, any
portion thereof not to be redeemed.
PAYMENT AND PAYING AGENTS
Payment of principal (and premium, if any) and interest on the Junior
Subordinated Debentures will be made at the office of the Indenture Trustee,
except that at the option of the Company payment of any interest may be made (i)
except in the case of Global Junior Subordinated Debentures, by check mailed to
the address of the person entitled thereto as such address shall appear in the
securities register, (ii) by transfer to an account maintained by the person
entitled thereto as specified in the Securities Register, provided that proper
transfer instructions have been received by the regular record date or (iii) if
the Junior Subordinated Debentures are held by the Property Trustee, by
agreement between the Company and the Property Trustee. Payment of any interest
on Junior Subordinated Debentures will be made to the person in whose name such
Junior Subordinated Debenture is registered at the close of business on the
regular record date for such interest. The Company may at any time designate
additional Paying Agents or rescind the designation of any Paying Agent; however
the Company will at all times be required to maintain a Paying Agent in each
place of payment for the Junior Subordinated Debentures. Any moneys deposited
with the Indenture Trustee or any Paying Agent, or then held by the Company in
trust, for the payment of the principal of (and premium, if any) or interest on
the Junior Subordinated Debentures and remaining unclaimed for two years after
such principal or interest has become due and payable shall, at the request of
the Company, be repaid to the Company and the holder of such Junior Subordinated
Debenture shall thereafter look, as a general unsecured creditor, only to the
Company for payment thereof.
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MODIFICATION OF INDENTURE
From time to time the Company and the Indenture Trustee may, without the
consent of the holders of the Junior Subordinated Debentures, amend, waive or
supplement the Indenture for specified purposes, including, among other things,
curing ambiguities, defects or inconsistencies (provided that any such action
does not materially adversely affect the interests of the holders of the Junior
Subordinated Debentures or the Trust Preferred Securities so long as they remain
outstanding) and qualifying, or maintaining the qualification of, the Indenture
under the Trust Indenture Act. The Indenture contains provisions permitting the
Company and the Indenture Trustee, with the consent of the holders of not less
than a majority in principal amount of the outstanding Junior Subordinated
Debentures, to modify the Indenture in a manner affecting the rights of the
holders of the Junior Subordinated Debentures; provided, that no such
modification may, without the consent of the holder of each outstanding Junior
Subordinated Debenture affected thereby, (i) change the Stated Maturity of the
Junior Subordinated Debentures, or reduce the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon or (ii) reduce
the percentage of principal amount of Junior Subordinated Debentures, the
holders of which are required to consent to any such modification of the
Indenture; provided that so long as any of the Trust Preferred Securities remain
outstanding, no such modification may be made that adversely affects the holders
of such Trust Preferred Securities in any material respect, and no termination
of the Indenture may occur, and no waiver of any Debenture Event of Default or
compliance with any covenant under the Indenture may be effective, without the
prior consent of the holders of at least a majority of the aggregate Liquidation
Amount of the Trust Preferred Securities unless and until the principal of the
Junior Subordinated Debentures and all accrued and unpaid interest thereon have
been paid in full and certain other conditions have been satisfied. Where a
consent under the Indenture would require the consent of each holder of Junior
Subordinated Debentures, no such consent shall be given by the Property Trustee
without the prior consent of each holder of Trust Preferred Securities. In
addition, the Company and the Indenture Trustee may execute, without the consent
of any holder of Junior Subordinated Debentures, any supplemental Indenture for
the purpose of creating any new series of Junior Subordinated Debentures.
DEBENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events with respect to the Junior Subordinated Debentures that has occurred and
is continuing constitutes a "Debenture Event of Default" with respect to the
Junior Subordinated Debentures:
(i) failure for 30 days to pay any interest on the Junior Subordinated
Debentures when due (subject to the deferral of any due date in the case of
an Extension Period); or
(ii) failure to pay any principal on the Junior Subordinated
Debentures when due, whether at maturity, upon redemption, by declaration
or otherwise; or
(iii) failure to observe or perform in any material respect certain
other covenants contained in the Indenture for 90 days after written notice
to the Company from the Indenture Trustee or to the Company and the
Indenture Trustee by the holders of at least 25% in aggregate outstanding
principal amount of the Junior Subordinated Debentures; or
(iv) certain events in bankruptcy, insolvency or reorganization of the
Company.
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 Indenture
Trustee. The Indenture Trustee or the holders of not less than 25% in aggregate
outstanding principal amount of the Junior Subordinated Debentures may declare
the principal due and payable immediately upon a Debenture Event of Default. If
the Indenture Trustee or such holders of such Junior Subordinated Debentures
fail to make such declaration, the holders of at least 25% in aggregate
Liquidation Amount of the Trust Preferred Securities shall have such right. The
holders of a majority in aggregate outstanding principal amount of the Junior
Subordinated Debentures may annul such declaration and waive the default if the
default (other than the non-payment of the principal of the Junior Subordinated
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Debentures which has become due solely by such acceleration) has been cured and
a sum sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Indenture Trustee.
Should the holders of the Junior Subordinated Debentures fail to annul such
declaration and waive such default, the holders of a majority in aggregate
Liquidation Amount of the Trust Preferred Securities shall have such right.
The holders of a majority in aggregate outstanding principal amount of
Junior Subordinated Debentures affected thereby may, on behalf of the holders of
all the Junior Subordinated Debentures, waive any past default, except a default
in the payment of principal or interest (unless such default has been cured and
a sum sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Indenture Trustee) or
a default in respect of a covenant or provision which under the Indenture cannot
be modified or amended without the consent of the holder of each outstanding
Junior Subordinated Debenture.
In case a Debenture Event of Default shall occur and be continuing as to
the Junior Subordinated Debentures, the Property Trustee, as holder of the
Junior Subordinated Debentures, will have the right to declare the principal of
and the interest on such Junior Subordinated Debentures, and any other amounts
payable under the Indenture, to be forthwith due and payable and to enforce its
other rights as a creditor with respect to such Junior Subordinated Debentures.
The Company is required to file annually with the Indenture Trustee a
certificate as to whether or not the Company is in compliance with all the
conditions and covenants applicable to it under the Indenture.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF TRUST PREFERRED SECURITIES
If a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of the Company to pay interest or principal
on the Junior Subordinated Debentures on the date such interest or principal is
otherwise payable, a holder of Trust Preferred Securities may institute a legal
proceeding directly against the Company for enforcement of payment to such
holder of the principal of or interest on such Junior Subordinated Debentures
having a principal amount equal to the aggregate Liquidation Amount of the Trust
Preferred Securities of such holder (a "Direct Action"). The Company may not
amend the Indenture to remove the foregoing right to bring a Direct Action
without the prior written consent of the holders of all of the Trust Preferred
Securities outstanding. The Company shall have the right under the Indenture to
set off any payment made to such holder of Trust Preferred Securities by the
Company in connection with a Direct Action.
The holders of the Trust Preferred Securities will not be able to exercise
directly any remedies other than those set forth in the preceding paragraph
available to the holders of the Junior Subordinated Debentures unless there
shall have been an Event of Default under the Trust Agreement. See "Description
of the Trust Preferred Securities -- Events of Default; Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Indenture provides that the Company shall not consolidate with or merge
into any other Person or 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 (i) in case the Company
consolidates with or merges into another Person or conveys, transfers or leases
its properties and assets substantially as an entirety to any Person, the
successor Person is organized under the laws of the United States or any state
or the District of Columbia, and such successor Person expressly assumes the
Company's obligations on the Junior Subordinated Debentures issued under the
Indenture; (ii) immediately after giving effect thereto, 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 occurred and be continuing; and (iii)
certain other conditions as prescribed in the Indenture are met.
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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
similar transaction involving the Company that may adversely affect holders of
the Junior Subordinated Debentures.
SATISFACTION AND DISCHARGE
The Indenture provides that when, among other things, all Junior
Subordinated Debentures not previously delivered to the Indenture Trustee for
cancellation (i) have become due and payable or (ii) will become due and payable
at their Stated Maturity within one year, and the Company deposits or causes to
be deposited with the Indenture Trustee funds, in trust, for the purpose and in
an amount in the currency or currencies in which the Junior Subordinated
Debentures are payable sufficient to pay and discharge the entire indebtedness
on the Junior Subordinated Debentures not previously delivered to the Indenture
Trustee for cancellation, for the principal and interest to the date of the
deposit or to the Stated Maturity, as the case may be, then the Indenture will
cease to be of further effect (except as to the Company's obligations to pay all
other sums due pursuant to the Indenture and to provide the officers'
certificates and opinions of counsel described therein), and the Company will be
deemed to have satisfied and discharged the Indenture.
COVENANTS OF THE COMPANY
The Company will covenant in the Indenture, as to the Junior Subordinated
Debentures, that if and so long as (i) the Property Trustee on behalf of the
Trust is the holder of all such Junior Subordinated Debentures, (ii) a Tax Event
in respect of the Trust has occurred and is continuing and (iii) the Company has
elected, and has not revoked such election, to pay Additional Sums (as defined
under "Description of the Trust Preferred Securities -- Redemption") in respect
of the Trust Preferred Securities, the Company will pay to the Trust such
Additional Sums. The Company will also covenant, as to the Junior Subordinated
Debentures, (i) to maintain directly or indirectly 100% ownership of the Common
Securities of the Trust to which Junior Subordinated Debentures have been
issued, provided that certain successors which are permitted to do so pursuant
to the Indenture may succeed to the Company's ownership of the Common
Securities, (ii) not to voluntarily dissolve, wind up or liquidate the Trust,
except (a) in connection with a distribution of Junior Subordinated Debentures
to the holders of the Trust Preferred Securities in liquidation of the Trust or
(b) in connection with certain mergers, consolidations, or amalgamations
permitted by the Trust Agreement and (iii) to use its reasonable efforts,
consistent with the terms and provisions of the Trust Agreement, to cause the
Trust to remain classified as a grantor trust and not an association taxable as
a corporation for United States federal income tax purposes.
GOVERNING LAW
The Indenture and the Junior Subordinated Debentures will be governed by
and construed in accordance with the laws of the State of California, except
that the immunities and standard of care of the Indenture Trustee will be
governed by Delaware law.
INFORMATION CONCERNING THE INDENTURE TRUSTEE
The Indenture Trustee shall have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to such provisions, the Indenture Trustee is under no
obligation to exercise any of the powers vested in it by the Indenture at the
request of any holder of Junior Subordinated Debentures, unless offered
reasonable indemnity by such holder against the costs, expenses and liabilities
which might be incurred thereby. The Indenture 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 Indenture Trustee reasonably believes that
repayment or adequate indemnity is not reasonably assured to it.
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BOOK-ENTRY ISSUANCE
The Depositary will act as securities depositary for all of the Trust
Preferred Securities and, if the Junior Subordinated Debentures are distributed
to holders of Trust Preferred Securities, the Junior Subordinated Debentures.
The Trust Preferred Securities and, in such event, the Junior Subordinated
Debentures will be issued only as fully-registered securities registered in the
name of Cede & Co. (the Depositary's nominee). One or more fully-registered
global certificates will be issued for the Trust Preferred Securities and the
Junior Subordinated Debentures and will be deposited with the Depositary.
The Depositary is a limited purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Exchange
Act. The Depositary holds securities that its Participants deposit with the
Depositary. The Depositary also facilitates the settlement among Participants of
securities transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in Participants' accounts,
thereby eliminating the need for physical movement of securities certificates.
"Direct Participants" include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations. The Depositary
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 Depositary system is also available to
others such as securities brokers and dealers, banks and trust companies that
clear through or maintain custodial relationships with Direct Participants,
either directly or indirectly ("Indirect Participants"). The rules applicable to
the Depositary and its Participants are on file with the Commission.
Purchases of Trust Preferred Securities or Junior Subordinated Debentures
within the Depositary system must be made by or through Direct Participants,
which will receive a credit for the Trust Preferred Securities or Junior
Subordinated Debentures on the Depositary's records. The ownership interest of
each actual purchaser of each Trust Preferred Security and each Junior
Subordinated Debenture ("Beneficial Owner") will be recorded on the Direct and
Indirect Participants' records. Beneficial Owners will not receive written
confirmation from the Depositary of their purchases, but Beneficial Owners are
expected to receive written confirmations providing details of the transactions,
as well as periodic statements of their holdings, from the Direct or Indirect
Participants through which the Beneficial Owners purchased Trust Preferred
Securities or Junior Subordinated Debentures. Transfers of ownership interests
in the Trust Preferred Securities or Junior Subordinated Debentures 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 Trust Preferred Securities or Junior Subordinated
Debentures, except in the event that use of the book-entry system for the Trust
Preferred Securities or Junior Subordinated Debentures is discontinued.
The Depositary has no knowledge of the actual Beneficial Owners of the
Trust Preferred Securities or Junior Subordinated Debentures; the Depositary's
records reflect only the identity of the Direct Participants to whose accounts
such Trust Preferred Securities or Junior Subordinated Debentures are credited,
which may or may not be the Beneficial Owners. The Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by the Depositary to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
If less than all of the Trust Preferred Securities or the Junior
Subordinated Debentures are being redeemed, the Depositary has informed the
Trust and the Company that its practice is to determine by lot the amount of the
Trust Preferred Securities of each Direct Participant to be redeemed.
Although voting with respect to the Trust Preferred Securities or the
Junior Subordinated Debentures is limited to the holders of record of the Trust
Preferred Securities or Junior Subordinated Debentures, as applicable, in those
instances in which a vote is required, neither the Depositary nor Cede & Co.
will itself
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consent or vote with respect to Trust Preferred Securities or Junior
Subordinated Debentures. Under its usual procedures, the Depositary would mail
an omnibus proxy (the "Omnibus Proxy") to the relevant 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 such
Trust Preferred Securities or Junior Subordinated Debentures are credited on the
record date (identified in a listing attached to the Omnibus Proxy).
Distribution and Redemption Price payments on the Trust Preferred
Securities or, if applicable, interest payments on the Junior Subordinated
Debentures will be made to Cede & Co., as nominee of the Depositary. The
Depositary's practice is to credit Direct Participants' accounts on the relevant
payment date in accordance with their respective holdings shown on the
Depositary's records. Payments by Participants to Beneficial Owners will be
governed by standing instructions and customary practices and will be the
responsibility of such Participant and not of the Depositary, the relevant
Trustee, the Trust or the Company, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of Distributions,
Redemption Price payments or interest, as applicable, to Cede & Co. is the
responsibility of the relevant Trustee, disbursement of such payments to Direct
Participants is the responsibility of Cede & Co., and disbursements of such
payments to the Beneficial Owners is the responsibility of Direct and Indirect
Participants.
Under certain circumstances set forth in the Trust Agreement, the Global
Trust Preferred Security will be exchangeable for definitive certificated Trust
Preferred Securities. See "Description of the Trust Preferred
Securities -- Global Trust Preferred Securities."
The information in this section concerning the Depositary and the
Depositary's book-entry system has been obtained from sources that the Trust and
the Company believe to be accurate, but the Trust and the Company assume no
responsibility for the accuracy thereof. Neither the Trust nor the Company has
any responsibility for the performance by the Depositary or its Participants of
their respective obligations as described herein or under the rules and
procedures governing their respective operations.
DESCRIPTION OF THE GUARANTEE
The Guarantee Agreement will be executed and delivered by the Company
concurrently with the issuance of the Trust Preferred Securities for the benefit
of the holders of the Trust Preferred Securities. Wilmington Trust Company will
act as Guarantee Trustee under the Guarantee Agreement for the purposes of
compliance with the Trust Indenture Act, and the Guarantee Agreement will be
qualified as an indenture under the Trust Indenture Act. The following summary
of certain provisions of the Guarantee does not purport to be complete and is
subject to, and qualified in its entirety by reference to, all of the provisions
of the Guarantee Agreement, including the definition therein of certain terms,
and the Trust Indenture Act. The form of the Guarantee Agreement has been filed
as an exhibit to the Registration Statement of which this Prospectus Supplement
forms a part. The Guarantee Trustee will hold the Guarantee for the benefit of
the holders of the Trust Preferred Securities.
GENERAL
The Guarantee will be an irrevocable guarantee on a subordinated basis of
the Trust's obligations under the Trust Preferred Securities, but will apply
only to the extent that the Trust has funds sufficient to make such payments,
and is not a guarantee of collection.
The Company will irrevocably unconditionally agree to pay in full on a
subordinated basis, to the extent set forth therein, the Guarantee Payments (as
defined below) to the holders of the Trust 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 following payments
with respect to the Trust Preferred Securities, to the extent not paid by or on
behalf of the Trust (the "Guarantee Payment"), will be subject to the Guarantee:
(i) any accumulated and unpaid Distributions required to be paid on the Trust
Preferred Securities, to the extent that the Trust has funds on hand available
therefor at such time, (ii) the redemption price with respect to any Trust
Preferred Securities called for redemption, to the extent that the Trust has
funds on hand
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available therefor at such time and (iii) upon a voluntary or involuntary
dissolution, winding up or liquidation of the Trust (unless the Junior
Subordinated Debentures are distributed to holders of the Trust Preferred
Securities), the lesser of (a) the Liquidation Distribution and (b) the amount
of assets of the Trust remaining available for distribution to holders of Trust
Preferred Securities, after satisfaction of liabilities to creditors of the
Trust as required by law. The Company's obligation to make a Guarantee Payment
may be satisfied by direct payment of the required amounts by the Company to the
holders of the Trust Preferred Securities or by causing the Trust to pay such
amounts to such holders.
If the Company does not make interest payments on the Junior Subordinated
Debentures held by the Trust, the Trust will not be able to pay Distributions on
the Trust Preferred Securities and will not have funds legally available
therefor. The Guarantee will rank subordinate and junior in right of payment to
all Senior Debt and Subordinated Debt of the Company. See "-- Status of the
Guarantee" below. Except as otherwise described herein, the Guarantee does not
limit the incurrence or issuance of other secured or unsecured debt of the
Company, including Senior Debt and Subordinated Debt whether under the
Indenture, any other indenture that the Company may enter into in the future, or
otherwise. The Company has, through the Guarantee Agreement, the Trust
Agreement, the Junior Subordinated Debentures, the Indenture and the Expense
Agreement, taken together, fully, irrevocably and unconditionally guaranteed all
of the Trust's obligations under the Trust Preferred Securities. No single
document standing alone or operating in conjunction with fewer than all of the
other documents constitutes such guarantee. It is only the combined operation of
these documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the Trust's obligations under the Trust Preferred
Securities. See "Relationship Among the Trust Preferred Securities, the Junior
Subordinated Debentures and the Guarantee."
STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of the Company and
will rank subordinate and junior in right of payment to all Senior Debt and
Subordinated Debt in the same manner as the Junior Subordinated Debentures.
The Guarantee will constitute a guarantee of payment and not of collection.
For example, the guaranteed party may institute a legal proceeding directly
against the Company to enforce its rights under the Guarantee without first
instituting a legal proceeding against any other person or entity. The Guarantee
will be held for the benefit of the holders of the Trust Preferred Securities.
The Guarantee will not be discharged except by payment of the Guarantee Payment
in full to the extent not paid by the Trust or upon distribution of the Junior
Subordinated Debentures to the holders of the Trust Preferred Securities. The
Guarantee does not place a limitation on the amount of additional Senior Debt
and Subordinated Debt that may be incurred by the Company. The Company expects
from time to time to incur additional indebtedness constituting Senior Debt and
Subordinated Debt.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not materially adversely affect
the rights of holders of the Trust Preferred Securities (in which case no vote
will be required), the Guarantee Agreement may not be amended without the prior
approval of the holders of not less than a majority of the aggregate Liquidation
Amount of such outstanding Trust Preferred Securities. See "Description of the
Trust Preferred Securities -- Voting Rights; Amendment of the Trust Agreement."
All guarantees and agreements contained in the Guarantee Agreement shall bind
the successors, assigns, receivers, trustees and representatives of the Company
and shall inure to the benefit of the holders of the Trust Preferred Securities
then outstanding.
EVENTS OF DEFAULT
An Event of Default under the Guarantee Agreement will occur upon the
failure of the Company to perform any of its payment or other obligations
thereunder and, except for a default in payment of a Guarantee Payment, the
Guarantor shall have received notice of default and shall not have cured such
default within 90 days after receipt of such notice. The holders of not less
than a majority in aggregate Liquidation
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Amount of the Trust Preferred Securities have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Guarantee Trustee in respect of the Guarantee or to direct the exercise of any
trust or power conferred upon the Guarantee Trustee under the Guarantee
Agreement. Any holder of the Trust Preferred Securities may institute a legal
proceeding directly against the Company to enforce its rights under the
Guarantee without first instituting a legal proceeding against the Trust, the
Guarantee Trustee or any other person or entity.
The Company, as guarantor, is required to file annually with the Guarantee
Trustee a certificate as to whether or not the Company is in compliance with all
the conditions and covenants applicable to it under the Guarantee Agreement.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of
an Event of Default, and after curing all Events of Default that shall have
occurred under the Guarantee Agreement, has undertaken to perform only such
duties as are specifically set forth in the Guarantee Agreement and, after the
occurrence of an Event of Default under the Guarantee Agreement, 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 the Trust Preferred
Securities unless it is offered adequate security and indemnity as would satisfy
a reasonable person in the position of the Guarantee Trustee against the costs,
expenses and liabilities that might be incurred thereby.
TERMINATION OF THE GUARANTEE
The Guarantee will terminate and be of no further force and effect upon
full payment of the Redemption Price of the Trust Preferred Securities, upon
full payment of the amounts payable upon liquidation of the Trust or upon
distribution of Junior Subordinated Debentures to the holders of the Trust
Preferred Securities. The Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any holder of the Trust Preferred
Securities must restore payment of any sums paid under the Trust Preferred
Securities or the Guarantee.
GOVERNING LAW
The Guarantee Agreement will be governed by and construed in accordance
with the laws of the State of California.
EXPENSE AGREEMENT
Pursuant to the Expense Agreement to be entered into between the Company
and the Trust under the Trust Agreement, the Company will irrevocably and
unconditionally guarantee to each person or entity to whom the Trust becomes
indebted or liable, the full payment of any costs, expenses or liabilities of
the Trust (including, without limitation, expenses relating to the Offering of
the Trust Preferred Securities and any expenses the Property Trustee may incur
relating to the enforcement of the rights of the holders of the Trust Preferred
Securities or the Junior Subordinated Debentures pursuant to the Trust Agreement
and the Indenture, respectively), other than obligations of the Trust to pay to
the holders of the Trust Preferred Securities or other similar interests in the
Trust the amounts due such holders pursuant to the terms of the Trust Preferred
Securities or such other similar interests, as the case may be. The Expense
Agreement may be enforced against the Company by any person or entity to whom
the Trust is or becomes indebted or liable.
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RELATIONSHIP AMONG THE TRUST PREFERRED SECURITIES,
THE JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Trust Preferred
Securities (to the extent the Trust has funds available for the payment of such
Distributions) are irrevocably guaranteed by the Company as and to the extent
set forth under "Description of the Guarantee." Taken together, the Company's
obligations under the Junior Subordinated Debentures, the Indenture, the Trust
Agreement, the Expense 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 Trust Preferred Securities. No single
document standing alone or operating in conjunction with fewer than all of the
other documents constitutes such guarantee. It is only the combined operation of
these documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the Trust's obligations under the Trust Preferred
Securities. If and to the extent that the Company does not make payments on the
Junior Subordinated Debentures, the Trust will not pay Distributions or other
amounts due on the Trust Preferred Securities. The Guarantee does not cover
payment of Distributions when the Trust does not have sufficient funds to pay
such Distributions. In such event, the remedy of a holder of the Trust Preferred
Securities is to institute a legal proceeding directly against the Company for
enforcement of payment on the Junior Subordinated Debentures. The obligations of
the Company under the Guarantee are subordinate and junior in right of payment
to all Senior Debt and Subordinated Debt of the Company.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on the
Junior Subordinated Debentures, such payments will be sufficient to cover
Distributions and other payments due on the Trust Preferred Securities,
primarily because: (i) the aggregate principal amount of the Junior Subordinated
Debentures will be equal to the sum of the aggregate Liquidation Amount of the
Trust Preferred Securities and Common Securities; (ii) 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
Trust Preferred Securities; (iii) the Company shall pay for all and any costs,
expenses and liabilities of the Trust, except the Trust's obligations to holders
of Trust Preferred Securities; and (iv) the Trust Agreement further provides
that the Trust will not engage in any activity that is not consistent with its
limited purposes.
Notwithstanding anything to the contrary in the Indenture, the Company has
the right to set off any payment it is otherwise required to make thereunder to
the extent the Company has theretofore made, or is concurrently on the date of
such payment making, a payment under the Guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF THE TRUST PREFERRED SECURITIES UNDER THE
GUARANTEE
A holder of any of the Trust Preferred Securities may institute a legal
proceeding directly against the Company to enforce its rights under the
Guarantee without first instituting a legal proceeding against the Guarantee
Trustee, the Trust or any other person or entity.
A default or event of default under any Senior Debt and Subordinated Debt
would not constitute a default or Event of Default under the Guarantee. However,
in the event of a default under Senior Debt and Subordinated Debt, the
subordination provisions of the Indenture provide that no payments may be made
in respect of the Junior Subordinated Debentures from and after the time that
the Company and the Indenture Trustee receive notice of such default and while
such default is continuing. Failure to make required payments on Junior
Subordinated Debentures would constitute an Event of Default.
LIMITED PURPOSE OF THE TRUST
The Trust Preferred Securities evidence a beneficial interest in the Trust,
and the Trust exists for the sole purpose of issuing the Trust Securities and
investing the proceeds thereof in Junior Subordinated Debentures. A principal
difference between the rights of a holder of the Trust Preferred Securities and
a holder of a Junior
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Subordinated Debenture is that a holder of a Junior Subordinated Debenture is
entitled to receive from the Company the principal amount of and interest
accrued on Junior Subordinated Debentures held, while a holder of the Trust
Preferred Securities is entitled to receive Distributions from the Trust (or
from the Company under the Guarantee) if and to the extent the Trust has funds
available for the payment of such Distributions.
RIGHTS UPON DISSOLUTION
Upon any voluntary or involuntary dissolution, winding-up or liquidation of
the Trust involving the liquidation of the Junior Subordinated Debentures, after
satisfaction of liabilities to creditors of the Trust as provided by applicable
law, the holders of Trust Preferred Securities will be entitled to receive, out
of assets held by the Trust, the Liquidation Distribution in cash. See
"Description of the Trust Preferred Securities -- Liquidation Distribution Upon
Dissolution." Upon any voluntary or involuntary liquidation or bankruptcy of the
Company, the Property Trustee, as holder of the Junior Subordinated Debentures,
would be a subordinated creditor of the Company, subordinated in right of
payment to all Senior Debt and Subordinated Debt as set forth in the Indenture,
but entitled to receive payment in full of principal and interest, before any
stockholders of the Company receive payments or distributions. Since the Company
is the guarantor under the Guarantee and has agreed to pay for all costs,
expenses and liabilities of the Trust (other than the Trust's obligations to the
holders of its Trust Preferred Securities), the positions of a holder of the
Trust Preferred Securities and a holder of Junior Subordinated Debentures
relative to other creditors and to stockholders of the Company in the event of
liquidation or bankruptcy of the Company are substantially the same.
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MATERIAL FEDERAL INCOME TAX CONSEQUENCES
It is the opinion of Cooley Godward LLP, counsel to the Company
("Counsel"), that the following is accurate in all material respects and,
subject to the limitations stated herein, describes the material federal income
tax consequences to holders of the Trust Preferred Securities arising from the
purchase, ownership and disposition thereof. The following discussion assumes
the accuracy of the facts set forth in the Prospectus and Prospectus Supplement.
The discussion set forth in this section, unless otherwise stated, deals only
with Trust Preferred Securities held as capital assets by United States Persons
(defined below) who purchase the Trust Preferred Securities upon original
issuance at their original offering price. As used herein, a "United States
Person" means a person that is (i) a citizen or resident of the United States as
determined for United States federal income tax purposes, (ii) a corporation,
partnership or other entity created or organized in or under the laws of the
United States or any political subdivision thereof, (iii) an estate the income
of which is subject to United States federal income taxation regardless of its
source or (iv) a trust if a U.S. court is able to exercise primary supervision
over the administration of such trust and one or more United States persons have
the authority to control all substantial decisions of such trust or an electing
trust that was existing on August 19, 1996 and treated as a domestic trust on
such date. The tax treatment of holders may vary depending on their particular
situation. The following discussion does not address all the tax consequences
that may be relevant to a particular holder or to holders who may be subject to
special tax treatment, such as banks, real estate investment trusts, regulated
investment companies, insurance companies, dealers in securities or currencies,
tax-exempt investors, foreign investors, investors that hold the Trust Preferred
Securities as part of a hedging, straddle, constructive sale, or conversion or
other risk reduction transaction or whose functional currency is not the U.S.
dollar. In addition, the following discussion does not include any description
of any alternative minimum tax consequences or the tax laws of any state, local
or foreign government that may be applicable to a holder of Trust Preferred
Securities. The discussion set forth herein is based on the Internal Revenue
Code of 1986, as amended (the "Code"), the Treasury Regulations promulgated
thereunder and administrative and judicial interpretations thereof, as of the
date hereof, all of which are subject to change, possibly on a retroactive
basis.
The following discussion does not address the tax consequences that might
be relevant to persons that are not United States Persons ("non-United States
Persons"). Non-United States Persons should consult their own tax advisors as to
the specific United States federal income and other tax consequences of the
purchase, ownership and disposition of Trust Preferred Securities.
The authorities on which the discussion set forth herein is based are
subject to various interpretations, and opinions of counsel are not binding on
the Internal Revenue Service ("Service") or the courts, either of which could
take a contrary position. Moreover, no rulings have been or will be sought from
the Service with respect to the transactions described herein. Accordingly,
there can be no assurance that the Service will not challenge the tax
consequences discussed herein or that a court would not sustain such a
challenge.
HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE TRUST
PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN
AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL
OR OTHER TAX LAWS. FOR A DISCUSSION OF THE POSSIBLE REDEMPTION OF THE TRUST
PREFERRED SECURITIES UPON THE OCCURRENCE OF CERTAIN TAX EVENTS, SEE "DESCRIPTION
OF THE TRUST PREFERRED SECURITIES -- REDEMPTION."
CLASSIFICATION OF THE TRUST
In connection with the issuance of the Trust Preferred Securities, Counsel
will render its opinion that, under current law and assuming compliance with the
terms of the Trust Agreement, and based on certain facts and assumptions
contained in such opinion, the Trust will be classified as a grantor trust and
not as a partnership or an association taxable as a corporation for United
States federal income tax purposes. As a result, each beneficial owner of the
Trust Preferred Securities (a "Securityholder") will be treated as owning
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an undivided beneficial interest in the Junior Subordinated Debentures.
Accordingly, each Securityholder will be required to include in its gross income
its pro rata share of the interest income or original issue discount ("OID")
that is paid or accrued on the Junior Subordinated Debentures. See "-- Interest
Income and Original Issue Discount" herein.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES
The Company intends to take the position that the Junior Subordinated
Debentures will be classified for United States federal income tax purposes as
indebtedness of the Company under current law, and, by acceptance of a Trust
Preferred Security, each holder covenants to treat the Junior Subordinated
Debentures as indebtedness and the Trust Preferred Securities as evidence of an
indirect beneficial ownership interest in the Junior Subordinated Debentures.
Counsel has not delivered any opinion relating to the classification of the
Junior Subordinated Debentures as indebtedness and no assurance can be given
that such position of the Company will not be challenged by the Service or, if
challenged, that such a challenge will not be successful. The remainder of this
"Material Federal Income Tax Consequences" section assumes that the Junior
Subordinated Debentures will be classified for United States federal income tax
purposes as indebtedness of the Company. No amount included in income with
respect to the Junior Subordinated Debentures and Trust Preferred Securities
will be eligible for the dividends received deduction.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Except as set forth below, stated interest on the Junior Subordinated
Debentures generally will be included in income by a Securityholder at the time
such interest income is paid or accrued in accordance with such Securityholder's
regular method of tax accounting. Under the applicable Treasury Regulations, the
Junior Subordinated Debentures will not be considered to have been issued with
OID within the meaning of Section 1273(a) of the Code, so long as the Junior
Subordinated Debentures have terms and conditions that render the likelihood of
the Company's exercising its right to defer payments of interest on the Junior
Subordinated Debentures to be remote. The Company believes that the terms and
conditions of the Junior Subordinated Debentures (including the restrictions on
other payments during the Extension Period) are such that the likelihood of its
exercising such right is remote, and intends to take the position that the
Junior Subordinated Debentures are not issued with OID. Because this issue is
inherently factual, Counsel is unable to express any opinion regarding whether
the Junior Subordinated Debentures are issued with OID. If, however, the Company
exercises its right to defer payments of interest on the Junior Subordinated
Debentures, the Junior Subordinated Debentures will become OID instruments at
such time and all Securityholders will be required to accrue the stated interest
on the Junior Subordinated Debentures as it accrues on a daily basis during the
Extension Period, even though the Company will not pay such interest until the
end of the Extension Period, and even though some Securityholders otherwise may
use the cash method of tax accounting. Moreover, if the Company exercises such
right, the Junior Subordinated Debentures thereafter will be taxed as OID
instruments for as long as they remain outstanding. Thus, even after the end of
the Extension Period, all Securityholders will be required to continue to
include the stated interest on the Junior Subordinated Debentures in income on a
daily economic accrual basis, regardless of their method of tax accounting and
in advance of receipt of the cash attributable to such interest income. Under
the economic accrual rules, a Securityholder is required to accrue an amount of
interest income each year that approximates the stated interest payments called
for under the Junior Subordinated Debentures, and actual cash payments of
interest on the Junior Subordinated Debentures are not reported separately as
taxable income. A Securityholder's basis in Trust Preferred Securities will be
increased by any OID includible in income.
The Company's determination that there is a remote likelihood of exercising
its right to defer the payment of interest on the Junior Subordinated Debentures
is binding on each Securityholder unless the holder explicitly discloses in the
manner required by applicable Treasury Regulations that its determination is
different from the Company's. The Company's determination is not, however,
binding on the Service.
The Treasury Regulations described above have not yet been addressed in any
definitive interpretations by the Service, and it is possible that the Service
could take a contrary position. If the Service were to assert successfully that
the stated interest on the Junior Subordinated Debentures was OID regardless of
whether the
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Company exercises its right to defer payments of interest on such debentures,
all Securityholders will be required to include such stated interest in income
on a daily economic accrual basis as described above.
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES TO HOLDERS OF TRUST PREFERRED
SECURITIES
Under current law, a distribution by the Trust of the Junior Subordinated
Debentures as described under the captions "Description of the Trust Preferred
Securities -- Distribution of Junior Subordinated Debentures" and "Liquidation
Distribution Upon Dissolution" will be non-taxable and will result in the
Securityholder receiving directly its pro rata share of the Junior Subordinated
Debentures previously held indirectly through the Trust, with a holding period
and aggregate tax basis equal to the holding period and aggregate tax basis such
Securityholder had in its Trust Preferred Securities before such distribution. A
Securityholder would continue to recognize interest income in respect of Junior
Subordinated Debentures received from the Trust in the manner described above
under "-- Interest Income and Original Issue Discount" herein. If, however, the
Trust is characterized for United States federal income tax purposes as an
association taxable as a corporation at the time of its dissolution, the
distribution of Junior Subordinated Debentures to Securityholders by the Trust
could be a taxable event to the Trust and each Securityholder, and a
Securityholder could be required to recognize gain or loss as if the
Securityholder had exchanged its Trust Preferred Securities for the Junior
Subordinated Debentures it received upon the liquidation of the Trust, and the
Securityholder's holding period for the Junior Subordinated Debentures received
would not include the holding period for the Trust Preferred Securities
surrendered in the liquidation.
SALES OR REDEMPTION OF TRUST PREFERRED SECURITIES
Gain or loss will be recognized by a Securityholder on a sale of Trust
Preferred Securities (including a redemption for cash) in an amount equal to the
difference between the amount realized (which for this purpose, will exclude
amounts attributable to accrued interest or OID not previously included in
income) and the Securityholder's adjusted tax basis in the Trust Preferred
Securities sold or so redeemed. Gain or loss recognized by a Securityholder on
Trust Preferred Securities held for more than one year will generally be taxable
as long-term capital gain or loss and any such long-term capital gain recognized
by a noncorporate Securityholder generally will be taxed at a rate of 20
percent.
Amounts attributable to accrued interest or OID with respect to a
Securityholder's pro rata share of the Junior Subordinated Debentures not
previously included in income will be taxable as ordinary income.
MARKET DISCOUNT
Securityholders acquiring Trust Preferred Securities should note that the
resale of Trust Preferred Securities may be adversely affected by the market
discount provisions of Section 1276 through 1278 of the Code. To the extent a
subsequent Securityholder acquires its Trust Preferred Securities at a price
that is less than the adjusted issue price of such holder's share of the Junior
Subordinated Debentures (which generally should approximate par plus accrued but
unpaid interest), the Securityholder will be deemed to have acquired its
interest in the Trust Preferred Securities with market discount. Such
Securityholders are advised to consult their tax advisors as to the income tax
consequences of the acquisition, ownership and disposition of the Trust
Preferred Securities.
A Securityholder acquiring Trust Preferred Securities at a market discount
generally will be required to recognize ordinary income to the extent of accrued
market discount upon the retirement of the underlying Junior Subordinated
Debentures or, to the extent of any gain, upon disposition of the Trust
Preferred Securities. Such market discount would accrue ratably, or, at the
election of the Securityholder, under a constant yield method, over the
remaining term of the Junior Subordinated Debentures. A Securityholder also will
be required, in the absence of the election described in the next sentence, to
defer the deduction of a portion of the interest paid or accrued on indebtedness
incurred to purchase or carry Trust Preferred Securities acquired with market
discount. In lieu of the foregoing, a Securityholder may elect to include market
discount in income currently as it accrues on all market discount instruments
acquired by such holder in the taxable year of the election or thereafter, in
which case the interest deduction deferral rule will not apply.
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BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
Income on the Trust Preferred Securities held of record by United States
Persons (other than certain exempt Securityholders), if any, will be reported to
the Service and to such holders. "Backup" withholding at a rate of 31% will
apply to distributions and other payments on, and proceeds from the sale of,
Trust Preferred Securities paid to non-exempt United States Persons unless the
Securityholder furnishes its taxpayer identification number in the manner
prescribed in applicable Treasury Regulations, certifies that such number is
correct, certifies as to no loss of exemption from backup withholding and meets
certain other conditions. Any amounts withheld from a Securityholder under the
backup withholding rules will be allowed as a refund or a credit against such
Securityholder's United States federal income tax liability, provided the
required information is timely furnished to the Service.
POSSIBLE TAX LAW CHANGES AFFECTING THE TRUST PREFERRED SECURITIES
There can be no assurance that future legislation will not affect the
ability of the Company to deduct interest on the Junior Subordinated Debentures.
Such a change could give rise to a Tax Event, which may permit the Company to
cause a redemption of the Trust Preferred Securities. In addition, the Service
recently asserted that interest payable on a security with characteristics and
issued in circumstances similar to the characteristics and issuance of the
Junior Subordinated Debentures was not deductible for United States federal
income tax purposes. The taxpayer in that case has filed a petition in the
United States Tax Court challenging the Service's position on this matter. If
this matter is litigated and the Tax Court sustains the Service's position, such
judicial decision could give rise to a Tax Event which could, in certain
circumstances, require the dissolution of the trust or permit the Company to
redeem the Junior Subordinated Debentures. See "Description of the Trust
Preferred Securities -- Redemption -- Tax Event Redemption, Investment Company
Event Redemption" and "Description of the Junior Subordinated
Debentures -- Redemption."
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ERISA CONSIDERATIONS
A fiduciary of a pension, profit-sharing or other employee benefit plan
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), should consider the fiduciary standards of ERISA in the context of
the plan's particular circumstances before authorizing an investment in the
Trust Preferred Securities. Among other factors, the fiduciary should consider
whether such an investment is in accordance with the documents governing the
plan and whether an investment is appropriate for the plan in view of its
overall investment policy and the composition and diversification of its
portfolio. Other provisions of ERISA and the Code prohibit an employee benefit
plan subject to either ERISA or Section 4975 of the Code (which generally
includes individual retirement accounts and so-called "Keogh" plans as well as
other employer-sponsored plans) from engaging in certain transactions involving
"plan assets" with parties which are "parties in interest" under ERISA or
"disqualified persons" under the Code with respect to the plan. Therefore, a
fiduciary of an employee benefit plan should also consider whether an investment
in the Trust Preferred Securities might constitute or give rise to a prohibited
transaction under ERISA and the Code.
If the assets of the Trust were deemed to be plan assets of employee
benefit plans that are holders of the Trust Preferred Securities (including
holders who are not employee benefit plans themselves but are investing "plan
assets" of an employee benefit plan), the plan's investment in the Trust
Preferred Securities might be deemed to constitute a delegation under ERISA of
the duty to manage plan assets by an ERISA plan fiduciary investing in Trust
Preferred Securities, and certain transactions involving the operation of the
Trust might be deemed to constitute prohibited transactions under ERISA and the
Code.
The U.S. Department of Labor (the "DOL") has issued a regulation with
regard to whether the underlying assets of an entity in which employee benefit
plans acquire equity investments would be deemed to be plan assets. The
regulation provides that the underlying assets of an entity will not be
considered to be plan assets if the interests of the entity acquired by the
employee benefit plan are "publicly offered securities" -- that is, they are (1)
widely held (i.e., owned by more than 100 investors independent of the entity
and of each other), (2) freely transferable and (3) sold as part of an offering
pursuant to an effective registration statement under the Securities Act and
timely registered under Section 12(b) or 12(g) of the Exchange Act. It is
expected that the Trust Preferred Securities will meet the criteria of "publicly
offered securities" above. The Underwriters expect that the Trust Preferred
Securities will be held by at least 100 independent investors at the conclusion
of the Offering. There are no restrictions imposed on the transfer of the Trust
Preferred Securities and the Trust Preferred Securities will be sold as part of
an offering pursuant to an effective registration statement under the Securities
Act, and will be timely registered under the Exchange Act.
Even if the assets of the Trust were deemed to be "plan assets" of employee
benefit plans that are holders of the Trust Preferred Securities, there are five
class exemptions issued by the DOL which could apply to except certain
transactions involving assets of the Trust from the prohibited transaction
provisions of ERISA and the Code -- Prohibited Transaction Exemption 84-14, for
certain transactions determined by qualified professional asset managers;
Prohibited Transaction Exemption 90-1, for certain transactions involving
insurance company pooled separate accounts; Prohibited Transaction Exemption
91-38, for certain transactions involving bank collective investment funds;
Prohibited Transaction Exemption 95-60, for certain transactions involving
insurance company general accounts; and Prohibited Transaction Exemption 96-23,
for certain transactions determined by in-house asset managers.
Even if the assets of the Trust are not deemed "plan assets" of employee
benefit plans that hold Trust Preferred Securities, one or more the Trustees of
the Trust might be considered a party in interest or a disqualified person with
respect to certain such employee benefit plans by reason of pre-existing
relationships, such as plans for which that Trustee or one of its affiliates
serves as trustee. Therefore, before such employee benefit plans purchase Trust
Preferred Securities, they should determine that (a) none of the Trustees nor
any affiliate is a party in interest or disqualified person with respect to such
plan or (b) one of the class exemptions referred to in the preceding paragraph
or any other exemption from the prohibited transaction rules under ERISA and the
Code is applicable to their purchase and holding of the Trust Preferred
Securities.
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Due to the complexity of these rules and the penalties imposed upon persons
involved in prohibited transactions, it is important that an employee benefit
plan considering the purchase of Trust Preferred Securities consult with its
counsel regarding the consequences under ERISA of the acquisition and ownership
of Trust Preferred Securities. Employee benefit plans which are governmental
plans (as defined in Section 3(32) of ERISA) and certain church plans (as
defined in Section 3(33) of ERISA) generally are not subject to ERISA
requirements of the prohibited transaction provisions of the Code.
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UNDERWRITING
Subject to the terms and certain conditions of the Underwriting Agreement
(the "Underwriting Agreement"), the underwriters named below (the
"Underwriters"), for whom EVEREN Securities, Inc., Prudential Securities
Incorporated and Ladenburg Thalmann & Co. Inc. are acting as representatives
(the "Representatives"), have severally agreed to purchase an aggregate of
5,000,000 Trust Preferred Securities from the Trust. The number of Trust
Preferred Securities that each Underwriter has agreed to purchase is set forth
opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF TRUST
UNDERWRITERS PREFERRED SECURITIES
------------ --------------------
<S> <C>
EVEREN Securities, Inc......................................
Prudential Securities Incorporated..........................
Ladenburg Thalmann & Co. Inc. ..............................
---------
Total............................................. 5,000,000
=========
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters who are parties thereunder are subject to certain conditions. If
any of the Trust Preferred Securities are purchased by the Underwriters pursuant
to the Underwriting Agreement, all of such Trust Preferred Securities (other
than the Trust Preferred Securities covered by the over-allotment option
described below) must be so purchased.
The Trust and the Company have been advised by the Representatives that the
Underwriters propose to offer the Trust Preferred Securities to the public
initially at the price to the public set forth on the cover page of this
Prospectus Supplement and to certain dealers at such price less a concession not
to exceed $ per Trust Preferred Security. The Underwriters may allow, and
such dealers may reallow, discounts not to exceed $ per Trust Preferred
Security to certain other dealers. After the initial public offering of the
Trust Preferred Securities, the public offering price and the other selling
terms may be changed by the Representatives. In view of the fact that the
proceeds of the sale of the Trust Preferred Securities will be used to purchase
the Junior Subordinated Debentures of the Company, the Underwriting Agreement
provides that the Company will pay as compensation to the Underwriters arranging
the investment therein of such proceeds, an amount in immediately available
funds of $.40 per Trust Preferred Security (or $2,000,000 in the aggregate) for
the accounts of the Underwriters.
The Trust has granted to the Underwriters an option to purchase up to an
additional $7,500,000 aggregate liquidation amount of Trust Preferred Securities
at the price to the public set forth on the cover page of this Prospectus
Supplement, solely to cover over-allotments, if any. To the extent that the
Underwriters exercise such option, each of the Underwriters will be committed,
subject to certain conditions, to purchase a number of option Trust Preferred
Securities proportionate to such Underwriter's initial commitment as indicated
in the preceding table.
The Trust and the Company have agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Act, or to contribute to
payments that the Underwriters may be required to make in respect thereof.
The Trust Preferred Securities are a new issue of securities with no
established trading market. The Trust Preferred Securities have been approved
for listing on the American Stock Exchange, subject to notice of issuance. In
order to meet the listing requirements of the American Stock Exchange, the
Representatives have undertaken to distribute the Trust Preferred Securities to
a minimum of 400 public stockholders. The Representatives have advised the Trust
and the Company that the Underwriters presently intend to make a market in the
Trust Preferred Securities after the commencement of trading on the American
Stock Exchange, but no assurances can be made as to the liquidity of the Trust
Preferred Securities or that an active and liquid trading market will develop
or, if developed, that it will continue. The offering price and distribution
rate have been determined by negotiations between representatives of the Company
and the Representatives, and the Offering price of the Trust Preferred
Securities may not be indicative of the market price following the
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Offering. The Underwriters will have no obligation to make a market in the Trust
Preferred Securities, however, and may cease market-making activities, if
commenced, at any time.
The Trust and the Company have agreed with the Underwriters not to (other
than in connection with this Offering), directly or indirectly, offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase, or
otherwise issue any Trust Preferred Securities or Junior Subordinated
Debentures, any securities convertible into or exercisable or exchangeable for
Trust Preferred Securities, or any securities substantially similar to the Trust
Preferred Securities or Junior Subordinated Debentures, enter into any swap or
other agreement to do any of the foregoing, or file any registration statement
relating to any of the foregoing on behalf of itself or any other person, for a
period of 90 days after the date of this Prospectus Supplement, without the
written consent of EVEREN Securities, Inc.
In connection with the Offering, certain Underwriters and selling group
members and their respective affiliates may engage in transactions that
stabilize, maintain or otherwise affect the market price of the Trust Preferred
Securities. Such transactions may include stabilization transactions effected in
accordance with the Securities Exchange Act pursuant to which such persons may
bid for or purchase Trust Preferred Securities for the purpose of stabilizing
its market price. The Underwriters also may create a short position for the
account of the Underwriters by selling more Trust Preferred Securities in
connection with this Offering than they are committed to purchase from the
Trust, and in such case may purchase Trust Preferred Securities in the open
market following completion of the Offering to cover all or a portion of such
Trust Preferred Securities or may exercise the Underwriters' over-allotment
option referred to above. In addition, the Representative, on behalf of the
Underwriters, may impose "penalty bids" under contractual arrangements with the
Underwriters whereby they may reclaim from an Underwriter (or dealer
participating in the Offering), for the account of the other Underwriters, the
selling concession with respect to Trust Preferred Securities that are
distributed in this Offering but subsequently purchased for the account of the
Underwriters in the open market.
LEGAL MATTERS
The validity of the Guarantee and the Junior Subordinated Debentures will
be passed upon for the Company by Cooley Godward LLP, counsel to the Company.
Certain legal matters relating to the Offering will be passed upon for the
Underwriters by Gibson, Dunn & Crutcher LLP. Certain matters of Delaware law
relating to the validity of the Trust Preferred Securities, the enforceability
of the Trust Agreement and the creation of the Trust will be passed upon by
Richards, Layton & Finger, P.A., Wilmington, Delaware, special Delaware counsel
to the Company and the Trust. Richards, Layton & Finger, P.A., will also pass on
certain matters on behalf of Wilmington Trust Company in connection with the
Offering. Cooley Godward LLP and Gibson, Dunn & Crutcher LLP will rely on the
opinions of Richards, Layton & Finger, P.A. as to certain matters of Delaware
law. Certain matters relating to United States federal income tax considerations
will be passed upon for the Company by Cooley Godward LLP.
EXPERTS
The financial statements of the Company as of December 31, 1996 and 1997
and for each of the years in the three-year period ended December 31, 1997 have
been included herein and in the registration statement in reliance upon the
report of KPMG Peat Marwick LLP, independent certified public accountants,
appearing elsewhere herein, and upon the authority of said firm as experts in
accounting and auditing.
The Combined Balance Sheets of Suncoast Toys, Inc., NW Toys Co. and Oregon
Coin Company as of December 31, 1996 and 1997 and the Combined Statements of
Income, Stockholders' Equity and Cash Flows for each of the three years in the
period ended December 31, 1997 included in the Prospectus Supplement have been
included herein in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of that firm as experts in
accounting and auditing.
S-84
<PAGE> 88
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
Pro forma statements of earnings for the year ended December
31, 1997 and for the six months ended June 30, 1998....... F-3
Notes to pro forma financial statements..................... F-4
AMERICAN COIN MERCHANDISING, INC
Independent Auditors' Report................................ F-5
Financial Statements:
Balance sheets as of December 31, 1996 and 1997 and June
30, 1998 (unaudited)................................... F-6
Statements of earnings for the years ended December 31,
1995, 1996 and 1997 and for the six months ended June
30, 1997 and 1998 (unaudited).......................... F-7
Statements of stockholders' equity for the years ended
December 31, 1995, 1996 and 1997 and for the six months
ended June 30, 1998 (unaudited)........................ F-8
Statements of cash flows for the years ended December 31,
1995, 1996 and 1997 and for the six months ended June
30, 1997 and 1998 (unaudited).......................... F-9
Notes to financial statements............................. F-10
SUNCOAST TOYS, INC., NW TOYS CO., OREGON COIN COMPANY
Report of Independent Accountants........................... F-23
Combined Financial Statements:
Combined balance sheets as of December 31, 1996 and 1997
and June 12, 1998 (unaudited).......................... F-24
Combined statements of income for the years ended December
31, 1995, 1996 and 1997, for the six months ended June
30, 1997 and the period from January 1, 1998 to June
12, 1998 (unaudited)................................... F-25
Combined statements of stockholders' equity for the years
ended December 31, 1995, 1996 and 1997 and the period
ended June 12, 1998 (unaudited)........................ F-26
Combined statements of cash flows for the years ended
December 31, 1995, 1996 and 1997, for the six months
ended June 30, 1997 and the period from January 1, 1998
to June 12, 1998 (unaudited)........................... F-27
Notes to combined financial statements.................... F-28
Report of Independent Accountants on Supplemental
Information............................................... F-31
Combining balance sheet as of December 31, 1997........... F-32
Combining statement of income for the year ended December
31, 1997............................................... F-33
</TABLE>
F-1
<PAGE> 89
PRO FORMA FINANCIAL DATA
The pro forma data set forth below have been derived from the Company's
financial statements. The unaudited pro forma financial data set forth below
gives effect to the acquisition of Suncoast, accounted for as a purchase, as if
it had occurred (i) on January 1, 1997 for the year ended December 31, 1997
statement of earnings data and January 1, 1998 for the six months ended June 30,
1998 statement of earnings data. The pro forma data is not necessarily
indicative of the results that would have been achieved had such transaction
been consummated on such dates and should not be construed as representative of
future operations. Such pro forma data is subject to the assumptions set forth
in the notes hereto.
F-2
<PAGE> 90
AMERICAN COIN MERCHANDISING, INC.
PRO FORMA FINANCIAL STATEMENTS
STATEMENT OF EARNINGS
YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
ADJUSTMENTS FOR
HISTORICAL COMBINED THE ACQUISITION OF
HISTORICAL SUNCOAST TOYS, INC., SUNCOAST TOYS, INC.,
AMERICAN COIN NW TOYS CO. AND NW TOY CO. AND
MERCHANDISING, INC. OREGON TOY COMPANY OREGON TOY COMPANY PRO FORMA
------------------- -------------------- -------------------- ---------
<S> <C> <C> <C> <C>
Revenue:
Vending........................ $52,866 $18,726 $71,592
Franchise and other............ 6,218 1,156 7,374
------- ------- -------
Total revenue.......... 59,084 19,882 78,966
------- ------- -------
Cost of revenue:
Vending........................ 37,506 12,795 $ (792)(a) 50,040
531 (a)
Franchise and other............ 3,967 491 4,458
------- ------- -------- -------
Total cost of
revenue.............. 41,473 13,286 (261) 54,498
Gross profit........... 17,611 6,596 261 24,468
General and administrative
expenses....................... 10,314 2,523 1,292 (b) 14,129
------- ------- -------- -------
Operating earnings..... 7,297 4,073 (1,031) 10,339
Interest expense, related
parties........................ 76 -- 76
Interest expense (income), other,
net............................ 536 (336) 2,554 (c) 2,754
------- ------- -------- -------
Earnings before
taxes................ 6,685 4,409 (3,585) 7,509
Provision for income taxes....... 2,256 -- 278 (d) 2,534
------- ------- -------- -------
Net earnings........... $ 4,429 $ 4,409 $ (3,863) $ 4,975
======= ======= ======== =======
</TABLE>
F-3
<PAGE> 91
AMERICAN COIN MERCHANDISING, INC.
PRO FORMA FINANCIAL STATEMENTS
STATEMENT OF EARNINGS
SIX MONTHS ENDED JUNE 30, 1998
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
ADJUSTMENTS FOR
HISTORICAL COMBINED THE ACQUISITION OF
HISTORICAL SUNCOAST TOYS, INC., SUNCOAST TOYS, INC.,
AMERICAN COIN NW TOYS CO. AND NW TOY CO. AND
MERCHANDISING, INC. OREGON TOY COMPANY* OREGON TOY COMPANY PRO FORMA
------------------- -------------------- -------------------- ---------
<S> <C> <C> <C> <C>
Revenue:
Vending..................... $37,709 $8,567 $46,276
Franchise and other......... 2,014 129 2,143
------- ------ -------
Total revenue....... 39,723 8,696 48,419
Cost of revenue:
Vending..................... 26,669 5,980 $ (363)(a) 32,529
243 (a)
Franchise and other......... 1,252 91 1,343
------- ------ ------- -------
Total cost of
revenue........... 27,921 6,071 (120) 33,872
Gross profit........ 11,802 2,625 120 14,547
General and administrative
expenses.................... 7,388 2,196(e) 646 (b) 10,230
------- ------ ------- -------
Operating
earnings.......... 4,414 429 (526) 4,317
Interest expense, related
parties..................... 19 -- 19
Interest expense (income),
other, net.................. 460 (187) 1,277 (c) 1,550
------- ------ ------- -------
Earnings before
taxes............. 3,935 616 (1,803) 2,748
Provisions for income taxes... 1,377 -- 416 (d) 1,793
------- ------ ------- -------
Net earnings........ $ 2,558 $ 616 $(1,388) $ 1,786
======= ====== ======= =======
</TABLE>
- ---------------
NOTES TO THE UNAUDITED PRO FORMA FINANCIAL STATEMENTS
(a) Represents adjustments to depreciation expense as a result of the impacts
of presenting the property and equipment at fair value and conforming the
method of depreciation from an accelerated method used by Suncoast Toys,
Inc., NW Toys Co. and Oregon Toy Company ("Suncoast") to the straight-line
method used by the Company.
(b) Represents the amortization of costs in excess of assets acquired.
Amortization expense is computed on a straight-line basis over 20 years.
(c) Represents interest expense as a result of the increased borrowings under
the Company's credit facility to finance the purchase. Interest expense on
such borrowings is calculated using an assumed interest rate of 8.5%
(d) Represents additional income tax expense for: (i) the income of Suncoast,
as no income tax expense has historically been included in the financial
statements of Suncoast as the Suncoast companies are S Corporations, and
(ii) the tax effects of the pro forma adjustments above. Income tax expense
is computed using the Company's statutory income tax rate.
(e) Included in general and administrative expenses for Suncoast for the period
from January 1, 1998 to June 12, 1998 is $567 of employee bonuses, $407 of
officers' salaries and $39 of additional vacation pay related to the
acquisition of Suncoast. These expenses were incurred or accelerated due to
the purchase by the Company and management does not expect them to recur.
*
The historical combined Suncoast information is for the period from January
1, 1998 to June 12, 1998.
F-4
<PAGE> 92
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
American Coin Merchandising, Inc.:
We have audited the accompanying balance sheets of American Coin
Merchandising, Inc. (formerly American Coin Merchandising, Inc. and affiliates
through August 31, 1995) as of December 31, 1997 and 1996, and the related
statements of earnings, stockholders' equity, and cash flows for each of the
years in the three-year period ended December 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of American Coin Merchandising,
Inc. as of December 31, 1997 and 1996, and the results of its operations and its
cash flows for each of the years in the three-year period ended December 31,
1997, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Boulder, Colorado
February 20, 1998
F-5
<PAGE> 93
AMERICAN COIN MERCHANDISING, INC.
BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
----------------- JUNE 30,
1996 1997 1998
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents................................. $ 771 $ 1,929 $ 3,690
Trade accounts and other receivables...................... 673 979 660
Inventories............................................... 4,329 5,625 8,704
Prepaid expenses and other assets......................... 164 365 1,139
------- ------- -------
Total current assets............................... 5,937 8,898 14,193
------- ------- -------
Property and equipment, at cost:
Vending machines.......................................... 12,446 22,829 35,824
Vehicles.................................................. 2,095 4,652 6,218
Office equipment, furniture and fixtures.................. 527 1,242 1,994
------- ------- -------
15,068 28,723 44,036
Less accumulated depreciation............................. (4,697) (7,557) (9,909)
------- ------- -------
Property and equipment, net........................ 10,371 21,166 34,127
------- ------- -------
Placement fees, net of accumulated amortization............. 183 281 459
Deferred income taxes....................................... 42 -- --
Cost in excess of assets acquired, net of accumulated
amortization.............................................. 3,209 6,682 39,343
Other assets................................................ 16 50 691
------- ------- -------
Total assets....................................... $19,758 $37,077 $88,813
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long -- term debt...................... $ 435 $ 945 $ 1,586
Current portion of notes payable to Control Group......... 674 674 337
Income taxes payable...................................... 279 317 384
Accounts payable.......................................... 544 1,680 6,777
Accrued commissions....................................... 747 1,001 1,221
Other accrued expenses.................................... 344 655 648
------- ------- -------
Total current liabilities.......................... 3,023 5,272 10,953
Long-term debt, net of current portion...................... 4,384 1,292 45,181
Notes payable to Control Group, net of current portion...... 675 -- --
Deferred Income Taxes....................................... -- 421 421
------- ------- -------
Total liabilities.................................. 8,082 6,985 56,555
------- ------- -------
Stockholders' equity:
Preferred stock, $.10 par value (Authorized 500,000
shares; none issued).................................... -- -- --
Common stock, $.01 par value (Authorized 20,000,000
shares; issued and outstanding 5,123,274 and 6,452,904
in 1996 and 1997, respectively, 6,468,903 at June 30,
1998)................................................... 51 65 65
Additional paid-in-capital................................ 8,407 22,352 21,949
Unearned stock option compensation........................ (49) (21) (10)
Retained earnings......................................... 3,267 7,696 10,254
------- ------- -------
Total stockholders' equity......................... 11,676 30,092 32,258
------- ------- -------
Commitments
Total liabilities and stockholders' equity......... $19,758 $37,077 $88,813
======= ======= =======
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE> 94
AMERICAN COIN MERCHANDISING, INC. (a)
STATEMENTS OF EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
--------------------------- -----------------
1995 1996 1997 1997 1998
------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue:
Vending.................................... $17,031 $30,439 $52,866 $22,648 37,709
Franchise and other........................ 8,683 7,828 6,218 3,499 2,014
------- ------- ------- ------- -------
Total revenue...................... 25,714 38,267 59,084 26,147 39,723
------- ------- ------- ------- -------
Cost of revenue:
Vending.................................... 11,701 21,283 37,506 16,042 26,669
Franchise and other........................ 6,054 5,659 3,967 2,309 1,252
------- ------- ------- ------- -------
Total cost of revenue.............. 17,755 26,942 41,473 18,351 27,921
------- ------- ------- ------- -------
Gross profit....................... 7,959 11,325 17,611 7,796 11,802
General and administrative expenses.......... 4,218 7,053 10,314 4,725 7,388
Commissions and royalties, related parties... 347 -- -- -- --
------- ------- ------- ------- -------
Operating earnings................. 3,394 4,272 7,297 3,071 4,414
------- ------- ------- ------- -------
Interest expense, related parties............ 224 108 76 45 19
Interest expense, other...................... 159 267 536 222 460
Minority interest in income of combined
affiliates................................. 80 -- -- -- --
Share of loss of equity affiliate............ 27 -- -- -- --
------- ------- ------- ------- -------
Earnings before taxes.............. 2,904 3,897 6,685 2,804 3,935
Provision for income taxes................... 329 1,311 2,256 1,039 1,377
------- ------- ------- ------- -------
Net earnings....................... $ 2,575 $ 2,586 $ 4,429 $ 1,765 2,558
======= ======= ======= ======= =======
Basic earnings per share of common stock..... $ 0.51 $ 0.80 $ 0.33 0.40
Diluted earnings per share of common stock... 0.48 0.78 0.33 0.38
Basic weighted average of common shares...... 5,092 5,565 5,323 6,463
Diluted weighted average of common shares.... 5,417 5,694 5,350 6,664
Pro forma information:
Historical earnings before taxes........... $ 2,904
Pro forma adjustments to earnings before
taxes................................... 1,207
-------
Pro forma earnings before taxes............ 4,111
Pro forma income tax expense............... (1,562)
-------
Pro forma net earnings..................... $ 2,549
=======
Pro forma earnings per common and common
equivalent share:
Pro forma basic earnings per share......... $ 0.59
Pro forma diluted earnings per share....... 0.55
Pro forma basic weighted average common
share................................... 4,299
Pro forma diluted weighted average common
share................................... 4,669
</TABLE>
- ---------------
(a) Through August 31, 1995, represents combined financial statements of
American Coin Merchandising, Inc. and the Affiliates Entities (see note 1).
See accompanying notes to financial statements.
F-7
<PAGE> 95
AMERICAN COIN MERCHANDISING, INC. (a)
STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
TOTAL
ADDITIONAL UNEARNED EQUITY STOCK-
COMMON PAID-IN STOCK OPTION RETAINED OF HOLDERS'
STOCK CAPITAL COMPENSATION EARNINGS AFFILIATES EQUITY
------ ---------- ------------ -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
DECEMBER 31, 1994................ $31 $ 34 $ -- $ 443 $ 706 $ 1,214
Issuance of 1,700,000 common
stock in public offering,
net............................ 17 10,034 -- -- -- 10,051
Issuance of employee stock
options........................ -- 80 (80) -- -- --
Exercise of employee stock
options........................ 2 3 -- -- -- 5
Conversion of stockholder
loans.......................... 1 675 -- -- -- 676
Net earnings..................... -- -- -- 2,072 503 2,575
Distributions.................... -- -- -- (634) (420) (1,054)
Distribution to Control Group in
conjunction with
Reorganization................. -- -- -- (4,162) (789) (4,951)
Deferred tax asset established in
Reorganization................. -- 491 -- -- -- 491
Termination of S corporation tax
status......................... -- (2,962) -- 2,962 -- --
--- ------- ---- ------- ----- -------
DECEMBER 31, 1995................ 51 8,355 (80) 681 -- 9,007
Amortization of deferred
compensation................... -- -- 26 -- -- 26
Tax benefit related to employee
stock options.................. -- 57 -- -- -- 57
Exercise of employee stock
options........................ -- 1 -- -- -- 1
Termination of employee stock
options........................ -- (6) 5 -- -- (1)
Net earnings..................... -- -- -- 2,586 -- 2,586
--- ------- ---- ------- ----- -------
DECEMBER 31, 1996................ 51 8,407 (49) 3,267 -- 11,676
Issuance of 1,000,000 common
stock in public offering,
net............................ 10 13,915 -- -- -- 13,925
Amortization of deferred
compensation................... -- -- 22 -- -- 22
Exercise of employee stock
options........................ 4 39 -- -- -- 43
Termination of employee stock
options........................ -- (9) 6 -- -- (3)
Net earnings..................... -- -- -- 4,429 -- 4,429
--- ------- ---- ------- ----- -------
DECEMBER 31, 1997................ 65 22,352 (21) 7,696 -- 30,092
Acquisition of 70,000 warrants to
purchase common stock.......... -- (492) -- -- -- (492)
Amortization of deferred
compensation................... -- -- 10 -- -- 10
Exercise of employee stock
options........................ -- 90 -- -- -- 90
Termination of employee stock
options........................ -- (1) 1 -- -- --
Net earnings..................... -- -- -- 2,558 -- 2,558
--- ------- ---- ------- ----- -------
JUNE 30, 1998 (unaudited)........ $65 $21,949 $(10) $10,254 $ -- $32,258
=== ======= ==== ======= ===== =======
</TABLE>
- ---------------
(a) Through August 31, 1995, represents combined financial statements of
American Coin Merchandising, Inc. and the Affiliates Entities (see note 1).
See accompanying notes to financial statements.
F-8
<PAGE> 96
AMERICAN COIN MERCHANDISING, INC. (A)
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------- ------------------
1995 1996 1997 1997 1998
------ ------ -------- ------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Operating activities:
Net earnings......................................... $2,575 $2,586 $ 4,429 $ 1,765 $ 2,558
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization...................... 930 1,891 3,292 1,359 2,791
Affiliate losses................................... 72 -- -- -- --
Compensation expense related to stock options...... -- 25 19 11 10
Deferred income tax expense........................ 141 308 463 -- --
Changes in operating assets and liabilities, net of
Reorganization and acquisitions:
Trade accounts and other receivables, net........ (206) 53 (332) (53) 319
Inventories...................................... (1,650) (756) (1,026) 230 (1,144)
Prepaid expenses and other assets................ (182) 10 (233) (173) (1,359)
Income taxes payable............................. 188 148 38 (52) 67
Accounts payable and accrued expenses............ 994 (49) 1,701 1,505 5,310
------ ------ -------- ------- --------
Net cash provided by operating activities..... 2,862 4,216 8,351 4,132 8,552
------ ------ -------- ------- --------
Investing activities:
Acquisitions of property and equipment, net.......... (2,234) (6,052) (12,168) (5,570) (10,668)
Acquisitions of franchisees and other................ (160) (1,224) (3,669) -- (36,147)
Acquisition of non-Control Group interests in
Reorganization..................................... (3,125) -- -- -- --
Placement fees....................................... (20) (192) (242) (215) (267)
Change in notes receivable........................... 31 20 -- -- --
------ ------ -------- ------- --------
Net cash used in investing activities......... (5,508) (7,448) (16,079) (5,785) (47,082)
------ ------ -------- ------- --------
Financing activities:
Net borrowings (payments) on revolving line of
credit............................................. (121) 3,381 (3,787) 2,248 41,795
Principal payments on notes payable to related
parties............................................ (167) -- -- -- --
Proceeds from issuance of notes payable to related
parties............................................ 22 -- -- -- --
Principal payments on long-term debt................. (1,172) (1,559) (620) (217) (765)
Principal payments on notes payable to Control
Group.............................................. -- -- (675) (338) (337)
Proceeds from issuance of long-term debt............. 516 1,224 -- -- --
Distributions........................................ (420) (634) -- -- --
Payments to Control Group in Reorganization.......... (4,509) -- -- -- --
Cash retained by combined affiliates in
Reorganization..................................... (326) -- -- -- --
Acquisition of warrants.............................. -- -- -- -- (492)
Issuance of common stock, net of offering costs...... 10,056 1 13,968 15 90
------ ------ -------- ------- --------
Net cash provided by (used in) financing
activities.................................. 3,879 2,413 8,886 (1,708) 40,291
------ ------ -------- ------- --------
Net increase (decrease) in cash and cash equivalents... 1,233 (819) 1,158 (55) 1,761
Cash and cash equivalents at beginning of period....... 357 1,590 771 771 1,929
------ ------ -------- ------- --------
Cash and cash equivalents at end of period............. $1,590 $ 771 $ 1,929 $ 826 $ 3,690
====== ====== ======== ======= ========
</TABLE>
- ---------------
(a) Through August 31, 1995, represents combined financial statements of
American Coin Merchandising, Inc. and the Affiliates Entities (see Note 1).
See accompanying notes to financial statements.
F-9
<PAGE> 97
AMERICAN COIN MERCHANDISING, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION AS OF JUNE 30, 1998 AND FOR THE SIX MONTHS ENDED JUNE 30, 1997
AND 1998 IS UNAUDITED)
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
American Coin Merchandising, Inc., d/b/a Sugarloaf Creations, Inc. (the
"Company") and its franchisees own and operate coin-operated skill-crane
machines ("Shoppes") that dispense stuffed animals, plush toys, watches, jewelry
and other items. The Company's Shoppes are placed in supermarkets, mass
merchandisers, bowling centers, bingo halls, bars, restaurants, warehouse clubs
and similar locations. The Company also operates bulk vending equipment and
kiddie rides that are located primarily in supermarkets and mass merchandisers.
At June 30, 1998, the Company has 40 field offices operating in 40 states. The
Company also sells products to franchisees. At December 31, 1997 there were 17
Company franchises in operation.
Prior to August 31, 1995, the date of the Reorganization described below,
certain stockholders of the Company, who collectively owned a controlling
interest in the Company at such time (the "Control Group"), owned interests in
the eight affiliated entities (the "Affiliated Entities") which were franchisees
of the Company. Except as noted below, each of the Affiliated Entities began
operations prior to January 1, 1993. The Control Group owned greater than 50% of
the outstanding common stock or partnership interests of seven of the Affiliated
Entities and less than 50% of the eighth, as follows:
Affiliated Entities:
Combined affiliates:
Chicago Toy Company
Georgia Toy Company
Inland Merchandising, Inc. (began operations in June 1993)
Lehigh Valley Toy Company
Performance Merchandising, Inc.
Southwest Coin Company
Sugarloaf, Ltd. (began operations in January 1993)
Equity affiliate:
Sugarloaf Marketing, Inc.
Due to the common controlling ownership, the accompanying financial
statements include the accounts of the Company and the combined affiliates
(collectively referred to as the "Combined Companies") through August 31, 1995.
All material intercompany balances and transactions have been eliminated.
Through August 31, 1995 the Control Group's interest has been accounted for as
equity of affiliates and the other stockholders' interests have been reflected
as a minority interest. As such, the assets and liabilities of the Combined
Companies have been accounted for in the financial statements based upon their
historical costs through August 31, 1995. The financial statements account for
the Control Group ownership interest in Sugarloaf Marketing, Inc. using the
equity method of accounting through August 31, 1995.
On August 31, 1995, the Company acquired substantially all of the
inventories, property and equipment, and assumed certain facilities leases,
which are operating leases, and contracts of the Affiliated Entities in exchange
for promissory notes in the principal amount of $8,983,000 (the
"Reorganization"), of which $7,634,000 was paid from the proceeds of the
Company's initial public offering in October 1995. The remaining promissory
notes in the principal amount of $674,000 are payable in 1998. As a result of
the Reorganization, assets attributable to the Control Group's interest have
been accounted for similar to the pooling-of-interests method of accounting for
business combinations. Assets and liabilities included in the financial
statements which were retained by the combined affiliates in the Reorganization
have been accounted for as distributions to the combined affiliates. Amounts
paid to the combined affiliates attributed to the Control Group interest have
been accounted for as a distribution for financial reporting purposes. Assets
F-10
<PAGE> 98
AMERICAN COIN MERCHANDISING, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
transferred attributable to the non-Control Group members (the minority interest
in the combined affiliates and the majority interest in the equity affiliate)
have been accounted for using the purchase method of accounting for business
combinations. The Company has recorded approximately $1,964,000 of costs in
excess of assets acquired as a result of the transfer of assets attributable to
the non-Control Group. The Reorganization was a taxable transaction for income
tax purposes, and accordingly, the Company has a tax basis in the transferred
assets in excess of that for financial reporting.
2. ACQUISITIONS
During the six months ended June 30, 1998, the Company acquired certain
assets and the operations of one of its franchisees (Suncoast Toys, Inc., N.W.
Toys Co. and Oregon Coin Company, collectively "Suncoast"), one other
franchisee, the operating assets of a video game, skill-crane and redemption
company, a bulk vending company and certain assets of a kiddie ride company for
approximately $39,647,000. Of this amount, $36,147,000 was paid in cash with the
balance to be paid over a three-year period in accordance with the terms of the
promissory notes issued in connection with the acquisition. The Company has
recorded approximately $32,942,000 of cost in excess of assets acquired as a
result of the acquisitions that were accounted for using the purchase method of
accounting.
During 1997, the Company acquired in July, October and December certain
assets and the business operations of three of its franchisees and also acquired
the operating assets of a bulk vending and kiddie ride company in November for
approximately $5,494,000. Of this amount, $3,669,000 was paid in cash with the
balance to be paid over a three-year periods in accordance with the terms of the
promissory notes issued in connection with the acquisitions. The Company has
recorded approximately $3,685,000 of costs in excess of assets acquired as a
result of these acquisitions that were accounted for using the purchase method
of accounting.
During 1996, the Company acquired in January, July and August certain
assets and the business operations of three of its franchisees and also acquired
the operating assets of a skill-crane service company in May for approximately
$2,103,000. Of this amount, $1,224,000 was paid in cash with the balance to be
paid over two to three year periods in accordance with the terms of the
promissory notes issued in connection with the acquisitions. The Company has
recorded approximately $1,239,000 of costs in excess of assets acquired as a
result of these acquisitions that were accounted for using the purchase method
of accounting.
In September 1995, the Company acquired certain assets and the business
operation of one of its franchisees for approximately $346,000. Of this amount,
$158,000 was paid in cash with the balance to be paid over a three-year period
in accordance with the terms of a promissory note issued in connection with the
acquisition. The Company has recorded approximately $187,000 of costs in excess
of assets acquired as a result of this acquisition that was accounted for using
the purchase method of accounting.
Other than the acquisition of the assets of Suncoast, the pro forma effect
of these acquisitions is not material to assets, revenue or net earnings for the
six months ended June 30, 1998 and the years ended December 31, 1995, 1996 and
1997.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Vending
Vending revenue represents cash receipts from customers using vending
machines and is recognized when collected. The cost of vending is comprised
primarily of the cost of products vended through the machines, the servicing of
machines and commissions paid to retail locations.
F-11
<PAGE> 99
AMERICAN COIN MERCHANDISING, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Franchise Royalties and Fees
Typically, franchisees are required to pay continuing royalties ranging
from 2% to 5% of gross machine revenue. Franchisees are required to pay an
initial nonrefundable franchise fee. Initial franchise fees are recognized as
revenue when the franchise opens. Included in franchise and other revenue are
continuing franchise royalties and initial franchise fee revenue of $86,000 for
1995.
Income Taxes
Prior to October 13, 1995 the Company had elected tax treatment as an S
corporation, and the combined affiliates were each organized as S corporations,
except for Southwest Coin Company which was organized as a partnership.
Accordingly, through October 12, 1995, no provisions were made for income taxes
since all income, deductions, gains, losses and credits were reported on the tax
returns of the stockholders or partners. The S corporation status of the Company
terminated on October 12, 1995 and, accordingly, the Company became a taxable
entity.
Effective October 13, 1995, the Company adopted the provisions of Statement
of Financial Accounting Standards Statement No. 109, "Accounting for Income
Taxes" (SFAS 109). Under the asset and liability method of accounting for income
taxes, as prescribed by SFAS 109, deferred income taxes reflect the net tax
effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and amounts used for income tax
purposes. Deferred tax assets and liabilities are measured using enacted tax
rates expected to be in effect for the year in which those temporary differences
are expected to be recovered or settled. The effects on deferred tax assets and
liabilities of a change in tax rates are recognized in income in the period that
includes the enactment date.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Cash Equivalents
The Company considers as cash equivalents all highly liquid investments
with an original maturity of three months or less.
Inventories
Inventories are stated at the lower of cost or market. Cost is determined
using the first-in, first-out method. Inventories consist of purchased items
ready for resale or use in vending operations.
Property and Equipment
Property and equipment are stated at cost. Depreciation is calculated on
the straight-line and accelerated methods over the estimated useful lives of the
assets that range from 3 to 10 years.
Cost in Excess of Assets Acquired
Cost in excess of assets acquired represents the purchase amount paid in
excess of the fair market value of the tangible net assets acquired and is
amortized using the straight-line method over a 20-year period.
F-12
<PAGE> 100
AMERICAN COIN MERCHANDISING, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of
The Company reviews its long-lived assets and intangibles for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Recoverability of assets to be held and used is
measured by a comparison of the carrying amount of the asset to the future net
cash flows expected to be generated by the asset. If such assets are considered
to be impaired, the impairment to be recognized is measured by the amount by
which the carrying amount of the assets exceed the fair value of the assets.
Earnings Per Share
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, Earnings Per Share (Statement No.
128) effective for periods ending after December 15, 1997. Statement No. 128
changes the computation, presentation and disclosure requirements for earnings
per share for entities with publicly held common stock or potential common
stock. Under such requirements the Company is required to present both basic
earnings per share and diluted earnings per share. Basic earnings and diluted
earnings per share are computed by dividing earnings available to common
stockholders by the weighted average number of common shares outstanding during
the period and by all dilutive potential common shares outstanding during the
period, respectively. The Company adopted the provisions of Statement No. 128 as
of December 31, 1997. As prescribed by Statement No. 128, the Company has
restated prior periods' earnings per share of common stock, including interim
earnings per share of common stock, in the period of adoption. Such amounts are
as follows:
<TABLE>
<CAPTION>
YEAR QUARTER ENDED (UNAUDITED)
ENDED ---------------------------------------------------------------------
DEC. 31 MAR. 31 JUNE 30 SEPT. 30 DEC. 31 MAR. 31 JUNE 30 SEPT. 30
1996 1996 1996 1996 1996 1997 1997 1997
------- ------- ------- -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Earnings per share of common stock as
previously reported................. $0.48 $0.09 $0.07 $0.11 $0.21 $0.16 $0.16 $0.18
Basic earnings per share of common
stock............................... $0.51 $0.10 $0.07 $0.11 $0.22 $0.17 $0.16 $0.18
Diluted earnings per share of common
stock............................... $0.48 $0.09 $0.07 $0.11 $0.21 $0.16 $0.16 $0.18
</TABLE>
Net earnings per share have been omitted for 1995 because through August
31, 1995 the Combined Companies were not a single entity with its own capital
structure.
Interim Financial Statements
The financial statements as of June 30, 1998 and for the six months ended
June 30, 1997 and 1998 are unaudited but, in the opinion of management, include
all adjustments, consisting of normal recurring adjustments, which are necessary
for a fair presentation of the financial condition, results of operations, and
cash flows. The operating results for the six months ended June 30, 1998 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1998.
Reclassifications
Certain amounts for prior periods have been reclassified to conform to the
June 30, 1998 presentation.
F-13
<PAGE> 101
AMERICAN COIN MERCHANDISING, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Supplemental Disclosures of Cash Flow Information
A schedule of supplemental cash flow information follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------------------- -----------------------
1995 1996 1997 1997 1998
----------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Cash paid during the year:
Interest paid....................... $ 370,000 $372,000 $ 640,000 $ 282,000 $ 335,000
Income taxes paid................... -- 858,000 1,755,000 1,092,000 1,309,000
Significant noncash investing and
financing activities:
Equipment purchases financed with
debt.............................. 241,000 54,000 -- -- --
Notes payable issued for
acquisitions of franchisees and
others............................ 188,000 879,000 1,825,000 -- 3,500,000
Distribution payable................ 634,000 -- -- -- --
Deferred tax asset established in
Reorganization.................... 491,000 -- -- -- --
Conversion of stockholder loans into
common stock...................... 676,000 -- -- -- --
Cash paid in Reorganization:
Value of tangible assets acquired... 983,000
Costs in excess of assets
acquired.......................... 1,964,000
Net liabilities retained by combined
affiliates, excluding cash
retained.......................... 1,310,000
Notes payable to Control Group...... (1,349,000)
Net elimination of investment in
equity affiliate and minority
interest.......................... 101,000
Distribution to Control Group....... 4,951,000
Cash paid and retained(1).... 7,960,000
</TABLE>
- ---------------
(1) Includes $326,000 of cash retained by the combined affiliates.
4. INVESTMENT IN EQUITY AFFILIATE
Prior to the Reorganization, investment in equity affiliate consisted of a
48% interest in 1995 in Sugarloaf Marketing, Inc. (Sugarloaf Marketing) which
was accounted for using the equity method (see note 1). On August 31, 1995, in
connection with the Reorganization, the Company acquired the remaining 52%
ownership in Sugarloaf Marketing. The acquisition has been accounted for using
the purchase method of accounting for business combinations. The operating
results of Sugarloaf Marketing are included in the Company's earnings statement
from the date of the acquisition. Pro forma results of operations for 1995 as if
the Reorganization, including the acquisition of Sugarloaf Marketing, had
occurred on January 1, 1995 are presented in note 14.
For the eight months ended August 31, 1995, Sugarloaf Marketing had revenue
and a net loss of $3,941,000 and $57,000, respectively. Included in 1995
franchise and other revenue is $712,000 representing product and service sales
and franchise royalties for the eight months ended August 31, 1995. Transactions
with Sugarloaf Marketing were conducted on a basis consistent with that of
unaffiliated franchisees.
5. BANK REVOLVING LINE OF CREDIT
As of June 30, 1998, under the reducing revolving loan agreement (the
"Credit Facility"), the Company may borrow up to $50.0 million at the bank's
prime interest rate (8.5% at December 31, 1997 and June 30, 1998) or, at the
Company's option, an interest rate based on the current LIBOR rate. The Credit
Facility is
F-14
<PAGE> 102
AMERICAN COIN MERCHANDISING, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
available through July 13, 2001. At December 31, 1997 there was no principal
amount outstanding. At June 30, 1998, there was a principal amount of
approximately $41,795,000 outstanding on this facility that is reflected in
long-term debt on the accompanying balance sheet. The credit agreement provides
that certain financial ratios be met and places restrictions on, among other
things, the occurrence of additional debt financing and the payment of
dividends. The Company was in compliance with such financial ratios and
restrictions at June 30, 1998.
At December 31, 1997 and June 30, 1998, approximately $161,000 and
$271,000, respectively, of the credit facility was committed on open letters of
credit for inventory on order but not yet received.
6. LONG-TERM DEBT AND NOTES PAYABLE TO CONTROL GROUP
Long-term debt and notes payable to control group consists of the
following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------- JUNE 30,
1996 1997 1998
---------- ---------- -----------
<S> <C> <C> <C>
Long-term debt:
Bank revolving line of credit (see note 5).... $3,787,000 $ -- $41,795,000
Notes payable to former franchisees and
others, due in monthly and quarterly
installments with interest ranging from 8%
to 8.5%; final payments at various dates
through October 2000, secured by certain
property and equipment..................... 871,000 2,181,000 4,969,000
Notes payable to banks, due in monthly
installments with interest ranging from
8.25% to 12.95%; final payments at various
dates through August 2000; secured by
certain property and equipment............. 161,000 56,000 3,000
---------- ---------- -----------
Total long-term debt.................. 4,819,000 2,237,000 46,767,000
Less current portion.......................... (435,000) (945,000) (1,586,000)
---------- ---------- -----------
Long-term debt, net of current
portion............................. $4,384,000 $1,292,000 $45,181,000
========== ========== ===========
Notes payable to Control Group:
Promissory notes to Affiliated Entities, due
in semi-annual principal payments with
interest at 8%; notes are secured by assets
exchanged (see note 1)..................... 1,349,000 674,000 337,000
Less current portion.......................... (674,000) (674,000) (337,000)
---------- ---------- -----------
Notes payable to Control Group, net of
current portion..................... $ 675,000 $ -- $ --
========== ========== ===========
</TABLE>
The carrying amount of long-term debt and notes payable to control group
approximates its fair value.
Maturities of long-term debt and notes payable to Control Group as of
December 31, 1997 are as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
- ------------------------
<S> <C>
1998..................................................... $1,619,000
1999..................................................... 793,000
2000..................................................... 499,000
----------
$2,911,000
==========
</TABLE>
F-15
<PAGE> 103
AMERICAN COIN MERCHANDISING, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
7. INCOME TAXES
Prior to October 13, 1995, the Company was an S corporation and was not
subject to income taxes. The S corporation status of the Company terminated on
October 12, 1995. As a result of the termination of the Company's S corporation
status, the Company incurred a one-time deferred tax expense of $141,000.
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1995 1996 1997
-------- ---------- ----------
<S> <C> <C> <C>
Current
Federal......................................... $160,000 $ 869,000 $1,507,000
State........................................... 28,000 134,000 286,000
-------- ---------- ----------
188,000 1,003,000 1,793,000
-------- ---------- ----------
Deferred
Federal......................................... 119,000 267,000 393,000
State........................................... 22,000 41,000 70,000
-------- ---------- ----------
141,000 308,000 463,000
-------- ---------- ----------
$329,000 $1,311,000 $2,256,000
======== ========== ==========
</TABLE>
A reconciliation of the expected tax expense, assuming income before taxes
is taxed at the statutory federal tax rate of 34%, and the Company's actual
provision for income taxes is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1995 1996 1997
--------- ---------- ----------
<S> <C> <C> <C>
Expected tax expense at the federal statutory
rate........................................... $ 987,000 $1,325,000 $2,273,000
State income taxes, net of federal taxes......... 33,000 116,000 265,000
Change in valuation allowance.................... -- (171,000) (292,000)
Termination of S corporation status.............. 141,000 -- --
S corporation income............................. (811,000) -- --
Other............................................ (21,000) 41,000 10,000
--------- ---------- ----------
$ 329,000 $1,311,000 $2,256,000
========= ========== ==========
</TABLE>
The sources and tax effects of temporary differences between financial
statement carrying amounts and the tax bases of assets and liabilities are as
follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1996 1997
---------- ----------
<S> <C> <C>
Deferred tax assets:
Costs in excess of assets acquired -- basis and
amortization differences............................... $1,157,000 $1,034,000
Valuation allowance....................................... 832,000 540,000
---------- ----------
325,000 494,000
Deferred tax liabilities:
Property and equipment -- basis and depreciation
differences............................................ (283,000) (915,000)
---------- ----------
$ 42,000 $ (421,000)
========== ==========
</TABLE>
F-16
<PAGE> 104
AMERICAN COIN MERCHANDISING, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
8. COMMISSIONS AND ROYALTIES TO RELATED PARTIES
The Company recognized commission expense of $232,000 in 1995 for services
provided by two other corporations whose stockholders were the majority
stockholders of the Company. In addition, the Company recognized royalty expense
of $115,000 in 1995 to a trust controlled by a stockholder of one of the
combined affiliates.
9. RETIREMENT PLAN
The Company maintains a 401(k) profit sharing plan, which covers
substantially all employees. Employees are permitted to contribute up to 15% of
their eligible compensation. The Company makes contributions to the plan
matching 50% of the employees' contribution up to 10% of compensation. The
Company's matching contributions totaled $17,000, $49,000 and $113,000 in 1995,
1996 and 1997, and totaled $54,000 and $86,000 for the six months ended June 30,
1997 and 1998, respectively.
10. COMMITMENTS
Leases
The Company has several noncancelable operating leases, primarily for
office and warehouse facilities and certain types of equipment. These leases
expire at various times over the next five years. Rent expense under these
leases totaled $190,000, $275,000 and $489,000 for the years ended December 31,
1995, 1996 and 1997, and totaled $243,000 and $380,000 for the six months ended
June 30, 1997 and 1998, respectively.
Future minimum commitments under operating leasing arrangements as of
December 31, 1997 are as follows:
<TABLE>
<S> <C>
1998.................................................... $ 599,000
1999.................................................... 452,000
2000.................................................... 332,000
2001.................................................... 215,000
2002 and thereafter..................................... 250,000
----------
Total......................................... $1,848,000
==========
</TABLE>
11. STOCK OPTIONS
The Company has two fixed option plans. Under the terms of the amended and
restated stock option plan (the "Option Plan"), the Company may grant to
employees, consultants and advisors up to 1,400,000 shares of common stock.
Under the Option Plan, the Company may grant both incentive stock options and
non-statutory stock options, and the maximum term is ten years. Non-statutory
options may be granted at no less than 85% of the fair market value of the
common stock at the date of grant. Stock options granted under the Option Plan
vest over a three to five year period.
Under terms of the amended 1995 Non-Employee Directors' Stock Option Plan
(the "Directors Plan"), the Company may grant to non-employee directors options
to purchase up to 100,000 shares of common stock. Under the Directors Plan,
options granted vest over a three-year period and have a maximum term of ten
years.
The Company applies APB Opinion No. 25 and the related Interpretations in
accounting for its plans. Accordingly, no compensation cost has been recognized
for options granted at fair market value under the plans. The compensation cost
that has been charged against income for options granted at a price less than
fair market value was $25,000 in 1996 and $19,000 in 1997. Had compensation cost
for the Company's stock-
F-17
<PAGE> 105
AMERICAN COIN MERCHANDISING, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
based compensation plans been determined consistent with SFAS No. 123, the
Company's net earnings and diluted earnings per share would have been reduced to
the pro forma amounts indicated below:
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
------------------------------------ -----------------------
1995 1996 1997 1997 1998
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net earnings
As reported............ $2,575,000 $2,586,000 $4,429,000 $1,765,000 $2,558,000
Pro forma.............. 2,559,000 2,489,000 4,234,000 1,693,000 2,398,000
Diluted earnings per
share
As reported............ N/A 0.48 0.78 0.33 0.38
As restated............ N/A 0.48 N/A N/A N/A
Pro forma.............. N/A 0.46 0.74 0.32 0.36
</TABLE>
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted average
assumptions used for grants in 1995, 1996 and 1997: no dividend yield; expected
volatility of 60 percent for 1997 and 81 percent for 1995 and 1996; risk-free
interest rates of 6.0 percent; and expected lives of six years.
The effect of applying SFAS No. 123, in the above pro forma disclosure,
does not purport to be representative of the effect on net earnings for future
years.
A summary of the status of the Company's two fixed stock option plans and
changes during the related periods is presented below:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------- SIX MONTHS ENDED
1995 1996 1997 JUNE 30, 1998
------------------- ------------------- ------------------- -------------------
WEIGHTED WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE EXERCISE
FIXED OPTIONS SHARES PRICE SHARES PRICE SHARES PRICE SHARES PRICE
------------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of
period................... 548,132 $ .02 488,463 $1.44 440,797 $1.51 316,000 $7.75
Granted.................... 123,500 5.61 -- -- 215,500 8.73 -- --
Exercised.................. (183,169) .02 (41,666) .02 (329,630) .13 (15,999) 5.53
Forfeited.................. -- -- (6,000) 5.53 (10,667) 5.53 (4,334) 7.93
-------- ----- -------- ----- -------- ----- -------- -----
Outstanding at end of
period................... 488,463 1.44 440,797 1.51 316,000 7.75 295,667 7.86
======== ===== ======== ===== ======== ===== ======== =====
Options exercisable at end
of period................ 364,943 360,797 63,667 71,778
Weighted average fair value
of options granted during
period................... $ 4.68 -- $ 5.38 --
</TABLE>
The following table summarizes information about fixed stock options
outstanding:
<TABLE>
<CAPTION>
DECEMBER 31, 1997
----------------------------------------------------------------------------------
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------------------- ------------------------------
WEIGHTED AVERAGE
RANGE OF NUMBER REMAINING WEIGHTED AVERAGE NUMBER WEIGHTED AVERAGE
EXERCISE PRICES OUTSTANDING CONTRACTUAL LIFE EXERCISE PRICE EXERCISABLE EXERCISE PRICE
--------------- ----------- ---------------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
$4.00 to 7.00.............. 100,500 7.8 $5.63 63,667 $5.69
7.50 to 10.00.............. 215,500 9.4 8.73 -- --
------- ------
4.00 to 10.00.............. 316,000 8.9 7.75 63,667 5.69
======= ======
</TABLE>
F-18
<PAGE> 106
AMERICAN COIN MERCHANDISING, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
JUNE 30, 1998
----------------------------------------------------------------------------------
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------------------- ------------------------------
WEIGHTED AVERAGE
RANGE OF NUMBER REMAINING WEIGHTED AVERAGE NUMBER WEIGHTED AVERAGE
EXERCISE PRICES OUTSTANDING CONTRACTUAL LIFE EXERCISE PRICE EXERCISABLE EXERCISE PRICE
--------------- ----------- ---------------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
$4.00 to 7.00.............. 82,667 7.3 $5.65 51,778 $5.73
7.50 to 10.00.............. 213,000 8.9 8.72 20,000 7.63
------- ------
4.00 to 10.00.............. 295,667 8.5 7.86 71,778 6.26
======= ======
</TABLE>
12. STOCKHOLDERS' EQUITY
Common stock
The Company was originally incorporated in Colorado in 1988 and was
reincorporated in Delaware effective July 1995. In October 1995, the Company
completed a public offering of 1,700,000 shares of its common stock at $7.00 per
share. Total proceeds, net of underwriting commission and other offering costs
of $1,849,000, were $10,051,000. In November 1997, the Company completed a
follow-on public offering of its common stock, whereby the Company sold
1,000,000 shares at $15 per share. Total proceeds, net of underwriting
commission and other expenses of $1,075,000, were $13,925,000.
Preferred stock
The Board of Directors has the authority to issue up to 500,000 shares of
$.10 par value preferred stock in one or more series and to fix the rights,
preferences, privileges and distributions thereof, including dividend rights,
conversion rights, voting rights, terms of redemption, liquidation preferences,
sinking fund terms and the number of shares constituting any series or the
designation of such series, without any further vote or action by stockholders.
No shares of preferred stock have been issued.
Warrants
In March 1998, the Company repurchased for $492,000, including acquisition
costs, warrants exercisable for 70,000 shares of its Common Stock from an
underwriter. The Company initially issued warrants to purchase 125,000 shares of
its Common Stock with an exercise price of $8.40 per share as partial
compensation for acting as the Company's underwriter in its initial public
offering in October 1995. After this purchase, the underwriter retains warrants
exercisable for 55,000 shares of the Company's Common Stock. The warrant expires
on October 18, 1999.
13. CERTAIN SIGNIFICANT RISKS AND UNCERTAINTIES
Certain Significant Estimates
At December 31, 1997 the Company has recorded a deferred tax asset of
$494,000, net of a $540,000 valuation allowance, as a result of the benefit
associated with the difference between the tax and financial statement basis of
assets acquired by the Company on August 31, 1995 in connection with the
Reorganization. Realization is dependent on generating sufficient taxable income
prior to the expiration of the benefit. Although realization is not assured,
management believes it is more likely than not that a portion of the deferred
tax asset will be realized. The amount of the deferred tax asset considered
realizable, however, could be increased in the near term if estimates of future
taxable income are increased.
F-19
<PAGE> 107
AMERICAN COIN MERCHANDISING, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Current Vulnerability Due to Certain Concentrations
Suppliers
Substantially all of the plush toys and other products dispensed from the
Shoppes are produced by foreign manufacturers. A majority are purchased directly
by the Company from manufacturers in China. The Company purchases its other
products indirectly from vendors who obtain a significant percentage of such
products from foreign manufacturers. As a result, the Company is subject to
changes in governmental policies, the imposition of tariffs, import and export
controls, transportation delays and interruptions, political and economic
disruptions and labor strikes which could disrupt the supply of products from
such manufacturers. Among other things, the loss of China's "most favored
nation" status under U.S. tariff laws could result in a substantial increase in
the import duty of certain products manufactured in China, which could result in
substantially increased costs for certain products purchased by the Company
which could have a material adverse effect on the Company's financial
performance.
Customers
The Company has made available to its franchisees a fee reduction program
whereby a franchisee is entitled to a reduction in the royalty rate on gross
revenue from the Sugarloaf Toy and Treasure Shoppes of one percentage point on
gross revenue for a future six-month period based upon the franchisee meeting
certain performance standards during the most recently completed six-month
period. One of the performance standards relates to the purchase of 30%, up to a
maximum of $250,000, of product used in the Sugarloaf Toy Shoppe program from
the Company. Three franchisees represent 17.7% of the Company's product sales to
franchisees, which is included in franchise and other revenue in 1997.
During the year ended December 31, 1997, one customer accounted for 33.5%
of the Company's revenue.
14. UNAUDITED PRO FORMA INFORMATION
The computation of pro forma total revenue, net earnings and earnings per
share for the year ended December 31, 1995 were prepared on the basis as if the
Reorganization had occurred on January 1, 1995 with an adjustment in the level
of commissions and royalties to related parties that were not paid after the
Reorganization, an adjustment for interest expense related to shareholder loans
converted to common stock in conjunction with the Company's initial public
offering of common stock on October 12, 1995 and the
F-20
<PAGE> 108
AMERICAN COIN MERCHANDISING, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
recording of income tax expense to reflect the conversion of the Company from an
S corporation to a taxable entity on October 12, 1995 follows:
<TABLE>
<S> <C>
Historical total revenue.................................... $25,714,000
Revenue of Sugarloaf Marketing through the date of
acquisition............................................... 3,941,000
Pro forma adjustment to eliminate intercompany revenue...... (712,000)
-----------
Pro forma total revenue..................................... $28,943,000
===========
Historical earnings before income taxes..................... $ 2,904,000
Pro forma adjustments:
Net loss of Sugarloaf Marketing through the date of
acquisition............................................ (57,000)
Adjust for change in level of commissions and royalties to
related parties........................................ 1,182,000
Adjust for interest related to stockholder loans converted
to equity.............................................. 61,000
Eliminate minority interest and equity interest through
the date of acquisition as a result of acquiring
remaining ownership interest in affiliated entities.... 107,000
Record amortization of cost in excess of assets
acquired............................................... (68,000)
Increase depreciation for assets acquired from non-control
group.................................................. (18,000)
-----------
Total adjustments to earnings before taxes........ 1,207,000
-----------
Pro forma earnings before income taxes...................... 4,111,000
Pro forma earnings tax expense at 38%....................... 1,562,000
-----------
Pro forma net earnings...................................... $ 2,549,000
===========
Pro forma basic earnings per share.......................... $ 0.59
Pro forma diluted earnings per share........................ $ 0.55
Pro forma basic weighted average shares outstanding(1)...... 4,299,000
Pro forma diluted weighted average shares outstanding(1).... 4,669,000
</TABLE>
- ---------------
(1) Shares used in computing pro forma earnings per share are based upon
3,503,120 weighted average shares outstanding, common equivalent shares of
370,332, and 96,571 shares issued in connection with the conversion of
certain stockholder loans at the initial public offering price of $7.00 per
share and 699,149 shares issued to pay distributions in conjunction with the
Reorganization. Common equivalent shares consist of stock options,
determined using the treasury stock method. Pursuant to the Securities and
Exchange Commission Staff Accounting Bulletins, common and common equivalent
shares issued at prices below the anticipated public offering price during a
12-month period prior to the proposed offering have been included in the
calculation as if they were outstanding for the entire year (using the
treasury stock method and the average price of the common stock from October
16, 1995 through December 31, 1995) and the shares issued in the initial
public offering whose proceeds were used to pay distributions to Control
Group stockholders in connection with the Reorganization have been included
in the calculation (using the initial public offering price) as if they were
outstanding for the entire year.
F-21
<PAGE> 109
AMERICAN COIN MERCHANDISING, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
15. UNAUDITED QUARTERLY FINANCIAL INFORMATION
<TABLE>
<CAPTION>
JUNE 30 SEPT. 30 DEC. 31 MAR. 31 JUNE 30 SEPT. 30 DEC. 31 MAR. 31 JUNE 30
1996 1996 1996 1997 1997 1997 1997 1998 1998
------- -------- ------- ------- ------- -------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total revenue.................. $8,403 $9,634 $12,216 $12,357 $13,790 $14,676 $18,261 $18,761 $20,962
Total cost of revenue.......... 6,085 6,743 8,489 8,551 9,800 10,342 12,780 13,294 14,627
------ ------ ------- ------- ------- ------- ------- ------- -------
Gross profit................. 2,318 2,891 3,727 3,806 3,990 4,334 5,481 5,467 6,335
General and administrative
expenses..................... 1,671 1,827 2,023 2,296 2,429 2,523 3,066 3,526 3,862
------ ------ ------- ------- ------- ------- ------- ------- -------
Operating earnings........... 647 1,064 1,704 1,510 1,561 1,811 2,415 1,941 2,473
Interest expense............... 45 136 148 111 156 217 128 118 361
------ ------ ------- ------- ------- ------- ------- ------- -------
Earnings before income
Taxes...................... 602 928 1,556 1,399 1,405 1,594 2,287 1,823 2,112
Provision for income Taxes..... 229 352 422 518 521 588 629 638 739
------ ------ ------- ------- ------- ------- ------- ------- -------
Net earnings................. $ 373 $ 576 $ 1,134 $ 881 $ 884 $ 1,006 $ 1,658 $ 1,185 $ 1,373
====== ====== ======= ======= ======= ======= ======= ======= =======
Basic earnings per share....... $ 0.07 $ 0.11 $ 0.22 $ 0.17 $ 0.16 $ 0.18 $ 0.27 $ 0.18 $ 0.21
Diluted earnings per share..... 0.07 0.11 0.21 0.16 0.16 0.18 0.26 0.18 $ 0.21
Basic weighted average common
shares....................... 5,082 5,094 5,123 5,251 5,394 5,450 6,158 6,457 6,469
Diluted weighted average common
shares....................... 5,449 5,459 5,449 5,425 5,452 5,633 6,388 6,649 6,678
</TABLE>
F-22
<PAGE> 110
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders of
Suncoast Toys, Inc., NW Toys Co., and Oregon Coin Company
We have audited the accompanying combined balance sheets of Suncoast Toys,
Inc., NW Toys Co., and Oregon Coin Company as of December 31, 1996 and 1997, and
the related combined statements of income, stockholders' equity, and cash flows
for each of the three years in the period ended December 31, 1997. These
financial statements are the responsibility of the Companies' management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined financial position of Suncoast
Toys, Inc., NW Toys Co., and Oregon Coin Company as of December 31, 1996 and
1997, and the combined results of their operations and their cash flows for each
of the three years in the period ended December 31, 1997, in conformity with
generally accepted accounting principles.
As discussed in Note 8 to the combined financial statements, in May 1998
the Companies and their stockholders entered into an agreement with American
Coin Merchandising, Inc. providing for the sale of certain assets and the
business operations of the Companies to American Coin Merchandising, Inc.
PricewaterhouseCoopers LLP
Tampa, Florida
May 20, 1998
F-23
<PAGE> 111
SUNCOAST TOYS, INC., NW TOYS CO., AND OREGON COIN COMPANY
COMBINED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
------------------------ JUNE 12,
1996 1997 1998
---------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents............................ $3,334,872 $ 5,916,750 $ 6,335,367
Trade accounts and other receivables................. 491,673 254,100 338,722
Inventories.......................................... 3,006,576 2,264,543 1,533,189
Prepaid expenses and other current assets............ 261,635 267,198 247,701
Note receivable...................................... 0 500,000 350,000
---------- ----------- -----------
Total current assets......................... 7,094,756 9,202,591 8,804,979
Property and equipment, net............................ 1,938,690 1,857,354 1,526,754
Other assets........................................... 43,015 43,015 43,015
---------- ----------- -----------
Total assets................................. $9,076,461 $11,102,960 $10,374,748
========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable..................................... $ 46,930 $ 605,750 $ 654,226
Accrued expenses..................................... 488,855 452,364 184,428
---------- ----------- -----------
Total current liabilities.................... 535,785 1,058,114 838,654
---------- ----------- -----------
Commitments (Note 5)
Stockholders' equity:
Common stock......................................... 53,200 53,200 53,200
Additional paid-in capital........................... 19,800 19,800 19,800
Retained earnings.................................... 8,467,676 9,971,846 9,463,094
---------- ----------- -----------
Total stockholders' equity................... 8,540,676 10,044,846 9,536,094
---------- ----------- -----------
Total liabilities and stockholders' equity... $9,076,461 $11,102,960 $10,374,748
========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-24
<PAGE> 112
SUNCOAST TOYS, INC., NW TOYS CO., AND OREGON COIN COMPANY
COMBINED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
PERIOD FROM
SIX MONTHS JANUARY 1, 1998
ENDED TO
1995 1996 1997 JUNE 30, 1997 JUNE 12, 1998
----------- ----------- ----------- ------------- ---------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
Vending..................... $18,462,142 $18,714,470 $18,725,699 $9,386,285 $8,566,494
Other....................... 778,721 1,964,667 1,155,842 593,374 129,252
----------- ----------- ----------- ---------- ----------
Total revenues...... 19,240,863 20,679,137 19,881,541 9,979,659 8,695,746
----------- ----------- ----------- ---------- ----------
Cost of revenues:
Vending..................... 12,224,715 12,985,261 12,795,243 6,386,271 5,979,849
Other....................... 528,868 354,844 490,352 254,115 91,448
----------- ----------- ----------- ---------- ----------
Total cost of
revenues.......... 12,753,583 13,340,105 13,285,595 6,640,386 6,071,297
----------- ----------- ----------- ---------- ----------
Gross profit................ 6,487,280 7,339,032 6,595,946 3,339,273 2,624,449
Selling, general and
administrative expenses..... 1,990,110 2,381,848 2,522,954 1,118,213 2,195,620
----------- ----------- ----------- ---------- ----------
Income from
operations........ 4,497,170 4,957,184 4,072,992 2,221,060 428,829
Interest income............... 168,212 189,427 336,178 139,732 187,419
----------- ----------- ----------- ---------- ----------
Net income.......... $ 4,665,382 $ 5,146,611 $ 4,409,170 $2,360,792 $ 616,248
=========== =========== =========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-25
<PAGE> 113
SUNCOAST TOYS, INC., NW TOYS CO., AND OREGON COIN COMPANY
COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN RETAINED
STOCK CAPITAL EARNINGS TOTAL
------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Balance, January 1, 1995....................... $53,200 $19,800 $ 4,205,683 $ 4,278,683
Net income................................... 0 0 4,665,382 4,665,382
Stockholder distributions.................... 0 0 (1,580,000) (1,580,000)
------- ------- ----------- -----------
Balance, December 31, 1995..................... 53,200 19,800 7,291,065 7,364,065
Net income................................... 0 0 5,146,611 5,146,611
Stockholder distributions.................... 0 0 (3,970,000) (3,970,000)
------- ------- ----------- -----------
Balance, December 31, 1996..................... 53,200 19,800 8,467,676 8,540,676
Net income................................... 0 0 4,409,170 4,409,170
Stockholder distributions.................... 0 0 (2,905,000) (2,905,000)
------- ------- ----------- -----------
Balance, December 31, 1997..................... 53,200 19,800 9,971,846 10,044,846
Net income................................... 0 0 616,248 1,308,075
Stockholder distributions.................... 0 0 (1,125,000) (1,125,000)
------- ------- ----------- -----------
Balance, June 12, 1998 (unaudited)............. $53,200 $19,800 $ 9,463,094 $ 9,536,094
======= ======= =========== ===========
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-26
<PAGE> 114
SUNCOAST TOYS, INC., NW TOYS CO., AND OREGON COIN COMPANY
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED DECEMBER 31, SIX MONTHS JANUARY 1, 1998
--------------------------------------- ENDED TO
1995 1996 1997 JUNE 30, 1997 JUNE 12, 1998
----------- ----------- ----------- ------------- ---------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating
activities:
Net income.................... $24,665,382 $ 5,146,611 $ 4,409,170 $ 2,360,792 $ 616,248
Adjustments to reconcile net
income to net cash provided
by Operating activities:
Depreciation............... 667,754 795,074 791,824 317,618 342,393
Changes in operating assets
and liabilities:
Trade accounts and other
receivables........... 630,373 (296,821) 237,573 207,703 (84,622)
Inventories.............. (1,238,644) (612,582) 742,033 75,800 731,354
Prepaid expenses and
other current
assets................ 14,157 (249,918) (5,563) 10,147 19,497
Accounts payable......... (326,914) (4,660) 558,820 357,724 48,476
Accrued expenses......... 92,570 (127,476) (36,491) (377,246) (267,936)
----------- ----------- ----------- ----------- -----------
Net cash provided by
operating
activities.......... 4,504,678 4,650,228 6,697,366 2,947,538 1,405,410
----------- ----------- ----------- ----------- -----------
Cash flows from investing
activities:
Purchases of property and
equipment, net............. (1,321,173) (743,084) (710,488) (339,458) (11,793)
(Additions) payments note
receivable................. 16,740 0 (500,000) (500,000) 150,000
----------- ----------- ----------- ----------- -----------
Net cash used in
investing
activities.......... (1,304,433) (743,084) (1,210,488) (839,458) 138,207
----------- ----------- ----------- ----------- -----------
Cash flows from financing
activities:
Stockholder distributions..... (1,580,000) (3,970,000) (2,905,000) (1,755,000) (1,125,000)
Payment of note payable....... (136,472) 0 0 0 0
----------- ----------- ----------- ----------- -----------
Net cash used in
financing
activities.......... (1,716,472) (3,970,000) (2,905,000) (1,755,000) (1,125,000)
----------- ----------- ----------- ----------- -----------
Net increase (decrease) in cash
and cash equivalents.......... 1,483,773 (62,856) 2,581,878 353,080 418,617
Cash and cash equivalents,
beginning of period........... 1,913,955 3,397,728 3,334,872 3,334,872 5,916,750
----------- ----------- ----------- ----------- -----------
Cash and cash equivalents, end
of period..................... $ 3,397,728 $ 3,334,872 $ 5,916,750 $ 3,687,952 $ 6,335,367
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-27
<PAGE> 115
SUNCOAST TOYS, INC., NW TOYS CO., AND OREGON COIN COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION:
Description of Business -- Suncoast Toys, Inc., NW Toys Co., and Oregon
Coin Company (collectively, the Companies) own and operate coin-operated
skill-crane machines that dispense stuffed animals, plush toys, watches, jewelry
and other items. The Companies' machines are placed in supermarkets, mass
merchandisers, bars, restaurants, warehouse clubs and similar locations in
franchised territories in Florida, Washington, and Oregon.
Basis of Presentation -- The accompanying financial statements present the
combined financial statements of the Companies. The Companies operate under
common ownership and their financial statements have been combined to provide a
more meaningful presentation of the financial position, results of operations
and cash flows of these entities. All significant intercompany balances and
transactions have been eliminated in combination.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Revenues -- Vending revenue represents cash receipts from customers using
vending machines and is recognized when collected. The cost of vending is
comprised primarily of the cost of products vended through the machines, the
servicing of machines and commissions and royalties paid to retail locations and
the Companies' franchisor. Other revenue represents bulk product sales to third
parties which are recognized upon shipment.
Franchise Expenses -- The Companies are required to pay continuing
royalties of 2.5-3.5% of gross machine revenues (subject to certain maximums and
other adjustments as provided in the franchise agreement) to the franchisor.
Royalties were approximately $300,000, $318,000, and $350,000 for the years
ended December 31, 1995, 1996, and 1997, respectively. In addition, the
Companies purchased from the franchisor vending products of approximately
$1,102,000, $689,000, and $610,000 during the years ended December 31, 1995,
1996, and 1997, respectively.
Cash and Cash Equivalents -- The Companies consider all highly liquid
investments with an original maturity of three months or less to be cash
equivalents.
Inventories -- Inventories are stated at the lower of cost or market. Cost
is determined using the first-in, first-out method. Inventories consist of
purchased items ready for resale or use in vending operations.
Property and Equipment -- Property and equipment are stated at cost.
Depreciation is computed using accelerated methods, based upon estimated useful
lives of five to seven years. Expenditures for maintenance and repairs are
charged to expense as incurred, whereas major betterments are capitalized. Gains
and losses on sales and retirements are included in other income and expense,
respectively.
Income Taxes -- The Companies have each elected to be taxed as an "S"
corporation for federal and state income tax purposes. Accordingly, the
stockholders are liable for federal and state income taxes.
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 and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of income and expenses during
the reporting period. Actual results could differ from those estimates.
Interim Financial Information -- The financial statements of the Companies
as of June 12, 1998 and for the six months ended June 30, 1997 and for the
period from January 1, 1998 to June 12, 1998 are unaudited. All adjustments and
accruals (consisting only of normal recurring adjustments) have been recorded
that, in the opinion of management, are necessary for a fair presentation.
Results of operations for the interim period are not necessarily indicative of
the results for the full year.
F-28
<PAGE> 116
SUNCOAST TOYS, INC., NW TOYS CO., AND OREGON COIN COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
3. NOTE RECEIVABLE:
The note receivable consists of a $500,000 demand note entered into in 1997
with one of the Companies' suppliers. Interest is accrued at 10% and the
principal balance is payable on demand.
4. PROPERTY AND EQUIPMENT:
Property and equipment consisted of the following at the following dates:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1996 1997
----------- -----------
<S> <C> <C>
Vending equipment.......................................... $ 3,868,046 $ 4,360,896
Vehicles................................................... 277,142 412,138
Furniture, fixtures and equipment.......................... 80,564 92,791
----------- -----------
4,225,752 4,865,825
Less accumulated depreciation.............................. (2,287,062) (3,008,471)
----------- -----------
$ 1,938,690 $ 1,857,354
=========== ===========
</TABLE>
Depreciation expense was approximately $668,000, $795,000, and $792,000 for
the years ended December 31, 1995, 1996, and 1997, respectively.
5. COMMITMENTS:
Certain properties used in the Companies' operations are leased under
operating leases. Total rent expense under operating leases was approximately
$90,000, $84,000, and $70,000 for the years ended December 31, 1995, 1996, and
1997, respectively. Future minimum rentals under operating leases with terms of
more than one year as of December 31, 1997 are as follows:
<TABLE>
<S> <C>
1998...................................................... $75,213
1999...................................................... 29,835
2000...................................................... 9,235
</TABLE>
6. CERTAIN SIGNIFICANT RISKS AND UNCERTAINTIES:
Concentrations of Credit Risk -- Financial instruments which potentially
subject the Companies to concentrations of credit risk consist principally of
cash and cash equivalents and trade accounts and note receivables.
The Companies place substantially all of their cash and cash equivalents
with Wells Fargo Bank. At December 31, 1997, the Companies had approximately
$5,349,000, including amounts representing outstanding checks, deposited with
Wells Fargo Bank.
Concentrations of credit risk with respect to trade accounts and note
receivables exist as a result of transactions with a small number of entities in
the same business as the Companies. Accordingly, management evaluates each
entity's credit worthiness before extending them credit.
Current Vulnerability Due to Certain Concentrations
Suppliers -- Substantially all of the plush toys and other products dispensed
from the machines are produced by foreign manufacturers. A majority are
purchased directly by the Companies from manufacturers in the People's Republic
of China (China). The Companies purchase their other products indirectly from
vendors and the Companies' franchisor who obtain a significant percentage of
such products from foreign manufacturers. As a result, the Companies are subject
to changes in governmental policies, the imposition of tariffs, import and
export controls, transportation delays and
F-29
<PAGE> 117
SUNCOAST TOYS, INC., NW TOYS CO., AND OREGON COIN COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
interruptions, political and economic disruptions and labor strikes which could
disrupt the supply of products from such manufacturers. Among other things, the
loss of China's "most favored nation" status under U.S. tariff laws could result
in a substantial increase in the import duty of certain products manufactured in
China, which could result in substantially increased costs for certain products
purchased by the Companies which could have a material adverse effect on the
Companies' financial performance.
7. COMMON STOCK:
Common stock consisted of the following at December 31, 1996 and 1997:
<TABLE>
<CAPTION>
SHARES SHARES
AUTHORIZED ISSUED
---------- ------
<S> <C> <C>
Suncoast Toys, Inc., $1.00 par.............................. 1,000 200
NW Toys Co., no par......................................... 10,000 100
Oregon Coin Company, no par................................. 500 100
</TABLE>
8. SUBSEQUENT EVENT:
In May 1998, the Companies and their stockholders entered into an agreement
with American Coin Merchandising, Inc. providing for the sale of certain assets
and the business operations of the Companies to American Coin Merchandising,
Inc. The sale is expected to close in June 1998.
F-30
<PAGE> 118
REPORT OF INDEPENDENT ACCOUNTANTS ON SUPPLEMENTAL INFORMATION
Our report on the audits of the combined financial statements of Suncoast
Toys, Inc., NW Toys Co., and Oregon Coin Company as of December 31, 1996 and
1997 and for each of the three years in the period ended December 31, 1997
appears on page F-23. These audits were conducted for the purpose of forming an
opinion on the basic financial statements taken as a whole. The combining
balance sheet and combining statement of income as of and for the year ended
December 31, 1997 are presented for purposes of additional analysis and are not
a required part of the basic combined financial statements. Such information has
been subjected to the auditing procedures applied in the audit of the basic
combined financial statements and, in our opinion, is fairly stated, in all
material respects, in relation to the basic combined financial statements taken
as a whole. This information should be read in conjunction with the last
paragraph of our report on page F-23.
PricewaterhouseCoopers LLP
Tampa, Florida
May 20, 1998
F-31
<PAGE> 119
SUNCOAST TOYS, INC., NW TOYS CO., AND OREGON COIN COMPANY
COMBINING BALANCE SHEET
DECEMBER 31, 1997
<TABLE>
<CAPTION>
OREGON
SUNCOAST COIN ELIMINATION
TOYS, INC. NW TOYS CO. COMPANY ENTRIES COMBINED
---------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents..... $ 660,903 $4,017,814 $1,238,033 $ 0 $ 5,916,750
Trade accounts and other
receivables................ 863,021 57,933 1,427 (668,281) 254,100
Inventories................... 1,854,138 269,950 157,169 (16,714) 2,264,543
Prepaid expenses and other
current assets............. 17,218 227,628 22,352 0 267,198
Note receivable............... 500,000 0 0 0 500,000
---------- ---------- ---------- --------- -----------
Total current
assets.............. 3,895,280 4,573,325 1,418,981 (684,995) 9,202,591
Property and equipment, net..... 703,079 736,446 417,829 0 1,857,354
Other assets.................... 43,015 0 0 0 43,015
---------- ---------- ---------- --------- -----------
Total assets.......... $4,641,374 $5,309,771 $1,836,810 $(684,995) $11,102,960
========== ========== ========== ========= ===========
CURRENT LIABILITIES:
Accounts payable.............. $ 433,456 $ 492,360 $ 333,959 $(654,025) $ 605,750
Accrued expenses.............. 419,564 17,291 15,509 0 452,364
---------- ---------- ---------- --------- -----------
Total current
liabilities......... 853,020 509,651 349,468 (654,025) 1,058,114
---------- ---------- ---------- --------- -----------
Stockholders' equity:
Common stock.................. 200 1,000 52,000 0 53,200
Additional paid-in capital.... 19,800 0 0 0 19,800
Retained earnings............. 3,768,354 4,799,120 1,435,342 (30,970) 9,971,846
---------- ---------- ---------- --------- -----------
Total stockholders'
equity.............. 3,788,354 4,800,120 1,487,342 (30,970) 10,044,846
---------- ---------- ---------- --------- -----------
Total liabilities and
stockholders'
equity.............. $4,641,374 $5,309,771 $1,836,810 $(684,995) $11,102,960
========== ========== ========== ========= ===========
</TABLE>
F-32
<PAGE> 120
SUNCOAST TOYS, INC., NW TOYS CO., AND OREGON COIN COMPANY
COMBINING STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
OREGON
SUNCOAST COIN ELIMINATION
TOYS, INC. NW TOYS CO. COMPANY ENTRIES COMBINED
----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
REVENUES:
Vending.................... $ 4,563,364 $9,759,035 $4,403,300 $ 0 $18,725,699
Other...................... 7,525,617 6,411 2,116 (6,378,302) 1,155,842
----------- ---------- ---------- ----------- -----------
Total revenues..... 12,088,981 9,765,446 4,405,416 (6,378,302) 19,881,541
----------- ---------- ---------- ----------- -----------
Cost of revenues:
Vending.................... 3,330,448 6,395,942 3,068,853 0 12,795,243
Other...................... 5,005,419 0 0 4,515,067 490,352
----------- ---------- ---------- ----------- -----------
Total cost of
revenues......... 8,335,867 6,395,942 3,068,853 4,515,067 13,285,595
----------- ---------- ---------- ----------- -----------
Gross profit....... 3,753,114 3,369,504 1,336,563 (1,863,235) 6,595,946
Selling, general and
administrative expenses.... 1,730,716 1,652,263 1,014,614 1,874,639 2,522,954
----------- ---------- ---------- ----------- -----------
Income from
operations....... 2,022,398 1,717,241 321,949 11,404 4,072,992
Interest income.............. 119,404 172,947 43,827 0 336,178
----------- ---------- ---------- ----------- -----------
Net income......... $ 2,141,802 $1,890,188 $ 365,776 $ 11,404 $ 4,409,170
=========== ========== ========== =========== ===========
</TABLE>
F-33
<PAGE> 121
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED AUGUST 18, 1998
PROSPECTUS
$100,000,000
AMERICAN COIN MERCHANDISING, INC.
JUNIOR SUBORDINATED DEBENTURES
---------------------
AMERICAN COIN MERCHANDISING TRUST I
AMERICAN COIN MERCHANDISING TRUST II
AMERICAN COIN MERCHANDISING TRUST III
AMERICAN COIN MERCHANDISING TRUST IV
TRUST PREFERRED SECURITIES
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
AMERICAN COIN MERCHANDISING, INC.
---------------------
American Coin Merchandising, Inc., a Delaware corporation (the "Company"),
may from time to time offer its junior subordinated debt securities (the "Junior
Subordinated Debentures") in one or more series and in amounts, at prices and on
terms to be determined at the time of the offering. The Junior Subordinated
Debentures when issued will be unsecured obligations of the Company. The
Company's obligations under the Junior Subordinated Debentures will be
subordinate and junior in right of payment to certain other indebtedness of the
Company, as may be described in an accompanying Prospectus Supplement (the
"Prospectus Supplement").
American Coin Merchandising Trust I, American Coin Merchandising Trust II,
American Coin Merchandising Trust III and American Coin Merchandising Trust IV,
(each, an "ACMI Trust"), each a statutory business trust formed under the laws
of Delaware, may from time to time offer trust preferred securities evidencing
undivided beneficial interests in the assets of the respective ACMI Trust
("Trust Preferred Securities"). The payment of periodic cash distributions
("distributions") with respect to Trust Preferred Securities of each of the ACMI
Trusts, out of monies held by each of the ACMI Trusts, and payments on
liquidation, redemption or otherwise with respect to such Trust Preferred
Securities will be guaranteed by the Company to the extent described herein
(each, a "Trust Preferred Securities Guarantee"). The Company's obligations
under the Guarantees will be subordinate and junior in right of payment to all
Senior Debt and Subordinated Debt (each as defined in an accompanying Prospectus
Supplement) of the Company. Junior Subordinated Debentures may be issued and
sold from time to time in one or more series by the Company to an ACMI Trust in
connection with the investment of the proceeds from the Offering of Trust
Preferred Securities and Common Securities (as defined herein) of such ACMI
Trust. The Junior Subordinated Debentures subsequently may be distributed pro
rata to holders of Trust Preferred Securities and Common Securities in
connection with the termination of such ACMI Trust upon the occurrence of
certain events as may be described in the Prospectus Supplement.
Specific terms of the particular Junior Subordinated Debentures of any
series, the Trust Preferred Securities of any ACMI Trust and the related
Guarantee in respect of which this Prospectus is being delivered (the "Offered
Securities") will be set forth in the accompanying Prospectus Supplement with
respect to such series of Junior Subordinated Debentures or such Trust Preferred
Securities, which will describe, without limitation and where applicable, the
following: (i) in the case of Junior Subordinated Debentures, the specific
designation, aggregate principal amount, denomination, maturity, premium, if
any, interest rate (or the method of determining such rate), dates on which
premium, if any, and interest, if any, will be payable, any redemption
provisions, any sinking fund provisions, the initial public offering price, the
subordination terms, any listing on a securities exchange and any other terms
and (ii) in the case of Trust Preferred Securities, the specific designation,
number of Trust Preferred Securities, distribution rate (or the method of
determining such rate), dates on which distributions will be payable,
liquidation amount, voting rights, any redemption provisions, terms for any
conversion into or exchange for other securities, the initial public offering
price, any listing on a securities exchange and any other rights, preferences,
privileges, limitations and restrictions.
The Offered Securities may be offered in amounts, at prices and on terms to
be determined at the time of offering; provided, however, that the aggregate
initial public offering price of all Offered Securities shall not exceed
$100,000,000. The Prospectus Supplement relating to any series of Offered
Securities will contain information concerning certain United States federal
income tax considerations applicable to such Offered Securities.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE. THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES
OF SECURITIES UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
The date of this Prospectus is , 1998
<PAGE> 122
The Offered Securities will be sold directly or through agents,
underwriters or dealers as designated from time to time, or through a
combination of such methods. If agents or any underwriters or dealers are
involved in the sale of the Offered Securities in respect of which this
Prospectus is being delivered, the names of such agents, underwriters or dealers
and any applicable commissions or discounts will be set forth in or may be
calculated from the Prospectus Supplement related to such Offered Securities.
No dealer, salesperson or any other individual has been authorized by the
Company or any of the ACMI Trusts to give any information or to make any
representation other than those contained or incorporated by reference in this
Prospectus or any accompanying Prospectus Supplement and, if given or made, such
information or representation must not be relied upon as having been authorized.
This Prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any of the securities offered hereby in any jurisdiction to any
person to whom it is unlawful to make such offer or solicitation in such
jurisdiction. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create any implication that there has
been no change in the affairs of the Company or any of the ACMI Trusts since the
date hereof.
AVAILABLE INFORMATION
The ACMI Trusts and the Company have filed with the Commission under the
Securities Act of 1933, as amended (the "Securities Act"), a combined
registration statement on Form S-3 (herein, together with all amendments and
exhibits, referred to as the "Registration Statement") relating to the Junior
Subordinated Debentures, the Trust Preferred Securities and the Guarantees. This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information, reference is hereby made
to the Registration Statement. Statements or extracts presented in this
Prospectus from financial statements, contracts, agreements or other documents
included as exhibits to the Registration Statement are not necessarily complete.
With respect to each such financial statement, contract, agreement or other
document filed as an exhibit to the Registration Statement, reference is hereby
made to such exhibit for a more complete description of the matter involved.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information concerning the Company can be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the Commission's
Regional Offices at Seven World Trade Center, 13th Floor, New York, New York
10048, and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material can be obtained from the Public
Reference Room of the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, at prescribed rates. The SEC maintains a World Wide
Website that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the SEC. The
address of the SEC's World Wide Website is http://www.sec.gov.
No separate financial statements of the ACMI Trusts have been included
herein. The Company does not believe that such financial statements would be
material to holders of the Trust Preferred Securities because the ACMI Trusts
are newly-formed special purpose entities, have no operating history, have no
independent operations and are not engaged in, and do not propose to engage in,
any activity other than the issuance of the Trust Securities (as defined herein)
and holding as trust assets the Junior Subordinated Debentures of the Company.
The ACMI Trusts are not currently subject to the informational reporting
requirements of the Exchange Act. The ACMI Trusts will become subject to such
requirements upon the effectiveness of the Registration Statement of which this
Prospectus forms a part, and will seek and expect to receive exemptions
therefrom.
2
<PAGE> 123
INCORPORATION OF DOCUMENTS BY REFERENCE
The Company hereby incorporates in this Prospectus by reference the
following documents filed by the Company with the Commission (Commission File
No. 000-26580): (i) its Definitive Proxy Statement filed with the Commission on
March 31, 1998; (ii) its Annual Report on Form 10-K for the year ended December
31, 1997, as amended on Form 10-K/A dated August 17, 1998; (iii) its Quarterly
Reports on Form 10-Q for the quarters ended March 31, 1998 and June 30, 1998;
and (iv) its Current Reports on Form 8-K dated June 2, 1998 and July 10, 1998.
All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to
the termination of the Offering of the securities offered hereby shall be deemed
to be incorporated herein by reference and to be a part hereof from the
respective dates of the filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a Prospectus
is delivered, on the written or oral request of any such person, a copy of any
or all of the documents incorporated by reference herein, other than certain
exhibits to such documents. Such requests should be addressed to W. John Cash,
Vice President and Chief Financial Officer, American Coin Merchandising, Inc.,
5660 Central Avenue, Boulder, Colorado 80301; telephone (303) 444-2559.
THE COMPANY
The Company is engaged in the ownership, placement, operation and
acquisition of skill-crane machines ("Shoppes") that dispense stuffed animals,
plush toys, watches, jewelry and other items. The Company is a leading owner,
operator and franchiser of Shoppes through a national network of skill-crane
machines operated by the Company and its franchisees. For up to 50c a play,
customers maneuver the skill-crane into position and attempt to retrieve the
desired item in the machine's enclosed display area before play is ended. The
Shoppes are located, in order of prevalence, in supermarkets, mass
merchandisers, restaurants, bowling centers, bingo halls, bars and similar
locations to take advantage of the regular customer traffic at these locations.
The Company has expanded into complementary vending businesses, including kiddie
rides, bulk vending (candy, gum, novelty items, etc.) and video games.
The Company was incorporated in Colorado in July 1988 and was
reincorporated in Delaware in July 1995. The Company's principal executive
offices are located at 5660 Central Avenue, Boulder, Colorado 80301 and its
telephone number is (303) 444-2559.
THE AMERICAN COIN MERCHANDISING TRUSTS
Each of American Coin Merchandising Trust I, American Coin Merchandising
Trust II, American Coin Merchandising Trust III and American Coin Merchandising
Trust IV is a statutory business trust formed under Delaware law pursuant to (i)
a separate trust agreement, dated as of July 22, 1998, executed by the Company,
as depositor and the ACMI Trustees (as defined herein) as of the date of such
trust and (ii) the filing of a separate certificate of trust with the Delaware
Secretary of State on July 22, 1998. Prior to the offering of any Trust
Preferred Securities by any ACMI Trust, the trust agreement of each ACMI Trust
will be amended and restated in its entirety (as so amended and restated, the
"Trust Agreement") substantially in a form to be filed (prior to any such
offering) as an exhibit to the Registration Statement of which this Prospectus
forms a part. Each ACMI Trust exists for the exclusive purposes of (i) issuing
the Trust Preferred Securities and Common Securities representing undivided
beneficial interests in the assets of such Trust (the "Common Securities" and,
together with the Trust Preferred Securities, the "Trust Securities"), (ii)
investing the gross proceeds of the Trust Securities in a series of Junior
Subordinated Debentures and (iii) engaging in only those other activities
necessary or incidental thereto. All of the Common Securities will
3
<PAGE> 124
be directly or indirectly owned by the Company. The Common Securities will rank
pari passu, and payments will be made thereon pro rata, with the Trust Preferred
Securities except that upon the event of default under the Trust Agreement
resulting from an event of default under the indenture governing a particular
series of subordinated Debentures (an "Indenture"), the rights of the holders of
the Common Securities to payment in respect of distributions and payments upon
liquidation, redemption and otherwise will be subordinated to the rights of the
holders of the Trust Preferred Securities. The Company will, directly or
indirectly, acquire Common Securities in an aggregate liquidation amount equal
to 3% of the total capital of each ACMI Trust. Each ACMI Trust has a perpetual
existence but may be terminated as provided in the applicable Trust Agreement.
Each ACMI Trust's business and affairs will be conducted by the trustees (the
"ACMI Trustees") appointed by the Company as the direct or indirect holder of
all the Common Securities. The holder of the Common Securities will be entitled
to appoint, remove or replace any of, or increase or reduce the number of, the
ACMI Trustees of a ACMI Trust. The duties and obligations of such ACMI Trustees
shall be governed by the Trust Agreement of such ACMI Trust. A majority of the
ACMI Trustees (the "Regular Trustees") of each ACMI Trust will be persons who
are employees or officers of or affiliated with the Company. One ACMI Trustee of
each ACMI Trust will be a financial institution which will be unaffiliated with
the Company and which shall act as property trustee and as indenture trustee for
purposes of the Trust Indenture Act of 1939 (the "Trust Indenture Act"),
pursuant to the terms set forth in a Prospectus Supplement (the "Property
Trustee"). In addition, unless the Property Trustee maintains a principal place
of business in the State of Delaware, and otherwise meets the requirements of
applicable law, another ACMI Trustee of each ACMI Trust will have its principal
place of business or reside in the State of Delaware (the "Delaware Trustee").
The Company will pay all fees and expenses related to the ACMI Trusts and the
offering of Trust Securities. The office of the Delaware Trustee for each ACMI
Trust in the State of Delaware is c/o Wilmington Trust Company, Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attn:
Corporate Trust Administration. The principal place of business of each ACMI
Trust shall be c/o American Coin Merchandising, 5660 Central Avenue, Boulder,
Colorado 80301 (Telephone: (303) 444-2559).
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
The following table sets forth the ratio of earnings to combined fixed
charges and preferred stock dividends of the Company for the periods indicated.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------------- -----------
1993 1994 1995 1996 1997 1997 1998
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges and
preferred stock dividends(1)................. 3.5x 5.1x 7.6x 9.3x 9.6x 9.0x 7.7x
</TABLE>
- ---------------
(1) For purposes of calculating the ratio of earnings to fixed charges, earnings
consist of income before income taxes, plus fixed charges. Fixed charges
consist of the interest expense on all indebtedness, the estimated
representative interest factor of rental expense and losses of less than
50%-owned affiliates.
USE OF PROCEEDS
Each ACMI Trust will invest all proceeds received from the sale of its
Trust Securities in Junior Subordinated Debentures.
The Company will use the net proceeds from the sale of the Junior
Subordinated Debentures for general corporate purposes, including the repayment
of outstanding indebtedness, acquisitions or for such other purposes as may be
specified in an accompanying Prospectus Supplement.
4
<PAGE> 125
DESCRIPTION OF THE TRUST PREFERRED SECURITIES
Each ACMI Trust may issue, from time to time, only one series of Trust
Preferred Securities having terms described in the Prospectus Supplement
relating thereto. The Trust Agreement of each ACMI Trust authorizes the
Administrative Trustees of such ACMI Trust to issue on behalf of such ACMI Trust
one series of Trust Preferred Securities. Each Trust Agreement will be qualified
as an indenture under the Trust Indenture Act. The Trust Preferred Securities
will have such terms, including distributions, redemption, voting, liquidation
rights and such other preferred, deferred or other special rights or such
restrictions as shall be set forth in each Trust Agreement or made part of each
Trust Agreement by the Trust Indenture Act. Reference is made to the Prospectus
Supplement relating to the Trust Preferred Securities of an ACMI Trust for
specific terms, including (i) the distinctive designation of such Trust
Preferred Securities; (ii) the number of Trust Preferred Securities issued by
such ACMI Trust; (iii) the annual distribution rate (or method of determining
such rate) for Trust Preferred Securities issued by such ACMI Trust and the date
or dates upon which such distributions shall be payable; provided, however, that
distributions on such Trust Preferred Securities shall be payable on a quarterly
basis to holders of such Trust Preferred Securities as of a record date in each
quarter during which such Trust Preferred Securities are outstanding; (iv)
whether distributions on Trust Preferred Securities issued by such ACMI Trust
shall be cumulative, and, in the case of Trust Preferred Securities having such
cumulative distribution rights, the date or dates or method of determining the
date or dates from which distributions on Trust Preferred Securities issued by
such ACMI Trust shall be cumulative; (v) the amount or amounts which shall be
paid out of the assets of such ACMI Trust to purchase or redeem Trust Preferred
Securities issued by such ACMI Trust and the price or prices at which, the
period or periods within which, and the terms and conditions upon which, Trust
Preferred Securities issued by such ACMI Trust shall be purchased or redeemed,
in whole or in part, pursuant to such obligation; (vi) the voting rights, if
any, of Trust Preferred Securities issued by such ACMI Trust in addition to
those required by law, including any requirement for the approval by the holders
of Trust Preferred Securities, or of Trust Preferred Securities issued by one or
more ACMI Trusts, or of both, as a condition to specified action or amendments
to the Trust Agreement of such ACMI Trust; and (vii) any other relevant rights,
preferences, privileges, limitations or restrictions of Trust Preferred
Securities issued by such ACMI Trust not inconsistent with the Trust Agreement
of such ACMI Trust or with applicable law. All Trust Preferred Securities
offered hereby will be guaranteed by the Company to the extent set forth below
under "Description of the Guarantees." Any applicable United States federal
income tax considerations applicable to any offering of Trust Preferred
Securities will be described in the Prospectus Supplement relating thereto.
In connection with the issuance of the Trust Preferred Securities, each
ACMI Trust will issue one series of Common Securities. The Trust Agreement of
each ACMI Trust authorizes the Administrative Trustees of such trust to issue on
behalf of such ACMI Trust one series of Common Securities having such terms
including distributions, redemption, voting, liquidation rights or such
restrictions as shall be set forth therein. The terms of the Common Securities
issued by an ACMI Trust will be substantially identical to the terms of the
Trust Preferred Securities issued by such ACMI Trust and the Common Securities
will rank pari passu, and payments will be made thereon pro rata, with the Trust
Preferred Securities except that, upon an event of default under the Trust
Agreement resulting from an event of default under the Indenture, the rights of
the holders of the Common Securities to payment in respect of distributions and
payments upon liquidation, redemption and otherwise will be subordinated to the
rights of the holders of the Trust Preferred Securities. All of the Common
Securities of an ACMI Trust will be directly or indirectly owned by the Company.
5
<PAGE> 126
DESCRIPTION OF THE GUARANTEES
Set forth below is a summary of information concerning the Guarantees which
will be executed and delivered by the Company for the benefit of the holders
from time to time of Trust Preferred Securities. Each Guarantee will be
qualified as an indenture under the Trust Indenture Act. Wilmington Trust
Company will act as indenture trustee under each Guarantee (the "Guarantee
Trustee"). The terms of each Guarantee will be those set forth in the Guarantee
and those made part of such Guarantee by the Trust Indenture Act. The following
summary does not purport to be complete and is subject in all respects to the
provisions of, and is qualified in its entirety by reference to, the form of
Guarantee, which is filed as an exhibit to the Registration Statement of which
this Prospectus is a part, and the Trust Indenture Act. Each Guarantee will be
held by the Guarantee Trustee for the benefit of the holders of the Trust
Preferred Securities of the applicable ACMI Trust.
GENERAL
Pursuant to each Guarantee, the Company will irrevocably unconditionally
agree to pay in full on a subordinated basis, to the extent set forth therein,
the Guarantee Payments (as defined below) to the holders of the Trust 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 following payments with respect to the Trust Preferred Securities,
to the extent not paid by or on behalf of the Trust (the "Guarantee Payment"),
will be subject to the Guarantee: (i) any accumulated and unpaid Distributions
required to be paid on the Trust Preferred Securities, to the extent that the
Trust has funds on hand available therefor at such time, (ii) the redemption
price with respect to any Trust Preferred Securities called for redemption, to
the extent that the Trust has funds on hand available therefor at such time, and
(iii) upon a voluntary or involuntary dissolution, winding up or liquidation of
the Trust (unless the Junior Subordinated Debentures are distributed to holders
of the Trust Preferred Securities), the lesser of (a) the Liquidation
Distribution and (b) the amount of assets of the Trust remaining available for
distribution to holders of Trust Preferred Securities, after satisfaction of
liabilities to creditors of the Trust as required by law. The Company's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Company to the holders of the Trust Preferred Securities
or by causing the Trust to pay such amounts to such holders.
Each Guarantee will be an irrevocable guarantee on a subordinated basis of
each ACMI Trust's obligations under the Trust Preferred Securities, but will
apply only to the extent that the applicable ACMI Trust has funds sufficient to
make such payments, and is not a guarantee of collection. If the Company does
not make interest payments on the Junior Subordinated Debentures held by an ACMI
Trust, such ACMI Trust will not be able to pay Distributions on the Trust
Preferred Securities and will not have funds legally available therefor. See
"Description of the Junior Subordinated Debentures -- Certain Covenants."
Status of the Guarantees
The Guarantees will constitute unsecured obligations of the Company and
will rank subordinate and junior in right of payment to all Senior Debt and
Subordinated Debt in the same manner as the Junior Subordinated Debentures. The
Guarantees will constitute a guarantee of payment and not of collection. For
example, the guaranteed party may institute a legal proceeding directly against
the Company to enforce its rights under a Guarantee without first instituting a
legal proceeding against any other person or entity. Each Guarantee will be held
for the benefit of the holders of the Trust Preferred Securities of a particular
ACMI Trust. A Guarantee will not be discharged except by payment of the
Guarantee Payment in full to the extent not paid by the particular ACMI Trust or
upon distribution of the Junior Subordinated Debentures related to a particular
ACMI Trust to the holders of the Trust Preferred Securities of such ACMI Trust.
The Guarantees do not place a limitation on the amount of additional Senior Debt
and Subordinated Debt that may be incurred by the Company. The Company expects
from time to time to incur additional indebtedness constituting Senior Debt and
Subordinated Debt.
6
<PAGE> 127
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not materially adversely affect
the rights of holders of the Trust Preferred Securities (in which case no vote
will be required), each Guarantee may not be amended without the prior approval
of the holders of not less than a majority of the aggregate Liquidation Amount
of such outstanding Trust Preferred Securities issued by the applicable ACMI
Trust. The manner of obtaining such approval of holders of such Trust Preferred
Securities will be as set forth in an accompanying Prospectus Supplement. All
guarantees and agreements contained in a Guarantee shall bind the successors,
assigns, receivers, trustees and representatives of the Company and shall inure
to the benefit of the holders of the Trust Preferred Securities then outstanding
of the applicable ACMI Trust.
Events of Default
An Event of Default under a Guarantee Agreement will occur upon the failure
of the Company to perform any of its payment or other obligations thereunder
and, except for a default in payment of a Guarantee Payment, the Guarantor shall
have received notice of default and shall not have cured such default within 90
days after receipt of such notice.
The holders of not less than a majority in aggregate Liquidation Amount of
the Trust Preferred Securities relating to such Guarantee 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 such Guarantee or to direct the
exercise of any trust or power conferred upon the Guarantee Trustee under such
Guarantee. Any holder of the Trust Preferred Securities relating to such
Guarantee may institute a legal proceeding directly against the Company to
enforce its rights under such Guarantee without first instituting a legal
proceeding against the relevant ACMI Trust, the Guarantee Trustee or any other
person or entity.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of
a default with respect to a Guarantee, and after curing all Events of Default
that have occurred under a Guarantee, has undertaken to perform only such duties
as are specifically set forth in a Guarantee and, after the occurrence of an
event of default under a Guarantee, 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 a Guarantee at the request of any
holder of Trust Preferred Securities unless it is offered adequate security and
indemnity as would satisfy a reasonable person in the position of the Guarantee
Trustee against the costs, expenses and liabilities that might be incurred
thereby.
TERMINATION OF THE GUARANTEE
Each Guarantee will terminate as to the Trust Preferred Securities issued
by the applicable ACMI Trust and be of no further force and effect upon full
payment of the Redemption Price of all Trust Preferred Securities of such ACMI
Trust, upon full payment of the amounts payable upon liquidation of such ACMI
Trust or upon distribution of Junior Subordinated Debentures held by such ACMI
Trust to the holders of the Trust Preferred Securities of such ACMI Trust. Each
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any holder of the Trust Preferred Securities issued by the
applicable ACMI Trust must restore payment of any sums paid under such Trust
Preferred Securities or such Guarantee.
GOVERNING LAW
The Guarantee Agreement will be governed by and construed in accordance
with the laws of the State of California.
7
<PAGE> 128
EXPENSE AGREEMENT
Pursuant to the Expense Agreement to be entered into between the Company
and each ACMI Trust under the applicable ACMI Trust Agreements, the Company will
irrevocably and unconditionally guarantee to each person or entity to whom such
ACMI Trust becomes indebted or liable, the full payment of any costs, expenses
or liabilities of such ACMI Trust (including, without limitation, expenses
relating to the Offering of the Trust Preferred Securities of such ACMI Trust
and any expenses the Property Trustee may incur relating to the enforcement of
the rights of the holders of the Trust Preferred Securities or the Junior
Subordinated Debentures related to such ACMI Trust pursuant to the applicable
Trust Agreement and the Indenture, respectively), other than obligations of an
ACMI Trust to pay to the holders of the Trust Preferred Securities or other
similar interests in such ACMI Trust the amounts due such holders pursuant to
the terms of the Trust Preferred Securities or such other similar interest, as
the case may be. The Expense Agreement may be enforced against the Company by
any person or entity to whom an ACMI Trust is or becomes indebted or liable.
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES
Junior Subordinated Debentures may be issued from time to time in one or
more series under an Indenture between the Company and Wilmington Trust Company,
as Indenture Trustee. The terms of the Junior Subordinated Debentures will
include those stated in the Indenture and in a Supplemental Indenture (as
defined below) and those made part of the Indenture by reference to the Trust
Indenture Act. The following summary does not purport to be complete and is
subject in all respects to the provision of, and is qualified in its entirety by
reference to, the Indenture, which is filed as an exhibit to the Registration
Statement of which this Prospectus is a part, and the Trust Indenture Act.
Whenever particular provisions or defined terms in the Indenture are referred to
herein, such provisions or defined terms are incorporated by reference herein.
GENERAL
The Junior Subordinated Debentures will be unsecured and will rank junior
and be subordinate in right of payment to all Senior Debt and Subordinated Debt
of the Company. The Indenture does not limit the incurrence or issuance of other
secured or unsecured debt of the Company, including Senior Debt and Subordinated
Debt, whether under the Indenture or any existing or other indenture that the
Company may enter into in the future or otherwise. The Indenture does not limit
the aggregate principal amount of Junior Subordinated Debentures which may be
issued thereunder and provides that the Junior Subordinated Debentures may be
issued from time to time in one or more series. The Junior Subordinated
Debentures are issuable in one or more series pursuant to an indenture
supplemental to the Indenture or a resolution of the Company's Board of
Directors or a special committee thereof (each, a "Supplemental Indenture").
In the event Junior Subordinated Debentures are issued to an ACMI Trust or
a trustee of such trust in connection with the issuance of Trust Preferred
Securities by such ACMI Trust, such Junior Subordinated Debentures subsequently
may be distributed pro rata to the holders of such Trust Preferred Securities in
connection with termination of such ACMI Trust upon the occurrence of certain
events described in the Prospectus Supplement relating to such Trust Preferred
Securities. Only one series of Junior Subordinated Debentures will be issued to
an ACMI Trust or a trustee of such trust in connection with the issuance of
Trust Preferred Securities by such ACMI Trust.
Reference is made to the accompanying Prospectus Supplement for the
following terms of the series of Junior Subordinated Debentures being offered
thereby: (i) the specific title of such Junior Subordinated Debentures; (ii) any
limit on the aggregate principal amount of such Junior Subordinated Debentures;
(iii) the date or dates on which the principal of such Junior Subordinated
Debentures is payable and the right, if any, to extend such date or dates; (iv)
the rate or rates at which such Junior Subordinated Debentures will bear
interest or the method of determination of such rate or rates; (v) the date or
dates from which such interest shall accrue, the interest payment dates on which
such interest will be payable or the manner of determination of such interest
payment dates and the record dates for the determination of holders to whom
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<PAGE> 129
interest is payable on any such interest payment dates; (vi) the right, if any,
to extend the interest payment periods and the duration of such extension; (vii)
the period or periods within which, the price or prices at which, and the terms
and conditions upon which, such Junior Subordinated Debentures may be redeemed,
in whole or in part, at the option of the Company; (viii) the right and/or
obligation, if any, of the Company to redeem or purchase such Junior
Subordinated Debentures pursuant to any sinking fund or analogous provisions or
at the option of the holder thereof and the period or periods during which, the
price or prices at which, and the terms and conditions upon which, such Junior
Subordinated Debentures shall be redeemed or purchased, in whole or in part,
pursuant to such right and/or obligation; (ix) the terms of subordination; (x)
if other than denominations of $10 or any integral multiple thereof, the
denominations in which such Junior Subordinated Debentures are issuable in a
global security, and in such case, the identity of the depositary.
The Indenture does not contain any provisions that afford holders of Junior
Subordinated Debentures protection in the event of a highly leveraged
transaction involving the Company.
SUBORDINATION
The Junior Subordinated Debentures will be subordinated and junior in right
of payment to certain other indebtedness of the Company to the extent set forth
in the accompanying Prospectus Supplement.
REGISTRATION, DENOMINATION AND TRANSFER
Junior Subordinated Debentures of each series will be issued in registered
form and in either certificated form or represented by one or more global
securities. Junior Subordinated Debentures of each series will initially be
registered in the name of the Property Trustee. If the Junior Subordinated
Debentures are distributed to holders of Trust Preferred Securities of an ACMI
Trust, it is anticipated that the depository arrangements for such series of
Junior Subordinated Debentures will be substantially identical to those in
effect for the Trust Preferred Securities of such ACMI Trust set forth in an
accompanying Prospectus Supplement.
Payments on any series of Junior Subordinated Debentures, whether
represented by a global certificate or issued in certificated form, will be made
in the manner described in the accompanying Prospectus Supplement relating to
such series of Junior Subordinated Debentures, as described under "Description
of the Trust Preferred Securities -- Global Trust Preferred Securities."
Junior Subordinated Debentures will be exchangeable for other Junior
Subordinated Debentures of like tenor, of any authorized denominations and of a
like aggregate principal amount.
Junior Subordinated Debentures of each series may be presented for exchange
as provided above, and may be presented for registration of transfer (with the
form of transfer endorsed thereon, or a satisfactory written instrument of
transfer, duly executed), at the office of the securities registrar (the
"Securities Registrar") appointed under the applicable Indenture or at the
office of any transfer agent designated by the Company for such purpose without
service charge and upon payment of any taxes and other governmental charges as
described in the applicable Indenture. The Company will appoint the Indenture
Trustee under the Indenture as the Securities Registrar for each series of
Junior Subordinated Debentures. The Company may at any time designate additional
transfer agents with respect to any series of Junior Subordinated Debentures.
In the event of any redemption, neither the Company nor the Indenture
Trustee shall be required to (i) issue, register the transfer of or exchange
Junior Subordinated Debentures of such series during a period beginning at the
opening of business 15 days before the day of selection for redemption of the
Junior Subordinated Debentures of such series to be redeemed and ending at the
close of business on the date of mailing of the relevant notice of redemption or
(ii) transfer or exchange any Junior Subordinated Debentures so selected for
redemption, except in the case of any Junior Subordinated Debentures being
redeemed in part, any portion thereof not to be redeemed.
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<PAGE> 130
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of and premium, if any, on any Junior Subordinated Debentures will
be made at the office of the Indenture Trustee, except that at the option of the
Company payment of any interest may be made (i) except in the case of Global
Junior Subordinated Debentures, by check mailed to the address of the person
entitled thereto as such address shall appear in the Securities Register, (ii)
by transfer to an account maintained by the person entitled thereto as specified
in the Securities Register, provided that proper transfer instructions have been
received by the regular record date or (iii) if the Junior Subordinated
Debentures are held by the Property Trustee, by agreement between the Company
and the Property Trustee. Payment of any interest on any Junior Subordinated
Debentures will be made to the person in whose name such Junior Subordinated
Debenture is registered at the close of business on the regular record date for
such interest. The Company may at any time designate additional Paying Agents or
rescind the designation of any Paying Agent; however, the Company will at all
times be required to maintain a Paying Agent in each place of payment for the
Junior Subordinated Debentures of each series. Any monies deposited with the
Indenture Trustee or any Paying Agent, or then held by the Company in trust, for
the payment of the principal of (and premium, if any) or interest on any Junior
Subordinated Debentures and remaining unclaimed for two years after such
principal, premium or interest has become due and payable shall, at the request
of the Company, be repaid to the Company and the holder of such Junior
Subordinated Debenture shall thereafter look, as a general unsecured creditor,
only to the Company for payment thereof.
GLOBAL SECURITIES
If any Junior Subordinated Debentures of a series are represented by one or
more global securities (each, a "Global Security"), the applicable Prospectus
Supplement will describe the circumstances, if any, under which beneficial
owners of interests in any such Global Security may exchange such interests for
Junior Subordinated Debentures of such series and of like tenor and principal
amount in any authorized form and denomination. Principal of and premium, if
any, and interest on a Global Security will be payable in the manner described
in the applicable Prospectus Supplement.
The specific terms of the depositary arrangement with respect to any
portion of a series of Junior Subordinated Debentures to be represented by a
Global Security will be described in the applicable Prospectus Supplement.
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting the Company and the Indenture
Trustee, with the consent of the holders of not less than a majority in
principal amount of the Junior Subordinated Debentures of each series which are
affected by the modification, to modify the Indenture or any supplemental
indenture affecting that series or the rights of the holders of that series of
Junior Subordinated Debentures; provided that no such modification may, without
the consent of the holder of each outstanding Junior Subordinated Debenture
affected thereby, (i) change or extend the fixed maturity of any Junior
Subordinated Debentures of any series, or reduce the principal amount thereof,
or reduce the rate or extend the time of payment of interest thereon, or reduce
any premium payable upon the redemption thereof, without the consent of the
holder of each Junior Subordinated Debenture so affected or (ii) reduce the
percentage of principal amount of Junior Subordinated Debentures the holders of
which are required to consent to any such supplemental indenture.
In addition, the Company and the Indenture Trustee may execute, without the
consent of any holder of Junior Subordinated Debentures, amend, waive or
supplement the Indenture for certain other specified purposes, including the
creation of any new series of Junior Subordinated Debentures.
DEBENTURE EVENTS OF DEFAULT
With respect to a particular series of Junior Subordinated Debentures, the
Indenture provides (or the Supplemental Indenture for such series will provide)
that any one or more of the following described events
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which has occurred and is continuing constitutes a "Debenture Event of Default"
with respect to such series of Junior Subordinated Debentures:
(i) failure for 30 days to pay any interest on the Junior Subordinated
Debentures of that series, when due (subject to the deferral of any due
date in the case of an Extension Period); or
(ii) failure to pay any principal on the Junior Subordinated
Debentures of that series when due whether at maturity, upon redemption, by
declaration or otherwise; or
(iii) failure to observe or perform in any material respect certain
other covenants contained in the Indenture (other than those specifically
relating to another series) for 90 days after written notice to the Company
from the Indenture Trustee or to the Company and the Indenture Trustee by
the holders of at least 25% in aggregate outstanding principal amount of
the Junior Subordinated Debentures of that series; or
(iv) certain events in bankruptcy, insolvency or reorganization of the
Company.
The holders of a majority in aggregate outstanding principal amount of any
series of Junior Subordinated Debentures have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Indenture Trustee for the series. The Indenture Trustee or the holders of not
less than 25% in aggregate outstanding principal amount of the Junior
Subordinated Debentures of that series may declare the principal due and payable
immediately upon a Debenture Event of Default. If the Indenture Trustee or the
holders of the Junior Subordinated Debentures of that series fail to make such
declaration, the holders of at least 25% in aggregate Liquidation Amount of the
Trust Preferred Securities of that series shall have such right. The holders of
a majority in aggregate outstanding principal amount of the Junior Subordinated
Debentures of that series may annul such declaration and waive the default if
the default (other than the non-payment of the principal of the Junior
Subordinated Debentures of that series which has become due solely by such
acceleration) has been cured and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by acceleration has
been deposited with the Indenture Trustee. Should the holders of the Junior
Subordinated Debentures of that series fail to annul such declaration and waive
such default, the holders of a majority in aggregate Liquidation Amount of the
Trust Preferred Securities of the ACMI Trust related to that series of Junior
Subordinated Debentures shall have such right.
The holders of a majority in aggregate outstanding principal amount of any
series of Junior Subordinated Debentures affected thereby may, on behalf of the
holders of all the Junior Subordinated Debentures of that series, waive any past
default, except a default in the payment of principal or interest (unless such
default has been cured and a sum sufficient to pay all matured installments of
interest and principal due otherwise than by acceleration has been deposited
with the Indenture Trustee) or a default in respect of a covenant or provision
which under the Indenture cannot be modified or amended without the consent of
the holder of each outstanding Junior Subordinated Debenture of such series.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF TRUST PREFERRED SECURITIES
If a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of the Company to pay interest, principal
or premium (if any) on a series of Junior Subordinated Debentures on the date
such interest, principal or premium is otherwise payable, a holder of Trust
Preferred Securities of the ACMI Trust related to that series of Junior
Subordinated Debentures may institute a legal proceeding directly against the
Company for enforcement of payment to such holder of the principal of or
interest on such Junior Subordinated Debentures having a principal amount equal
to the aggregate premium (if any) or Liquidation Amount of the Trust Preferred
Securities of such holder (a "Direct Action"). The Company may not amend the
Indenture to remove the foregoing right to bring a Direct Action without the
prior written consent of the holders of all of the Trust Preferred Securities
outstanding. The Company shall have the right under the Indenture to set off any
payment made to such holder of Trust Preferred Securities by the Company in
connection with a Direct Action.
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The holders of the Trust Preferred Securities will not be able to exercise
directly any remedies other than those set forth in the preceding paragraph
available to the holders of the Junior Subordinated Debentures unless there
shall have been an event of default under the Trust Agreement.
CONSOLIDATION, MERGER AND SALE
The Indenture provides that 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 (i) in case the Company
consolidates with or merges into another Person or conveys, transfers or leases
its properties and assets substantially as an entirety to any Person, the
successor Person is organized under the laws of the United States or any state
or the District of Columbia, and such successor Person expressly assumes the
Company's obligations on the Junior Subordinated Debentures of any series issued
under the Indenture; (ii) immediately after giving effect thereto, 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 occurred and be
continuing; and (iii) certain 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
similar transaction involving the Company that may adversely affect holders of
the Junior Subordinated Debentures.
SATISFACTION AND DISCHARGE
The Indenture provides that when, among other things, all Junior
Subordinated Debentures of a series not previously delivered to the Indenture
Trustee for cancellation (i) have become due and payable or (ii) will become due
and payable at their Stated Maturity within one year, and the Company deposits
or causes to be deposited with the Indenture Trustee funds, in trust, for the
purpose and in an amount in the currency or currencies in which the Junior
Subordinated Debentures of such series are payable sufficient to pay and
discharge the entire indebtedness on the Junior Subordinated Debentures of such
series not previously delivered to the Indenture Trustee for cancellation, for
the principal and interest to the date of the deposit or to the Stated Maturity,
as the case may be, then the Indenture will cease to be of further effect
(except as to the Company's obligations to pay all other sums due pursuant to
the Indenture with respect to such series of Junior Subordinated Debentures and
to provide the officers' certificates and opinions of counsel described therein)
and the Company will be deemed to have satisfied and discharged the Indenture
with respect to such series.
COVENANTS OF THE COMPANY
The Company will covenant in the Indenture, as to the Junior Subordinated
Debentures of a series, that if and so long as (i) the Property Trustee on
behalf of an ACMI Trust is the holder of all such Junior Subordinated
Debentures, (ii) a Tax Event in respect of such ACMI Trust has occurred and is
continuing and (iii) the Company has elected, and has not revoked such election,
to pay Additional Sums in respect of the Trust Preferred Securities of such ACMI
Trust, the Company will pay to such ACMI Trust such Additional Sums. The Company
also will covenant, as to the Junior Subordinated Debentures of each series, (i)
to maintain directly or indirectly 100% ownership of the Common Securities of
such ACMI Trust to which any series of Junior Subordinated Debentures have been
issued, provided that certain successors which are permitted to do so pursuant
to the Indenture may succeed to the Company's ownership of the Common
Securities, (ii) not to voluntarily dissolve, wind up or liquidate such ACMI
Trust, except (a) in connection with a distribution of Junior Subordinated
Debentures to the holders of the Trust Preferred Securities of such ACMI Trust
in liquidation of such ACMI Trust or (b) in connection with certain mergers,
consolidations, or amalgamations permitted by the Trust Indenture and (iii) to
use its reasonable efforts, consistent with the terms and provisions of the
Trust Indenture, to cause such ACMI Trust to remain classified as a grantor
trust and not an association taxable as a corporation for United States federal
income tax purposes.
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GOVERNING LAW
The Indenture and the Junior Subordinated Debentures will be governed by
and construed in accordance with the laws of the State of California, except
that the immunities and standard of care of the Indenture Trustee will be
governed by Delaware law.
INFORMATION CONCERNING THE INDENTURE TRUSTEE
The Indenture Trustee shall have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to such provisions, the Indenture Trustee is under no
obligation to exercise any of the powers vested in it by the Indenture at the
request of any holder of Junior Subordinated Debentures of a series, unless
offered reasonable indemnity by such holder against the costs, expenses and
liabilities which might be incurred thereby. The Indenture 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 Indenture Trustee reasonably
believes that repayment or adequate indemnity is not reasonably assured to it.
PLAN OF DISTRIBUTION
The Company may sell any series of Junior Subordinated Debentures and the
ACMI Trusts may sell the Trust Preferred Securities in one or more of the
following ways from time to time: (i) to or through underwriters or dealers,
(ii) directly to purchasers or (iii) through agents. The Prospectus Supplement
with respect to any Offered Securities will set forth (i) the terms of the
offering of such Offered Securities, including the name or names of any
underwriters, dealers or agents, (ii) the purchase price of such Offered
Securities and the proceeds to the Company or the applicable ACMI Trust, as the
case may be, from such sale, (iii) any underwriting discounts and commissions or
agency fees and other items constituting underwriters' or agents' compensation,
(iv) any initial public offering prices, (v) any discounts or concessions
allowed or reallowed or paid to dealers and (vi) any securities exchange or
other securities market on which such Offered Securities may be listed.
If underwriters are used in the sale, the Offered Securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
The Offered Securities may be offered to the public either through underwriting
syndicates represented by one or more managing underwriters or directly by one
or more firms acting as underwriters. The underwriter or underwriters with
respect to a particular underwritten offering of Offered Securities will be
named in the Prospectus Supplement relating to such offering and, if any
underwriting syndicate is used, the managing underwriter or underwriters will be
set forth on the cover of the Prospectus Supplement. Unless otherwise set forth
in the Prospectus Supplement relating thereto, the obligations of the
underwriters to purchase the Offered Securities will be subject to certain
conditions precedent, and the underwriters will be obligated to purchase all the
Offered Securities if any are purchased.
If dealers are utilized in the sale of Offered Securities, the Company or
the applicable ACMI Trust will sell such Offered Securities to the dealers as
principals. The dealers may then resell such Offered Securities to the public at
varying prices to be determined by such dealers at the time of resale. The names
of the dealers and the terms of the transaction will be set forth in the
Prospectus Supplement relating thereto.
Any series of Junior Subordinated Debentures may be sold from time to time
either directly by the Company or through agents designated by the Company. Any
series of Trust Preferred Securities may be sold from time to time either
directly by the applicable ACMI Trust or by agents of the applicable ACMI Trust
designated by such ACMI Trust. Any agent involved in the offer or sale of the
Offered Securities in respect to which this Prospectus is delivered will be
named, and any commissions payable by the Company or the applicable ACMI Trust
to such agent will be set forth, in the Prospectus Supplement relating thereto.
Unless otherwise indicated in the Prospectus Supplement, any such agent will be
acting on a best efforts basis for the period of its appointment.
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The Junior Subordinated debentures may be sold directly by the Company and
the Trust Preferred Securities may be sold directly by the applicable ACMI Trust
to institutional investors or others who may be deemed to be underwriters within
the meaning of the Securities Act with respect to any resale thereof. The terms
of any such sales will be described in the Prospectus Supplement relating
thereto.
If so indicated in the Prospectus Supplement, the Company or the applicable
ACMI Trust will authorize agents, underwriters or dealers to solicit offers from
certain types of institutions to purchase Offered Securities from the Company or
such ACMI Trust at the public offering price set forth in the Prospectus
Supplement pursuant to delayed delivery contracts providing for payment and
delivery on a specified date in the future. Such contracts will be subject only
to those conditions set forth in the Prospectus Supplement, and the Prospectus
Supplement will set forth the commission payable for solicitation of such
contracts.
Underwriters, dealers and agents may be entitled under agreements entered
into with the Company or the applicable ACMI Trust (or both) to indemnification
by the Company or such ACMI Trust (or both) against certain civil liabilities,
including liabilities under the Securities Act, or to contribution with respect
to payments which such underwriters, dealers or agents may be required to make
in respect thereof. Underwriters, dealers and agents may be customers of, engage
in transactions with, or perform services for the Company and its affiliates in
the ordinary course of business.
Each series of Offered Securities will be a new issue of securities and
will have no established trading market. Any underwriters to whom Offered
Securities are sold by the Company or by an ACMI Trust for public offering and
sale may make a market in such Offered Securities, but such underwriters will
not be obligated to do so and may discontinue any market making at any time
without notice. The Offered Securities may or may not be listed on a national
securities exchange. No assurance can be given that there will be a market for
the Offered Securities.
LEGAL MATTERS
The validity of the Guarantees and the Junior Subordinated Debentures will
be passed upon for the Company by Cooley Godward LLP, counsel to the Company.
Certain matters of Delaware law relating to the validity of the Trust Preferred
Securities, the enforceability of the Trust Agreement and the creation of the
Trust will be passed upon by Richards, Layton & Finger, P.A., Wilmington,
Delaware, special Delaware counsel to the Company and the Trust. Richards,
Layton & Finger, P.A., will also pass on certain matters on behalf of Wilmington
Trust Company in connection with the offering. Cooley Godward LLP will rely on
the opinions of Richards, Layton & Finger, P.A. as to certain matters of
Delaware law. Certain matters relating to United States federal income tax
considerations will be passed upon for the Company by Cooley Godward LLP.
EXPERTS
The financial statements of the Company as of December 31, 1996 and 1997,
and for each of the years in the three-year period ended December 31, 1997 have
been included herein and in the registration statement in reliance upon the
report of KPMG Peat Marwick LLP, independent certified public accountants,
appearing elsewhere herein, and upon the authority of said firm as experts in
accounting and auditing.
The Combined Balance Sheets of Suncoast Toys, Inc., NW Toys Co. and Oregon
Coin Company as of December 31, 1996 and 1997 and the Combined Statements of
Income, Stockholders' Equity and Cash Flows for each of the three years in the
period ended December 31, 1997 included in the Prospectus Supplement have been
included herein in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of that firm as experts in
accounting and auditing.
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Inside back cover: American Coin Merchandising, Inc. logo; caption "Kiddie
Rides" over a picture of a kiddie ride shaped like an apple and a picture of
another kiddie ride shaped like Spiderman over the caption "Examples of the
Company's Licensed Kiddie Rides."
Picture of a bulk vending machine with various items inside the machines over
the caption "Electronic Bulk Vending Machines."
<PAGE> 136
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NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY AMERICAN COIN MERCHANDISING, INC., AMERICAN COIN MERCHANDISING TRUST I OR THE
UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN
OFFER TO SELL OR THE SOLICITATION OF ANY OFFER TO BUY ANY SECURITY OTHER THAN
THE SECURITIES OFFERED BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS, NOR
DOES IT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF ANY OFFER TO BUY THE
SECURITIES BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS
NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Prospectus Summary............................ S-5
Risk Factors.................................. S-14
Use of Proceeds............................... S-24
Accounting Treatment.......................... S-24
Capitalization................................ S-25
Selected Financial and Operating Data......... S-26
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................. S-29
Business...................................... S-36
Management.................................... S-46
Principal Stockholders........................ S-49
Description of the Trust Preferred
Securities.................................. S-51
Description of the Junior Subordinated
Debentures.................................. S-63
Book-Entry Issuance........................... S-71
Description of the Guarantee.................. S-72
Expense Agreement............................. S-74
Relationship among the Trust Preferred
Securities, the Junior Subordinated
Debentures and the Guarantee................ S-75
Material Federal Income Tax Consequences...... S-77
ERISA Considerations.......................... S-81
Underwriting.................................. S-83
Legal Matters................................. S-84
Experts....................................... S-84
Index to Financial Statements................. F-1
PROSPECTUS
Available Information......................... 2
Incorporation of Documents by Reference....... 3
The Company................................... 3
The American Coin Merchandising Trusts........ 3
Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends............... 4
Use of Proceeds............................... 4
Description of the Trust Preferred
Securities.................................. 5
Description of the Guarantees................. 6
Expense Agreement............................. 8
Description of the Junior Subordinated
Debentures.................................. 8
Plan of Distribution.......................... 13
Legal Matters................................. 14
Experts....................................... 14
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
5,000,000 TRUST PREFERRED SECURITIES
AMERICAN COIN
MERCHANDISING
TRUST I
% CUMULATIVE TRUST
TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $10 PER
TRUST PREFERRED SECURITY)
FULLY AND UNCONDITIONALLY
GUARANTEED BY
AMERICAN COIN LOGO
--------------------
PROSPECTUS SUPPLEMENT
--------------------
EVEREN SECURITIES, INC.
PRUDENTIAL SECURITIES INCORPORATED
LADENBURG THALMANN & CO. INC.
, 1998
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<PAGE> 137
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
Registration fee............................................ $ 29,500
American Stock Exchange listing fee......................... 27,500
Blue sky qualification fee and expenses..................... 5,000
NASD filing fee............................................. 10,500
Printing and engraving expenses............................. 200,000
Legal fees and expenses..................................... 150,000
Accounting fees and expenses................................ 75,000
Miscellaneous............................................... 52,500
--------
Total............................................. $550,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Under Section 145 of the Delaware General Corporation Law, the Company has
broad powers to indemnify its directors and officers against liabilities they
may incur in such capacities, including liabilities under the Securities Act of
1933, as amended (the "Securities Act"). The Company's Bylaws also provide that
the Company will indemnify its directors and officers and may indemnify its
employees and other agents to the fullest extent not prohibited by Delaware law.
The Company's Certificate of Incorporation provides for the elimination of
liability for monetary damages for breach of the directors' fiduciary duty of
care to the Company and its stockholders. These provisions do not eliminate the
directors' duty of care and, in appropriate circumstances, equitable remedies
such an injunctive or other forms of non- monetary relief will remain available
under Delaware law. In addition, each director will continue to be subject to
liability for breach of the director's duty of loyalty to the Company, for acts
or omissions not in good faith or involving intentional misconduct, for knowing
violations of law, for any transaction from which the director derived an
improper personal benefit, and for payment of dividends or approval of stock
repurchases or redemptions that are unlawful under Delaware law. The provision
does not affect a director's responsibilities under any other laws, such as the
federal securities laws or state or federal environmental laws.
The Company has entered into agreements with its directors and executive
officers that require the Company to indemnify such persons against expenses,
judgments, fines, settlements and other amounts actually and reasonably incurred
(including expenses of a derivative action) in connection with any proceeding,
whether actual or threatened, to which any such person may be made a party by
reason of the fact that such person is or was a director or officer of the
Company or any of its affiliated enterprises, provided 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 criminal proceeding,
had no reasonable cause to believe his or her conduct was unlawful. The
indemnity agreements also set forth certain procedures that will apply in the
event of a claim for indemnification thereunder.
The Underwriting Agreement filed as Exhibit 1.1 to this Registration
Statement provides for indemnification by the Underwriters of the Registrants
and its officers and directors for certain liabilities arising under the
Securities Act or otherwise.
II-1
<PAGE> 138
ITEM 16. EXHIBITS
<TABLE>
<C> <S>
1.1 -- Form of Underwriting Agreement.
4.1* -- Certificate of Trust of American Coin Merchandising Trust
I.
4.2* -- Certificate of Trust of American Coin Merchandising Trust
II.
4.3* -- Certificate of Trust of American Coin Merchandising Trust
III.
4.4* -- Certificate of Trust of American Coin Merchandising Trust
IV.
4.5* -- Trust Agreement of American Coin Merchandising Trust I.
4.6* -- Trust Agreement of American Coin Merchandising Trust II.
4.7* -- Trust Agreement of American Coin Merchandising Trust III.
4.8* -- Trust Agreement of American Coin Merchandising Trust IV.
4.9 -- Amended and Restated Trust Agreement of American Coin
Merchandising Trust I.
4.10 -- Form of Junior Subordinated Indenture between the
Registrant and Wilmington Trust Company, as Trustee.
4.11 -- Form of Guarantee Agreement with respect to Trust
Preferred Securities of American Coin Merchandising Trust
I.
4.12 -- Form of Agreement as to Expenses and Liabilities between
the Registrant and American Coin Merchandising Trust I.
4.13 -- Form of Certificate Evidencing Trust Preferred
Securities.
4.14 -- Form of Certificate Evidencing Trust Common Securities.
4.15 -- Form of % Junior Subordinate Deferrable Interest
Debenture.
4.16 -- Form of Officer's Certificate and Company Order.
5.1 -- Opinion of Cooley Godward LLP regarding the legality of
the securities being registered.
5.2 -- Opinion of Richards, Layton & Finger, P.A. regarding the
validity under Delaware law of the securities being
registered.
8 -- Opinion of Cooley Godward LLP regarding certain tax
matters.
10.36* -- Reducing Revolving Loan Agreement between the Registrant
and Wells Fargo Bank, N.A., dated as of June 10, 1998.
10.37* -- Amendment No. 1 to the Reducing Revolving Loan Agreement,
dated June 30, 1998.
12 -- Calculation of Ratios of Earnings to Combined Fixed
Charges and Preferred Stock Dividends of the Company.
23.1 -- Consent of KPMG Peat Marwick LLP.
23.2 -- Consent of PricewaterhouseCoopers LLP.
23.3 -- Consents of Cooley Godward LLP and Richards, Layton &
Finger, P.A. (included in Exhibit 5.1 and Exhibit 5.2).
24 -- Powers of Attorney (included on pages II-6, II-7, II-8,
II-9 and II-10.
25.1 -- Statement of Eligibility of Wilmington Trust Company, as
Trustee for the Indenture, on Form T-1.
25.2 -- Statement of Eligibility of Wilmington Trust Company, as
Trustee for Trust Preferred Securities of American Coin
Merchandising Trust I, on Form T-1.
25.3 -- Statement of Eligibility of Wilmington Trust Company, as
Trustee for Trust Preferred Securities of American Coin
Merchandising Trust II, on Form T-1.
</TABLE>
II-2
<PAGE> 139
<TABLE>
<C> <S>
25.4 -- Statement of Eligibility of Wilmington Trust Company, as
Trustee for Trust Preferred Securities of American Coin
Merchandising Trust III, on Form T-1.
25.5 -- Statement of Eligibility of Wilmington Trust Company, as
Trustee for Trust Preferred Securities of American Coin
Merchandising Trust IV, on Form T-1.
25.6 -- Statement of Eligibility of Wilmington Trust Company, as
Trustee for Guarantee of Trust Preferred Securities of
American Coin Merchandising Trust I, on Form T-1.
25.7 -- Statement of Eligibility of Wilmington Trust Company, as
Trustee for Guarantee of Trust Preferred Securities of
American Coin Merchandising Trust II, on Form T-1.
25.8 -- Statement of Eligibility of Wilmington Trust Company, as
Trustee for Guarantee of Trust Preferred Securities of
American Coin Merchandising Trust III, on Form T-1.
25.9 -- Statement of Eligibility of Wilmington Trust Company, as
Trustee for Guarantee of Trust Preferred Securities of
American Coin Merchandising Trust IV, on Form T-1.
</TABLE>
- ---------------
* Previously filed
ITEM 17. UNDERTAKINGS
THE UNDERSIGNED REGISTRANTS HEREBY UNDERTAKE:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(5) The undersigned registrant hereby undertakes to provide to the
underwriter at the closing specified in the underwriting agreements certificates
in such denominations and registered in such names as required by the
underwriter to permit prompt delivery to each purchaser.
(6) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of a
registration statement in reliance upon Rule 430A and contained
II-3
<PAGE> 140
in the form of prospectus filed by the registrant pursuant to Rule 424(b)(i) or
(4) or 497(h) under the Securities Act shall be deemed to be part of the
registration statement as of the time it was declared effective.
(7) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the 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 Securities Act of 1933 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
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
II-4
<PAGE> 141
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, 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 Amendment
No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boulder, State of
Colorado, on August 18, 1998.
AMERICAN COIN MERCHANDISING,
INC.
By /s/ JEROME M. LAPIN
-----------------------------------
Name: Jerome M. Lapin
Title: Chairman of the Board,
President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended, 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 Amendment
No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boulder, State of
Colorado, on August 18, 1998.
AMERICAN COIN MERCHANDISING TRUST I
By /s/ JEROME M. LAPIN
-----------------------------------
Name: Jerome M. Lapin
Title: Trustee
By /s/ W. JOHN CASH
-----------------------------------
Name: W. John Cash
Title: Trustee
II-5
<PAGE> 142
Pursuant to the requirements of the Securities Act of 1933, as amended, 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 Amendment
No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boulder, State of
Colorado, on August 18, 1998.
AMERICAN COIN MERCHANDISING
TRUST II
By /s/ JEROME M. LAPIN
-----------------------------------
Name: Jerome M. Lapin
Title: Trustee
By /s/ W. JOHN CASH
-----------------------------------
Name: W. John Cash
Title: Trustee
Pursuant to the requirements of the Securities Act of 1933, as amended, 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 Amendment
No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boulder, State of
Colorado, on August 18, 1998.
AMERICAN COIN MERCHANDISING
TRUST III
By: /s/ JEROME M. LAPIN
----------------------------------
Name: Jerome M. Lapin
Title: Trustee
By: /s/ W. JOHN CASH
----------------------------------
Name: W. John Cash
Title: Trustee
II-6
<PAGE> 143
Pursuant to the requirements of the Securities Act of 1933, as amended, 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 Amendment
No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boulder, State of
Colorado, on August 18, 1998.
AMERICAN COIN MERCHANDISING
TRUST IV
By: /s/ JEROME M. LAPIN
----------------------------------
Name: Jerome M. Lapin
Title: Trustee
By: /s/ W. JOHN CASH
--------------------------------
Name: W. John Cash
Title: Trustee
II-7
<PAGE> 144
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 to the Registration Statement has been signed by the
following persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JEROME M. LAPIN Chairman of the Board, President August 18, 1998
- ----------------------------------------------------- and Chief Executive Officer,
Jerome M. Lapin American Coin Merchandising,
Inc.
/s/ W. JOHN CASH* Vice President, Chief Financial August 18, 1998
- ----------------------------------------------------- Officer and Treasurer (Principal
W. John Cash Financial and Accounting
Officer)
/s/ RANDALL J. FAGUNDO* Vice President of Operations August 18, 1998
- ----------------------------------------------------- Secretary and Director
Randall J. Fagundo
/s/ ABBE M. STUTSMAN* Vice President of Product August 18, 1998
- ----------------------------------------------------- Development and Purchasing and
Abbe M. Stutsman Director
/s/ J. GREGORY THEISEN* Director August 18, 1998
- -----------------------------------------------------
J. Gregory Theisen
/s/ RICHARD D. JONES* Director August 18, 1998
- -----------------------------------------------------
Richard D. Jones
/s/ JIM D. BALDWIN* Director August 18, 1998
- -----------------------------------------------------
Jim D. Baldwin
/s/ JOHN A. SULLIVAN* Director August 18, 1998
- -----------------------------------------------------
John A. Sullivan
*By: /s/ JEROME M. LAPIN August 18, 1998
------------------------------------------------
Jerome M. Lapin
Attorney-in-Fact
</TABLE>
II-8
<PAGE> 145
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 to the Registration Statement has been signed by the
following persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JEROME M. LAPIN Trustee of American Coin August 18, 1998
- ----------------------------------------------------- Merchandising Trust I
Jerome M. Lapin
/s/ W. JOHN CASH Trustee of American Coin August 18, 1998
- ----------------------------------------------------- Merchandising Trust I
W. John Cash
</TABLE>
II-9
<PAGE> 146
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 to the Registration Statement has been signed by the
following persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JEROME M. LAPIN Trustee of American Coin August 18, 1998
- ----------------------------------------------------- Merchandising Trust II
Jerome M. Lapin
/s/ W. JOHN CASH Trustee of American Coin August 18, 1998
- ----------------------------------------------------- Merchandising Trust II
W. John Cash
</TABLE>
II-10
<PAGE> 147
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 to the Registration Statement has been signed by the
following persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JEROME M. LAPIN Trustee of American Coin August 18, 1998
- ----------------------------------------------------- Merchandising Trust III
Jerome M. Lapin
/s/ W. JOHN CASH Trustee of American Coin August 18, 1998
- ----------------------------------------------------- Merchandising Trust III
W. John Cash
</TABLE>
II-11
<PAGE> 148
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 to the Registration Statement has been signed by the
following persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JEROME M. LAPIN Trustee of American Coin August 18, 1998
- ----------------------------------------------------- Merchandising Trust IV
Jerome M. Lapin
/s/ W. JOHN CASH Trustee of American Coin August 18, 1998
- ----------------------------------------------------- Merchandising Trust IV
W. John Cash
</TABLE>
II-12
<PAGE> 149
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
1.1 -- Form of Underwriting Agreement.
4.1* -- Certificate of Trust of American Coin Merchandising Trust
I.
4.2* -- Certificate of Trust of American Coin Merchandising Trust
II.
4.3* -- Certificate of Trust of American Coin Merchandising Trust
III.
4.4* -- Certificate of Trust of American Coin Merchandising Trust
IV.
4.5* -- Trust Agreement of American Coin Merchandising Trust I.
4.6* -- Trust Agreement of American Coin Merchandising Trust II.
4.7* -- Trust Agreement of American Coin Merchandising Trust III.
4.8* -- Trust Agreement of American Coin Merchandising Trust IV.
4.9 -- Amended and Restated Trust Agreement of American Coin
Merchandising Trust I.
4.10 -- Form of Junior Subordinated Indenture between the
Registrant and Wilmington Trust Company, as Trustee.
4.11 -- Form of Guarantee Agreement with respect to Trust
Preferred Securities of American Coin Merchandising Trust
I.
4.12 -- Form of Agreement as to Expenses and Liabilities between
the Registrant and American Coin Merchandising Trust I.
4.13 -- Form of Certificate Evidencing Trust Preferred
Securities.
4.14 -- Form of Certificate Evidencing Trust Common Securities.
4.15 -- Form of % Junior Subordinate Deferrable Interest
Debenture.
4.16 -- Form of Officer's Certificate and Company Order.
5.1 -- Opinion of Cooley Godward LLP regarding the legality of
the securities being registered.
5.2 -- Opinion of Richards, Layton & Finger, P.A. regarding the
validity under Delaware law of the securities being
registered.
8 -- Opinion of Cooley Godward LLP regarding certain tax
matters.
10.36* -- Reducing Revolving Loan Agreement between the Registrant
and Wells Fargo Bank, N.A., dated as of June 10, 1998.
10.37* -- Amendment No. 1 to the Reducing Revolving Loan Agreement,
dated June 30, 1998.
12 -- Calculation of Ratios of Earnings to Combined Fixed
Charges and Preferred Stock Dividends of the Company.
23.1 -- Consent of KPMG Peat Marwick LLP.
23.2 -- Consent of PricewaterhouseCoopers LLP.
23.3 -- Consents of Cooley Godward LLP and Richards, Layton &
Finger, P.A. (included in Exhibit 5.1 and Exhibit 5.2).
24 -- Powers of Attorney (included on pages II-6, II-7, II-8,
II-9 and II-10.
25.1 -- Statement of Eligibility of Wilmington Trust Company, as
Trustee for the Indenture, on Form T-1.
25.2 -- Statement of Eligibility of Wilmington Trust Company, as
Trustee for Trust Preferred Securities of American Coin
Merchandising Trust I, on Form T-1.
25.3 -- Statement of Eligibility of Wilmington Trust Company, as
Trustee for Trust Preferred Securities of American Coin
Merchandising Trust II, on Form T-1.
25.4 -- Statement of Eligibility of Wilmington Trust Company, as
Trustee for Trust Preferred Securities of American Coin
Merchandising Trust III, on Form T-1.
</TABLE>
<PAGE> 150
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
25.5 -- Statement of Eligibility of Wilmington Trust Company, as
Trustee for Trust Preferred Securities of American Coin
Merchandising Trust IV, on Form T-1.
25.6 -- Statement of Eligibility of Wilmington Trust Company, as
Trustee for Guarantee of Trust Preferred Securities of
American Coin Merchandising Trust I, on Form T-1.
25.7 -- Statement of Eligibility of Wilmington Trust Company, as
Trustee for Guarantee of Trust Preferred Securities of
American Coin Merchandising Trust II, on Form T-1.
25.8 -- Statement of Eligibility of Wilmington Trust Company, as
Trustee for Guarantee of Trust Preferred Securities of
American Coin Merchandising Trust III, on Form T-1.
25.9 -- Statement of Eligibility of Wilmington Trust Company, as
Trustee for Guarantee of Trust Preferred Securities of
American Coin Merchandising Trust IV, on Form T-1.
</TABLE>
- ---------------
* Previously filed
<PAGE> 1
EXHIBIT 1.1
- --------------------------------------------------------------------------------
5,000,000 SHARES
AMERICAN COIN MERCHANDISING TRUST I
(A DELAWARE BUSINESS TRUST)
____% CUMULATIVE TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT OF $10 PER TRUST PREFERRED SECURITY)
UNDERWRITING AGREEMENT
AUGUST , 1998
--
EVEREN SECURITIES, INC.
PRUDENTIAL SECURITIES INCORPORATED
AND
LADENBURG THALMANN & CO. INC.
- --------------------------------------------------------------------------------
<PAGE> 2
5,000,000 Shares
American Coin Merchandising Trust I
(a Delaware Business Trust)
____% Cumulative Trust Preferred Securities
(Liquidation Amount of $10 per Trust Preferred Security)
UNDERWRITING AGREEMENT
August , 1998
--
EVEREN Securities, Inc.
Prudential Securities Incorporated
Ladenburg Thalmann & Co. Inc.
As Representatives of
the Several Underwriters
c/o EVEREN Securities, Inc.
77 West Wacker Drive
Chicago, Illinois 60601-1994
Ladies and Gentlemen:
American Coin Merchandising, Inc., a Delaware corporation (the
"Company"), and its financing subsidiary, American Coin Merchandising Trust I, a
Delaware business trust (the "Trust," and together with the Company, the
"Offerors"), confirm their agreements with the several underwriters listed in
Schedule I hereto (the "Underwriters"), for whom EVEREN Securities, Inc.,
Prudential Securities Incorporated and Ladenburg Thalmann & Co. Inc.
(collectively, the "Representatives") have been duly authorized to act as
representatives, as follows:
1. The Shares. Subject to the terms and conditions set forth in
this agreement (the "Agreement"), the Trust proposes to issue and sell to the
Underwriters 5,000,000 shares of ____% Cumulative Trust Preferred Securities
having a Liquidation Amount of $10 per share (the "Trust Preferred
Securities"), to be issued under the Trust Agreement (as defined below), the
terms of which are more fully described in the Prospectus (as defined below).
Such 5,000,000 shares of Trust Preferred Securities proposed to be sold by the
Trust are hereinafter referred to as the "Firm Shares." The Trust also proposes
to grant to the Underwriters an option to purchase up to 750,000 additional
shares of Trust Preferred Securities (the "Additional Shares") solely for the
purpose of covering overallotments, if any, if requested by the Underwriters as
provided in
A-1
<PAGE> 3
Section 3 hereof. The Firm Shares and the Additional Shares are herein
collectively called the "Shares."
The Offerors hereby confirm their agreements with the
Underwriters as follows:
2. Registration Statement and Prospectus. 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 (the "Act"), and the rules and regulations of the Commission
thereunder (the "Rules and Regulations"), a registration statement on Form S-3
(File No. 333-60267) including a prospectus, relating to the Shares, the ____%
Junior Subordinated Deferrable Interest Debentures due 2028 of the Company (the
"Debentures"), and the Guarantee pursuant to the Guarantee Agreement (as
defined below) for the benefit of the Trust Preferred Securities (the
"Guarantee"). To the extent the registration statement has been amended, each
such amendment has been prepared and filed with the Commission. The
registration statement, as amended, by such filing with the Commission, at the
time when it became effective, and any registration statement filed with the
Commission pursuant to Rule 462(b) under the Act, at the time when it becomes
effective, including all financial schedules and exhibits thereto, all
documents incorporated or deemed to be incorporated by reference therein and
all of the information (if any) deemed to be part of the registration statement
at the time of effectiveness pursuant to Rule 430A under the Act ("Rule 430A"),
is hereinafter referred to as the "Registration Statement;" the prospectus
supplement, dated the date hereof and containing the public offering price of
the Shares, the underwriting discounts and commissions, the plan of
distribution of the Shares and such other information as may be required by the
Act, the Rules and Regulations promulgated thereunder or as the Representatives
and the Company deem appropriate (the "Prospectus Supplement"), and the related
prospectus dated ________, 1998 (the "Base Prospectus"), each in the form
first provided to the Underwriters by the Offerors for use in connection with
the offering and sale of the Shares (whether or not required to be filed
pursuant to Rule 424(b) under the Act ("Rule 424(b)") and including all
documents incorporated or deemed to be incorporated by reference therein, are
hereinafter referred to collectively as the "Prospectus," provided that in the
event any revised prospectus supplement shall be provided to the Underwriters
by the Offerors for use in connection with the offering of the Shares that
differs from the Prospectus (whether or not any such revised prospectus is
required to be filed by the Offerors pursuant to Rule 424(b) under the Act),
the term "Prospectus" shall refer to the revised prospectus supplement from and
after the time it is first provided to the Underwriters for such use; and each
preliminary prospectus included in the Registration Statement prior to the time
it became or becomes effective is herein referred to as a "Preliminary
Prospectus." Unless the context otherwise requires, all references in this
Agreement to documents, financial statements and schedules and other
information which is "contained," "included," "stated," "described in" or
"referred to" in the Registration Statement or the Prospectus (and all other
references of like import) shall be deemed to mean and include all such
documents, financial statements and schedules and other information which is or
is deemed to be incorporated by reference in the Registration Statement or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement or the Prospectus shall
be deemed to mean and include the filing of any document under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), after the date of this
Agreement which is or is deemed
A-2
<PAGE> 4
to be incorporated by reference in the Registration Statement or the
Prospectus, as the case may be.
3. Agreements to Sell and Purchase.
(a) On the basis of the representations and warranties
contained in this Agreement, and subject to the terms and conditions hereof:
(i) the Offerors, jointly and severally, agree that the Trust will issue and
sell to the Underwriters, at a price of $10 per Share (the "Purchase Price"),
5,000,000 newly issued Firm Shares; and (ii) each Underwriter agrees, severally
and not jointly, to purchase from the Trust, at the Purchase Price, the
aggregate number of Firm Shares set forth opposite the name of such Underwriter
in Schedule I hereto.
(b) On the basis of the representations and warranties
contained in this Agreement, and subject to the terms and conditions hereof:
(i) the Offerors, jointly and severally, agree that the Trust will issue and
sell to the Underwriters, at the Purchase Price, up to 750,000 newly issued
Additional Shares; and (ii) the Underwriters shall have the right to purchase,
severally and not jointly, from time to time as provided in Section 4(b) below,
up to an aggregate of 750,000 Additional Shares at the Purchase Price.
Additional Shares may be purchased as provided in Section 4 hereof solely for
the purpose of covering over-allotments made in connection with the offering of
the Firm Shares. If any Additional Shares are to be purchased, each
Underwriter, severally and not jointly, agrees to purchase the number of
Additional Shares (subject to such adjustments to eliminate fractional shares
as the Representatives may determine) that bears the same proportion to the
total number of Additional Shares to be purchased as the number of Firm Shares
set forth opposite the name of such Underwriter in Schedule I bears to the
total number of Firm Shares.
(c) The Offerors are advised by you that the Underwriters
propose to make a public offering of their prospective portions of the Shares
as soon after the Registration Statement and this Agreement become effective as
in your judgment is advisable. As compensation to the Underwriters for their
commitments hereunder and in view of the fact that the proceeds of the sale of
the Shares (together with the entire proceeds from the sale by the Trust to the
Company of the Common Securities (as defined below)) will be used to purchase
the Debentures, the Company hereby agrees to pay by wire transfer of same day
funds on the Closing Date, directly to the Underwriters, a commission of $0.40
per Share purchased by the Underwriters and delivered by the Trust pursuant to
this Agreement (the "Underwriting Commission").
(d) For a period of 90 days from the date this Agreement
becomes effective, the Offerors will not, without the prior written consent of
EVEREN Securities, Inc. on behalf of the Underwriters, directly or indirectly,
(1) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, or otherwise issue any shares of Trust Preferred
Securities or Debentures, any securities convertible into or exercisable or
exchangeable for Trust Preferred Securities, or any securities substantially
similar to the Trust Preferred Securities or Debentures, (2) enter into any
swap or other agreement to do any of the foregoing or (3) file any registration
statement relating to any of the foregoing on behalf of itself or any other
person.
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<PAGE> 5
4. Agreements of the Company as to Delivery and Payment. The
Offerors, jointly and severally, agree with each Underwriter that:
(a) Delivery to the Underwriters of and payment for the
Firm Shares shall be made at 10:00 A.M., New York City time, on the
third full business day (such time and date being referred to as the
"Closing Date") following the date of the initial public offering of
the Firm Shares pursuant to this Agreement as advised to you by the
Offerors, at such place as you shall designate.
(b) Delivery to the Underwriters of and payment for any
Additional Shares to be purchased by the Underwriters shall be made at
such place as you shall designate, at 10:00 A.M., New York City time,
on such date or dates (individually, an "Option Closing Date" and
collectively, the "Option Closing Dates"), which may be the same as
the Closing Date but shall in no event be earlier than the Closing
Date, as shall be specified in a written notice from you to the
Offerors of the Underwriters' determination to purchase a number,
specified in said notice, of Additional Shares. Any such notice may
be given within 30 days after the date of this Agreement. Any Option
Closing Date may be after the expiration of 30 days after the date of
this Agreement.
(c) Unless otherwise agreed, the Shares to be purchased
by each Underwriter in book-entry form and in authorized denominations
and registered in the name of the nominee of The Depository Trust
Company ("DTC") shall be delivered by or on behalf of the Offerors
through the facilities of DTC for the account of such Underwriter,
against payment of the Purchase Price therefor by wire transfer of
same day funds to the Trust, or upon its order, to an account
designated by the Trust, with any transfer taxes payable upon initial
issuance or the transfer thereof duly paid by the Offerors for the
respective accounts of the Underwriters.
5. Further Agreements of the Offerors. The Offerors, jointly and
severally, also agree with each Underwriter that, in the case of each Offeror:
(a) it will, if the Registration Statement has not
heretofore become effective under the Act, file an amendment to the
Registration Statement or, if necessary pursuant to Rule 430A under
the Act, a post- effective amendment to the Registration Statement, as
soon as practicable after the execution and delivery of this
Agreement, and will use its best efforts to cause the Registration
Statement or such post-effective amendment to become effective at the
earliest possible time; and the Offerors will comply fully and in a
timely manner with the applicable provisions of Rule 424(b), Rule 430A
and the other rules under the Act;
(b) it will advise you promptly and, if requested by you,
confirm such advice in writing, (i) when the Registration Statement
has become effective, if and when the Prospectus is sent for filing
pursuant to Rule 424 under the Act and when any post-effective
amendment to the Registration Statement becomes effective, (ii) of the
receipt of any comments or correspondence from the Commission that
relate to the Registration Statement or requests by the Commission for
amendments to the Registration Statement
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<PAGE> 6
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 Shares for offering or sale in any
jurisdiction, or the initiation or, to the best knowledge of the
Offerors, threat of any proceedings for such purpose by the Commission
or any state securities commission or other regulatory authority, and
(iv) of the happening of any event or information becoming known
during the period referred to in paragraph (e) below that makes any
statement of a material fact made in the Registration Statement untrue
or that requires the making of any additions to or changes in the
Registration Statement (as amended or supplemented from time to time)
in order to make the statements therein not misleading or that makes
any statement of a material fact made in the Prospectus (as amended or
supplemented from time to time) untrue or that requires the making of
any additions to or changes in the Prospectus (as amended or
supplemented from time to time) in order to make the statements
therein, not misleading; if at any time the Commission shall issue or
institute proceedings (or threaten to institute any such proceedings)
to issue any stop order suspending the effectiveness of the
Registration Statement, or any state securities commission or other
regulatory authority shall issue or institute proceedings (or threaten
to institute proceedings) to issue an order suspending the
qualification or exemption of the Shares under any state securities or
Blue Sky laws, the Offerors shall use their best efforts to obtain the
withdrawal or lifting of such order at the earliest possible time;
(c) it will furnish to you without charge one signed copy
of the Registration Statement as first filed with the Commission and
of each amendment to it, including all exhibits filed therewith, and
will 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;
(d) it will not file any amendment or supplement to the
Registration Statement, whether before or after the time when it
becomes effective, or make any amendment or supplement to the
Prospectus of which you shall not previously have been advised and
provided a copy a reasonable period of time prior to the filing
thereof and to which you and your counsel shall reasonably object; and
it will prepare and file with the Commission, promptly upon your
reasonable request, any amendment to the Registration Statement or
supplement to the Prospectus that may be necessary or advisable in
connection with the distribution of the Shares by you in you or your
counsel's opinion, and will use its best efforts to cause the same to
become effective as promptly as possible;
(e) promptly after the Registration Statement becomes
effective, and from time to time thereafter for such period as a
prospectus is required by the Act to be delivered in connection with
the sales by an underwriter or a dealer (in the opinion of your
counsel), it will furnish to each Underwriter and dealer without
charge as many copies of the Prospectus (and any amendment or
supplement of the Prospectus) as such Underwriter or dealer may
reasonably request for the purposes contemplated by the Act; the
Offerors consent to the use of the Prospectus and any amendment or
supplement thereto by any Underwriter or any dealer, both in
connection with the offering or sale of
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<PAGE> 7
the Shares and for such period of time thereafter as the Prospectus is
required by the Act to be delivered in connection therewith;
(f) if during the period specified in paragraph (e) any
event shall occur or information become known as a result of which in
the opinion of your counsel it becomes necessary to amend or
supplement the Prospectus in order to make the statements therein, in
light of the circumstances existing as of the date the Prospectus is
delivered to a purchaser, not misleading, or it is necessary to amend
or supplement the Prospectus to comply with any law, it will forthwith
prepare and, subject to paragraph 5(d) above, file with the Commission
at the sole expense of the Offerors an appropriate amendment or
supplement to the Prospectus so that the statements of any material
facts in the Prospectus, as so amended and supplemented, will not in
light of the circumstances when it is so delivered, be misleading, or
so that the Prospectus will comply with Act and it will furnish to the
Underwriters and to such dealers as the Underwriters shall specify, at
the sole expense of the Offerors, such number of copies thereof as
such Underwriters or dealers may reasonably request;
(g) without limiting the generality of the foregoing
clause (f), the Offerors acknowledge and agree that if, prior to the
exercise in full or termination or expiration of the option to
purchase the Additional Shares, either Offeror incurs any liability or
obligation, direct or contingent, or enters into any material
transaction, or otherwise takes any action or experiences any change
in situation or circumstances which may render the Prospectus (as it
then exists) misleading, the Offerors shall (i) promptly notify EVEREN
Securities, Inc. in writing of such event, such notice to explain the
nature and scope of such event in reasonable detail insofar as
possible, and (ii) forthwith prepare and, subject to paragraph 5(d)
above, file with the Commission at the sole expense of the Offerors an
appropriate amendment to the Registration Statement or supplement to
the Prospectus, and (iii) at the sole expense of the Offerors,
reproduce and distribute such amendment or supplement to such persons
or institutions as EVEREN Securities, Inc. shall request;
(h) prior to any public offering of the Shares, it will
cooperate with you and counsel for the Underwriters in connection with
the filing of notices of the offer and sale of the Shares by the
several Underwriters and by dealers under the state securities or Blue
Sky laws of such jurisdictions as you may request (provided, that it
shall not be obligated to qualify as a foreign corporation in any
jurisdiction in which it is not so qualified or to take any action
which would subject it to general consent to service of process in any
jurisdiction in which it is not now so subject);
(i) except as contemplated by or described in the
Prospectus, it will not acquire any Trust Preferred Securities or any
capital stock of the Company prior to the earlier of (1) the exercise
in full of the option to purchase the Additional Shares and close of
the purchase thereof by the Underwriters or (2) the termination or
expiration of such option, nor will the Company declare or pay any
dividend or make any other distribution upon its common stock, $0.01
par value per share (the "Common Stock"), payable to stockholders of
record on a date prior to the earlier of such dates;
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<PAGE> 8
(j) the Offerors will mail and make generally available
to holders of beneficial interests in the Trust and furnish to you as
soon as reasonably practicable a consolidated earnings statement
covering a period of at least 12 months beginning after the "effective
date" (as defined in Rule 158 under the Act) of the Registration
Statement (but in no event commencing later than 90 days after such
date) that will satisfy the provisions of Section 11(a) of the Act and
Rule 158 thereunder, if applicable to holders of beneficial interests
in the Trust;
(k) during the period of five years after the date of
this Agreement, it will furnish to you a copy (i) as soon as
practicable after the filing thereof, of each report filed by the
Offerors with the Commission, any securities exchange or the National
Association of Securities Dealers, Inc. ("NASD"); (ii) as soon as
practicable after the release thereof, of each press release relating
to either Offeror; (iii) as soon as available, of each report of the
Company mailed to its stockholders and each report of the Trust mailed
to holders of beneficial interests in the Trust; and (iv) as soon as
available, such other publicly available information concerning the
Offerors as you may reasonably request;
(l) whether or not the transactions contemplated hereby
are consummated or this Agreement becomes effective as to all of its
provisions or is terminated, to pay all costs, fees, expenses and
taxes incident to the performance by the Offerors of their obligations
hereunder, including (i) the preparation, printing, filing and
distribution under the Act of the Registration Statement (including
financial statements and exhibits), each Preliminary Prospectus, the
Prospectus and all amendments and supplements to any of them prior to
or during the period specified in paragraph (e) above of this Section
5, (ii) the word processing, reproduction and distribution of the Blue
Sky Survey and any related memoranda, correspondence and other
documents prepared and delivered by the Underwriters or their counsel
(including in each case any disbursements of counsel for the
Underwriters relating to such preparation and delivery), (iii) the
filing of notices of the offer and sale of the Shares by the several
Underwriters and by dealers under the securities or Blue Sky laws of
the several states (including in each case the fees and disbursements
of counsel for the Underwriters relating to such filings), (iv) the
filings and clearance with the NASD in connection with the offering
and sale of the Shares (but excluding the fees, but not disbursements,
of counsel for the Underwriters relating to such filings and
clearance), (v) the approval for quotation of the Shares on the
American Stock Exchange, Inc., (vi) furnishing such copies of the
Registration Statement, each Preliminary Prospectus, the Prospectus
and all amendments and supplements thereto as may reasonably be
requested for use in connection with the offering or sale of the
Shares by the Underwriters or by dealers to whom the Shares may be
sold, (vii) obtaining the opinions to be provided pursuant to Sections
8(f), 8(g) and 8(h) of this Agreement, (viii) the fees and expenses of
the Property Trustee, the Delaware Trustee, the Guarantee Trustee and
the Indenture Trustee (each as defined below), including the fees and
disbursements of counsel for such trustees, (ix) the cost of
qualifying the Shares with DTC and (x) the performance by the Offerors
of all of their other obligations under this Agreement; if the sale of
the Shares provided for herein is not consummated because the
Underwriters exercise their right to terminate this Agreement pursuant
to Section 9 hereof
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<PAGE> 9
and any of the following have occurred during the term of this
Agreement: (a) there has been any material adverse change in the
condition (financial or otherwise), earnings, affairs or business of
the Company, or any event or events that could reasonably be expected
to result in such a material adverse change or (b) the Offerors shall
refuse or be unable to comply with any provision hereof (except as the
result of a breach of this Agreement by the Underwriters), the
Offerors will promptly reimburse the Underwriters upon demand for all
reasonable out-of-pocket expenses (including the fees and
disbursements of counsel for the Underwriters) that shall have been
incurred by the Underwriters in connection with the proposed purchase
and sale of Shares;
(m) it will use all of the net proceeds received by it
from the sale of the Shares being sold by the Trust in the manner
specified in the Prospectus;
(n) if, at the time of effectiveness of the Registration
Statement, any information shall have been omitted therefrom in
reliance upon Rule 430A, then immediately following the execution and
delivery of this Agreement, it will prepare, and file or transmit for
filing with the Commission in accordance with such Rule 430A and Rule
424(b), copies of an amended prospectus, or, if required by such Rule
430A, a post-effective amendment to the Registration Statement
(including an amended prospectus), containing all information so
omitted;
(o) it will cause the Shares to be approved for
quotation, subject to notice of issuance or sale, on the American
Stock Exchange, Inc.; it will comply with all registration, filing and
reporting requirements of the Exchange Act and American Stock
Exchange, Inc. in connection with the sale of the Shares; and
(p) it will use its best efforts to do and perform all
things required to be done and performed under this Agreement by it
prior to or after the Closing Date or any Option Closing Date, as the
case may be, and to satisfy all conditions precedent to the delivery
of the Shares.
6. Representations and Warranties.
(a) The Offerors, jointly and severally, represent and
warrant to each Underwriter as of the date hereof, the Closing Date
and each Option Closing Date that:
(i) The Commission has not issued any order
preventing or suspending the use of any Preliminary Prospectus
relating to the proposed offering of the Shares nor instituted
or threatened any proceedings for that purpose. The
Registration Statement, on the date it became or becomes
effective, and the Prospectus and any amendment or supplement
thereto, on the date of filing thereof with the Commission (or
if not filed, on the date provided by the Offerors to the
Underwriters in connection with the offering and sale of the
Shares) and at the Closing Date and each Option Closing Date
conformed or will conform with the requirements of the Act,
the Rules and Regulations and the Trust Indenture Act of 1939,
as amended (the "Trust Indenture Act"), and the rules and
regulations
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<PAGE> 10
promulgated thereunder (the "Trust Indenture Regulations").
The Registration Statement, on the date it became or becomes
effective, did not or will not contain an untrue statement of
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading. The Prospectus and any amendment or supplement
thereto, on the date of filing thereof with the Commission (or
if not filed, on the date provided by the Offerors to the
Underwriters in connection with the offering and sale of the
Shares) and at the Closing Date and each Option Closing Date
did not and will not include an untrue statement of material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not
misleading. The foregoing shall not apply to statements in or
omissions from the Registration Statement and the Prospectus
made or omitted in reliance upon, and in conformity with,
information relating to the Underwriters furnished in writing
to the Offerors by or on behalf of the Underwriters with your
consent expressly for use therein. The Offerors hereby
acknowledge for all purposes under this Agreement that the
written information furnished to the Offerors by or on behalf
of the Underwriters for use in the preparation of the
Registration Statement or the Prospectus or any amendment or
supplement thereto ("Underwriters' Information") consists only
of (A) the statements set forth under the caption
"Underwriting" in the Prospectus Supplement, (B) the
stabilization and passive market-making legends on the
gate-fold of the Prospectus and (C) the last paragraph of text
on the cover page of the Prospectus.
(ii) The documents incorporated or deemed to be
incorporated by reference in the Registration Statement and
the Prospectus, when they were filed with the Commission,
complied in all material respects to the requirements of the
Exchange Act and the published rules and regulations of the
Commission thereunder, and none of such documents contained an
untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading; and any further
documents so filed and incorporated or deemed to be
incorporated by reference, when they are filed with the
Commission, will comply in all material respects with the
requirements of the Exchange Act and the published rules and
regulations of the Commission thereunder and will not contain
an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(iii) The Company has been duly incorporated and is
a validly existing corporation in good standing under the laws
of Delaware, with full corporate power and authority to own or
lease its properties and assets and to conduct its business as
described in the Registration Statement and the Prospectus and
is duly qualified to do business in each jurisdiction in which
it owns or leases real
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<PAGE> 11
property or in which the conduct of its business or the
ownership or leasing of property requires such qualification,
except where the failure to be so qualified, either
individually or in the aggregate, would not have a material
adverse effect on the condition (financial or otherwise),
business, assets, prospects, net worth or results of
operations of the Company (a "Material Adverse Effect," and,
when used with respect to the Trust, "Material Adverse Effect"
means any material adverse effect on the condition (financial
or otherwise), business, assets, prospects, net worth or
results of operations of the Trust). Other than ACMI Canada,
Inc., a Colorado corporation ("ACMI Canada" or the
"Subsidiary"), the Company has no subsidiaries and has never
had a subsidiary. All of the issued and outstanding capital
stock of ACMI Canada is owned directly by the Company. ACMI
Canada does not now conduct, and never has conducted, any
business and does not now own, and never has owned, any
material assets. ACMI Canada has been duly incorporated and
is a validly existing corporation in good standing under the
laws of Colorado, with full corporate power and authority to
own or lease its properties and assets and to conduct its
business and is duly qualified to do business in each
jurisdiction in which it owns or leases real property or in
which the conduct of its business or the ownership or leasing
of property requires such qualification.
(iv) The Trust has been duly created and is a
validly existing business trust in good standing under the
laws of Delaware, with full power and authority to own or
lease its properties and assets and to conduct its business as
described in the Registration Statement and the Prospectus,
including, without limitation, to enter into this Agreement
and the other agreements or instruments contemplated hereby,
to issue and sell the Shares, to issue and sell the Common
Securities and to otherwise consummate the transactions
contemplated hereby. The Trust is a consolidated subsidiary
of the Company and has no subsidiaries of its own. The Trust
is not a party to or bound by any agreement or instrument
other than this Agreement and the agreements and instruments
contemplated by the Trust Agreement and this Agreement and
described in the Registration Statement and the Prospectus.
The Trust has no liabilities or obligations other than those
arising out of the transactions contemplated by the Trust
Agreement and this Agreement and described in the Registration
Statement and the Prospectus. The Trust is not, and on the
Closing Date will not be, to the knowledge of the Offerors,
classified as an association taxable as a corporation for
United States federal income tax purposes. The Trust is, and
on the Closing Date will be, to the knowledge of the Offerors,
classified as a grantor trust and not as a partnership or an
association taxable as a corporation for United States federal
income tax purposes.
(v) The capitalization of the Company is, and
upon consummation of the transactions contemplated hereby will
be, as set forth in the Registration Statement and the
Prospectus under the caption "Capitalization." All of the
outstanding shares of capital stock of the Company have been
duly authorized and are validly issued, are fully paid and
non-assessable and conform to the description thereof in the
Registration Statement and the Prospectus and were
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<PAGE> 12
not issued in violation of any preemptive rights or other
rights to subscribe for or purchase securities. Except as set
forth in the Registration Statement and the Prospectus with
respect to the Option Plan and Directors' Plan (as defined in
the Prospectus) and the 55,000 shares of Common Stock issuable
upon the exercise of those certain warrants described in
clause (ii) of footnote 2 under the caption "Capitalization"
in the Prospectus (the "Warrants"), no options, warrants or
other rights to purchase fromthe Company, agreements or other
obligations of the Company to issue or other rights to convert
any obligation into, or exchange any securities for, shares of
capital stock of or ownership interests in the Company are
outstanding. The description of the Option Plan, the
Directors' Plan, the Warrant and the other options or rights
granted and exercised thereunder, as set forth in the
Registration Statement and the Prospectus, accurately and
fairly presents the information required to be shown under the
Act with respect to such options, warrants and rights.
(vi) Subsequent to the respective dates as of
which information is given in the Registration Statement and
Prospectus, and except as described therein, (A) neither the
Trust, the Company nor the Subsidiary has incurred any
material liabilities or obligations, direct or contingent, or
entered into any material transactions, (B) neither the Trust,
the Company nor the Subsidiary has purchased any of its
outstanding capital stock or declared, paid or otherwise made
any dividend or distribution of any kind on its capital stock
or otherwise and (C) there has not been any material adverse
change in the condition (financial or otherwise), business,
affairs, prospects or results of operations of the Trust, the
Company and the Subsidiary, taken as a whole, or any material
change in the Trust's, the Company's or the Subsidiary's
capital stock, short-term debt or long-term debt.
(vii) The Shares to be sold by the Trust pursuant
to this Agreement have been duly and validly authorized and,
when issued, delivered and paid for pursuant to this
Agreement, will be validly issued, fully paid and
nonassessable undivided beneficial interests in the assets of
the Trust and will be entitled to the benefits of the Trust
Agreement. The shares of __% Cumulative Trust Common
Securities having a Liquidation Amount of $10 per share (the
"Common Securities") will be sold by the Trust to the Company,
and when so sold, will have been duly and validly authorized
and, when issued, delivered and paid for, will be validly
issued, fully paid and nonassessable undivided beneficial
interests in the assets of the Trust and will be entitled to
the benefits of the Trust Agreement. The Shares and the
Common Securities conform to the descriptions thereof
contained in the Registration Statement and the Prospectus.
(viii) Subject to the terms of the Trust Agreement,
holders of the Shares will be entitled to the same limitation
of personal liability under Delaware law as extended to
stockholders of private corporations for profit.
(ix) This Agreement has been duly authorized,
executed and delivered by the Trust and the Company and is a
legal, valid and binding agreement of the
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<PAGE> 13
Trust and the Company enforceable in accordance with its
terms, except (i) as the enforceability hereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and by
general equity principles, and (ii) that rights to indemnity
or contribution hereunder may be limited by Federal or state
securities laws or the public policy underlying such laws.
(x) Each of the Administrative Trustees (as
defined below) of the Trust is an employee of the Company and
has been authorized by the Company to execute and deliver the
Amended and Restated Trust Agreement ( the "Trust Agreement")
by and among the Company, as Depositor, Wilmington Trust
Company ("WTC") as Delaware Trustee (the "Delaware Trustee"),
WTC as Property Trustee (the "Property Trustee"), Jerome M.
Lapin and W. John Cash, as Administrative Trustees (the
"Administrative Trustees"), and the holders from time to time
of undivided beneficial interests in the assets of the Trust.
The Trust Agreement has been duly authorized by the Company,
will be duly executed and delivered by the Company, as
Depositor, and the Administrative Trustees on the Closing
Date, and will be a legal, valid and binding agreement of the
Company and the Administrative Trustees enforceable against
each of them, in their capacities as Administrative Trustees
and not in their individual capacities, in accordance with its
terms, except (i) as the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and by
general equity principles and (ii) that rights to indemnity or
contribution thereunder may be limited by Federal or state
securities laws or the public policy underlying such laws.
The Trust Agreement conforms in all material respects with the
description thereof and all statements relating thereto in the
Registration Statement and the Prospectus and has been
qualified under the Trust Indenture Act.
(xi) The Indenture ("Indenture") by and between
the Company and WTC, as Indenture Trustee (the "Indenture
Trustee"), has been duly authorized by the Company, will be
duly executed and delivered by the Company on the Closing
Date, and will be the legal, valid and binding agreement of
the Company enforceable in accordance with its terms, except
(i) as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and by
general equity principles and (ii) that rights to indemnity or
contribution thereunder may be limited by Federal or state
securities laws or the public policy underlying such laws.
The Indenture conforms in all material respects with the
description thereof and all statements relating thereto in the
Registration Statement and the Prospectus and has been
qualified under the Trust Indenture Act.
(xii) The Debentures have been duly authorized by
the Company, will be duly executed and delivered by the
Company on the Closing Date, and, when authenticated in the
manner provided for in the Indenture and delivered against
payment therefor as described in the Registration Statement
and the Prospectus,
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<PAGE> 14
will be the legal, valid and binding obligations of the
Company enforceable in accordance with its terms, except (i)
as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and by general equity
principles and (ii) that rights to indemnity or contribution
thereunder may be limited by Federal or state securities laws
or the public policy underlying such laws, and will be
entitled to the benefits of the Indenture. The Debentures
conform in all material respects with the description thereof
and all statements relating thereto in the Registration
Statement and the Prospectus.
(xiii) The Guarantee Agreement (the "Guarantee
Agreement") by and between the Company and WTC, as Guarantee
Trustee (the "Guarantee Trustee"), has been duly authorized by
the Company, will be duly executed and delivered by the
Company on the Closing Date, and will be the legal, valid and
binding agreement of the Company enforceable in accordance
with its terms, except (i) as the enforceability thereof may
be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights
generally and by general equity principles and (ii) that
rights to indemnity or contribution thereunder may be limited
by Federal or state securities laws or the public policy
underlying such laws. The Guarantee pursuant to the Guarantee
Agreement and related documents conforms in all material
respects with the description thereof and all statements
relating thereto in the Registration Statement and the
Prospectus and has been qualified under the Trust Indenture
Act.
(xiv) The Expense Agreement (the "Expense
Agreement") by and between the Trust and the Company has been
duly authorized by the Trust and the Company, will be duly
executed and delivered by the Trust and the Company on the
Closing Date, and will be the legal, valid and binding
agreements of the Trust and the Company enforceable in
accordance with its terms, except (i) as the enforceability
thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting
creditors' rights generally and by general equity principles
and (ii) that rights to indemnity or contribution thereunder,
if any, may be limited by Federal or state securities laws or
the public policy underlying such laws. The Expense Agreement
conforms in all material respects with the description thereof
and all statements relating thereto in the Registration
Statement and the Prospectus.
(xv) Neither the Trust nor the Company is in
violation of its Certificate of Trust or Trust Agreement, or
its Certificate of Incorporation or by-laws, respectively.
Neither the Trust nor the Company is in violation of or in
breach of or in default in (nor has any event occurred that
with notice or lapse of time, or both, would be a breach of or
a default in) the performance of any obligation, agreement or
condition contained in any agreement, lease, contract, permit,
license, franchise agreement, mortgage, loan agreement,
debenture, note, deed of trust, bond, indenture or other
evidence of indebtedness or any other instrument or
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obligation (collectively, "Obligations and Instruments") to
which it is a party or by which it or any of its properties or
assets are bound or affected (except for such contraventions
or defaults as would not, individually or in the aggregate,
have a Material Adverse Effect). Neither the Trust nor the
Company is in violation of any statute, judgment, decree,
order, rule or regulation (collectively, "Laws") applicable to
it or any of its properties or assets that, alone or together
with other violations of Laws, would result in a Material
Adverse Effect. The Company has not been charged with and, to
the best knowledge of the Offerors (it being understood that,
for the purposes of this Agreement, the "knowledge" of the
Offerors includes the actual knowledge of Jerome M. Lapin, W.
John Cash, Randall J. Fagundo and Abbe M. Stutsman), is not
under investigation with respect to any material violation of
any such Laws. To the best knowledge of the Offerors, no
other party under any contract or other agreement to which the
Company is a party is in material default thereunder except
for such defaults as would not, individually or in the
aggregate, result in a Material Adverse Effect.
(xvi) The execution, delivery and performance of
this Agreement and delivery of the Shares by the Trust and
compliance by the Trust and the Company with all the
provisions hereof and the consummation of the transactions
contemplated hereby and as described in the Registration
Statement and the Prospectus will not, alone or upon notice or
the passage of time or both (A) require any consent, approval,
authorization or other order of, or filing with, any court,
regulatory body, administrative agency or other governmental
body or third party (except such as may be required under the
Act and the securities or Blue Sky laws of the various states
or by the NASD), (B) result in the creation or imposition of
any lien, charge or encumbrance upon any of the properties or
assets of the Trust or the Company pursuant to the terms and
provisions of any Obligation or Instrument, (C) conflict with
or constitute a breach or default under any Obligation or
Instrument to which the Trust or the Company is a party or by
which it or any of its properties or assets are bound (except
for such conflicts, breaches or defaults as would not,
individually or in the aggregate, have a Material Adverse
Effect), or (D) assuming compliance with the Act and all
applicable state securities or Blue Sky laws, violate or
conflict with any Laws applicable to the Trust or the Company
or any of its properties or assets (except for such violations
or conflicts as could not, individually or in the aggregate,
have a Material Adverse Effect).
(xvii) Except as set forth in the Registration
Statement and the Prospectus, there is no action, suit,
proceeding, inquiry or investigation, governmental or
otherwise, before any court, arbitrator or governmental agency
or body (collectively, "Proceedings") pending to which the
Company is a party or to which any of its properties or assets
are subject, that, if determined adversely to the Company,
might, individually or in the aggregate, result in a Material
Adverse Effect, or that might materially and adversely affect
the properties or assets thereof, or that seeks to restrain,
enjoin, prevent the consummation of or otherwise challenge the
issuance or sale of any of the Shares to be sold hereunder or
the
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<PAGE> 16
consummation of the transactions described in the Registration
Statement and the Prospectus and, to the best knowledge of
Offerors after due inquiry of appropriate Company personnel,
no such Proceedings are threatened. There is no contract,
document, agreement or transaction to which the Trust or the
Company is a party, or that (to the Offerors' knowledge)
involved or involves the Trust or the Company or any of their
properties or assets that is required to be described in or
filed as an exhibit to the Registration Statement by the Act
or the Rules and Regulations that has not been so described or
filed. No action has been taken with respect to the Offerors,
and, to the best knowledge of the Offerors, no statute, rule
or regulation or order has been enacted, adopted or issued by
any governmental agency that suspends the effectiveness of the
Registration Statement, prevents or suspends the use of any
Preliminary Prospectus or the Prospectus or suspends the sale
of the Shares in any jurisdiction referred to in Section 5(g)
hereof. No injunction, restraining order or order of any
nature by a federal or state court of competent jurisdiction
has been issued with respect to the Trust, the Company or the
Subsidiary that might prevent the issuance of the Shares,
suspend the effectiveness of the Registration Statement,
prevent or suspend the use of any Preliminary Prospectus or
the Prospectus or suspend the sale of the Shares in any
jurisdiction referred to in Section 5(g) hereof. Every
request of the Commission, or any securities authority or
agency of any jurisdiction, for additional information (to be
included in the Registration Statement or the Prospectus or
otherwise) has been complied with in all material respects.
(xviii) The Company has not violated, and is not in
violation of, any foreign, federal, state or local law or
regulation relating to the protection of human health and
safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("Environmental Laws"), nor
any foreign, Federal, state or local law relating to
discrimination in the hiring, promotion or pay of employees
nor any applicable foreign, Federal or state wages and hours
laws, nor any provisions of the Employee Retirement Income
Security Act of 1974, as amended or the rules and regulations
promulgated thereunder or similar foreign laws, that, in each
case or in the aggregate, might result in a Material Adverse
Effect. None of the property leased by the Company is
contaminated with any waste or hazardous substances (except
that certain leased locations may contain asbestos or certain
cleaning materials, the presence of which will not result in a
Material Adverse Effect), nor may the Company be deemed an
"owner or operator" of a "facility" or "vessel" that owns,
possesses, transports, generates, discharges or disposes of a
"hazardous substance" as those terms are defined in Section
9601 of the Comprehensive Response Compensation and Liability
Act of 1980, U.S.C. Section 9601 et seq. (except that the
Company disposes in the ordinary course of its business
ordinary household products that may be classified as or
contain "hazardous substances". The disposal of such products
(A) is in material compliance with all applicable laws as of
the date hereof and (B) has not and will not result in a
Material Adverse Effect).
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<PAGE> 17
(xix) The Trust and the Company have such permits,
licenses, franchises and authorizations of governmental or
regulatory authorities or third parties ("Permits"),
including, without limitation, under any applicable
Environmental Laws, as are necessary to own, lease and operate
their properties and assets and to conduct their businesses,
except where such failures to have any such Permit which would
not, individually or in the aggregate, have a Material Adverse
Effect. The Trust and the Company have fulfilled and
performed all of their material obligations with respect to
such Permits and no event has occurred that allows, or after
notice or lapse of time, or both would allow, revocation or
termination thereof or result in any other material impairment
of the rights of the holder of any such Permit. Except as
described in the Prospectus, such Permits contain no
restrictions that are materially burdensome to the Company.
(xx) Neither the Trust nor the Company is, or
intends to conduct its business in a manner in which it would
become, an "investment company" or a company "controlled" by
an "investment company" within the meaning of the Investment
Company Act of 1940, as amended (the "Investment Company
Act");
(xxi) Except as otherwise set forth in the
Prospectus, the Company has good and marketable title, free
and clear of all liens, claims, encumbrances and restrictions
(except liens for taxes not yet due and payable) to all
property and assets described in the Registration Statement as
being owned by it. All leases to which the Company is a party
are subsisting, valid and binding and no default of the
Company or its affiliates or, to the best knowledge of the
Offerors, any other person has occurred or is continuing
thereunder that might result in a Material Adverse Effect.
The Company enjoys peaceful and undisturbed possession under
all such leases to which the Company is a party as lessee with
such exceptions as do not materially interfere with the use
made thereof by the Company.
(xxii) The Company maintains reasonably adequate
insurance for the conduct of its business in accordance with
prudent business practices (and the insurance maintained by
retailers generally) with reputable third-party insurers.
(xxiii) The Company is not in violation of any
foreign, Federal, state or local law relating to
discrimination in the hiring, promotion or pay of employees
for any applicable foreign, Federal or state wages and hours
laws, nor any provisions of the Employee Retirement Income
Security Act of 1974, as amended, or the rules and regulations
promulgated thereunder ("ERISA") or similar foreign laws, the
violation of which in each case or in the aggregate would
result in a Material Adverse Effect. No "reportable event"
(as defined in ERISA) has occurred with respect to any
"pension plan" (as defined in ERISA) which in each case or in
the aggregate would result in a Material Adverse Effect. The
Company has not incurred any material liability under (i)
Title IV of ERISA with respect to the termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or
4971 of the Internal Revenue Code of 1986, as amended.
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<PAGE> 18
(xxiv) No labor dispute with the employees of the
Company exists, or to the best knowledge of the Offerors, is
imminent, that could result in a Material Adverse Effect. The
Company does not know of any existing or imminent labor
disturbance by the employees of any of its principle
suppliers, customers, manufacturers or contractors that could
reasonably be expected to result in a Material Adverse Effect.
(xxv) To the best knowledge of the Offerors, KPMG
Peat Marwick is an independent public accounting firm with
respect to the Company as required by the Act.
(xxvi) The financial statements of the Company,
together with related notes of the Company included in the
Registration Statement and the Prospectus, are accurate and
present fairly the financial position, results of operations
and cash flows of the Company at the indicated dates and for
the indicated periods. Such financial statements have been
prepared in accordance with generally accepted accounting
principles ("GAAP") consistently applied throughout the
periods involved, and all adjustments necessary for a fair
presentation of results for such periods have been made and
any unaudited financial statements have been prepared on a
basis substantially consistent with that of the audited
financial statements included in the Registration Statement
and the Prospectus. The summary and selected financial and
operating data included in the Registration Statement and the
Prospectus presents fairly the information shown therein and
have been compiled on a basis consistent with the audited and
any unaudited financial statements, as the case may be,
included therein. The pro forma information included in the
Prospectus present fairly the information shown therein, have
been prepared in accordance with GAAP and the Commission's
rules and guidelines with respect to pro forma financial
statements and other pro forma information, and has been
properly compiled on the pro forma basis described therein,
and the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate
under the circumstances.
(xxvii) No holder of any security of the Company has
any right to require inclusion of any such security in the
Registration Statement. There are no preemptive rights with
respect to the offering being made by the Prospectus.
(xxviii) The Trust, the Company and the Subsidiary
have filed or caused to be filed, or have properly filed
extensions for, all foreign, federal, state and local income,
value added and franchise tax returns and has paid all taxes
and assessments shown thereon as due, except for such taxes
and assessments as are disclosed or adequately reserved
against and that are being contested in good faith by
appropriate proceedings, promptly instituted and diligently
conducted. All material tax liabilities are adequately
provided for on the books of the Company, and there is no
material tax deficiency that has been or might be asserted
against the Trust, the Company or the Subsidiary that is not
so provided for. During the time the Company had elected to
be treated as an "S" Corporation under the
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<PAGE> 19
Internal Revenue Code of 1986, as amended (the "Code"), and any
applicable state law, the Company's election of such status was
validly made, and at all times until October 12, 1995 the
Company qualified continuously for treatment as an "S"
Corporation under the Code.
(xxix) The Company owns or possesses, or can acquire
on reasonable terms, the 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 (collectively, "Patents and
Proprietary Rights") currently employed by it in connection
with the business it now operates except where the failure to
so own, possess or acquire such Patents and Proprietary Rights
would not have a Material Adverse Effect. The Company has not
received any notice and is not otherwise aware of any
infringement of or conflict with asserted rights of others
with respect to any Patent or Proprietary Rights that, if the
subject of any unfavorable decision, ruling or finding, singly
or in the aggregate, could result in a Material Adverse
Effect.
(xxx) Neither the Trust nor the Company has taken
or will take, directly or indirectly, any action designed to
or which has constituted or that might reasonably be expected
to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of
the Trust to facilitate the sale or resale of the Shares.
(xxxi) Neither the Trust, the Company nor, to the
best knowledge of the Offerors, any employee or agent of the
Trust or the Company has made any payment of funds of the
Trust or the Company or received or retained any funds in
violation of any law, rule or regulation (including, without
limitation, the Foreign Corrupt Practices Act) or of a
character required by the Act to be disclosed in the
Prospectus. Neither the Trust nor the Company has, at any
time during the past five years, (1) made any unlawful
contributions to any candidate for any political office, or
failed fully to disclose any contribution in violation of law,
or (2) made any unlawful payment to state, federal or foreign
government officer or officers, or other person charged with
similar public or quasi-public duty.
(xxxii) No transaction has occurred between or among
the Trust and the Company and any of the Trust's or the
Company's officers, directors or trustees or any affiliate or
affiliates of any such officer, director or trustee that is
required to be described in and is not described in the
Registration Statement and the Prospectus;
(xxxiii) The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with
management's authorizations, (ii) transactions are recorded as
necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability,
(iii) access to assets is permitted only in
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<PAGE> 20
accordance with management's authorization, and (iv) the
recorded accountability for inventory is compared with the
existing inventory at reasonable intervals and appropriate
action is taken with respect to any differences.
(xxxiv) There is no material contract, document,
agreement, transaction or relationship of a character required
by the Act to be described in the Registration Statement or
the Prospectus or to be filed as an exhibit to the
Registration Statement that is not described or filed as
required.
(xxxv) Other than as contemplated in this Agreement,
neither the Trust nor the Company has incurred any liability
for any finder's or broker's fee or agent's commission in
connection with the execution and delivery of this Agreement
or the consummation of the transactions contemplated hereby.
(xxxvi) The Company has been subject to the
requirements of Section 12 or 15(d) of the Exchange Act and,
other than with respect to its Current Report on Form 8-K due
within 15 days of the closing of the Suncoast Acquisition (as
defined in the Prospectus) which was not timely filed, has
filed in a timely manner all reports and other material
required to be filed pursuant to Sections 13, 14 or 15(d) of
the Exchange Act since October 12, 1995 and, if the Company
has used Rule 12b-25(b) under the Exchange Act with respect to
a report or a portion of any such report, that report or
portion thereof has actually been filed within the time period
prescribed by that rule. All such reports and other materials
filed pursuant to the Exchange Act were, at the time of their
filing, complete and accurate in all material respects.
(xxxvii) The Company has not, since the end of its
last fiscal year for which certified financial statements of
the Company were included in a report filed pursuant to
Section 13(a) or 15(d) of the Exchange Act defaulted on any
(a) installment or installments of indebtedness for borrowed
money or (b) rental on one or more long term leases, which
defaults in the aggregate are material to the financial
position of the Company.
(xxxviii) The Offerors confirm as of the date hereof
that the Trust and the Company are in compliance with all
provisions of Section 1 of Florida Statutes, Section 517.075,
An Act Relating to Disclosure of Doing Business with Cuba; the
Offerors further agree that if they commence engaging in
business (whether directly or indirectly) with the government
of Cuba or with any person or affiliate located in Cuba after
the date the Registration Statement becomes or has become
effective with the Commission or with the Florida Department
of Banking and Finance (the "Department"), whichever date is
later, the Trust and the Company will provide the Department
notice of such business, as appropriate, in a form acceptable
to the Department.
(b) Any certificate signed by any trustee of the Trust or
officer of the Company and delivered to you or to counsel for the
Underwriters shall be deemed a
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<PAGE> 21
representation and warranty made by the Trust or the Company, as the
case may be, to each Underwriter as to the matters covered thereby and
shall be deemed incorporated herein in its entirety and shall be
effective as if such representation and warranty were made herein.
7. Indemnification.
(a) The Offerors agree, jointly and severally, to
indemnify and hold harmless each of the Underwriters and each person,
if any, who controls each of the Underwriters within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act (collectively
the Underwriters and each such person are sometimes referred to in
this Section 7 as the "indemnified parties") from and against any and
all losses, claims, damages, liabilities and judgments caused by,
arising out of, related to or based upon any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement, including the information deemed to be part of
the Registration Statement at the time of effectiveness pursuant to
Rule 430A, if applicable, or the Prospectus 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, in light of the circumstances under which
they were made, not misleading; provided, however, that the Offerors
shall not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue
statement or omission made or omitted in reliance upon and in
conformity with any of the Underwriters' Information.
(b) In case any action shall be brought against any of
the indemnified parties, 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 Offerors, such indemnified parties shall promptly notify
the Offerors in writing (but the failure so to notify shall not
relieve the Offerors of any liability that they may otherwise have to
such indemnified parties under this Section 7 (although the Offerors'
liability to an indemnified party may be reduced on a monetary basis
to the extent, but only to the extent, they have been prejudiced by
such failure on the part of such indemnified party)), and the Offerors
shall promptly assume the defense thereof, including the employment of
counsel satisfactory to such indemnified party and payment of all fees
and expenses. The indemnified parties shall each have the right to
employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall be at
the expense of such indemnified parties unless (i) the employment of
such counsel shall have been specifically authorized by the Offerors,
(ii) the Offerors shall have failed to assume promptly the defense or
to employ counsel reasonably satisfactory to such indemnified party or
(iii) the named parties to any such action (including any impleaded
parties) include both the indemnified parties and the Offerors, and an
indemnified party shall have been advised by counsel that there may be
one or more legal defenses available to one or more of the indemnified
parties that are different from or additional to those available to
the Offerors (in which case the Offerors shall not have the right to
assume the defense of such action on behalf of such indemnified party,
it being understood, however, that the Offerors shall not, in
connection
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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 fees and
expenses of more than one separate firm of attorneys (in addition to
any local counsel) for the indemnified parties, which firm shall be
designated in writing by EVEREN Securities, Inc., and that all such
fees and expenses shall be reimbursed promptly as they are incurred).
The Offerors shall not be liable for any settlement of any such action
effected without their written consent, which consent shall not be
unreasonably withheld, but if settled with the written consent of the
Offerors, the Offerors agree to indemnify and hold harmless the
indemnified parties from and against any and all loss or liability by
reason of such settlement. Notwithstanding the foregoing sentence, if
at any time an indemnified party shall have requested an indemnifying
party to reimburse the indemnified party for fees and expenses of
counsel as contemplated by the second sentence of this paragraph, the
indemnifying party agrees that it shall be liable for any settlement
of any proceeding effected without its written consent if (i) such
settlement is entered into more than 10 business days after delivery
by registered or certified mail to the proper address for notice to
such indemnifying party of the aforesaid request (whether or not such
delivery is accepted) and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior
to the date of such settlement. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which
any indemnified party is or could have been a party and indemnity
could have been sought hereunder by such indemnified party, unless
such settlement includes an unconditional and complete release in
writing of such indemnified party from any and all liability on claims
that are the subject matter of such proceeding, which release shall be
in form and substance satisfactory to the indemnified party. The
indemnification provided in this Section 7 will be in addition to any
liability which the Offerors may otherwise have.
(c) The Underwriters agree, severally and not jointly, to
indemnify and hold harmless each of the Offerors and its directors,
officers or trustees who sign the Registration Statement and any
person controlling the Company within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act, to the same extent as the
indemnity provided in Section 7(a) above from the Offerors to the
Underwriters, but only with reference to information stated in or
omitted from the Registration Statement, the Prospectus or any
Preliminary Prospectus in reliance upon, and in conformity with,
information relating to the Underwriters furnished in writing to the
Offerors by or on behalf of the Underwriters with your consent
expressly for use in the Registration Statement, the Prospectus or any
Preliminary Prospectus. In case any action shall be brought against
the Offerors, any of the Offerors' directors, any such officers or any
person controlling the Offerors based on the Registration Statement,
the Prospectus or any Preliminary Prospectus and in respect of which
indemnity may be sought against the Underwriters, the Underwriters
shall have the rights and duties given to the Offerors by Section 7(b)
hereof (except that if the Offerors 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
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the expense of such Underwriter), and the Offerors, their directors,
any such officers and any person controlling the Offerors shall have
the rights and duties given to the "indemnified parties" by Section
7(b) hereof.
(d) The Company agrees to indemnify and hold harmless the
Trust, its directors, officers or trustees who sign the Registration
Statement and any person controlling the Trust within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, to the same
extent as the indemnity provided in Section 7(a) above from the
Offerors to the Underwriters.
(e) If the indemnification provided for in this Section 7
is for any reason unavailable to an indemnified party or insufficient
to hold such indemnified party harmless 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 Offerors on the one hand
and the Underwriters on the other from the offering of the Shares or
(ii) if the allocation provided in 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 Offerors on the one hand and the
Underwriters on the other in connection with the statements or
omissions or alleged statements or omissions that resulted in such
losses, claims, damages, liabilities or judgments, as well as any
other relevant equitable considerations. The relative benefits
received by the Offerors on the one hand and the Underwriters on the
other shall be deemed to be in the same proportion as the total net
proceeds from the offering and sale of the Shares (before deducting
expenses) received by the Offerors on the one hand, and the total
underwriting discounts and commissions received by the Underwriters on
the other, bears to the total price to the public of the Shares, in
each case as set forth in the table on the cover page of the
Prospectus. The relative fault of the Offerors 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
or the alleged omission to state a material fact relates to
information supplied by the Offerors or the Underwriters and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Offerors and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7(e) were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that 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 7, no Underwriter
shall be required to contribute any amount in
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excess of the amount of underwriting commissions received by such
Underwriter in connection with the Shares underwritten by it and
distributed to the public. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Underwriters' obligation in
this Section 7(e) to contribute are several in proportion to the
respective amount of Shares purchased hereunder by each Underwriter and
not joint.
8. Conditions of the Obligations of the Underwriters. The
obligations of the several Underwriters to purchase and pay for the
Firm Shares on the Closing Date and the Additional Shares on any Option
Closing Date are subject to the fulfillment of each of the following
conditions on or prior to the Closing Date and each Option Closing
Date:
(a) All the representations and warranties of the
Offerors contained in this Agreement and in any certificate delivered
hereunder shall be true and correct in all material respects on the
Closing Date and each Option Closing Date with the same force and
effect as if made on and as of the Closing Date or Option Closing
Date, as applicable. The Offerors shall not have failed at or prior
to the Closing Date or Option Closing Date, as applicable, to perform
or comply in all respects with any of the agreements herein contained
and required to be performed or complied with by the Offerors at or
prior to the Closing Date.
(b) If the Registration Statement is not effective at the
time of the execution and delivery of this Agreement, the Registration
Statement shall have become effective (or, if a post-effective
amendment is required to be filed pursuant to Rule 430A under the Act,
such post-effective amendment shall have become effective) not later
than 9:30 A.M., New York City time, on the date of this Agreement or
such later time as you may approve in writing or, if the Registration
Statement has been declared effective prior to the execution and
delivery hereof in reliance on Rule 430A, the Prospectus shall have
been filed as required by the Act, if necessary; and at the Closing
Date and each applicable Option Closing Date, no stop order suspending
the effectiveness of the Registration Statement shall have been issued
and no proceedings for that purpose shall have been commenced or shall
be pending before or, to the best knowledge of the Underwriters or the
Offerors, threatened by the Commission; every request for additional
information on the part of the Commission shall have been complied
with to the Underwriters' satisfaction; no stop order suspending the
sale of the Shares in any jurisdiction referred to in Section 5(g)
shall have been issued and no proceeding for that purpose shall have
been commenced or shall be pending or, to the best knowledge of the
Underwriters or the Offerors, threatened.
(c) The Shares shall have been qualified for sale (or
exempt from qualification) under the Blue Sky laws of such states as
shall have been specified by you.
(d) The legality and sufficiency of the authorization,
issuance and sale or transfer and sale of the Shares hereunder, the
validity and form of the certificates representing the Shares, the
execution and delivery of this Agreement and all corporate
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proceedings and other legal matters incident thereto, and the form of
the Registration Statement and the Prospectus (except financial
statements) shall have been approved by counsel for the Underwriters
exercising reasonable judgment, and no Underwriter shall have advised
the Offerors that the Registration Statement or the Prospectus,or any
amendment or supplement thereto, contains an untrue statement of a
material fact, or omits to state a fact that in the your opinion is
material and is required to be stated therein or is necessary to make
the statements therein not misleading.
(e) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred any material change, or any
material development involving a prospective change, in or affecting
particularly the business or properties of the Trust or the Company,
whether or not arising in the ordinary course of business, that, in
the judgment of the Representatives, makes it impractical or
inadvisable to proceed with the public offering or purchase of the
Shares as contemplated hereby.
(f) You shall have received an opinion (satisfactory to
you and you counsel) dated the Closing Date or the Option Closing
Date, as the case may be, of Cooley Godward LLP, counsel for the
Company, in form and substance satisfactory to you and attached hereto
as Exhibit A-1;
(g) you shall have received an opinion (satisfactory to
you and your counsel) dated the Closing Date or the Option Closing
Date, as the case may be, of Richards, Layton & Finger, P.A., special
Delaware counsel for the Offerors, in form and substance satisfactory
to you and attached hereto as Exhibit A-2;
(h) you shall have received an opinion (satisfactory to
you and your counsel) dated the Closing Date or the Option Closing
Date, as the case may be, of Richards, Layton & Finger, P.A., special
counsel for the Property Trustee, the Indenture Trustee and the
Guarantee Trustee, in form and substance satisfactory to you and
attached hereto as Exhibit A-3.
(i) You shall have received an opinion of Gibson, Dunn &
Crutcher LLP, counsel for the Underwriters, dated the Closing Date or
the Option Closing Date, as the case may be, in form and substance
satisfactory to you and attached hereto as Exhibit A-4.
(j) The Underwriters shall have received, in connection
with the execution of this Agreement and on the Closing Date and each
Option Closing Date, a "cold comfort" letter from KPMG Peat Marwick
LLP, dated as of each such date in form and substance satisfactory to
you with respect to the financial statements and certain financial
information contained in the Registration Statement and the
Prospectus.
(k) The Underwriters shall have received, in connection
with the execution of this Agreement and on the Closing Date and each
Option Closing Date, a "cold comfort" letter from
PricewaterhouseCoopers LLP, dated as of each such date in form and
substance satisfactory to you with respect to the financial statements
and certain financial
A-24
<PAGE> 26
information contained in the Registration Statement and the
Prospectus, but only to the extent such financial statements and
information pertain to the Suncoast Acquisition (as defined in the
Prospectus) and the financial condition and operations of the entities
which the Company acquired in the Suncoast Acquisition.
(l) You shall have received from the Company a
certificate, signed by Jerome M. Lapin and W. John Cash in their
capacities as the President and Chief Executive Officer and the Vice
President, Chief Financial Officer and Treasurer of the Company,
respectively, addressed to the Underwriters and dated the Closing Date
or Option Closing Date, as applicable, to the effect that:
(i) such officer does not know of any Proceedings
instituted, threatened or contemplated against the Company of
a character required to be disclosed in the Prospectus that
are not so disclosed; such officer does not know of any
material contract required to be filed as an exhibit to the
Registration Statement which is not so filed;
(ii) such officer has carefully examined the
Registration Statement and the Prospectus and all amendments
or supplements thereto and, in such officer's opinion, such
Registration Statement or such amendment as of its effective
date and as of the Closing Date, and the Prospectus or such
supplement as of its date and as of the Closing Date, did not
contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading
and, in such officer's opinion, since the effective date of
the Registration Statement, no event has occurred or
information become known that should have been set forth in an
amendment to the Registration Statement or a supplement to the
Prospectus which has not been so set forth in such amendment
or supplement;
(iii) the representations and warranties of the
Company set forth in Section 6 of this Agreement are true and
correct in all material respects as of the date of this
Agreement and as of the Closing Date or the Option Closing
Date, as the case may be, and the Company has complied with
all the agreements and satisfied all the conditions on its
part to be performed or satisfied at or prior to such Closing
Date; and
(iv) the Commission has not issued an order
preventing or suspending the use of the Prospectus or any
preliminary prospectus filed as a part of the Registration
Statement or any amendment thereto; no stop order suspending
the effectiveness of the Registration Statement has been
issued; and, to the best knowledge of the respective officers,
no proceedings for that purpose have been instituted or are
pending or contemplated under the Act.
A-25
<PAGE> 27
The delivery of the certificate provided for in this
subparagraph shall be and constitute a representation and warranty of
the Company as to the facts set forth in said certificate.
(m) The Underwriters shall have received from the Trust a
certificate, signed by each of the Administrative Trustees, addressed
to the Underwriters and dated the Closing Date or Option Closing Date,
as applicable, to the effect that:
(i) such trustee does not know of any Proceedings
instituted, threatened or contemplated against the Trust of a
character required to be disclosed in the Prospectus that are
not so disclosed; such trustee does not know of any material
contract required to be filed as an exhibit to the
Registration Statement which is not so filed;
(ii) such trustee has carefully examined the
Registration Statement and the Prospectus and all amendments
or supplements thereto and, in such trustee's opinion, such
Registration Statement or such amendment as of its effective
date and as of the Closing Date, and the Prospectus or such
supplement as of its date and as of the Closing Date, did not
contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading
and, in such trustee's opinion, since the effective date of
the Registration Statement, no event has occurred or
information become known that should have been set forth in an
amendment to the Registration Statement or a supplement to the
Prospectus which has not been so set forth in such amendment
or supplement;
(iii) the representations and warranties of the
Trust set forth in Section 6 of this Agreement are true and
correct in all material respects as of the date of this
Agreement and as of the Closing Date or the Option Closing
Date, as the case may be, and the Trust has complied with all
the agreements and satisfied all the conditions on its part to
be performed or satisfied at or prior to such Closing Date;
and
(iv) the Commission has not issued an order
preventing or suspending the use of the Prospectus or any
preliminary prospectus filed as a part of the Registration
Statement or any amendment thereto; no stop order suspending
the effectiveness of the Registration Statement has been
issued; and, to the best knowledge of the respective trustees,
no proceedings for that purpose have been instituted or are
pending or contemplated under the Act.
The delivery of the certificate provided for in this
subparagraph shall be and constitute a representation and warranty of
the Trust as to the facts set forth in said certificate.
A-26
<PAGE> 28
(n) You and Gibson, Dunn & Crutcher LLP, counsel for the
Underwriters, shall have received on or before the Closing Date or the
Option Closing Date, as the case may be, such further documents,
opinions, certificates and schedules or instruments relating to the
business, corporate, legal and financial affairs of the Offerors as
you and they shall have reasonably requested from the Offerors.
9. Effective Date of Agreement, Termination and Defaults. This
Agreement shall become effective upon, and shall not be deemed delivered until,
the later of (i) execution of this Agreement and (ii) when notification of the
effectiveness of the Registration Statement has been released by the
Commission.
This Agreement may be terminated at any time prior to the Closing Date
and any exercise of the option to purchase Additional Shares may be canceled at
any time prior to any Option Closing Date by the Underwriters by written notice
to the Offerors if any of the following has occurred: (i) since the respective
dates as of which information is given in the Registration Statement and the
Prospectus, any material adverse change or development involving a prospective
material adverse change in the condition, financial or otherwise, of the Trust
or the Company or the earnings, affairs, management or business of the Trust or
the Company, or any event or events that could reasonably be expected to result
in such a material adverse change (in any such case, whether or not arising in
the ordinary course of business) that would, in the Representatives' sole
judgment, make it impracticable to market the Shares on the terms and in the
manner contemplated in the Prospectus, (ii) any outbreak or escalation of
hostilities or other national or international calamity or crisis or change in
economic conditions or in the financial markets of the United States that, in
the Representatives' judgment, is material and adverse and would, in the
Representatives' judgment, make it impracticable to market the Shares on the
terms and in the manner contemplated in the Prospectus, (iii) the suspension or
material limitation of trading in securities on the New York Stock Exchange,
Inc., the American Stock Exchange, Inc., the Nasdaq SmallCap Market or the
Nasdaq National Market System or limitation on prices for securities on either
such exchange, the Nasdaq SmallCap Market or the Nasdaq National Market System,
(iv) the enactment, publication, decree or other promulgation of any federal or
state statute, regulation, rule or order of any court or other governmental
authority that in the Representatives' opinion materially and adversely
affects, or will materially and adversely affect, the business or operations of
the Trust or the Company, (v) the declaration of a banking moratorium by either
federal or New York, California, Illinois or Colorado state authorities, (vi)
the taking of any action by any Federal, state or local government or agency in
respect of its monetary or fiscal affairs that in the Representatives' opinion
has a material adverse effect on the financial markets in the United States,
(vii) there shall be any change in financial markets or in political, economic
or financial conditions which, in the opinion of the Representatives, either
renders it impracticable or inadvisable to proceed with the offering and sale
of the Shares on the terms set forth in the Prospectus or materially adversely
affects the market for the Shares or (vii) any conditions to the Underwriters'
obligations shall not have been fulfilled when and as required by this
Agreement.
If on the Closing Date or on any Option Closing Date, as the
case may be, any of the Underwriters shall fail or refuse to purchase the Firm
Shares or Additional Shares, as the case may be, which it has agreed to
purchase hereunder on such date, and the aggregate number of
A-27
<PAGE> 29
Firm Shares or Additional Shares, as the case may be, that such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase does not
exceed, in the aggregate, 10% of the total number of Shares that all
Underwriters are obligated to purchase on such date, each non-defaulting
Underwriter shall be obligated, in the proportion which the number of Firm
Shares set forth opposite its name in Schedule I hereto bears to the total
number of Firm Shares or Additional Shares, as the case may be, that all the
non-defaulting Underwriters have agreed to purchase, or in such other
proportion as the non-defaulting Underwriters may specify, to purchase the Firm
Shares or Additional Shares, as the case may be, that such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase on such
date. If, on the Closing Date or on the Option Closing Date, as the case may
be, any of the Underwriters shall fail or refuse to purchase the Firm Shares or
Additional Shares, as the case may be, in an amount that exceeds, in the
aggregate, 10% of the total number of the Shares, and arrangements satisfactory
to the non-defaulting Underwriters and the Offerors for the purchase of such
Shares are not made within 48 hours after such default, this Agreement shall
terminate without liability on the part of the non-defaulting Underwriters and
the Offerors, except as otherwise provided in this Section 9. In any such case
that does not result in termination of this Agreement, either you or the
Company may postpone the Closing Date or the Option Closing Date, as the case
may be, for not longer than seven (7) days, in order that the required changes,
if any, in the Registration Statement and the Prospectus or any other documents
or arrangements may be effected. Any action taken under this paragraph shall
not relieve a defaulting Underwriter from liability in respect of any default
of any such Underwriter under this Agreement.
The indemnity and contribution provisions and other
agreements, representations and warranties of the Offerors and the Offerors'
officers, directors and trustees set forth in or made pursuant to this
Agreement shall remain operative and in full force and effect, and will survive
delivery of and payment for the Shares, regardless of (i) any investigation, or
statement as to the results thereof, made by or on behalf of any of the
Underwriters or by or on behalf of the Offerors or the officers, directors or
trustees of the Offerors or any controlling person of the Offerors, (ii)
acceptance of the Shares and payment therefor hereunder or (iii) termination of
this Agreement. Notwithstanding any termination of this Agreement, the
Offerors shall be liable for and shall pay all expenses they have agreed to pay
pursuant to Section 5(l).
Except as otherwise provided, this Agreement has been and is
made solely for the benefit of, and shall be binding upon, the Offerors, the
Underwriters, any indemnified person referred to herein and their respective
successors and assigns, all as and to the extent provided in this Agreement,
and no other person shall acquire or have any right under or by virtue of this
Agreement. The terms "successors and assigns" shall not include a purchaser of
any of the Shares from any of the several Underwriters merely because of such
purchase.
10. Effectiveness of Registration Statement. The Representatives
and the Offerors will use their best efforts to cause the Registration
Statement to become effective, if it has not yet become effective, and to
prevent the issuance of any stop order suspending the effectiveness of the
Registration Statement and, if such stop order be issued, to obtain as soon as
possible the lifting thereof.
A-28
<PAGE> 30
11. Miscellaneous. All communications hereunder will be in
writing and, if sent to the Underwriters will be mailed, delivered or
telegraphed and confirmed to you c/o EVEREN Securities, Inc., 77 West Wacker
Drive, Chicago, Illinois 60601-1994, Attention: Syndicate Department, with a
copy to Gibson, Dunn & Crutcher LLP, 333 South Grand Avenue, Los Angeles,
California 90071, Attention: Kenneth M. Doran, Esq.; and if sent to the
Offerors will be mailed, delivered or telegraphed and confirmed to the Offerors
at the Company's corporate headquarters with a copy to Cooley Godward LLP, 2595
Canyon Boulevard, Suite 250, Boulder, Colorado 80302, Attention: James H.
Carroll, Esq.
THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF [CALIFORNIA] WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS
OF LAW THEREOF.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
A-29
<PAGE> 31
Please confirm that the foregoing correctly sets forth the agreement
among the Offerors and the several Underwriters, including you.
Very truly yours,
AMERICAN COIN MERCHANDISING, INC.
By:
-----------------------------------
W. John Cash
Vice President, Chief Financial
Officer and Treasurer
Very truly yours,
AMERICAN COIN MERCHANDISING TRUST I
By: American Coin Merchandising, Inc.,
as Depositor
By:
------------------------------
W. John Cash
Vice President, Chief Financial
Officer and Treasurer
The foregoing Underwriting Agreement is hereby confirmed and
accepted as of the date first above written.
EVEREN SECURITIES, INC.
PRUDENTIAL SECURITIES
INCORPORATED
LADENBURG THALMANN & CO. INC.
Acting as Representatives of the several
Underwriters named in Schedule I.
By: EVEREN Securities, Inc.
By:
--------------------------------
Basil E. Horner
Senior Managing Director
A-30
<PAGE> 32
SCHEDULE I
<TABLE>
<CAPTION>
NUMBER OF FIRM SHARES
UNDERWRITER TO BE PURCHASED
----------- ---------------------
<S> <C>
EVEREN Securities, Inc. . . . . . . . . . . .
Prudential Securities Incorporated . . . . .
Ladenburg Thalmann & Co. Inc. . . . . . . . .
[Name] . . . . . . . . . . . . . . . . . . .
Total Firm Shares . . . . . . . . . . . . . . 5,000,000
---------
</TABLE>
<PAGE> 1
EXHIBIT 4.9
AMENDED AND RESTATED TRUST AGREEMENT
among
American Coin Merchandising, Inc., as Depositor,
Wilmington Trust Company,
as Property Trustee,
Wilmington Trust Company,
as Delaware Trustee,
and
The Administrative Trustees Named Herein
Dated as of ______, 1998
AMERICAN COIN MERCHANDISING TRUST I
<PAGE> 2
AMERICAN COIN MERCHANDISING TRUST I
Certain Sections of this Trust Agreement relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
Trust Indenture Trust Agreement
Act Section Section
--------------------- --------------------
<S> <C>
(Section)310(a)(1) 8.7
(a)(2) 8.7
(a)(3) 8.9
(a)(4) 2.7(a)(ii)
(a)(5) Not applicable
(b) 8.8
(c) Not applicable
(Section)311(a) 8.13
(b) 8.13
(c) Not applicable
(Section)312(a) 5.7
(b) 5.7
(c) 5.7
(Section)313(a) 8.14(a)
(a)(4) 8.14(b)
(b) 8.14(b)
(c) 10.9
(d) 8.14(c)
(Section)314(a) 8.15
(b) Not Applicable
(c)(1) 8.16
(c)(2) 8.16
(c)(3) Not Applicable
(d) Not Applicable
(e) 1.1, 8.16
(Section)315(a) 8.1(a), 8.3(a)
(b) 8.2, 10.9
(c) 10.11
(d) 8.1, 8.3
(e) 10.11
(Section)316(a)(1)(A) 5.14
(a)(1)(B) 5.14
(a)(2) Not Applicable
(b) 5.14
(c) 6.7
(Section)317(a)(1) 10.11
(a)(2) 10.11
(b) 5.9
(Section)318(a) 10.11
- -----------------
</TABLE>
Note: This reconciliation and tie sheet shall not, for any purpose, be
deemed to be a part of the Trust Agreement.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II ESTABLISHMENT OF THE TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.1 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.2 Office of the Delaware Trustee; Principal Place of Business . . . . . . . . . . . 10
Section 2.3 Initial Contribution of Trust Property; Organizational Expenses . . . . . . . . . 10
Section 2.4 Issuance of the Preferred Securities . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.5 Issuance of the Common Securities; Subscription and Purchase of
Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.6 Declaration of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.7 Authorization to Enter into Certain Transactions . . . . . . . . . . . . . . . . 12
Section 2.8 Assets of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.9 Title to Trust Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE III PAYMENT ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.1 Payment Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE IV DISTRIBUTIONS; REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.1 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.2 Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.3 Subordination of Common Securities . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.4 Payment Procedures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.5 Tax Returns and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.6 Payment of Taxes, Duties, Etc. of the Trust . . . . . . . . . . . . . . . . . . 20
Section 4.7 Payments under Indenture or Pursuant to Direct Actions . . . . . . . . . . . . . 20
ARTICLE V TRUST SECURITIES CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.1 Initial Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.2 The Trust Securities Certificates. . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.3 Execution and Delivery of Trust Securities Certificates. . . . . . . . . . . . . . 20
Section 5.4 Registration of Transfer and Exchange of Preferred
Securities Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.5 Mutilated, Destroyed, Lost or Stolen Trust Securities Certificates . . . . . . . . 22
</TABLE>
i
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 5.6 Persons Deemed Securityholders . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 5.7 Access to List of Securityholders' Names and Addresses . . . . . . . . . . . . 22
Section 5.8 Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.9 Appointment of Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.10 Ownership of Common Securities by Depositor . . . . . . . . . . . . . . . . . 23
Section 5.11 Book-Entry Preferred Securities Certificates; Common Securities
Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.12 Notices to Clearing Agency . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.13 Definitive Preferred Securities Certificates . . . . . . . . . . . . . . . . . 25
Section 5.14 Rights of Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE VI ACTS OF SECURITYHOLDERS; MEETINGS; VOTING . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.1 Limitations on Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.2 Notice of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 6.3 Meetings of Preferred Securityholders . . . . . . . . . . . . . . . . . . . . 29
Section 6.4 Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 6.5 Proxies, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 6.6 Securityholder Action by Written Consent . . . . . . . . . . . . . . . . . . . 29
Section 6.7 Record Date for Voting and Other Purposes . . . . . . . . . . . . . . . . . . 30
Section 6.8 Acts of Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 6.9 Inspection of Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VII REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.1 Representations and Warranties of the Bank . . . . . . . . . . . . . . . . . . 31
Section 7.2 Representations and Warranties of Depositor . . . . . . . . . . . . . . . . . 32
ARTICLE VIII THE TRUSTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.1 Certain Duties and Responsibilities . . . . . . . . . . . . . . . . . . . . . 32
Section 8.2 Certain Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 8.3 Certain Rights of Property Trustee . . . . . . . . . . . . . . . . . . . . . . 34
Section 8.4 Not Responsible for Recitals or Issuance of Securities . . . . . . . . . . . . 36
Section 8.5 May Hold Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 8.6 Compensation; Indemnity; Fees . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 8.7 Corporate Property Trustee Required; Eligibility of Trustees . . . . . . . . . 37
Section 8.8 Conflicting Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 8.9 Co-Trustees and Separate Trustee . . . . . . . . . . . . . . . . . . . . . . . 38
Section 8.10 Resignation and Removal; Appointment of Successor . . . . . . . . . . . . . . 39
Section 8.11 Acceptance of Appointment by Successor . . . . . . . . . . . . . . . . . . . . 41
Section 8.12 Merger, Conversion, Consolidation or Succession to Business . . . . . . . . . 41
Section 8.13 Preferential Collection of Claims Against Depositor or Trust . . . . . . . . . 42
</TABLE>
ii
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 8.14 Reports by Property Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 8.15 Reports to the Property Trustee. . . . . . . . . . . . . . . . . . . . . . . . 43
Section 8.16 Evidence of Compliance with Conditions Precedent. . . . . . . . . . . . . . . . 43
Section 8.17 Number of Trustees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 8.18 Delegation of Power. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 8.19 Voting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE IX DISSOLUTION, LIQUIDATION AND MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 9.1 Dissolution Upon Expiration Date. . . . . . . . . . . . . . . . . . . . . . . . 44
Section 9.2 Early Dissolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 9.3 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 9.4 Liquidation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 9.5 Mergers, Consolidations, Amalgamations or Replacements of the Trust. . . . . . 46
ARTICLE X MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 10.1 Limitation of Rights of Securityholders. . . . . . . . . . . . . . . . . . . . 47
Section 10.2 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 10.3 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 10.4 Separability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 10.5 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 10.6 Payments Due on Non-Business Day. . . . . . . . . . . . . . . . . . . . . . . . 49
Section 10.7 Successors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 10.8 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 10.9 Reports, Notices and Demands. . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 10.10 Agreement Not to Petition. . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 10.11 Trust Indenture Act; Conflict with Trust Indenture Act. . . . . . . . . . . . . 51
Section 10.12 Acceptance of Terms of Trust Agreement, Guarantee and Indenture. . . . . . . . 51
</TABLE>
iii
<PAGE> 6
AMENDED AND RESTATED TRUST AGREEMENT (this "Trust Agreement"), dated
as of _____________, 1998, among (i) American Coin Merchandising, Inc., a
Delaware corporation (including any successors or assigns, the "Depositor"),
(ii) Wilmington Trust Company, a Delaware banking corporation organized and
existing under the laws of the State of Delaware, as property trustee (in such
capacity, the "Property Trustee" and, in its separate corporate capacity and
not in its capacity as Property Trustee, the "Bank"), (iii) Wilmington Trust
Company, a Delaware banking corporation organized under the laws of the State
of Delaware, as Delaware trustee (in such capacity, the "Delaware Trustee"),
(iv) Jerome M. Lapin, an individual, and W. John Cash, an individual, each of
whose address is c/o American Coin Merchandising, Inc., 5660 Central Avenue,
Boulder, Colorado 80301 (each an "Administrative Trustee" and collectively the
"Administrative Trustees") (the Property Trustee, the Delaware Trustee and the
Administrative Trustees are referred to collectively herein as the "Trustees")
and (v) the several Holders, as hereinafter defined.
WITNESSETH
WHEREAS, the Depositor and the Delaware Trustee established a business
trust pursuant to the Delaware Business Trust Act by entering into a Trust
Agreement, dated as of July 22, 1998 (the "Original Trust Agreement"), and by
the execution and filing by the Delaware Trustee and Jerome M. Lapin and W.
John Cash, as Administrative Trustees, with the Secretary of State of the State
of Delaware of the Certificate of Trust, filed on July 22, 1998.
WHEREAS, the parties hereto, by this Trust Agreement, amend and
restate each and every term and provision of the Original Trust Agreement.
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 Securityholders, hereby agrees as follows:
ARTICLE I
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
<PAGE> 7
(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.
"Act" has the meaning specified in Section 6.8.
"Additional Amount" means, with respect to Trust Securities of a given
Liquidation Amount and/or a given period, the amount of Additional Interest (as
defined in the Indenture) paid by the Depositor on a Like Amount of Debentures
for such period.
"Additional Sums" has the meaning specified in Section 10.6 of the
Indenture.
"Administrative Trustee" means each of the Persons identified as an
"Administrative Trustee" in the preamble to this Trust Agreement solely in such
Person's capacity as Administrative Trustee of the Trust created and continued
hereunder and not in such Person's individual capacity, or such Administrative
Trustee's successor in interest in such capacity, or any successor 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. 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.
"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 a 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 Bankruptcy 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 90 consecutive days; or
(b) the institution by such Person of proceedings to be
adjudicated a 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 Bankruptcy 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 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.
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<PAGE> 8
"Bankruptcy Law" means any Federal or state bankruptcy, insolvency,
reorganization or similar law.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Depositor to have been duly adopted
by the Depositor's Board of Directors, or such committee of the Board of
Directors or officers of the Depositor 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 appropriate Trustees.
"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 a day other than (a) a Saturday or Sunday, (b) a
day on which banking institutions in the State of Colorado are authorized or
required by law or executive order to remain closed, or (c) a day on which the
Property Trustee's Corporate Trust Office 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 Preferred Securities
Certificates, substantially in the form attached as Exhibit B, as the same may
be amended and supplemented from time to time.
"Certificate of Trust" means the certificate of trust filed with the
Secretary of State of the State of Delaware with respect to the Trust, as
amended or restated from time to time.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act. The Depository Trust
Company will act as the initial Clearing Agency hereunder.
"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 date of execution and delivery of this Trust
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, 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 Security" means an undivided beneficial interest in the assets
of the Trust, having a Liquidation Amount of $10 and having the rights provided
therefor in this Trust Agreement, including the right to receive Distributions
and a Liquidation Distribution as provided herein.
3
<PAGE> 9
"Common Securities Certificate" means a certificate evidencing
ownership of Common Securities, substantially in the form attached as Exhibit
C.
"Corporate Trust Office" means (i) when used with respect to the
Property Trustee, the principal office of the Property Trustee located at
Rodney Square North, 1100 North Market Street, Wilmington, Delaware,
19890-0001, Attention: Corporate Trust Administration, and (ii) when used with
respect to the Debenture Trustee, the principal office of the Debenture Trustee
located at Rodney Square North, 1100 North Market Street, Wilmington, Delaware,
19890-0001, Attention: Corporate Trust Administration.
"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 under the
Indenture.
"Debenture Tax Event" means a "Tax Event" as defined in the Indenture.
"Debenture Trustee" means Wilmington Trust Company, a Delaware banking
corporation organized under the laws of the State of Delaware and any successor
thereto, as trustee under the Indenture.
"Debentures" means the aggregate principal amount of the Depositor's
___% Junior Subordinated Deferrable Interest Debentures, issued pursuant to the
Indenture.
"Definitive Preferred Securities Certificates" means either or both
(as the context requires) of (a) Preferred Securities Certificates issued as
Book-Entry Preferred Securities Certificates as 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 created and continued hereunder and not in its
individual capacity, or its successor in interest in such capacity, or any
successor trustee appointed as herein provided.
"Depositor" has the meaning specified in the preamble to this Trust
Agreement.
"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.
4
<PAGE> 10
"Event of Default" means any one of the following events (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) the occurrence of a Debenture Event of Default; or
(b) default by the Property Trustee in the payment of any
Distribution when it becomes due and payable, and continuation of such default
for a period of 30 days; or
(c) default by the Property Trustee in the payment of any
Redemption Price of any Trust Security when it becomes due and payable; or
(d) default in the performance, or breach, in any
material respect, of any covenant or warranty of the Property Trustee in this
Trust Agreement (other than a covenant or warranty a default in the performance
or breach of which is dealt with in clause (b) or (c) above) and continuation
of such default or breach for a period of 60 days after there has been given,
by registered or certified mail, to the defaulting Property Trustee by the
Holders of at least 25% in aggregate liquidation preference of the Outstanding
Preferred Securities a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice of
Default" hereunder; or
(e) the occurrence of a Bankruptcy Event with respect to
the Property Trustee and the failure by the Depositor to appoint a successor
Property Trustee within 60 days thereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expense Agreement" means the Agreement as to Expenses and Liabilities
between the Depositor and the Trust, substantially in the form attached as
Exhibit D, as amended from time to time.
"Expiration Date" has the meaning specified in Section 9.1.
"Guarantee" means the Guarantee Agreement executed and delivered by
the Depositor and Wilmington Trust Company, as 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 Securityholder.
"Indenture" means the Junior Subordinated Indenture, dated as of
_______, 1998, between the Depositor and the Debenture Trustee, as trustee, as
amended or supplemented from time to time.
"Investment Company Event" means the receipt by the Depositor and the
Trust of an Opinion of Counsel experienced in such matters 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
5
<PAGE> 11
legislative body, court, governmental agency or regulatory authority (a "Change
in Investment Company Act Law"), the Trust is or will be considered an
"investment company" that is required to be registered under the 1940 Act,
which Change in Investment Company Act Law becomes effective on or after the
date or original issuance of the Preferred Securities under this Trust
Agreement.
"Lien" means any lien, pledge, charge, encumbrance, mortgage, deed of
trust, adverse ownership interest, adverse claim, hypothecation, assignment,
security interest or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever.
"Like Amount" means (a) with respect to a redemption of Trust
Securities, Trust Securities having a Liquidation Amount equal to the principal
amount of Debentures to be contemporaneously redeemed in accordance with the
Indenture, allocated to the Common Securities and the Preferred Securities
based upon the relative Liquidation Amounts of such classes and the proceeds of
which will be used to pay the Redemption Price of such Trust Securities, and
(b) with respect to a distribution of Debentures to Holders of Trust Securities
in connection with a dissolution or liquidation of the Trust, Debentures having
a principal amount equal to the Liquidation Amount of the Trust Securities of
the Holder to whom such Debentures are distributed.
"Liquidation Amount" means the stated amount of $10 per Trust
Security.
"Liquidation Date" means the date on which Debentures 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.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, Chief Executive Officer, President or a Vice President, and by the
Chief Financial Officer, Treasurer, Secretary or an Assistant Secretary, of the
Depositor, and delivered to the appropriate Trustee. One of the officers
signing an Officers' Certificate given pursuant to Section 8.16 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 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
6
<PAGE> 12
(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, the Delaware Trustee or the
Depositor, but not an employee of any thereof, and who shall be reasonably
acceptable to the Property Trustee.
"Original Trust Agreement" has the meaning specified in the recitals
to this Trust Agreement.
"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 Property
Trustee or delivered to the Property Trustee for cancellation;
(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; and
(c) 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 Sections 5.4, 5.5, 5.11 and 5.13; provided, however, that in
determining whether the Holders of the requisite Liquidation Amount of the
Outstanding Preferred Securities have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, Preferred 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 protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Preferred Securities that such Trustee knows to be so owned shall be so
disregarded and (b) the foregoing shall not apply at any time when all of the
outstanding Preferred Securities are owned by the Depositor, one or more of the
Trustees and/or any such Affiliate. Preferred Securities so owned which have
been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Administrative Trustees the pledgee's
right so to act with respect to such Preferred 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 and shall initially be the Bank.
7
<PAGE> 13
"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 Securityholders in which all amounts paid in
respect of the Debentures will be held and from which the Property Trustee,
through the Paying Agent, shall make payments to the Securityholders in
accordance with Sections 4.1 and 4.2.
"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 Security" means an undivided beneficial interest in the
assets of the Trust designated as "____% Cumulative Trust Preferred
Securities," having a Liquidation Amount of $10 per security and having the
rights provided therefor in this Trust Agreement, including the right to
receive Distributions and a Liquidation Distribution as provided herein.
"Preferred Securities Certificate" means a certificate evidencing
ownership of Preferred Securities, substantially in the form attached as
Exhibit E.
"Property Trustee" means the Person identified as the "Property
Trustee" in the preamble to this Trust Agreement solely in its capacity as
Property Trustee of the Trust heretofore created and continued hereunder and
not in its individual capacity, or its successor in interest in such capacity,
or any successor property trustee appointed as herein provided.
"Redemption Date" means, with respect to any Trust Security to be
redeemed, the date fixed for such redemption by or pursuant to this Trust
Agreement; provided that each Debenture Redemption Date and the stated maturity
of the Debentures shall be a Redemption Date for a Like Amount of Trust
Securities.
"Redemption Price" means, with respect to any Trust Security, the
Liquidation Amount of such Trust Security, plus accumulated and unpaid
Distributions to the Redemption Date, plus the related amount of the premium,
if any, paid by the Depositor upon the concurrent redemption of a Like Amount
of Debentures, allocated on a pro rata basis (based on Liquidation Amounts)
among the Trust Securities.
"Relevant Trustee" shall have the meaning specified in Section 8.10.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 5.4.
"Securityholder" means a Person in whose name a Trust Security 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.
"Tax Event" means the receipt by the Trust of an Opinion of Counsel
experienced in such matters to the effect that, as a result of any amendment
to, or change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein, or as a result of any official
administrative
8
<PAGE> 14
pronouncement or judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or which pronouncement or
decision is announced on or after the date of issuance of the Preferred
Securities under this Trust Agreement, there is more than an insubstantial risk
that (i) the Trust is, or will be within 90 days after the date of such Opinion
of Counsel, subject to United States 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 within 90 days after the date of such Opinion of
Counsel, will not be, deductible by the Depositor, 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 of such Opinion of Counsel, subject to more than
a de minimis amount of other taxes, duties, assessments or other governmental
charges.
"Trust" means the Delaware business trust created by the Original
Trust Agreement and continued hereby and identified on the cover page to this
Trust Agreement.
"Trust Agreement" means this Amended and Restated Trust Agreement, as
the same may be further modified, amended, restated or supplemented in
accordance with the applicable provisions hereof, including (i) all exhibits
hereto and (ii) for all purposes of this Amended and Restated Trust Agreement
and any such modification, amendment or supplement, the provisions of the Trust
Indenture Act that are deemed to be a part of and govern this Amended and
Restated 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 and any other property and assets for the time being held or
deemed to be held by the Property Trustee pursuant to the trusts of this Trust
Agreement.
"Trust Security" means any one of the Common Securities or the
Preferred Securities.
"Trust Securities Certificate" means any one of the Common Securities
Certificates or the Preferred Securities Certificates.
"Trustees" means, collectively, the Property Trustee, the Delaware
Trustee and the Administrative Trustees.
"Underwriters" means each of the Underwriters named in the Underwriting
Agreement.
"Underwriting Agreement" means that certain Underwriting Agreement,
dated as of _________, 1998, among the Trust, the Depositor, and EVEREN
Securities, Inc. as the representative of the Underwriters.
9
<PAGE> 15
ARTICLE II
ESTABLISHMENT OF THE TRUST
Section 2.1 Name.
The Trust continued hereby shall be known as "AMERICAN COIN
MERCHANDISING TRUST I," 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 engage in the
transactions contemplated hereby, 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
Wilmington Trust Company, Rodney Square North, 1100 North Market Street,
Wilmington, Delaware, 19890-0001, Attention: Corporate Trust Administration,
or such other address in the State of Delaware as the Delaware Trustee may
designate by written notice to the Securityholders and the Depositor. The
principal executive office of the Trust is c/o American Coin Merchandising,
Inc., 5660 Central Avenue, Boulder, Colorado 80301.
Section 2.3 Initial Contribution of Trust Property; Organizational
Expenses.
The Trustees acknowledge receipt in trust from the Depositor in
connection with the Original Trust Agreement of the sum of $10, which
constituted the initial Trust Property. 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.
The Depositor, on behalf of the Trust and pursuant to the Original
Trust Agreement, has 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, registered in the name of the
nominee of the initial Clearing Agency, as instructed by EVEREN Securities,
Inc., as the representative of the Underwriters, in an aggregate amount of
5,000,000 Preferred Securities having an aggregate Liquidation Amount of
$50,000,000, against receipt of such aggregate purchase price of such Preferred
Securities of $50,000,000, which amount the Administrative Trustee shall
promptly deliver to the Property Trustee. If the Underwriters exercise their
option to purchase all or any portion of an additional 750,000 Preferred
Securities pursuant to the terms of the Underwriting Agreement, then an
Administrative Trustee, on behalf of the Trust, shall execute in accordance
with Section 5.2 and deliver to the Underwriters, additional Preferred
Securities Certificates, registered in the name of the nominee of the initial
Clearing Agency, as instructed by EVEREN Securities, Inc., as the
representative of the Underwriters, in an aggregate amount of up to 750,000
Preferred Securities
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<PAGE> 16
having an aggregate Liquidation Amount of up to $7,500,000, against receipt of
the aggregate purchase price of such additional Preferred Securities of
$7,500,000 which amount the Administrative Trustee shall promptly deliver to
the Property Trustee.
Section 2.5 Issuance of the Common Securities; Subscription and
Purchase of Debentures.
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 Depositor Common Securities
Certificates, registered in the name of the Depositor, in an aggregate amount
of __________ Common Securities having an aggregate Liquidation Amount of
$__________, against payment by the Depositor of such amount, which amount such
Administrative Trustee shall promptly deliver to the Property Trustee.
Contemporaneously therewith, 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 and having an aggregate principal amount equal
to $_________ 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 $_________, such amount being the sum of the amounts delivered to
the Property Trustee pursuant to (i) the second sentence of Section 2.4 and
(ii) the first sentence of this Section 2.5. If the Underwriters exercise
their option to purchase additional Preferred Securities pursuant to the terms
of the Underwriting Agreement, then an Administrative Trustee, on behalf of the
Trust, shall execute in accordance with Section 5.2 and deliver to the
Depositor, additional Common Securities Certificates, registered in the name of
the Depositor, in an aggregate amount of up to 25,000 Common Securities having
an aggregate Liquidation Amount of up to $250,000, against payment by the
Depositor of such amount, which amount the Administrative Trustee shall
promptly deliver to the Property Trustee. Contemporaneously therewith, 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
and having an aggregate principal amount of up to $250,000, and, in
satisfaction of the purchase price for such Debentures, the Property Trustee,
on behalf of the Trust, shall deliver to the Depositor an aggregate amount
equal to the sum of the amounts delivered to the Property Trustee pursuant to
(i) the third sentence of Section 2.4, and (ii) the third sentence of this
Section 2.5.
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, and (b) to engage in those activities necessary, advisable or
incidental thereto. 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 in trust upon and subject
to the conditions set forth herein for the benefit of the Trust and the
Securityholders. 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 Property Trustee or the Administrative
Trustees set forth herein. The Delaware Trustee shall be one of the Trustees
of the Trust for the
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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 paragraph (b) of this Section and Section 2.6, and in
accordance with the following provisions (i) and (ii), the Trustees shall have
the authority to enter into all transactions and agreements determined by the
Trustees to be appropriate in exercising the authority, express or implied,
otherwise granted to the Trustees under this Trust Agreement, and to perform
all acts in furtherance thereof, including without limitation, the following:
(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) the issuance and sale of the Trust
Securities;
(B) to cause the Trust to enter into, and to
execute, deliver and perform on behalf of the Trust, the Expense
Agreement and the Certificate Depository Agreement and such other
agreements as may be necessary or desirable in connection with the
purposes and function of the Trust;
(C) assisting 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;
(D) assisting in the listing of the Preferred
Securities upon such securities exchange or exchanges as shall be
determined by the Depositor and the registration of the Preferred
Securities under the Exchange Act, and the preparation and filing of
all periodic and other reports and other documents pursuant to the
foregoing;
(E) the sending of notices (other than
notices of default) and other information regarding the Trust
Securities and the Debentures to the Securityholders in accordance
with this Trust Agreement;
(F) the appointment of a Paying Agent and
Securities Registrar in accordance with this Trust Agreement;
(G) registering transfer of the Trust
Securities in accordance with this Trust Agreement;
(H) to the extent provided in this Trust
Agreement, the winding up of the affairs of and liquidation of the
Trust and the preparation, execution and filing of the certificate of
cancellation with the Secretary of State of the State of Delaware;
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(I) 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 or all of the
other Administrative Trustees) any documents that the Administrative
Trustees have the power to execute pursuant to this Trust Agreement;
and
(J) the taking of any action incidental to
the foregoing as the Administrative Trustees may from time to time
determine is necessary or advisable to give effect to the terms of
this Trust Agreement for the benefit of the Securityholders (without
consideration of the effect of any such action on any particular
Securityholder).
(ii) As among the Trustees, the Property Trustee have the
power, duty and authority to act on behalf of the Trust respect to the
following matters:
(A) the establishment of the Payment Account;
(B) the receipt of the Debentures;
(C) the collection of interest, principal and
any other payments made in respect of the Debentures in the Payment
Account;
(D) the distribution through the Paying Agent
of amounts owed to the Securityholders 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 and
other information regarding the Trust Securities and the Debentures to
the Securityholders 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 and the preparation, execution and filing of the certificate of
cancellation with the Secretary of State of the State of Delaware;
(I) after an Event of Default (other than
under paragraph (b), (c), (d) or (e) of the definition of such term if
such Event of Default is by or with respect to the Property Trustee)
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 Securityholders
(without consideration of the effect of any such action on any
particular Securityholder);
(J) so long as the Property Trustee is the
Securities Registrar, registering transfers of the Trust Securities in
accordance with this Trust Agreement; and
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(K) except as otherwise provided in 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).
(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 Trustees shall not (i) 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
Securityholders, 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) incur any indebtedness for
borrowed money or issue any other debt or (v) take or consent to any action
that would result in the placement of a Lien on any of the Trust Property. The
Administrative Trustees shall defend all claims and demands of all Persons at
any time claiming any Lien on any of the Trust Property adverse to the interest
of the Trust or the Securityholders in their capacity as Securityholders.
(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 (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) the preparation and filing by the Trust with
the Commission and the execution by the Trust of a registration
statement on the appropriate form in relation to the Preferred
Securities, including any amendments thereto;
(ii) the determination of the States in which to
take appropriate action to qualify or register for sale all or part of
the Preferred Securities and the determination of any and all such
acts, other than actions which must be taken by or on behalf of the
Trust, and the advice to the Trustees of actions they must take on
behalf of the Trust, and the preparation for execution and filing of
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;
(iii) the preparation for filing by the Trust and
execution on behalf of the Trust of an application to the American
Stock Exchange or any other national stock exchange or the Nasdaq
National Market for listing upon notice of issuance of any Preferred
Securities;
(iv) the preparation for filing by the Trust with
the Commission and the execution on behalf of the Trust of a
registration statement on Form 8-A relating to the registration of the
Preferred Securities under Section 12(b) or 12(g) of the Exchange Act,
including any amendments thereto;
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(v) the negotiation of the terms of, and the
execution and delivery of, the Underwriting Agreement providing for
the sale of the Preferred Securities; and
(vi) the taking of any other actions necessary or
desirable 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 fail
to be classified as a grantor trust 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 any Administrative Trustee
determines in its discretion to be necessary or desirable for such purposes, as
long as such action does not adversely affect in any material respect the
interests of the holders of the Preferred Securities.
Section 2.8 Assets of Trust.
The assets of the Trust shall consist of 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 Securityholders in
accordance with this Trust Agreement.
ARTICLE III
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 Securityholders 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.
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ARTICLE IV
DISTRIBUTIONS; REDEMPTION
Section 4.1 Distributions.
(a) The Trust Securities represent undivided beneficial
interests in the Trust Property, and Distributions (including of Additional
Amounts) will be made on the Trust Securities at the rate and on the dates that
payments of interest (including of Additional Interest, as defined in the
Indenture) are made on the Debentures. Accordingly:
(i) Distributions on the Trust Securities shall be
cumulative, and will accumulate whether or not there are funds of the
Trust available for the payment of Distributions. Distributions shall
accrue from the date of original issuance of the Trust Securities,
and, except in the event (and to the extent) 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
the 15th day of each January, April, July and October of each year,
commencing on October 15, 1998. If any date on which a Distribution
is otherwise payable on the Trust Securities is not a Business Day,
then the payment of such Distribution shall 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 such date (each date on which distributions are
payable in accordance with this Section 4.1(a), a "Distribution
Date").
(ii) Assuming payments of interest on the Debentures
are made when due (and before giving effect to Additional Amounts, if
applicable), Distributions on the Trust Securities shall be paid at a
rate of ___% per annum of the Liquidation Amount of the Trust
Securities. The amount of Distributions payable for any full period
shall be computed on the basis of a 360-day year of twelve 30-day
months. The amount of Distributions for any partial period shall be
computed on the basis of the number of days elapsed in a 360-day year
of twelve 30-day months. The amount of Distributions payable for any
period shall include the Additional Amounts, if any.
(iii) 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.
(b) 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 one Business Day prior to such Distribution Date; provided,
however, that in the event that the Preferred Securities do not remain in
book-entry-only form, the relevant record date shall be the date 15 days prior
to the relevant Distribution Date (or, if such date is not a Business Day, the
next Business Day following such date).
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Section 4.2 Redemption.
(a) On each Debenture Redemption Date and on the stated
maturity of the Debentures, the Trust will be required to redeem, subject to
Section 4.3, a Like Amount of Trust Securities at the Redemption Price.
(b) Notice of redemption 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 each Holder of Trust Securities to
be redeemed, at such Holder's address appearing in the Security Register. All
notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the CUSIP number;
(iv) if less than all the Outstanding Trust
Securities are to be redeemed, the identification and the total
Liquidation Amount of the particular Trust Securities to be redeemed;
and
(v) that on the Redemption Date the Redemption
Price 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.
(c) The Trust Securities redeemed on each Redemption Date
shall be redeemed at the Redemption Price with the proceeds from the
contemporaneous redemption of Debentures. Redemptions of the Trust Securities
shall be made and the Redemption Price 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.
(d) If the Property Trustee gives a notice of redemption
in respect of any Preferred Securities, then, by 12:00 noon, Eastern time, on
the Redemption Date, with respect to Preferred Securities held in certificated
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
and will give the Paying Agent irrevocable instructions and authority to pay
the Redemption Price to the Holders thereof upon surrender of their Preferred
Securities Certificates. With respect to Preferred Securities held in
book-entry form, the Property Trustee, subject to Section 4.2(c), will
irrevocably deposit with the Clearing Agency for the Preferred Securities funds
sufficient to pay the applicable Redemption Price and will give such Clearing
Agency irrevocable instructions and authority to pay the Redemption Price to
the holders thereof. 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 Securityholders holding Trust Securities so called for redemption will
cease, except the right of such Securityholders to receive the Redemption Price
and any
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Distribution payable on or prior to the Redemption Date, but without interest,
and such Trust Securities will cease to be outstanding. 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 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 such date. In the event that payment of the Redemption Price in
respect of any Trust Securities called for redemption is improperly withheld or
refused and not paid either by the Trust or by the Depositor pursuant to the
Guarantee, Distributions on such Trust Securities will continue to accrue, at
the then applicable rate, from the Redemption Date originally established by
the Trust for such Trust Securities to the date such Redemption Price is
actually paid, in which case the actual payment date will be the date fixed for
redemption for purposes of calculating the Redemption Price.
(e) Payment of the Redemption Price on the Trust
Securities shall be made to the recordholders thereof as they appear on the
Securities Register for the Trust Securities on the relevant record date, which
shall be one Business Day prior to the relevant Redemption Date; provided,
however, that in the event that the Preferred Securities do not remain in
book-entry-only form, the relevant record date shall be the date 15 days prior
to the relevant Redemption Date (or, if such date is not a Business Day, the
next Business Day following such date).
(f) Subject to Section 4.3(a), if less than all the
Outstanding Trust Securities are to be redeemed on a Redemption Date, then the
aggregate Redemption Price 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. The particular Preferred Securities
to be redeemed shall be selected on a pro rata basis (based upon Liquidation
Amounts) 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 such method (including, without limitation, by lot) as the
Property Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of portions (equal to $10 or an integral multiple of
$10 in excess thereof) of the Liquidation Amount of Preferred Securities of a
denomination larger than $10. The Property Trustee shall promptly notify the
Securities Registrar in writing of the Preferred Securities selected for
redemption and, in the case of any Preferred Securities selected for partial
redemption, the Liquidation Amount thereof to be redeemed. 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 that has been or is
to be redeemed.
Section 4.3 Subordination of Common Securities.
(a) Payment of Distributions (including Additional
Amounts, if applicable) on, and the Redemption Price of, the Trust Securities,
as applicable, shall be made, subject to Section 4.2(f), pro rata among the
Common Securities and the Preferred Securities based on the Liquidation Amount
of the Trust Securities; provided, however, that if on any Distribution Date or
Redemption Date any Event of Default resulting from a Debenture Event of
Default shall have occurred and be continuing, no payment of any Distribution
(including Additional Amounts, if applicable) on, or Redemption Price of, any
Common Security, and no other payment on account of the redemption, liquidation
or other acquisition of Common Securities, shall be made unless
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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.
(b) In the case of the occurrence of any Event of Default
resulting from any Debenture Event of Default, the Holder of Common Securities
will be deemed to have waived any right to act with respect to any such Event
of Default under this Trust Agreement until the effect of all such Events of
Default with respect to the Preferred Securities have been cured, waived or
otherwise eliminated. Until any such Event of Default under this Trust
Agreement with respect to the Preferred Securities has been so cured, waived or
otherwise eliminated, the Property Trustee shall act solely on behalf of the
Holders of the Preferred Securities and not the 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.
Section 4.4 Payment Procedures.
Payments of Distributions (including Additional Amounts, if
applicable) 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, provided that payments will be made by wire
transfer if requested by a holder of at least $1,000,000 aggregate Liquidation
Amount of the Preferred Securities, or, if the Preferred Securities are held by
a Clearing Agency, such Distributions shall be made to the Clearing Agency in
immediately available funds, which shall credit the relevant Persons' accounts
at such Clearing Agency 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 Common Securityholder.
Section 4.5 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 and filed) 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 Securityholder the appropriate Internal Revenue Service form
required to be provided on such form. The Administrative Trustees shall
provide the Depositor and the Property Trustee with a copy of all such returns
and reports 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
Securityholders under the Trust Securities.
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Section 4.6 Payment of Taxes, Duties, Etc. of the Trust.
Upon receipt under the Debentures of Additional Sums, the Property
Trustee shall promptly pay 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 4.7 Payments under Indenture or Pursuant to Direct
Actions.
Any amount payable hereunder to any Holder of Preferred Securities
shall be reduced by the amount of any corresponding payment that such Holder
(and any Owner with respect thereto) has directly received pursuant to Section
5.8 of the Indenture or Section 5.14 of this Trust Agreement.
ARTICLE V
TRUST SECURITIES CERTIFICATES
Section 5.1 Initial Ownership.
Upon the creation of the Trust and the contribution by the Depositor
pursuant to Section 2.3 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 $10 Liquidation Amount and integral multiples of $10 in excess
thereof, and the Common Securities Certificates shall be issued in
denominations of $10 Liquidation Amount and integral multiples of $10 in excess
thereof. The Trust Securities Certificates shall be executed on behalf of the
Trust by signature of at least one Administrative Trustee. Trust Securities
Certificates bearing the 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 benefits 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 Securityholder, and shall be entitled to the rights and subject to the
obligations of a Securityholder hereunder, upon due registration of such Trust
Securities Certificate in such transferee's name pursuant to Sections 5.4, 5.11
and 5.13.
Section 5.3 Execution and Delivery of Trust Securities
Certificates.
On or prior to the Closing Date, and on the date, if any, on which the
Underwriters exercise their option to purchase additional Preferred Securities
pursuant to the terms of the Underwriting Agreement, as applicable, the
Administrative Trustees shall cause Trust Securities Certificates, in an
aggregate Liquidation Amount as provided in Section 2.4, 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, Chief Executive Officer,
President or any Vice President and its Chief Financial Officer, Treasurer,
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Secretary or any Assistant Secretary, without further corporate action by the
Depositor, in authorized denominations.
Section 5.4 Registration of Transfer and Exchange of Preferred
Securities Certificates.
The Depositor shall keep or cause to be kept, at the office or agency
maintained pursuant to Section 5.8, a register or registers for the purpose of
registering Trust Securities Certificates and transfers and exchanges of
Preferred Securities Certificates (the "Securities Register") in which, the
registrar designated by the Depositor (the "Securities Registrar"), subject to
such reasonable regulations as it may prescribe, 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.
Upon surrender for registration of transfer of any Preferred
Securities Certificate at the office or agency maintained pursuant to Section
5.8, the Administrative Trustees or any one of them shall execute and deliver,
in the name of the designated transferee or transferees, one or more new
Preferred Securities Certificates in authorized denominations of a like
aggregate Liquidation Amount dated the date of execution by such Administrative
Trustee or Trustees.
The Securities Registrar shall not be required to register the
transfer of any Preferred Securities that have been called for redemption. At
the option of a Holder, Preferred Securities Certificates may be exchanged for
other Preferred Securities Certificates in authorized denominations of the same
class and of a like aggregate Liquidation Amount upon surrender of the
Preferred Securities Certificates to be exchanged at the office or agency
maintained pursuant to Section 5.8.
Every Preferred Securities Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a written
instrument of transfer in form satisfactory to an Administrative Trustee and
the Securities Registrar duly executed by the Holder or his attorney duly
authorized in writing. Each Preferred Securities Certificate surrendered for
registration of transfer or exchange shall be canceled and subsequently
disposed of by the Securities Registrar in accordance with such Person's
customary practice. The Trust shall not be required to (i) issue, register the
transfer of, or exchange any Preferred Securities during a period beginning at
the opening of business 15 calendar days before the date of mailing of a notice
of redemption of any Preferred Securities called for redemption and ending at
the close business on the day of such mailing or (ii) register the transfer of
or exchange any Preferred Securities so selected for redemption, in whole or in
part, except the unredeemed portion of any such Preferred Securities being
redeemed in part.
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.
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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 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
class, tenor and denomination. In connection with the issuance of any new
Trust Securities Certificate under this Section, the Administrative
Trustees or 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 duplicate 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 Securityholders.
The Trustees or 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 Trustees nor the Securities Registrar shall
be bound by any notice to the contrary.
Section 5.7 Access to List of Securityholders' Names and
Addresses.
At any time when the Property Trustee is not also acting as the
Securities Registrar, the Administrative Trustees or the Depositor shall
furnish or cause to be furnished to the Property Trustee (a) semi-annually
on or before January 1 and July 1 in each year, a list, in such form as the
Property Trustee may reasonably require, of the names and addresses of the
Securityholders as of the most recent record date and (b) promptly after
receipt by any Administrative Trustee or the Depositor of a request
therefor from the Property Trustee, such other information as the Property
Trustee may reasonably require 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
Securityholders to communicate with other Securityholders 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. Each Securityholder, 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.
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Section 5.8 Maintenance of Office or Agency.
The Administrative Trustees shall maintain an office or offices or
agency or agencies where Preferred Securities Certificates may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Trustees in respect of the Trust Securities Certificates may be
served. The Administrative Trustees initially designate the principal
corporate trust office of the Property Trustee, Rodney Square North, 1100 North
Market Street, Wilmington, Delaware 19890- 0001, Attention: Corporate Trust
Administration, as the principal Corporate Trust office for such purposes. The
Administrative Trustees shall give prompt written notice to the Depositor and
to the Securityholders of any change in the location of the Securities Register
or any such office or agency.
Section 5.9 Appointment of Paying Agent.
The Paying Agent shall make Distributions to Securityholders from the
Payment Account and shall report the amounts of such Distributions to the
Property Trustee and the Administrative Trustees. 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 Administrative Trustees, 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). The Administrative
Trustees shall cause such successor Paying Agent or any additional Paying Agent
appointed by the Administrative Trustees to execute and deliver to the Trustees
an instrument in which such successor Paying Agent or 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 Securityholders in trust for the benefit of the Securityholders entitled
thereto until such sums shall be paid to such Securityholders. 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 herein 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 Trust 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.
At the Closing Date, the Depositor shall acquire and retain beneficial
and record ownership of the Common Securities. To the fullest extent permitted
by law, other than a transfer in connection with a consolidation or merger of
the Depositor into another Person, or any conveyance, transfer or lease by the
Depositor of its properties and assets substantially as an entirety to any
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Person, pursuant to Section 8.1 of the Indenture, any attempted transfer of the
Common Securities shall be void. The Administrative Trustees shall cause each
Common Securities Certificate issued to the Depositor to contain a legend
stating "THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT IN ACCORDANCE WITH SECTION
5.10 OF THE TRUST AGREEMENT."
Section 5.11 Book-Entry Preferred Securities Certificates; Common
Securities Certificate.
(a) The Preferred Securities Certificates, upon original
issuance, will be issued in the form of a typewritten Preferred Securities
Certificate or Certificates representing Book-Entry Preferred Securities
Certificates, to be delivered to The Depository Trust Company, the initial
Clearing Agency, by, or on behalf of, the Trust. Such Preferred Securities
Certificate or Certificates shall initially be registered on the Securities
Register in the name of Cede & Co., the nominee of the initial Clearing Agency,
and no Owner will receive a Definitive Preferred Securities Certificate,
representing such Owners' interest in such Preferred Securities, except as
provided in Section 5.13. Unless and until Definitive Preferred Securities
Certificates have been issued to Owners pursuant to Section 5.13:
(i) the provisions of this Section 5.11(a) shall be
in full force and effect;
(ii) the Securities Registrar, the Paying Agent and
the Trustees shall be entitled to deal with the Clearing Agency for
all purposes of this Trust Agreement relating to the Book-Entry
Preferred Securities Certificates (including the payment of the
Liquidation Amount of and Distributions on the Preferred Securities
evidenced by Book-Entry Preferred Securities Certificates) as the
owner of the Book-Entry Preferred Securities Certificates and shall
have no obligations to the Owners thereof;
(iii) to the extent that the provisions of this
Section 5.11 conflict with any other provisions of this Trust
Agreement, the provisions of this Section 5.11 shall control; and
(iv) the rights of the Owners of the Book-Entry
Preferred Securities Certificates shall be exercised only through the
Clearing Agency and shall be limited to those established by law and
agreements between such Owners and the Clearing Agency and/or the
Clearing Agency Participants. Pursuant to the Certificate Depository
Agreement, unless and until Definitive Preferred Securities
Certificates are issued pursuant to Section 5.13, the initial Clearing
Agency will make book-entry transfers among the Clearing Agency
Participants and receive and transmit payments on the Preferred
Securities to such Clearing Agency Participants. Any Clearing Agency
designated pursuant hereto will not be deemed an agent of the Trustees
for any purpose.
(b) A single Common Securities Certificate representing
the Common Securities shall be issued to the Depositor in the form of a
definitive Common Securities Certificate.
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Section 5.12 Notices to Clearing Agency.
To the extent that a notice or other communication to the Holders 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 Holders to the Clearing Agency, and shall have no
obligations to the Owners.
Section 5.13 Definitive Preferred Securities Certificates.
If (a) the Clearing Agency notifies the Depositor that it is no longer
willing or able to continue as depositary for the Preferred Securities
Certificates and no successor Clearing Agency shall have been appointed, or if
at any time the Clearing Agency ceases to be a clearing agency registered under
the Exchange Act, at a time when the Clearing Agency is required to be so
registered to act as such depositary, and no successor depositary shall have
been appointed, or (b) the Depositor, in its sole discretion, determines that
such Preferred Securities Certificates shall be so exchangeable, or (c) after
there shall have occurred and be continuing a Debenture Event of Default,
Owners of Book Entry Preferred Securities Certificates representing beneficial
interests aggregating at least a majority of the Liquidation Amount advise the
Property Trustee in writing that the continuation of a book-entry system
through the Clearing Agency is no longer in the best interest of the Owners of
Preferred Securities Certificates, then, in each case, the Property Trustee
shall notify the Clearing Agency and the Clearing Agency shall notify all
Owners of Preferred Securities Certificates and the other Trustees of the
occurrence of any such event that Definitive Preferred Securities Certificates
will be distributed to such Owners in exchange for their beneficial interests
in such Preferred Securities Certificate or Certificates. Upon surrender to
the Property Trustee of the typewritten Preferred Securities Certificate or
Certificates representing the Book-Entry Preferred Securities Certificates by
the Clearing Agency, accompanied by registration instructions, the
Administrative Trustees, or any one of them, shall execute the Definitive
Preferred Securities Certificates in accordance with the instructions of the
Clearing Agency and deliver the same to or upon the order of the Clearing
Agency or an authorized representative thereof. Neither the Securities
Registrar nor the Trustees shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying
on, such instructions. Upon the issuance of Definitive Preferred Securities
Certificates, the Trustees shall recognize the Holders of the Definitive
Preferred Securities Certificates as Securityholders. The Definitive Preferred
Securities Certificates shall be engraved and executed in accordance with the
applicable rules of the American Stock Exchange or such other national exchange
or over-the-counter market on which the Preferred Securities are then listed
for trading. Thereafter, payments of Distributions (including Additional
Amounts, if applicable) in respect of the Definitive Preferred Securities
Certificates shall be made by check mailed to the address of the Person
entitled thereto as such address shall appear on the Securities Register,
provided that payments will be made by wire transfer if requested by a holder
of at least $1,000,000 aggregate Liquidation Amount of the Preferred Securities.
Section 5.14 Rights of Securityholders.
(a) 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 Securityholders shall not
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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 Securityholders against payment of the
purchase price therefor will be fully paid and nonassessable by 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.
(b) For so long as any Preferred Securities remain
Outstanding, if, upon a Debenture Event of Default, the Debenture Trustee fails
or the holders of not less than 25% in principal amount of the outstanding
Debentures fail to declare the principal of all of the Debentures to be
immediately due and payable, the Holders of at least 25% in Liquidation Amount
of the Preferred Securities then Outstanding shall have such right by a notice
in writing to the Depositor and the Debenture Trustee; and upon any such
declaration such principal amount of and the accrued interest on all of the
Debentures shall become immediately due and payable, provided that the payment
of principal and interest on such Debentures shall remain subordinated to the
extent provided in the Indenture.
At any time after such a declaration of acceleration with
respect to the Debentures has been made and before a judgment or decree for
payment of the money due has been obtained by the Debenture Trustee as in the
Indenture provided, the Holders of a majority in Liquidation Amount of the
Preferred Securities, by written notice to the Property Trustee, the Depositor
and the Debenture Trustee, may rescind and annul such declaration and its
consequences if:
(i) the Depositor has paid or deposited with the Debenture
Trustee a sum sufficient to pay
(A) all overdue installments of interest
(including any Additional Interest (as defined in the Indenture)) on
all of the Debentures,
(B) the principal of (and premium, if any,
on) any Debentures which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate borne by
the Debentures, and
(C) all sums paid or advanced by the
Debenture Trustee under the Indenture and the reasonable compensation,
expenses, disbursements and advances of the Debenture Trustee and the
Property Trustee, their agents and counsel; and
(ii) all Events of Default with respect to the 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 of the Indenture.
The Holders of a majority in aggregate Liquidation Amount of
the Preferred Securities may, on behalf of the Holders of all the Preferred
Securities, waive any past default under
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the Indenture, except a default in the payment of principal or interest (unless
such default has been cured and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by acceleration has
been deposited with the Debenture Trustee) or a default in respect of a
covenant or provision which under the Indenture cannot be modified or amended
without the consent of the holder of each outstanding Debenture. No such
rescission shall affect any subsequent default or impair any right consequent
thereon.
Upon receipt by the Property Trustee of written notice
declaring such an acceleration, or rescission and annulment thereof, by Holders
of the Preferred Securities all or part of which is represented by Book-Entry
Preferred Securities Certificates, a record date shall be established for
determining Holders of Outstanding Preferred Securities entitled to join in
such notice, which record date shall be at the close of business on the day the
Property 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 such declaration of acceleration, or rescission
and annulment, as the case may be, shall have become effective by virtue of the
requisite percentage having joined in such notice prior to the day which is 90
days after such record date, such notice of declaration of acceleration, or
rescission and annulment, as the case may be, 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 written notice of declaration of
acceleration, or rescission and annulment thereof, as the case may be, that is
identical to a written 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 5.14(b).
(c) For so long as any Preferred Securities remain
Outstanding, to the fullest extent permitted by law and subject to the terms of
this Trust Agreement and the Indenture, upon a Debenture Event of Default
specified in Section 5.1(a) or 5.1(b) of the Indenture, any Holder of Preferred
Securities shall have the right to institute a proceeding directly against the
Depositor, pursuant to Section 5.8 of the Indenture, for enforcement of payment
to such Holder of the principal amount of or interest on Debentures having a
principal amount equal to the Liquidation Amount of the Preferred Securities of
such Holder (a "Direct Action"). Except as set forth in Section 5.14(b) and
this Section 5.14(c), the Holders of Preferred Securities shall have no right
to exercise directly any right or remedy available to the holders of, or in
respect of, the Debentures.
ARTICLE VI
ACTS OF SECURITYHOLDERS; MEETINGS; VOTING
Section 6.1 Limitations on Voting Rights.
(a) Except as provided in this Section, in Sections 5.14,
8.10 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
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of the Trust Securities Certificates, be construed so as to constitute the
Securityholders from time to time as partners or members of an association.
(b) So long as any Debentures are held by the Property
Trustee, the Trustees shall not (i) 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, (ii) waive any past default which is waivable under Section
5.14 of the Indenture, (iii) exercise any right to rescind or annul a
declaration that the principal of all the Debentures shall be due and payable
or (iv) consent to any amendment, modification or termination of the Indenture
or the Debentures, where such consent shall be required, without, in each case,
obtaining the prior approval of the Holders of at least a majority in
Liquidation Amount of all Outstanding Preferred Securities, 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 Preferred Securities, except by a
subsequent vote of the Holders of Preferred Securities. The Property Trustee
shall notify all Holders 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 such action shall not cause the Trust to fail
to be classified as a grantor trust for United States federal income tax
purposes.
(c) If any proposed amendment to the Trust Agreement
provides for, or the Trustees otherwise propose to effect, (i) any action that
would adversely affect in any material respect the powers, preferences or
special rights of the Preferred Securities, whether by way of amendment to the
Trust Agreement or otherwise, or (ii) 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 at
least a majority in Liquidation Amount of the Outstanding Preferred Securities.
Notwithstanding any other provision of this Trust Agreement, no amendment to
this Trust Agreement may be made if, as a result of such amendment, it would
cause the Trust to fail to be classified as a grantor trust for United States
federal income tax purposes.
Section 6.2 Notice of Meetings.
Notice of all meetings of the Preferred Securityholders, stating the
time, place and purpose of the meeting, shall be given by the Property Trustee
pursuant to Section 10.9 to each Preferred Securityholder of record, at his
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.
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Section 6.3 Meetings of Preferred Securityholders.
No annual meeting of Securityholders is required to be held. The
Administrative Trustees, however, shall call a meeting of Preferred
Securityholders to vote on any matter upon the written request of Holders of
record of 25% of the Outstanding 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 Preferred
Securityholders to vote on any matters as to which Preferred Securityholders
are entitled to vote.
Holders of record of 50% of the Outstanding Preferred Securities
(based upon their Liquidation Amount), present in person or by proxy, shall
constitute a quorum at any meeting of Securityholders.
If a quorum is present at a meeting, an affirmative vote by the
Preferred Securityholders of record present, in person or by proxy, holding a
majority of the Preferred Securities (based upon their Liquidation Amount) held
by the Preferred Securityholders of record present, either in person or by
proxy, at such meeting shall constitute the action of the Preferred
Securityholders, unless this Trust Agreement requires a greater number of
affirmative votes.
Section 6.4 Voting Rights.
Securityholders shall be entitled to one vote for each $10 of
Liquidation Amount represented by their Trust Securities in respect of any
matter as to which such Securityholders are entitled to vote.
Section 6.5 Proxies, etc.
At any meeting of Securityholders, any Securityholder 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. Only Securityholders 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 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 Securityholder 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 Securityholder Action by Written Consent.
Any action which may be taken by Securityholders at a meeting may be
taken without a meeting if Securityholders holding a majority of all
Outstanding Trust Securities (based upon their aggregate 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.
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Section 6.7 Record Date for Voting and Other Purposes.
For the purposes of determining the Securityholders 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 Administrative Trustees may from time to time
fix a date, not more than 90 days prior to the date of any meeting of
Securityholders or the payment of a Distribution or other action, as the case
may be, as a record date for the determination of the identity of the
Securityholders of record for such purposes.
Section 6.8 Acts of Securityholders.
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 Securityholders or Owners may be embodied in and evidenced by one
or more instruments of substantially similar tenor signed by such
Securityholders 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 Securityholders 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 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 Securityholder of any Trust Security shall bind every
future Securityholder of the same Trust Security and the Securityholder 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 Securityholder 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.
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If any dispute shall arise between the Securityholders and the
Administrative Trustees or among such Securityholders or Trustees with respect
to the authenticity, validity or binding nature of any request, demand,
authorization, direction, consent, waiver or other Act of such Securityholder
or Trustee under this Article VI, then the determination of such matter by the
Property Trustee shall be conclusive with respect to such matter.
A Securityholder may institute a legal proceeding directly against the
Depositor under the Guarantee to enforce its rights under the Guarantee without
first instituting a legal proceeding against the Guarantee Trustee (as defined
in the Guarantee), the Trust or any Person.
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
Securityholders during normal business hours for any purpose reasonably related
to such Securityholder's interest as a Securityholder.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Section 7.1 Representations and Warranties of the Bank.
The Bank hereby represents and warrants for the benefit of the
Depositor and the Securityholders that:
(a) the Bank is a Delaware banking corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware;
(b) the Bank has full corporate 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 the Bank and constitutes the valid and legally
binding agreement of the Bank enforceable against it 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;
(d) the execution, delivery and performance of this Trust
Agreement has been duly authorized by all necessary corporate or other action
on the part of the Bank and does not require any approval of stockholders of
the Bank and such execution, delivery and performance will not (i) violate the
charter or bylaws of the Bank, (ii) violate any provision of, or constitute,
with or without notice or lapse of time, a default under, or result in the
creation or imposition of any Lien on any properties included in the Trust
Property pursuant to the provisions of, any indenture, mortgage, credit
agreement, license or other agreement or instrument to which the Bank is a
party or by which it is bound, or (iii) violate any law, governmental rule or
regulation of the United States
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or the State of Delaware, as the case may be, governing the banking, trust or
general powers of the Bank or any order, judgment or decree applicable to the
Bank;
(e) neither the authorization, execution or delivery by
the Bank of this Trust Agreement nor the consummation of any of the
transactions by the Property Trustee or the Delaware Trustee (as appropriate in
context) contemplated herein requires the consent or approval of, the giving of
notice to, the registration with, or the taking of any other action with
respect to any governmental authority or agency under, any existing federal law
governing the banking, trust or general powers of the Bank, as the case may be,
under the laws of the United States or the State of Delaware;
(f) there are no proceedings pending or, to the of best
the Bank's knowledge, threatened against or affecting the Property Trustee or
the Delaware Trustee in any court or before any governmental authority, agency
or arbitration board or tribunal which, individually or in the aggregate, would
materially and adversely affect the Trust or would question the right, power
and authority of the Bank to enter into or perform its obligations as one of
the Trustees under this Trust Agreement.
Section 7.2 Representations and Warranties of Depositor.
The Depositor hereby represents and warrants for the benefit of the
Securityholders that:
(a) the Trust Securities Certificates issued at 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 Securityholders will be, as of each 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 Bank, the
Property Trustee or the Delaware Trustee, as the case may be, of this Trust
Agreement.
ARTICLE VIII
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. 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
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protection to the Trustees shall be subject to the provisions of this Section.
No Administrative Trustee or the Delaware Trustee shall be subject to any
liability under this Trust Agreement except for its own grossly negligent
action, its own grossly negligent failure to act, or its own willful
misconduct. To the extent that, at law or in equity, a Trustee has duties
(including fiduciary duties) and liabilities relating thereto to the Trust or
to the Securityholders, such Trustee shall not be liable to the Trust or to any
Securityholder for such 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 Trustees otherwise existing at
law or in equity, are agreed by the Depositor and the Securityholders to
replace such other duties and liabilities of the Trustees as permitted by
Section 3806(c) of the Delaware Business Trust Act.
(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 Securityholder, 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:
(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 the Trust
Securities given in accordance with this Trust Agreement 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, safe keeping and physical preservation of the
Debentures and the Payment Account shall be to deal with such Property
in a similar manner as the Property Trustee deals with similar
property for its own account, 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
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Payment Account maintained by the Property Trustee pursuant to Section
3.1 and except to the extent otherwise required by law; and
(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.
Section 8.2 Certain Notices.
(a) Within five (5) Business 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 10.9, notice of such Event of Default to the
Securityholders, the Administrative Trustees and the Depositor, unless the
Event of Default shall have been cured or waived. For purposes of this
Section, the term "Event of Default" means any event that is, or after notice
or lapse of time or both would become, an Event of Default.
(b) The Administrative Trustees shall transmit, to the
Securityholders in the manner and to the extent provided in Section 10.9,
notice of the Depositor's election to begin or further extend an Extension
Period (as defined in the Indenture) on the Debentures (unless such election
shall have been revoked) within the time specified for transmitting such notice
to the holders of the Debentures pursuant to the Indenture as originally
executed.
Section 8.3 Certain Rights of Property Trustee.
Subject to the provisions of Section 8.1:
(a) the Property Trustee may rely and shall be protected
in acting or refraining from acting in good faith upon any resolution, Opinion
of Counsel, certificate, written representation of a Holder or transferee,
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 (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 of 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 Preferred Securityholders 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
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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 Securityholders, 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 contemplated by
this Trust Agreement shall be sufficiently evidenced by an Officers'
Certificate; and any direction or act of the Administrative Trustees
contemplated by this Trust Agreement shall be sufficiently evidenced by a
certificate in substantially the same form as an Officers' Certificate;
(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 rely upon an Officers'
Certificate 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 see to any
recording, filing or registration of any instrument (including any financing or
continuation statement or any filing under tax or securities laws) or any
rerecording, refiling or registration thereof;
(f) the Property Trustee may consult with counsel (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 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, such counsel may be counsel to the Depositor or
any of its Affiliates, and may include any of its employees; 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 Securityholders pursuant to this Trust
Agreement, unless such Securityholders shall have offered to the Property
Trustee reasonable security or indemnity against the costs, expenses 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 resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond, debenture, note or other evidence of indebtedness or other
paper or document, unless requested in writing to do so by one or more
Securityholders, but the Property Trustee may make such further inquiry or
investigation into such facts or 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 or attorneys, provided that
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the Property Trustee shall be responsible for its own negligence or
recklessness with respect to selection of any agent or attorney appointed by it
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 protected in acting in accordance with such
instructions; and
(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.
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 be taken as the statements of the Trust, 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.
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, except as provided in the definition of the term "Outstanding"
in Article I and subject to Sections 8.8 and 8.13, 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 to 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 to the extent such provisions may be varied by
contract) as specified in a separate agreement between any of the Trustees and
the Depositor;
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(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 gross negligence (or
ordinary negligence in the case of the Property Trustee), bad faith or willful
misconduct; and
(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, 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 or dissolution 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 gross negligence (or ordinary negligence in the
case of the Property Trustee), bad faith or willful misconduct with respect to
such acts or omissions.
The provisions of this Section 8.6 shall survive the termination of
this Trust Agreement.
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.
The Depositor and any Trustee may (subject to Section 8.8) engage in
or possess an interest in other business ventures of any nature or description,
independently or with others, similar or dissimilar to the business of the
Trust, and the Trust and the Holders of Trust Securities shall have no rights
by virtue of this Trust Agreement in and to such independent ventures or the
income or profits derived therefrom, and the pursuit of any such venture, even
if competitive with the business of the Trust, shall not be deemed wrongful or
improper. Neither the Depositor, nor any Trustee, shall be obligated to
present any particular investment or other opportunity to the Trust even if
such opportunity is of a character that, if presented to the Trust, could be
taken by the Trust, and the Depositor or any Trustee shall have the right to
take for its own account (individually or as a partner or fiduciary) or to
recommend to others any such particular investment or other opportunity. Any
Trustee may engage or be interested in any financial or other transaction with
the Depositor or any Affiliate of the Depositor, or may act as depository for,
trustee or agent for, or act on any committee or body of holders of, securities
or other obligations of the Depositor or its Affiliates.
Section 8.7 Corporate 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
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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 required and in the
manner provided by, and subject to the provisions of, the Trust Indenture Act
and this Trust Agreement.
Section 8.9 Co-Trustees and Separate Trustee.
Unless an Event of Default shall have occurred and be continuing, at
any time or times, for the purpose of meeting the legal requirements of the
Trust Indenture Act or of any jurisdiction in which any part of the Trust
Property may at the time be located, the Depositor and the Administrative
Trustees, by agreed action of the majority of such Trustees, shall have power
to appoint, and upon the written request of the Administrative Trustees, the
Depositor shall for such purpose join with the Administrative Trustees in the
execution, delivery, and performance of all instruments and agreements
necessary or proper to appoint, one or more Persons approved by the Property
Trustee either to act as co-trustee, jointly with the Property Trustee, of all
or any part of such Trust Property, or to the extent required by law to act as
separate trustee of any such property, in either case with such powers as may
be provided in the instrument of appointment, and to vest in such Person or
Persons in the capacity aforesaid, any property, title, right or power deemed
necessary or desirable, subject to the other provisions of this Section. If
the Depositor does not join in such appointment within 15 days after the
receipt by it of a request so to do, or in case a Debenture Event of Default
has occurred and is continuing, the Property Trustee alone shall have power to
make such appointment. Any co-trustee or separate trustee appointed pursuant
to this Section shall either be (i) a natural person who is at least 21 years
of age and a resident of the United States or (ii) a legal entity with its
principal place of business in the United States that shall act through one or
more persons authorized to bind such entity.
Should any written instrument from the Depositor be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such property,
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title, right, or power, any and all such instruments shall, on request, be
executed, acknowledged and delivered by the Depositor.
Every co-trustee or separate trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following terms,
namely:
(a) The Trust Securities shall be executed and delivered
and all rights, powers, duties, and obligations hereunder in respect of the
custody of securities, cash and other personal property held by, or required to
be deposited or pledged with, the Trustees specified hereunder shall be
exercised solely by such Trustees and not by such co-trustee or separate
trustee.
(b) Except as set forth in Section (a) above, the rights,
powers, duties, and obligations hereby conferred or imposed upon the Property
Trustee in respect of any property covered by such appointment shall be
conferred or imposed upon and exercised or performed by the Property Trustee or
by the Property Trustee and such co-trustee or separate trustee jointly, as
shall be provided in the instrument appointing such co-trustee or separate
trustee, except to the extent that under any law of any jurisdiction in which
any particular act is to be performed, the Property Trustee shall be
incompetent or unqualified to perform such act, in which event such rights,
powers, duties and obligations shall be exercised and performed by such
co-trustee or separate trustee.
(c) The Property Trustee at any time, by an instrument in
writing executed by it, with the written concurrence of the Depositor, may
accept the resignation of or remove any co-trustee or separate trustee
appointed under this Section, and, in case a Debenture Event of Default has
occurred and is continuing, the Property Trustee shall have power to accept the
resignation of, or remove, any such co-trustee or separate trustee without the
concurrence of the Depositor. Upon the written request of the Property
Trustee, the Depositor shall join with the Property Trustee in the execution,
delivery and performance of all instruments and agreements necessary or proper
to effectuate such resignation or removal. A successor to any co-trustee or
separate trustee so resigned or removed may be appointed in the manner provided
in this Section.
(d) No co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of the Property Trustee or
any other trustee hereunder.
(e) The Property Trustee shall not be liable by reason of
any act of a co-trustee or separate trustee.
(f) Any Act of Holders delivered to the Property Trustee
shall be deemed to have been delivered to each such co-trustee and separate
trustee.
Section 8.10 Resignation and Removal; Appointment of Successor.
No resignation or removal of any Trustee (the "Relevant Trustee") and
no appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of Section 8.11.
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Subject to the immediately preceding paragraph, the Relevant Trustee
may resign at any time by giving written notice thereof to the Common
Securityholder. If the instrument of acceptance by the successor Trustee
required by Section 8.11 shall not have been delivered to the Relevant Trustee
within 30 days after the giving of such notice of resignation, the Relevant
Trustee may petition, at the expense of the Trust, any court of competent
jurisdiction for the appointment of a successor Relevant Trustee.
Unless a Debenture Event of Default shall have occurred and be
continuing, any Trustee may be removed at any time by Act of the Common
Securityholder. If a Debenture Event of Default shall have occurred and be
continuing, the Property Trustee or the Delaware Trustee, or both of them, may
be removed at such time by Act of the Holders of a majority in Liquidation
Amount of the Preferred Securities, delivered to the Relevant Trustee (in its
individual capacity and on behalf of the Trust). In no event will the Holders
of the Preferred Securities have the right to vote to appoint, remove or
replace the Administrative Trustees. An Administrative Trustee may be removed
by the Common Securityholder at any time.
If any Trustee shall resign, be removed or become incapable of acting
as Trustee, or if a vacancy shall occur in the office of any Trustee for any
cause, at a time when no Debenture Event of Default shall have occurred and be
continuing, the Common Securityholder, by Act of the Common Securityholder
delivered to the retiring Trustee, shall promptly appoint a successor Trustee
or Trustees, and the retiring and successor Trustees shall comply with the
applicable requirements of Section 8.11. If the Property Trustee or the
Delaware Trustee shall resign, be removed or become incapable of continuing to
act as the Property Trustee or the Delaware Trustee, as the case may be, at a
time when a Debenture Event of Default shall have occurred and be continuing,
the Preferred Securityholders, by Act of the Securityholders of a majority in
Liquidation Amount of the Preferred Securities then Outstanding delivered to
the retiring Relevant Trustee, shall promptly appoint a successor Relevant
Trustee or Trustees, and such retiring and successor Trustees shall comply with
the applicable requirements of Section 8.11. If an Administrative Trustee
shall resign, be removed or become incapable of acting as Administrative
Trustee, at a time when a Debenture Event of Default shall have occurred and be
continuing, the Common Securityholder by Act of the Common Securityholder
delivered to the Administrative Trustee shall promptly appoint a successor
Administrative Trustee or Administrative Trustees and such successor
Administrative Trustee or Trustees shall comply with the applicable
requirements of Section 8.11. If no successor Relevant Trustee shall have been
so appointed by the Common Securityholder or the Preferred Securityholders, as
the case may be, and accepted appointment in the manner required by Section
8.11, any Securityholder who has been a Securityholder of Trust Securities for
at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the appointment of a
successor Relevant Trustee.
The Depositor shall give notice of each resignation and each removal
of a Trustee and each appointment of a successor Trustee to all Securityholders
in the manner provided in Section 10.9. 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.
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
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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
Delaware Trustee, as the case may be, set forth in Section 8.7).
Section 8.11 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 with respect
to the Trust Securities 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 with respect to the
Trust Securities and the Trust 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 Trust 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 an Administrative Trustee 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
with respect to the Trust Securities and the Trust.
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 preceding paragraph.
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 8.12 Merger, Conversion, Consolidation or Succession to
Business.
Any Person into which the Property Trustee or the Delaware 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 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 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.
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Section 8.13 Preferential Collection of Claims Against Depositor
or Trust.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
similar judicial proceeding relative to the Trust or any other obligor upon the
Trust Securities or the property of the Trust or of such other obligor or their
creditors, the Property Trustee (irrespective of whether any Distributions on
the Trust Securities shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Property Trustee shall
have made any demand on the Trust for the payment of any past due
Distributions) shall be entitled and empowered, to the fullest extent permitted
by law, by intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of any
Distributions owing and unpaid in respect of the Trust Securities and to file
such other papers or documents as may be necessary or advisable in order to
have the claims of the Property Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Property Trustee, its
agents and counsel) and of the Holders allowed in such judicial proceeding, and
(b) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same; and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Property Trustee and, in the event the
Property Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Property Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Property Trustee, its
agents and counsel, and any other amounts due the Property Trustee.
Nothing herein contained shall be deemed to authorize the Property
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement adjustment or compensation affecting
the Trust Securities or the rights of any Holder thereof or to authorize the
Property Trustee to vote in respect of the claim of any Holder in any such
proceeding.
Section 8.14 Reports by Property Trustee.
(a) Not later than July 31 of each year commencing with
the year commencing January 1, 1999, the Property Trustee shall transmit to all
Securityholders in accordance with Section 10.9, and to the Depositor, a brief
report dated as of the immediately preceding December 31 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 December 31 or, if the
Property Trustee has not complied in any material respect with such
obligations, a description of such noncompliance; and
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(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.
(b) In addition the Property Trustee shall transmit to
Securityholders 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 each such report shall, at the time of such
transmission to Holders, be filed by the Property Trustee with each national
stock exchange (including the American Stock Exchange), the Nasdaq National
Market or such other interdealer quotation system or self-regulatory
organization upon which the Trust Securities are listed or traded, with the
Commission and with the Depositor.
Section 8.15 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 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 8.16 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 8.17 Number of Trustees.
(a) The number of Trustees initially shall be four (4)
provided that the number of Trustees may be increased or decreased by a like
increase or decrease in the number of Administrative Trustees in the discretion
of the Holder of all of the Common Securities by written instrument. 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
8.17(a), or if the number of Trustees is increased pursuant to Section 8.17(a),
a vacancy shall occur. The vacancy shall be filled with a Trustee appointed in
accordance with Section 8.10.
(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
43
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vacancy is filled by the appointment of an Administrative Trustee in accordance
with Section 8.10, the Administrative Trustees in office, regardless of their
number (and notwithstanding any other provision of this Trust 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 8.18 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 making any governmental filing; and
(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 this Trust
Agreement, as set forth herein.
Section 8.19 Voting.
Except as otherwise provided in this Trust Agreement, the consent or
approval of the Administrative Trustees shall require consent or approval by
not less than a majority of the Administrative Trustees, unless there are only
two, in which case both must consent.
ARTICLE IX
DISSOLUTION, LIQUIDATION AND MERGER
Section 9.1 Dissolution Upon Expiration Date.
Unless dissolved earlier, the Trust shall automatically dissolve on
December 31, 2029 (the "Expiration Date").
Section 9.2 Early Dissolution.
The first to occur of any of the following events is an "Early
Dissolution Event," upon the occurrence of which the Trust shall dissolve:
(a) the occurrence of a Bankruptcy Event in respect of,
or the dissolution or liquidation of, the Depositor;
(b) the written direction to the Property Trustee from
the Depositor at any time to dissolve the Trust and distribute Debentures to
Securityholders in exchange for a Like Amount of the Preferred Securities
(which direction is optional and wholly within the discretion of the
Depositor);
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<PAGE> 50
(c) the redemption of all of the Preferred Securities in
connection with the redemption of all the Debentures; and
(d) the entry of an order for dissolution of the Trust by
a court of competent jurisdiction.
Section 9.3 Termination.
The respective obligations and responsibilities of the Trustees and
the Trust continued hereby shall terminate upon the latest to occur of the
following: (a) the distribution by the Property Trustee to Securityholders
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 any 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 Securityholders, and (d) the filing of a Certificate of
Cancellation by an Administrative Trustee under the Delaware Business Trust
Act. As soon as practicable after the occurrence of an event referred to in
Sections 9.1 or 9.2 and upon the completion of the winding up and liquidation
of the Trust, an Administrative Trustee shall file a certificate of
cancellation with the Secretary of State of the State of Delaware terminating
the Trust.
Section 9.4 Liquidation.
(a) If an Early Dissolution Event specified in clause
(a), (b) or (d) 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 Securityholder a Like
Amount of Debentures, 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 appearing 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 will be
deemed to represent a Like Amount of Debentures; and
(iii) provide such information with respect to the
mechanics by which Holders may exchange Trust Securities Certificates
for certificates representing the Like Amount of the 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 Securityholders, the Administrative Trustees shall establish a record date
for such distribution (which shall be not more than 45 days prior to the
Liquidation Date) and, either itself acting as exchange agent or through the
appointment
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<PAGE> 51
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) certificates representing a Like Amount of Debentures will be
issued to Holders of Trust Securities Certificates, upon surrender of such
certificates to the Administrative Trustees or their agent for exchange, (iii)
the Depositor shall use its best efforts to have the Debentures listed on the
American Stock Exchange or on such other exchange, interdealer quotation system
or self-regulatory organization as the Preferred Securities are then listed,
(iv) any Trust Securities Certificates not so surrendered for exchange will be
deemed to represent a Like Amount of Debentures, accruing interest at the rate
provided for in the Debentures from the last Distribution Date on which a
Distribution was made on such Trust Securities Certificates until such
certificates are so surrendered (and until such certificates are so
surrendered, no payments of interest or principal will be made to holders of
Debentures represented by such certificates) and (v) all rights of
Securityholders holding Trust Securities will cease, except the right of such
Securityholders to receive a Like Amount of Debentures upon surrender of Trust
Securities Certificates.
(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 practical, 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. In such event, on the date of the dissolution of
the Trust, Securityholders will be entitled to receive out of the assets of the
Trust available for distribution to Securityholders, 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 accumulated 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, Holders of the Preferred Securities shall have a priority over the
Holders of Common Securities.
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 corporation or other body, 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 Holders
of the Preferred Securities, the Property Trustee or the Delaware Trustee, the
Trust may merge with or into, consolidate, amalgamate, or be replaced by or
convey, transfer or lease its properties and assets
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<PAGE> 52
substantially as an entirety to a trust organized as such under the laws of any
State; provided, that (i) such 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 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 traded, 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 or traded, 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, and (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 (viii) the Depositor owns 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 Liquidation Amount of the Preferred Securities, consolidate,
amalgamate, merge with or into, or be replaced by or convey, transfer or lease
its properties and assets substantially as an entirety to any 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 X
MISCELLANEOUS PROVISIONS
Section 10.1 Limitation of Rights of Securityholders.
The death, bankruptcy, dissolution, termination or incapacity of any
Person having an interest, beneficial or otherwise, in Trust Securities shall
not operate to terminate this Trust Agreement, nor dissolve, terminate or wind
up the Trust, nor entitle the legal representatives or heirs of such Person or
any Securityholder of 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.
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Section 10.2 Amendment.
(a) This Trust Agreement may be amended from time to time
by the Property Trustee, the Administrative Trustees and the Depositor, without
the consent of any Securityholders, (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, or (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; provided, however, that in the case
of clause (i), such action shall not adversely affect in any material respect
the interests of any Securityholder, and any such amendments of this Trust
Agreement shall become effective when notice thereof is given to the
Securityholders.
(b) Except as provided in Section 10.2(c) hereof, any
provision of this Trust Agreement may be amended by the Administrative Trustees
and the Property Trustee with (i) the consent of Securityholders representing
not less than a majority (based upon Liquidation Amounts) of the Trust
Securities then Outstanding 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 Trust's
status as a grantor trust for United States federal income tax purposes or the
Trust's exemption from registration as an investment company under the 1940
Act.
(c) In addition to and notwithstanding any other
provision in this Trust Agreement, without the consent of each affected
Securityholder (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
Securityholder 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 Securityholders (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 Administrative Trustee shall enter into or consent to any
amendment to this Trust Agreement which would (i) cause the Trust to fail or
cease to qualify for the exemption from registration as an investment company
under the 1940 Act, (ii) cause the Trust to fail or cease to be classified as a
grantor trust for United States federal income tax purposes, or (iii) cause the
Preferred Securities to be delisted by the American Stock Exchange.
(e) Notwithstanding anything in this Trust Agreement to
the contrary, without the consent of the Delaware Trustee or the Depositor, as
the case may be, this Trust Agreement may not be amended in a manner which
imposes any additional obligation on the Delaware Trustee or the Depositor.
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<PAGE> 54
(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 Counterparts.
This Trust Agreement may be executed in one or more counterparts, each
of which shall be an original and all of which shall constitute one and the
same instrument.
Section 10.4 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 10.5 Governing Law.
THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE
SECURITYHOLDERS, THE TRUST AND THE TRUSTEES WITH RESPECT TO THIS TRUST
AGREEMENT AND THE TRUST SECURITIES SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF DELAWARE (WITHOUT REGARD TO CONFLICT OF
LAWS PRINCIPLES).
Section 10.6 Payments Due on Non-Business Day.
If the date fixed for any payment on any Trust Security shall be a day
that is not a Business Day, then such payment need not be made on such date but
may be made on the next succeeding day that is a Business Day, 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 10.7 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
consolidation, merger or sale involving the Depositor that is permitted under
Article Eight 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 10.8 Headings.
The Article and Section headings are for convenience only and shall
not affect the construction of this Trust Agreement.
49
<PAGE> 55
Section 10.9 Reports, Notices and Demands.
Any report, 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 any Securityholder 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 Preferred Securityholder, to such Preferred Securityholder as
such Securityholder's name and address may appear on the Securities Register;
and (b) in the case of the Common Securityholder or the Depositor, to American
Coin Merchandising, Inc., 5660 Central Avenue, Boulder, Colorado 80301,
Attention: Jerome M. Lapin, President. Such notice, demand or other
communication to or upon a Securityholder shall be deemed to have been
sufficiently given or made, for all purposes, upon hand delivery, mailing or
transmission.
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 Wilmington Trust Company, Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890-0001, Attention: Corporate Trust Administration;
(b) with respect to the Delaware Trustee, to Wilmington Trust Company, Rodney
Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001,
Attention: Corporate Trust Administration; and (c) with respect to the
Administrative Trustees, to them at the address above for notices to the
Depositor, marked "Attention Administrative Trustees of AMERICAN COIN
MERCHANDISING TRUST I." Such notice, demand or other communication to or upon
the Trust, the Property Trustee, the Delaware Trustee or the Administrative
Trustees shall be deemed to have been sufficiently given or made only upon
actual receipt of the writing by the Trust, the Property Trustee, the Delaware
Trustee or the Administrative Trustee.
Section 10.10 Agreement Not to Petition.
Each of the Trustees and the Depositor agree for the benefit of the
Securityholders that, until at least one year and one day after the Trust has
been terminated in accordance with Article IX, they shall not file, or join in
the filing of, a petition against the Trust under any 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 10.10, the Property Trustee agrees, for the benefit of
Securityholders, 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 10.10 shall survive the termination of this Trust Agreement.
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Section 10.11 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 a 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 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 10.12 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 SECURITYHOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY
SIGNATURE OR FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE
UNCONDITIONAL ACCEPTANCE BY THE SECURITYHOLDER AND ALL OTHERS HAVING A
BENEFICIAL INTEREST IN SUCH TRUST SECURITY OF ALL THE TERMS AND PROVISIONS OF
THIS TRUST AGREEMENT AND AGREEMENT TO THE SUBORDINATION PROVISIONS AND OTHER
TERMS OF THE GUARANTEE AND THE INDENTURE, AND SHALL CONSTITUTE THE AGREEMENT OF
THE TRUST, SUCH SECURITYHOLDER AND SUCH OTHERS THAT THE TERMS AND PROVISIONS OF
THIS TRUST AGREEMENT SHALL BE BINDING, OPERATIVE AND EFFECTIVE AS BETWEEN THE
TRUST AND SUCH SECURITYHOLDER AND SUCH OTHERS.
51
<PAGE> 57
IN WITNESS WHEREOF, the undersigned have executed this Trust Agreement
this ____ day of ____, 1998.
AMERICAN COIN MERCHANDISING, INC.
By:
---------------------------------
Name: Jerome M. Lapin
Title: President and Chief Executive
Officer
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely as Property
Trustee
By:
--------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely as Delaware
Trustee
By:
--------------------------------
Name:
Title:
--------------------------------
Name: Jerome M. Lapin
Title: not in his individual capacity but
solely as Administrative Trustee
--------------------------------
Name: W. John Cash
Title: not in his individual capacity but
solely as Administrative Trustee
52
<PAGE> 58
EXHIBIT A
CERTIFICATE OF TRUST
A-1
<PAGE> 59
EXHIBIT B
DTC Letter of Representations
B-1
<PAGE> 60
EXHIBIT C
CERTIFICATE EVIDENCING COMMON SECURITIES
C-1
<PAGE> 61
EXHIBIT D
AGREEMENT AS TO EXPENSES AND LIABILITIES
D-1
<PAGE> 62
EXHIBIT E
CERTIFICATE EVIDENCING TRUST PREFERRED SECURITIES
E-1
<PAGE> 1
EXHIBIT 4.10
AMERICAN COIN MERCHANDISING, INC.
to
WILMINGTON TRUST COMPANY
Trustee
JUNIOR SUBORDINATED INDENTURE
Dated as of August , 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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RECITALS OF THE COMPANY .................................................... 1
ARTICLE I: DEFINITIONS AND OTHER PROVISIONS OF GENERAL
APPLICATION ................................................... 1
Section 1.1 Definitions ............................................. 1
Section 1.2 Compliance Certificate and Opinions ..................... 9
Section 1.3 Forms of Documents Delivered to Trustee ................. 9
Section 1.4 Acts of Holders ......................................... 10
Section 1.5 Notices, Etc. to Trustee and Company .................... 12
Section 1.6 Notice to Holders; Waiver ............................... 12
Section 1.7 Conflict with Trust Indenture Act ....................... 13
Section 1.8 Effect of Headings and Table of Contents ................ 13
Section 1.9 Successors and Assigns .................................. 13
Section 1.10 Separability Clause ..................................... 13
Section 1.11 Benefits of Indenture ................................... 13
Section 1.12 Governing Law ........................................... 13
Section 1.13 Non-Business Days ....................................... 13
ARTICLE II: SECURITY FORMS ................................................ 14
Section 2.1 Forms Generally ......................................... 14
Section 2.2 Form of Face of Security ................................ 14
Section 2.3 Form of Reverse of Security ............................. 18
Section 2.4 Additional Provisions Required in Global Security ....... 21
Section 2.5 Form of Trustee's Certificate of Authentication ......... 21
ARTICLE III: THE SECURITIES ................................................ 21
Section 3.1 Title and Terms ......................................... 21
Section 3.2 Denominations ........................................... 24
Section 3.3 Execution, Authentication, Delivery and Dating .......... 24
Section 3.4 Temporary Securities .................................... 25
Section 3.5 Registration, Transfer and Exchange ..................... 26
Section 3.6 Mutilated, Destroyed, Lost and Stolen Securities ........ 27
Section 3.7 Payment of Interest; Interest Rights Preserved .......... 28
Section 3.8 Persons Deemed Owners ................................... 29
Section 3.9 Cancellation ............................................ 29
Section 3.10 Computation of Interest ................................. 30
Section 3.11 Deferrals of Interest Payment Dates ..................... 30
Section 3.12 Right of Set-Off ........................................ 31
Section 3.13 Agreed Tax Treatment .................................... 31
Section 3.14 Shortening of Stated Maturity ........................... 31
</TABLE>
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<TABLE>
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Section 3.15 CUSIP Numbers ........................................... 32
ARTICLE IV: SATISFACTION AND DISCHARGE ..................................... 32
Section 4.1 Satisfaction and Discharge of Indenture ................. 32
Section 4.2 Application of Trust Money .............................. 33
ARTICLE V: REMEDIES ....................................................... 33
Section 5.1 Events of Default ....................................... 33
Section 5.2 Acceleration of Maturity; Rescission and Annulment ...... 34
Section 5.3 Collection of Indebtedness and Suits for
Enforcement by Trustee .................................. 36
Section 5.4 Trustee May File Proofs of Claim ........................ 36
Section 5.5 Trustee May Enforce Claim Without Possession of
Securities .............................................. 37
Section 5.6 Application of Money Collected .......................... 37
Section 5.7 Limitation on Suits ..................................... 38
Section 5.8 Unconditional Right of Holders to Receive ............... 38
Section 5.9 Restoration of Rights and Remedies 39
Section 5.10 Rights and Remedies Cumulative .......................... 39
Section 5.11 Delay or Omission Not Waiver ............................ 39
Section 5.12 Control by Holders ...................................... 40
Section 5.13 Waiver of Past Defaults ................................. 40
Section 5.14 Undertaking for Costs ................................... 40
Section 5.15 Waiver of Usury, Stay or Extension Laws ................. 41
ARTICLE VI: THE TRUSTEE .................................................... 41
Section 6.1 Certain Duties and Responsibilities ..................... 41
Section 6.2 Notice of Defaults ...................................... 42
Section 6.3 Certain Rights of Trustee ............................... 42
Section 6.4 Not Responsible for Recitals or Issuance of Securities .. 43
Section 6.5 May Hold Securities ..................................... 44
Section 6.6 Money Held in Trust ..................................... 44
Section 6.7 Compensation and Reimbursement .......................... 44
Section 6.8 Disqualification; Conflicting Interests ................. 45
Section 6.9 Corporate Trustee Required; Eligibility ................. 45
Section 6.10 Resignation and Removal; Appointment of Successor ....... 45
Section 6.11 Acceptance of Appointment by Successor .................. 47
Section 6.12 Merger, Conversion, Consolidation or Succession
to Business ............................................. 48
Section 6.13 Preferential Collection of Claims Against Company ....... 48
Section 6.14 Appointment of Authenticating Agent ..................... 48
</TABLE>
ii
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<TABLE>
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ARTICLE VII: HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY ............... 50
Section 7.1 Company to Furnish Trustee Names and Addresses of Holders . 50
Section 7.2 Preservation of Information; Communications to Holders .... 50
Section 7.3 Reports by Trustee ........................................ 50
Section 7.4 Reports by Company ........................................ 51
ARTICLE VIII: CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE ........... 51
Section 8.1 Company May Consolidate, Etc., Only on Certain Terms ...... 51
Section 8.2 Successor Corporation Substituted ......................... 52
ARTICLE IX: SUPPLEMENTAL INDENTURES .......................................... 52
Section 9.1 Supplemental Indentures without Consent of Holders ........ 52
Section 9.2 Supplemental Indentures with Consent of Holders ........... 53
Section 9.3 Execution of Supplemental Indentures ...................... 55
Section 9.4 Effect of Supplemental Indentures ......................... 55
Section 9.5 Conformity with Trust Indenture Act ....................... 55
Section 9.6 Reference in Securities to Supplemental Indentures ........ 55
ARTICLE X: COVENANTS ......................................................... 56
Section 10.1 Payment of Principal, Premium and Interest ................ 56
Section 10.2 Maintenance of Office or Agency ........................... 56
Section 10.3 Money for Security Payments to be Held in Trust ........... 56
Section 10.4 Statement as to Compliance ................................ 58
Section 10.5 Waiver of Certain Covenants ............................... 58
Section 10.6 Additional Sums ........................................... 58
Section 10.7 Additional Covenants ...................................... 59
ARTICLE XI: REDEMPTION OF SECURITIES ......................................... 60
Section 11.1 Applicability of This Article ............................. 60
Section 11.2 Election to Redeem; Notice to Trustee ..................... 60
Section 11.3 Selection of Securities to be Redeemed .................... 60
Section 11.4 Notice of Redemption ...................................... 61
Section 11.5 Deposit of Redemption Price ............................... 61
Section 11.6 Payment of Securities Called for Redemption ............... 62
</TABLE>
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<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 11.7 Right of Redemption of Securities Initially
Issued to an American Coin Merchandising
Trust .................................................. 62
ARTICLE XII: SINKING FUNDS ................................................. 63
Section 12.1 Applicability of Article ............................... 63
Section 12.2 Satisfaction of Sinking Fund Payments with
Securities ............................................. 63
Section 12.3 Redemption of Securities for Sinking Fund .............. 63
ARTICLE XIII: SUBORDINATION OF SECURITIES .................................. 65
Section 13.1 Securities Subordinate to Senior Debt and
Subordinated Debt ...................................... 65
Section 13.2 Payment Over of Proceeds Upon Dissolution, Etc ......... 65
Section 13.3 Prior Payment to Senior Debt and Subordinated Debt
Upon Acceleration of Securities ........................ 66
Section 13.4 No Payment When Senior Debt and Subordinated
Debt in Default ........................................ 67
Section 13.5 Payment Permitted If No Default ........................ 67
Section 13.6 Subrogation to Rights of Holders of Senior
Debt and Subordinated Debt ............................. 68
Section 13.7 Provisions Solely to Define Relative Rights ............ 68
Section 13.8 Trustee to Effectuate Subordination .................... 68
Section 13.9 No Waiver of Subordination Provisions .................. 69
Section 13.10 Notice to Trustee ...................................... 69
Section 13.11 Reliance on Judicial Order or Certificate of
Liquidating Agent ...................................... 70
Section 13.12 Trustee Not Fiduciary for Holders of Senior Debt
and Subordinated Debt .................................. 70
Section 13.13 Rights of Trustee as Holder of Senior Debt and
Subordinated Debt; Preservation of Trustee's Rights .... 70
Section 13.14 Article Applicable to Paying Agents .................... 71
Section 13.15 Certain Conversions or Exchanges Deemed Payment ........ 71
</TABLE>
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<PAGE> 6
JUNIOR SUBORDINATED INDENTURE, dated as of August _________, 1998,
between AMERICAN COIN MERCHANDISING, INC., a Delaware corporation (hereinafter
called the "Company") having its principal office at 5660 Central Avenue,
Boulder, Colorado 80301, and WILMINGTON TRUST COMPANY, a Delaware banking
corporation, as Trustee (hereinafter called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured junior
subordinated debt securities in series (hereinafter called the "Securities") of
substantially the tenor hereinafter provided, including, without limitation,
Securities issued to evidence loans made to the Company of the proceeds from
the issuance from time to time by one or more business trusts (each an
"American Coin Merchandising Trust," and, collectively, the "American Coin
Merchandising Trusts") of preferred trust interests in such American Coin
Merchandising Trusts (the "Preferred Securities") and common interests in such
American Coin Merchandising Trusts (the "Common Securities" and, collectively
with the Preferred Securities, the "Trust Securities"), and to provide the
terms and conditions upon which the Securities are to be authenticated, issued
and delivered.
All things necessary to make the Securities, 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 Securities by the Holders thereof, it is
mutually covenanted and agreed, for the equal and proportionate benefit of all
Holders of the Securities or of any series thereof, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.1 Definitions.
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(a) The terms defined in this Article have the meanings assigned
to them in this Article, and include the plural as well as the singular;
(b) All other terms used herein which are defined in the Trust
Indenture Act, 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
<PAGE> 7
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; provided, that when two or
more principles are so generally accepted, it shall mean that set of principles
consistent with those in use by the Company; and
(d) The words "herein," "hereof" and "hereunder" and other words
of similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"1940 Act" means the Investment Company Act of 1940, as amended.
"Act" when used with respect to any Holder has the meaning specified
in Section 1.4.
"Additional Interest" means the interest, if any, that shall accrue on
any interest on the Securities of any series the payment of which has not been
made on the applicable Interest Payment Date and which shall accrue at the rate
per annum specified or determined as specified in such Security.
"Additional Sums" has the meaning specified in Section 10.6.
"Additional Taxes" means the sum of any additional taxes, duties and
other governmental charges to which an American Coin Merchandising Trust has
become subject from time to time as a result of a Tax Event.
"Administrative Trustee" means, in respect of any American Coin
Merchandising Trust, each Person identified as an "Administrative Trustee" or
an "Administrative Agent" in the related Amended and Restated Trust Agreement,
solely in such Person's capacity as Administrative Trustee or an Administrative
Agent, as the case may be, of such American Coin Merchandising Trust under such
Amended and Restated Trust Agreement and not in such Person's individual
capacity, or any successor administrative trustee or successor administrative
agent, as the case may be, appointed as therein 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, no American Coin
Merchandising Trust to which Securities have been issued shall be deemed to be
an Affiliate of the Company. 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.
"American Coin Merchandising Guarantee" means the guarantee by the
Company of distributions on the Preferred Securities of an American Coin
Merchandising Trust to the extent provided in the related Guarantee Agreement.
"American Coin Merchandising Trust" has the meaning specified in the
first recital of this Indenture.
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<PAGE> 8
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 6.14 to act on behalf of the Trustee to authenticate
Securities of one or more series.
"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 a 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 (i) a Saturday or Sunday, (ii)
a day on which banking institutions in the State of Colorado are authorized or
required by law or executive order to remain closed or (iii) a day on which the
Corporate Trust Office of the Trustee, or, with respect to the Securities of a
series initially issued to an American Coin Merchandising Trust, the principal
office of the Property Trustee under the related Trust Agreement, is closed for
business.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or if at any time
after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties on such date.
"Common Securities" has the meaning specified in the first recital of
this Indenture.
"Common Stock" means the common stock, $.01 par value per share, of the
Company.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor corporation shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor corporation.
"Company Request" and "Company Order" mean, respectively, the written
request or order signed in the name of the Company by the Chairman of the
Board, Chief Executive Officer, President or a Vice President, and by its Chief
Financial Officer, Treasurer, Secretary or an Assistant Secretary of the
Company, and delivered to the Trustee.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be
administered.
"Corporation" includes a corporation, association, limited liability
company, joint-stock company or business trust.
"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
3
<PAGE> 9
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; (vi) all
indebtedness of such Person whether incurred on or prior to the date of this
Indenture or thereafter incurred, for claims in respect of derivative products,
including interest rate, foreign exchange rate and commodity forward contracts,
options and swaps and similar arrangements; and (vii) every obligation of the
type referred to in clauses (i) through (vi) of another Person and all
dividends of another Person the payment of which, in either case, such Person
has guaranteed or is responsible or liable for, directly or indirectly, as
obligor or otherwise.
"Default" has the meaning specified in Section 6.2.
"Defaulted Interest" has the meaning specified in Section 3.7.
"Depositary" means, with respect to the Securities of any series
issuable or issued in whole or in part in the form of one or more Global
Securities, the Person designated as Depositary by the Company pursuant to
Section 3.1 with respect to such series (or any successor thereto).
"Discount Security" means any security which provides for an amount
less than the principal amount thereof to be due and payable upon a declaration
of acceleration of the Maturity thereof pursuant to Section 5.2.
"Distributions" with respect to the Trust Securities issued by an
American Coin Merchandising Trust, means amounts payable in respect of such
Trust Securities as provided in the related Trust Agreement and referred to
therein as "Distributions."
"Dollar" or "U.S. $" means the currency of the United States of
America that, as at the time of payment, is legal tender for the payment of
public and private debts.
"Event of Default" has the meaning specified in Article V, unless
otherwise specified in the supplemental indenture or the Officers' Certificate
delivered pursuant to Section 3.1 hereof creating a series of Securities.
"Exchange Act" means the Securities Exchange Act of 1934 and any
statute successor thereto, in each case as amended from time to time.
"Expiration Date" has the meaning specified in Section 1.4(vi).
"Extension Period" has the meaning specified in Section 3.11.
"Global Security" means a Security in the form prescribed in Section
2.4 evidencing all or part of a series of Securities, issued to the Depositary
or its nominee for such series, and registered in the name of such Depositary
or its nominee.
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<PAGE> 10
"Guarantee Agreement" means the Guarantee Agreement substantially in
the form attached hereto as Annex C, or substantially in such form as may be
specified as contemplated by Section 3.1 with respect to the Securities of any
series, in each case as amended from time to time.
"Holder" means a Person in whose name a Security 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
or one or more Officers' Certificates delivered pursuant to Section 3.1 and
shall include the terms of each particular series of Securities established as
contemplated by Section 3.1.
"Interest Payment Date" means as to each series of Securities, the
Stated Maturity of an installment of interest on such Securities.
"Investment Company Event" means, in respect of an American Coin
Merchandising Trust, the receipt by the Company and an American Coin
Merchandising Trust of an Opinion of Counsel experienced in such matters to the
effect that, as a result of 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, such American Coin
Merchandising Trust is or will be considered an "investment company" that is
required to be registered under the 1940 Act, which change becomes effective on
or after the date of original issuance of the Preferred Securities of such
American Coin Merchandising Trust.
"Junior Subordinated Payment" has the meaning specified in Section
13.2.
"Maturity" when used with respect to any Security means the date on
which the principal of such Security becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
"Notice of Default" means a written notice of the kind specified in
Section 5.2.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, Chief Executive Officer, the President or a Vice President, and by
the Chief Financial Officer, Treasurer, 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, and who shall be reasonably acceptable to the Trustee.
"Original Issue Date" means the date of issuance specified as such in
each Security.
"Outstanding" means, when used in reference to any Securities, as of
the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
5
<PAGE> 11
(i) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Securities for whose payment money in the necessary
amount has been theretofore deposited with the Trustee or any Paying Agent in
trust for the Holders of such Securities; and
(iii) Securities in substitution for or in lieu of which
other Securities have been authenticated and delivered or which have been paid
pursuant to Section 3.6, unless proof satisfactory to the Trustee is presented
that any such Securities are held by Holders in whose hands such Securities are
valid, binding and legal obligations of the Company; provided, however, that in
determining whether the Holders of the requisite principal amount of
Outstanding Securities have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, Securities owned by the Company
or any other obligor upon the Securities or any Affiliate of the Company or
such other obligor shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Securities which the Trustee knows to be so owned shall be so
disregarded. Securities so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities and that
the pledgee is not the Company or any other obligor upon the Securities or any
Affiliate of the Company or such other obligor. Upon the written request of
the Trustee, the Company shall furnish to the Trustee promptly an Officers'
Certificate listing and identifying all Securities, 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 Securities 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 Securities 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 Securities on behalf of the
Company.
"Person" means any individual, corporation, partnership, joint
venture, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Place of Payment" means, with respect to the Securities of any
series, the place or places where the principal of (and premium, if any) and
interest on the Securities of such series are payable pursuant to Section 3.1.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any security
authenticated and delivered under Section 3.6 in lieu of a lost, destroyed or
stolen Security shall be deemed to evidence the same debt as the lost,
destroyed or stolen Security.
"Preferred Securities" has the meaning specified in the first recital
of this Indenture.
6
<PAGE> 12
"Proceeding" has the meaning specified in Section 13.2.
"Property Trustee" means, in respect of any American Coin
Merchandising Trust, the commercial bank or trust company identified as the
"Property Trustee" in the related Trust Agreement, solely in its capacity as
Property Trustee of such American Coin Merchandising Trust under such 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.
"Redemption Date," when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price," when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Regular Record Date" for the interest payable on any Interest Payment
Date with respect to the Securities of a series means, unless otherwise
provided pursuant to Section 3.1 with respect to Securities of a series, (i) in
the case of Securities of a series represented by one or more Global
Securities, the Business Day next preceding such Interest Payment Date and (ii)
in the case of Securities of a series not represented by one or more Global
Securities, the date which is fifteen days next preceding such Interest Payment
Date (whether or not a Business Day).
"Responsible Officer" when used with respect to the Trustee means any
officer of the Trustee assigned by the Trustee from time to time to administer
its corporate trust matters.
"Securities" or "Security" means any debt securities or debt security,
as the case may be, authenticated and delivered under this Indenture.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 3.5.
"Senior Debt and Subordinated 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
Securities or to other Debt which is pari passu with, or subordinated to, the
Securities; provided, however, that Senior Debt and Subordinated 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 United States
Bankruptcy Reform Act of 1978, as amended, 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, and (d) any Securities.
"Special Record Date" for the payment of any Defaulted Interest means
a date fixed by the Trustee pursuant to Section 3.7.
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<PAGE> 13
"Stated Maturity" when used with respect to any Security or any
installment of principal thereof or interest thereon means the date specified
pursuant to the terms of such Security as the date on which the principal of
such Security or such installment of interest is due and payable, in the case
of such principal, as such date may be shortened or extended as provided
pursuant to the terms of such Security and this Indenture.
"Subsidiary" means a corporation more than 50% of the outstanding
voting stock of which is owned, directly or indirectly, by the Company or by
one or more other Subsidiaries, or by the Company and one or more other
Subsidiaries. For purposes of this definition, "voting stock" means stock
which ordinarily 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 Company and the American Coin
Merchandising Trust of an Opinion of Counsel (as defined in the relevant Trust
Agreement) experienced in such matters 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, 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 prospective change, pronouncement or decision is announced on or after the
date of issuance of the Preferred Securities of such American Coin
Merchandising Trust, there is more than an insubstantial risk that (i) such
American Coin Merchandising Trust is, or will be within 90 days of the date of
such Opinion of Counsel, subject to United States Federal income tax with
respect to income received or accrued on the corresponding series of
Securities, (ii) interest payable by the Company on such corresponding series
of Securities is not, or within 90 days of the date of such Opinion of Counsel,
will not be, deductible by the Company, in whole or in part, for United States
Federal income tax purposes or (iii) such American Coin Merchandising Trust is,
or will be within 90 days of the date of such Opinion of Counsel, subject to
more than a de minimis amount of other taxes, duties or other governmental
charges.
"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, or
substantially in such form as may be specified as contemplated by Section 3.1
with respect to the Securities of any series, in each case 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
and, if at any time there is more than one such Person, "Trustee" as used with
respect to the Securities of any series shall mean the Trustee with respect to
Securities of that series.
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<PAGE> 14
"Trust Indenture Act" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbb), as amended and as in effect on the date as of this
Indenture, except as provided in Section 9.5.
"Trust Securities" has the meaning specified in the first recital of
this Indenture.
"Vice President" when used with respect to the Company, means any duly
appointed vice president, whether or not designated by a word or words added
before or after the title "vice president" of the Company.
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 10.4) 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.
Section 1.3 Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, 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
9
<PAGE> 15
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, or representation by, counsel
may be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Company
stating that the information with respect to such factual matters is in the
possession of the Company, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions, or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 1.4 Acts of Holders.
(i) 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 or
proxy 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 Acts of the Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and (subject to Section
6.1) conclusive in favor of the Trustee and the Company, if made in the manner
provided in this Section.
(ii) 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.
(iii) 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.
(iv) The ownership of Securities shall be proved by the Securities
Register.
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<PAGE> 16
(v) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every Security 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 Security.
(vi) The Company may set any day as a record date for the purpose
of determining the Holders of Outstanding Securities of any series entitled to
give, make or take any request, demand, authorization, direction, notice,
consent, waiver or other action provided or permitted by this Indenture to be
given, made or taken by Holders of Securities of such series, provided that the
Company may not set a record date for, and the provisions of this paragraph
shall not apply with respect to, the giving or making of any notice,
declaration, request or direction referred to in the next paragraph. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities of the relevant series on such record date, and no other Holders,
shall be entitled to take the relevant action, whether or not such Holders
remain Holders after such record date, provided that no such action shall be
effective hereunder unless taken on or prior to the applicable Expiration Date
by holders of the requisite principal amount of Outstanding Securities of such
series on such record date. Nothing in this paragraph shall be construed to
prevent the Company from setting a new record date for any action for which a
record date has previously been set pursuant to this paragraph (whereupon the
record date previously set shall automatically and with no action by any Person
be canceled and of no effect), and nothing in this paragraph shall be construed
to render ineffective any action taken by Holders of the requisite principal
amount of Outstanding Securities of the relevant series on the date such action
is taken. Promptly after any record date is set pursuant to this paragraph,
the Company, at its own expense, shall cause notice of such record date, the
proposed action by Holders and the applicable Expiration Date to be given to
the Trustee in writing and to each Holder of Securities of the relevant series
in the manner set forth in Section 1.6.
The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to
join in the giving or making of (i) any Notice of Default, (ii) any declaration
of acceleration referred to in Section 5.2, (iii) any request to institute
proceedings referred to in Section 5.7(b) or (iv) any direction referred to in
Section 5.12, in each case with respect to Securities of such series. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities of such series on such record date, and no other Holders, shall be
entitled to join in such notice, declaration, request or direction, whether or
not such Holders remain Holders after such record date, provided that no such
action shall be effective hereunder unless taken on or prior to the applicable
Expiration Date by Holders of the requisite principal amount of Outstanding
Securities of such series on such record date. Nothing in this paragraph shall
be construed to prevent the Trustee from setting a new record date for any
action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and
with no action by any Person be canceled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Securities of the relevant
series on the date such action is taken. Promptly after any record date is set
pursuant to this paragraph, the Trustee, at the Company's expense, shall cause
notice of such record date, the proposed action by Holders and the applicable
Expiration Date to be given to the Company in
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<PAGE> 17
writing and to each Holder of Securities of the relevant series in the manner
set forth in Section 1.6.
With respect to any record date set pursuant to this Section, the
party hereto which sets such record dates may designate any day as the
"Expiration Date" and from time to time may change the Expiration Date to any
earlier or later day, provided that no such change shall be effective unless
notice of the proposed new Expiration Date is given to the other party hereto
in writing, and to each Holder of Securities of the relevant series in the
manner set forth in Section 1.6, on or prior to the existing Expiration Date.
If an Expiration Date is not designated with respect to any record date set
pursuant to this Section, the party hereto which set such record date shall be
deemed to have initially designated the 180th day after such record date as the
Expiration Date with respect thereto, subject to its right to change the
Expiration Date as provided in this paragraph. Notwithstanding the foregoing,
no Expiration Date shall be later than the 180th day after the applicable
record date.
(vii) Without limiting the foregoing, a Holder entitled hereunder to
take any action hereunder with regard to any particular Security may do so with
regard to all or any part of the principal amount of such 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 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, any holder of Preferred Securities
or 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, any Holder or any holder of
Preferred Securities shall be sufficient for every purpose (except as otherwise
provided in Section 5.1) 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, 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
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<PAGE> 18
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.
Section 1.7 Conflict with Trust Indenture Act.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by any of Sections 310 to 317, inclusive, of the Trust
Indenture Act through operation of Section 318(c) thereof, such imposed duties
shall control.
Section 1.8 Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
Section 1.9 Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
Section 1.10 Separability Clause.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 1.11 Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
and assigns, the holders of Senior Debt and Subordinated Debt, the Holders of
the Securities and, to the extent expressly provided in this Indenture, the
holders of Preferred Securities, any benefit or any legal or equitable right,
remedy or claim under this Indenture.
Section 1.12 Governing Law.
This Indenture and the Securities shall be governed by and construed
in accordance with the laws of the State of California without regard to
conflict of laws principles thereof, except that the immunities and standard of
care of the Trustee shall be governed by Delaware law.
Section 1.13 Non-Business Days.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day, then (notwithstanding any
other provision of this Indenture or the Securities) payment of interest or
principal (and premium, if any) need not be made on such date, but may be made
on the next succeeding Business Day (and no interest shall accrue for
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<PAGE> 19
the period from and after such Interest Payment Date, Redemption Date or Stated
Maturity, as the case may be, until such next succeeding Business Day, with the
same force and effect as if made on the Interest Payment Date or Redemption
Date or at the Stated Maturity).
ARTICLE II
SECURITY FORMS
Section 2.1 Forms Generally.
The Securities of each series shall be in substantially the forms set
forth in this Article, or in such other form or forms as shall be established
by or pursuant to a Board Resolution or in one or more indentures supplemental
hereto, in each case with such appropriate insertions, omissions, substitutions
and other variations as are required or permitted by this Indenture and may
have such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with applicable tax
laws or the rules of any securities exchange or as may, consistently herewith,
be determined by the officers executing such Securities, as evidenced by their
execution of the Securities. If the form of Securities of any series is
established by action taken pursuant to a Board Resolution, a copy of an
appropriate record of such action shall be certified by the Vice President,
Controller, the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Company Order
contemplated by Section 3.3 with respect to the authentication and delivery of
such Securities.
The Trustee's certificates of authentication shall be substantially in
the form set forth in this Article.
The definitive Securities shall be printed, lithographed or engraved
or produced by any combination of these methods, if required by any Securities
exchange on which the Securities 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 Securities may be listed, all as
determined by the officers executing such Securities, as evidenced by their
execution of such Securities.
Section 2.2 Form of Face of Security.
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<PAGE> 20
AMERICAN COIN MERCHANDISING, INC.
___% JUNIOR SUBORDINATED DEBENTURE DUE _______
Registered Principal Amount:
No. CUSIP No.
American Coin Merchandising, Inc., a corporation organized and existing under
the laws of Delaware (hereinafter called the "Company," which term includes any
successor corporation under the Indenture hereinafter referred to), for value
received, hereby promises to pay to _____________________, or registered
assigns, the principal sum of $_______ (______ Dollars) on
______________________; provided that the Company may shorten the Stated
Maturity of the principal of this Security to a date not earlier than
___________. The Company further promises to pay interest on said principal
sum from ____________ 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 (subject to deferral as set forth herein) in arrears on
the 15th day of each January, April, July and October of each year commencing
October 15, 1998 at the rate of ___% per annum, until the principal hereof
shall have become due and payable, plus Additional Interest, if any, until the
principal hereof is paid or duly provided for or made available for payment and
on any overdue principal and (without duplication and to the extent that
payment of such interest is enforceable under applicable law) on any overdue
installment of interest at the rate of ___% per annum. The amount of interest
payable for any period shall be computed on the basis of twelve 30-day months
and a 360-day year. The amount of interest payable for any partial period
shall be computed on the basis of the number of days elapsed in a 360-day year
of twelve 30-day months. In the event that any date on which interest is
payable on this Security is not a Business Day, then a payment of the interest
payable on such date will be made on the next succeeding day which is a
Business Day (and without any interest or other payment in respect of any such
delay), with the same force and effect as if made on the date the payment was
originally payable. A "Business Day" shall mean any day other than a Saturday
or Sunday or a day on which banking institutions in the State of Colorado are
authorized or required by law or executive order to remain closed or on a day
on which the Corporate Trust Office of the Trustee, or the principal office of
the Property Trustee under the Amended and Restated Trust Agreement
(hereinafter referred to) for [name of Trust] is closed for business. 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 Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest installment, which shall be [insert Record Date] 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
Security (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to holders of Securities
of this series not less than ______ days prior to such Special Record Date, or
be paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities of this series
may be listed, and upon such notice as may be required by such exchange, all as
more fully provided in said Indenture.
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<PAGE> 21
[If applicable insert -- So long as no Event of Default has occurred
and is continuing, the Company shall have the right at any time during the term
of this Security to defer payment of interest on this Security, at any time or
from time to time, for up to 20 consecutive quarterly interest payment periods
with respect to each deferral period (each an "Extension Period"), (during
which Extension Periods the Company shall have the right to make partial
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 thereon to the extent permitted by applicable law));
provided, however, that no Extension Period shall extend beyond the Stated
Maturity of the principal of this Security; provided, further, that during any
such Extension Period, the Company shall not, and shall not permit any
Subsidiary of the Company 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 Company's capital stock (which includes common and preferred stock),
(ii) make any payment of principal of or interest or premium, if any, on or
repay, repurchase or redeem any debt security of the Company (including
Securities issued by the Company pursuant to the Indenture other than the
Securities represented by this certificate) that ranks pari passu with or
junior in interest to this Security, (iii) make any guarantee payments with
respect to any guarantee by the Company of the debt securities of any
Subsidiaries of the Company if such guarantee ranks pari passu in all respects
with or junior in interest to this Security (other than (a) dividends or
distributions in the Company's capital stock (which includes common and
preferred stock), (b) any declaration of a dividend in connection with the
implementation of a stockholders' rights plan, or the issuance of stock under
any such plan in the future or the redemption or repurchase of any such rights
pursuant thereto, (c) payments under the American Coin Merchandising Guarantee
related to the Preferred Securities issued by [name of Trust], and (d)
purchases of Common Stock related to the issuance of Common Stock or rights
under any of the Company's benefit plans for its directors, officers, employees
or consultants), or (iv) redeem, purchase or acquire less than all of the
Securities of this series or any of the Preferred Securities. Prior to the
termination of any such Extension Period, the Company may further extend such
Extension Period, provided that such extension does not cause such Extension
Period to exceed 20 consecutive quarterly interest payment periods or to extend
beyond the Stated Maturity. Upon the termination of any such Extension Period
and upon the payment of all amounts then due on any Interest Payment Date, and
subject to the foregoing limitation, the Company may elect to begin a new
Extension Period. 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 of [name of Trust] notice of
its election to begin any Extension Period (or an extension thereof) at least
one Business Day prior to the earlier of (i) the date on which Distributions on
the Preferred Securities would be payable except for the election to begin or
extend such Extension Period, or (ii) the date the Administrative Trustees are
required to give notice to the American Stock Exchange, the New York Stock
Exchange, the Nasdaq Stock Market or other applicable stock exchange or
automated quotation system on which the Preferred Securities are then listed or
quoted or to holders of such Preferred Securities on the record date or (iii)
the date such Distributions are payable, but in any event not less than one
Business Day prior to such record date. The Trustee shall give notice of the
Company's election to begin a new Extension Period to the holders of the
Securities. There is no limitation on the number of times that the Company may
elect to begin an Extension Period.]
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<PAGE> 22
Payment of the principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Trustee or at the office
of such paying agent or paying agents as the Company may designate from time to
time, maintained for that purpose in the United States, 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 (i) by check mailed to
the address of the Person entitled thereto as such address shall appear in the
Securities Register or (ii) by transfer to an account maintained by the Person
entitled thereto, 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 Security is, to the extent provided
in the Indenture, unsecured and will rank junior and subordinate and subject in
right of payments to the prior payment in full of all Senior Debt and
Subordinated Debt, and this Security is issued subject to the provisions of the
Indenture with respect thereto. Each Holder of this Security, 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 and Subordinated Debt, whether now outstanding or hereafter
incurred, and waives reliance by each such holder upon said provisions.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this
Security shall not be entitled to any benefit under the Indenture or be valid
or obligatory for any purpose.
Terms used but not defined herein have the meanings set forth in the
Indenture.
[remainder of page intentionally left blank]
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<PAGE> 23
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
American Coin Merchandising, Inc.
By:
-----------------------------
[Chief Executive Officer,
President or Vice President]
Attest:
- -----------------------------
[Secretary or Assistant Secretary]
Section 2.3 Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or
more series under a Junior Subordinated Indenture, dated as of [______] __, 1998
(herein called the "Indenture"), between the Company and Wilmington Trust
Company as Trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Trustee,
the Company and the Holders of the Securities, and of the terms upon which the
Securities are, and are to be, authenticated and delivered. This Security is
one of the series designated on the face hereof, limited in aggregate principal
amount to $ ______________.
All terms used in this Security that are defined in the Indenture and
in the Amended and Restated Trust Agreement, dated as of __________________, as
amended (the "Amended and Restated Trust Agreement"), for [insert name of
trust] among American Coin Merchandising, Inc., as depositor, the Trustees
named therein and the holders, from time to time, of undivided beneficial
interests in the assets of the [insert name of trust], shall have the meanings
assigned to them in the Indenture or the Amended and Restated Trust Agreement,
as the case may be.
[If applicable, insert--The Company may at any time, at its option, on
or after _______________, and subject to the terms and conditions of Article XI
of the Indenture, redeem this Security [in whole at any time] [or in part from
time to time], without premium or penalty, at a redemption price equal to
[insert redemption price] to the Redemption Date.]
[If applicable, insert--Upon the occurrence and during the
continuation of a Tax Event or Investment Company Event in respect of an
American Coin Merchandising Trust, the Company may, at its option, at any time
within 90 days of the occurrence of such Tax Event or Investment Company Event
redeem this Security, [if applicable, insert--in whole but not in part],
subject to the provisions of Section 11.7 and the other provisions of Article
XI of the Indenture, at a redemption price equal to [insert redemption price]
to the Redemption Date.]
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<PAGE> 24
[If applicable, insert--In the event of redemption of this Security in
part only, a new Security or Securities of this series for the portion hereof
not redeemed will be issued in the name of the Holder hereof upon the
cancellation hereof.]
The Indenture contains provisions for satisfaction and discharge of
the entire indebtedness of this Security upon compliance by the Company with
certain conditions set forth in the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the Company and the Trustee at any time to enter into a supplemental indenture
or indentures for the purpose of modifying in any manner the rights and
obligations of the Company and of the Holders of the Securities, with the
consent of the Holders of not less than a majority in principal amount of the
Outstanding Securities of each series to be affected by such supplemental
indenture. The Indenture also contains provisions permitting Holders of
specified percentages in principal amount of the Securities of each series at
the time Outstanding, on behalf of the Holders of all Securities of such
series, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Security shall be conclusive
and binding upon such Holder and upon all future Holders of this Security and
of any Security issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Security.
[If the Security is not a Discount Security,--As provided in and
subject to the provisions of the Indenture, if an Event of Default with respect
to the Securities of this series at the time Outstanding occurs and is
continuing, then and in every such case the Trustee or the Holders of not less
than 25% in principal amount of the Outstanding Securities of this series may
declare the principal amount of all the Securities of this series to be due and
payable immediately, by a notice in writing to the Company (and to the Trustee
if given by Holders), provided that, in the case of the Securities of this
series issued to an American Coin Merchandising Trust, if upon an Event of
Default, the Trustee or the Holders of not less than 25% in principal amount of
the Outstanding Securities of this series fails to declare the principal of all
the Securities of this series 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 the principal amount of and the accrued
interest (including any Additional Interest) on all the Securities of this
series shall become immediately due and payable, provided that the payment of
principal and interest (including any Additional Interest) on such Securities
shall remain subordinated to the extent provided in Article XIII of the
Indenture.]
[If the Security is a Discount Security,--As provided in and subject
to the provisions of the Indenture, if an Event of Default with respect to the
Securities of this series at the time Outstanding occurs and is continuing,
then and in every such case the Trustee or the Holders of not less than such
portion of the principal amount as may be specified in the terms of this series
may declare an amount of principal of the Securities of this series to be due
and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by Holders), provided that, in the case of the Securities of
this series issued to an American Coin
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<PAGE> 25
Merchandising Trust, if upon an Event of Default, the Trustee or the Holders of
not less than 25% in principal amount of the Outstanding Securities of this
series fails to declare the principal of all the Securities of this series 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. Such amount shall
be equal to [insert formula for determining the amount]. Upon any such
declaration, such amount of the principal of and the accrued interest
(including any Additional Interest) on all the Securities of this series shall
become immediately due and payable, provided that the payment of principal and
interest (including any Additional Interest) on such Securities shall remain
subordinated to the extent provided in Article XIII of the Indenture. Upon
payment (i) of the amount of principal so declared due and payable and (ii) of
interest on any overdue principal and overdue interest (in each case to the
extent that the payment of such interest shall be legally enforceable), all of
the Company's obligations in respect of the payment of the principal of and
interest, if any, on this Security shall terminate.]
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of (and premium, if any)
and interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the
Securities Register, upon surrender of this Security 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 Securities of this series, 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 Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Securities of this series are issuable only in registered form
without coupons in minimum denominations of $10 and any integral multiples of
$10 in excess thereof. As provided in the Indenture and subject to certain
limitations therein set forth, Securities of this series are exchangeable for a
like aggregate principal amount of Securities of such series of a different
authorized denomination, as requested by the Holder surrendering the same.
The Company and, by its acceptance of this Security or a beneficial
interest therein, the Holder of, and any Person that acquires a beneficial
interest in, this Security agree that for United
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<PAGE> 26
States Federal, state and local tax purposes it is intended that this Security
constitute indebtedness.
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO CONFLICT
OF LAWS PRINCIPLES THEREOF.
Section 2.4 Additional Provisions Required in Global Security.
Any Global Security 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 SECURITY IS A GLOBAL SECURITY 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 SECURITY IS EXCHANGEABLE FOR SECURITIES
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.
This is one of the Securities referred to in the within mentioned
Indenture.
Dated:
[INSERT NAME OF TRUSTEE]
as Trustee
By:
------------------------------
Authorized Officer
ARTICLE III
THE SECURITIES
Section 3.1 Title and Terms.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution, and set forth in an Officers'
Certificate (such Officers' Certificate shall have the effect of a supplemental
indenture for all purposes hereunder), or established in one or more indentures
supplemental hereto, prior to the issuance of Securities of a series:
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<PAGE> 27
(i) the title of the securities of such series, which
shall distinguish the Securities of the series from all other Securities;
(ii) the limit, if any, upon the aggregate principal
amount of the Securities of such series which may be authenticated and
delivered under this Indenture (except for Securities authenticated and
delivered upon registration of transfer of, or in exchange for, or in lieu of,
other Securities of the series pursuant to Section 3.4, 3.5, 3.6, 9.6 or 11.6
and except for any Securities which, pursuant to Section 3.3, are deemed never
to have been authenticated and delivered hereunder); provided, however, that
the authorized aggregate principal amount of such series may be increased above
such amount by a Board Resolution to such effect;
(iii) the Stated Maturity or Maturities on which the
principal of the Securities of such series is payable or the method of
determination thereof;
(iv) the rate or rates, if any, at which the Securities of
such series shall bear interest, if any, the rate or rates and extent to which
Additional Interest, if any, shall be payable in respect of any Securities of
such series, the Interest Payment Dates on which such interest shall be
payable, the right, pursuant to Section 3.11 or as otherwise set forth therein,
of the Company to defer or extend an Interest Payment Date, and the Regular
Record Date for the interest payable on any Interest Payment Date or the method
by which any of the foregoing shall be determined;
(v) the place or places where the principal of (and
premium, if any) and interest on the Securities of such series shall be
payable, the place or places where the Securities of such series may be
presented for registration of transfer or exchange, and the place or places
where notices and demands to or upon the Company in respect of the Securities
of such series may be made;
(vi) the period or periods within or the date or dates on
which, if any, the price or prices at which and the terms and conditions upon
which the Securities of such series may be redeemed, in whole or in part, at
the option of the Company;
(vii) the obligation or the right, if any, of the Company
to prepay, repay or purchase the Securities of such series pursuant to any
sinking fund, amortization or analogous provisions, or at the option of a
holder thereof, and the period or periods within which, the price or prices at
which, the currency or currencies (including currency unit or units) in which
and the other terms and conditions upon which Securities of the series shall be
redeemed, repaid or purchased, in whole or in part, pursuant to such
obligation;
(viii) the denominations in which any Securities of such
series shall be issuable, if other than denominations of $10 and any integral
multiples of $10 in excess thereof;
(ix) if other than Dollars, the currency or currencies
(including currency unit or units) in which the principal of (and premium, if
any) and interest, if any, on the Securities of the series shall be payable, or
in which the Securities of the series shall be denominated;
(x) the additions, modifications or deletions, if any, in
the Events of Default or covenants of the Company set forth herein with respect
to the Securities of such series;
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(xi) if other than the principal amount thereof, the
portion of the principal amount of Securities of such series that shall be
payable upon declaration of acceleration of the Maturity thereof;
(xii) the additions or changes, if any, to this Indenture
with respect to the Securities of such series as shall be necessary to permit
or facilitate the issuance of the Securities of such series in bearer form,
registrable or not registrable as to principal, and with or without interest
coupons;
(xiii) any index or indices used to determine the amount of
payments of principal of and premium, if any, on the Securities of such series
or the manner in which such amounts will be determined;
(xiv) whether the Securities of the series, or any portion
thereof, shall initially be issuable in the form of a temporary Global Security
representing all or such portion of the Securities of such series and
provisions for the exchange of such temporary Global Security for definitive
Securities of such series;
(xv) if applicable, that any Securities of the series
shall be issuable in whole or in part in the form of one or more Global
Securities and, in such case, the respective Depositaries for such Global
Securities, the form of any legend or legends which shall be borne by any such
Global Security in addition to or in lieu of that set forth in Section 2.4 and
any circumstances in addition to or in lieu of those set forth in Section 3.5
in which any such Global Security may be exchanged in whole or in part for
Securities registered, and any transfer of such Global Security in whole or in
part may be registered, in the name or names of Persons other than the
Depositary for such Global Security or a nominee thereof;
(xvi) the appointment of any Paying Agent or Agents for the
Securities of such series;
(xvii) the terms of any right to convert or exchange
Securities of such series into any other securities or property of the Company,
and the additions or changes, if any, to this Indenture with respect to the
Securities of such series to permit or facilitate such conversion or exchange;
(xviii) the form or forms of the Trust Agreement, Amended and
Restated Trust Agreement and Guarantee Agreement, if different from the forms
attached hereto as Annexes A, B and C, respectively;
(xix) the relative degree, if any, to which the Securities
of the series shall be senior to or be subordinated to other series of
Securities in right of payment, whether such other series of Securities are
Outstanding or not; and
(xx) any other terms of the Securities of such series
(which terms shall not be inconsistent with the provisions of this Indenture).
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All Securities of any one series shall be substantially identical
except as to denomination and except as may otherwise be provided herein or in
or pursuant to such Board Resolution and set forth in such Officers'
Certificate or in any such indenture supplemental hereto.
If any of the terms of the series are established by action taken
pursuant to a Board Resolution, a copy of an appropriate record of such action
shall be certified by the Secretary or an Assistant Secretary of the Company
and delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.
The Securities shall be subordinated in right of payment to Senior
Debt and Subordinated Debt as provided in Article XIII.
Section 3.2 Denominations.
The Securities of each series shall be in registered form without
coupons and shall be issuable in minimum denominations of $10 and integral
multiples of $10 in excess thereof, unless otherwise specified as contemplated
by Section 3.1.
Section 3.3 Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its
Chairman of the Board, President or one of its Vice Presidents under its
corporate seal reproduced or impressed thereon and attested by its Chief
Financial Officer, Treasurer, Secretary or one of its Assistant Secretaries.
The signature of any of these officers on the Securities may be manual or
facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities. At any time and from time to
time after the execution and delivery of this Indenture, the Company may
deliver Securities of any series executed by the Company to the Trustee for
authentication, together with a Company Order for the authentication and
delivery of such Securities, and the Trustee in accordance with the Company
Order shall authenticate and deliver such Securities. If the form or terms of
the Securities of the series have been established by or pursuant to one or
more Board Resolutions as permitted by Sections 2.1 and 3.1, in authenticating
such Securities, and accepting the additional responsibilities under this
Indenture in relation to such Securities, the Trustee shall be entitled to
receive, and (subject to Section 6.1) shall be fully protected in relying upon,
an Opinion of Counsel stating,
(a) if the form of such Securities has been established by or
pursuant to Board Resolution as permitted by Section 2.1, that such form has
been established in conformity with the provisions of this Indenture;
(b) if the terms of such Securities have been established by or
pursuant to Board Resolution as permitted by Section 3.1, that such terms have
been established in conformity with the provisions of this Indenture; and
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(c) that such Securities, when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to any conditions
specified in such Opinion of Counsel, will constitute valid and legally binding
obligations of the Company enforceable in accordance with their terms, 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.
If such form or terms have been so established, the Trustee shall not
be required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 3.1 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at one
time, it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 3.1 or the Company Order and Opinion of Counsel
otherwise required pursuant to such preceding paragraph at or prior to the
authentication of each Security of such series if such documents are delivered
at or prior to the authentication upon original issuance of the first Security
of such series to be issued.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose, unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by the manual signature of one of its authorized
officers, and such certificate upon any Security shall be conclusive evidence,
and the only evidence, that such Security has been duly authenticated and
delivered hereunder. Notwithstanding the foregoing, if any Security shall have
been authenticated and delivered hereunder but never issued and sold by the
Company, and the Company shall deliver such Security to the Trustee for
cancellation as provided in Section 3.9, for all purposes of this Indenture
such Security shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this Indenture.
Section 3.4 Temporary Securities.
Pending the preparation of definitive Securities of any series, the
Company may execute, and upon Company Order the Trustee shall authenticate and
deliver, temporary Securities which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any denomination, substantially of the
tenor of the definitive Securities of such series in lieu of which they are
issued and with such appropriate insertions, omissions, substitutions and other
variations as the officers executing such Securities may determine, as
evidenced by their execution of such Securities.
If temporary Securities of any series are issued, the Company will
cause definitive Securities of such series to be prepared without unreasonable
delay. After the preparation of definitive Securities, the temporary
Securities shall be exchangeable for definitive Securities upon surrender of
the temporary Securities at the office or agency of the Company designated for
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that purpose without charge to the holder. Upon surrender for cancellation of
any one or more temporary Securities, the Company shall execute and the Trustee
shall authenticate and deliver in exchange therefor one or more definitive
Securities of the same series of authorized denominations having the same
Original Issue Date and Stated Maturity and having the same terms as such
temporary Securities. Until so exchanged, the temporary Securities of any
series shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities of such series.
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 the
Trustee may prescribe, the Company shall provide for the registration of
Securities and of transfers of Securities. Such register is herein sometimes
referred to as the "Securities Register." The Trustee is hereby appointed
"Securities Registrar" for the purpose of registering Securities and transfers
of Securities as herein provided.
Upon surrender for registration of transfer of any Security 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 Securities of the same
series of any authorized denominations, of a like aggregate principal amount,
of the same Original Issue Date and Stated Maturity and having the same terms.
At the option of the Holder, Securities may be exchanged for other
Securities of the same series of any authorized denominations, of a like
aggregate principal amount, of the same Original Issue Date and Stated Maturity
and having the same terms, upon surrender of the Securities to be exchanged at
such office or agency. Whenever any Securities are so surrendered for
exchange, the Company shall execute, and the Trustee shall authenticate and
deliver, the Securities which the Holder making the exchange is entitled to
receive.
All Securities issued upon any transfer or exchange of Securities
shall be the valid obligations of the Company, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Securities
surrendered upon such transfer or exchange.
Every Security 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 Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Securities.
The provisions of Clauses (a), (b), (c) and (d) below shall apply only
to Global Securities
(a) Each Global Security authenticated under this Indenture shall
be registered in the name of the Depositary designated for such Global Security
or a nominee thereof and delivered
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to such Depositary or a nominee thereof or custodian therefor, and each such
Global Security shall constitute a single Security for all purposes of this
Indenture.
(b) Notwithstanding any other provision in this Indenture, no
Global Security may be exchanged in whole or in part for Securities registered,
and no transfer of a Global Security in whole or in part may be registered, in
the name of any Person other than the Depositary for such Global Security or a
nominee thereof unless (A) such Depositary (i) has notified the Company that it
is unwilling or unable to continue as Depositary for such Global Security or
(ii) has ceased to be a clearing agency registered under the Exchange Act at a
time when the Depositary is required to be so registered to act as depositary,
in each case unless the Company has approved a successor Depositary within 90
days, (B) there shall have occurred and be continuing an Event of Default with
respect to such Global Security, (C) the Company in its sole discretion
determines that such Global Security will be so exchangeable or transferable or
(D) there shall exist such circumstances, if any, in addition to or in lieu of
the foregoing as have been specified for this purpose as contemplated by
Section 3.1.
(c) Subject to Clause (b) above, any exchange of a Global Security
for other Securities may be made in whole or in part, and all Securities issued
in exchange for a Global Security or any portion thereof shall be registered in
such names as the Depositary for such Global Security shall direct.
(d) Every Security authenticated and delivered upon registration
of transfer of, or in exchange for or in lieu of, a Global Security or any
portion thereof, whether pursuant to this Section, Section 3.4, 3.6, 9.6 or
11.6 or otherwise, shall be authenticated and delivered in the form of, and
shall be, a Global Security, unless such Security is registered in the name of
a Person other than the Depositary for such Global Security or a nominee
thereof.
Neither the Company nor the Trustee shall be required, pursuant to the
provisions of this Section, (a) to issue, transfer or exchange any Security of
any series during a period beginning at the opening of business 15 days before
the day of selection for redemption of Securities pursuant to Article XI and
ending at the close of business on the day of mailing of notice of redemption
or (b) to transfer or exchange any Security so selected for redemption in whole
or in part, except, in the case of any Security to be redeemed in part, any
portion thereof not to be redeemed.
Section 3.6 Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security 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 Security of the same issue
and series of like tenor and principal amount, having the same Original Issue
Date and Stated Maturity, and bearing a number not contemporaneously
outstanding.
If there shall be delivered to the Company and to the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Security, and (ii) such security or indemnity as may be required by them to
save each of them harmless, then, in the absence of notice to the
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Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and upon its request the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security, a new Security of the same issue and series of like tenor and
principal amount, having the same Original Issue Date and Stated Maturity as
such destroyed, lost or stolen Security, and bearing a number not
contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
The provisions of this Section 3.6 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.
Section 3.7 Payment of Interest; Interest Rights Preserved.
Interest on any Security of any series which is payable, and is
punctually paid or duly provided for, on any Interest Payment Date, shall be
paid to the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest in respect of Securities of such series, except that, unless
otherwise provided in the Securities of such series, interest payable on the
Stated Maturity of the principal of a Security shall be paid to the Person to
whom principal is paid. The initial payment of interest on any Security of any
series which is issued between a Regular Record Date and the related Interest
Payment Date shall be payable as provided in such Security or in the Board
Resolution pursuant to Section 3.1 with respect to the related series of
Securities.
Any interest on any Security which is payable, but is not timely paid
or duly provided for, on any Interest Payment Date for Securities of such
series (herein called "Defaulted Interest"), shall forthwith cease to be
payable to the registered Holder on the relevant Regular Record Date by virtue
of having been such Holder, and such Defaulted Interest may be paid by the
Company, at its election in each case, as provided in Clauses (a) or (b) below:
(a) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities of such series in respect
of which interest is in default (or their respective Predecessor Securities)
are registered at the close of business on a Special Record
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Date for the payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each Security 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 a Security of such series 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 Securities of such series (or their respective Predecessor
Securities) 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 Securities of the series in respect of which interest is
in default may be listed and, upon such notice as may be required by such
exchange (or by the Trustee if the Securities 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.
Subject to the foregoing provisions of this Section 3.7, each Security
delivered under this Indenture upon transfer of or in exchange for or in lieu
of any other Security shall carry the rights to interest accrued and unpaid,
and to accrue, which were carried by such other Security.
Section 3.8 Persons Deemed Owners.
The Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name any Security is registered as the owner of
such Security for the purpose of receiving payment of principal of and (subject
to Section 3.7) any interest on such Security and for all other purposes
whatsoever, whether or not such Security be overdue, and neither the Company,
the Trustee nor any agent of the Company or the Trustee shall be affected by
notice to the contrary.
Section 3.9 Cancellation.
All Securities surrendered for payment, redemption, transfer or
exchange shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee, and any such Securities and Securities surrendered
directly to the Trustee for any such purpose shall be
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promptly canceled by it. The Company may at any time deliver to the Trustee
for cancellation any Securities previously authenticated and delivered
hereunder which the Company may have acquired in any manner whatsoever, and all
Securities so delivered shall be promptly canceled by the Trustee. No
Securities shall be authenticated in lieu of or in exchange for any Securities
canceled as provided in this Section, except as expressly permitted by this
Indenture. All canceled Securities shall be destroyed by the Trustee and the
Trustee shall deliver to the Company a certificate of such destruction.
Section 3.10 Computation of Interest.
Except as otherwise specified as contemplated by Section 3.1 for
Securities of any series, interest on the Securities of each series for any
period shall be computed on the basis of a 360-day year of twelve 30-day months
and interest on the Securities of each series for any partial period shall be
computed on the basis of the number of days elapsed in a 360-day year of twelve
30-day months.
Section 3.11 Deferrals of Interest Payment Dates.
If specified as contemplated by Section 2.1 or Section 3.1 with
respect to the Securities of a particular series, so long as no Event of
Default has occurred and is continuing, the Company shall have the right, at
any time during the term of such series, from time to time to defer the payment
of interest on such Securities for such period or periods as may be specified
as contemplated by Section 3.1 (each, an "Extension Period") during which
Extension Periods the Company shall have the right to make partial payments of
interest on any Interest Payment Date. No Extension Period shall end on a date
other than an Interest Payment Date. At the end of any such Extension Period
the Company shall pay all interest then accrued and unpaid on the Securities
(together with Additional Interest thereon, if any, at the rate specified for
the Securities of such series to the extent permitted by applicable law);
provided, however, that no Extension Period shall extend beyond the Stated
Maturity of the principal of the Securities of such series; provided, further,
that during any such Extension Period, the Company shall not, and shall not
permit any Subsidiary 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 Company's capital stock (which includes common and preferred stock),
(ii) make any payment of principal of or interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Company (including
securities other than the Securities of such series) that ranks pari passu in
all respects with or junior in interest to the Securities of such series or
make any guarantee payments with respect to any guarantee by the Company of the
debt securities of any Subsidiary of the Company if such guarantee ranks pari
passu in all respects with or junior in interest to the securities of such
series (other than (a) dividends or distributions in capital stock (which
includes common and preferred stock), (b) any declaration of a dividend in
connection with the implementation of a stockholders' rights plan, or the
issuance of stock under any such plan in the future or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under the American
Coin Merchandising Guarantee related to the Preferred Securities issued by the
American Coin Merchandising Trust holding Securities of such series, and (d)
purchases of Common Stock related to the issuance of Common Stock or rights
under any of the Company's benefit plans for its directors, officers, employees
or consultants (in connection with an optionee's or rightholder's use of Common
Stock as consideration for the exercise or purchase price of the related option
or
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right)) or (iii) redeem, purchase or acquire less than all of the Securities of
such series or any of the Preferred Securities. Prior to the termination of
any such Extension Period, the Company may further extend such Extension
Period, provided that such extension does not cause such Extension Period to
extend beyond the Stated Maturity of the principal of such Securities. Upon
termination of any Extension Period and upon the payment of all accrued and
unpaid interest and any Additional Interest then due on any Interest Payment
Date, 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 of the American Coin
Merchandising Trust holding securities of such series notice of its election of
any Extension Period (or an extension thereof) at least one Business Day prior
to the earlier of (i) the next occurring date on which Distributions on the
Preferred Securities of such American Coin Merchandising Trust would be payable
except for the election to begin or extend such Extension Period or (ii) the
date the Administrative Trustees are required to give notice to the American
Stock Exchange, the New York Stock Exchange, the Nasdaq Stock Market or other
applicable stock exchange or automated quotation system on which the Preferred
Securities are then listed or quoted or to holders of such Preferred Securities
on the record date or (iii) the date such Distributions are payable, but in any
event not less than one Business Day prior to such record date. The Trustee
shall give notice of the Company's election to begin a new Extension Period to
the holders of the Securities. There is no limitation on the number of times
that the Company may elect to begin an Extension Period.
The Trustee shall promptly give notice of the Company's election to
begin any such Extension Period to the holders of the outstanding Securities of
such series.
Section 3.12 Right of Set-Off.
With respect to the Securities of a series issued to an American Coin
Merchandising Trust, 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 any such Security to the extent the
Company has theretofore made, or is concurrently on the date of such payment
making, a payment under the Guarantee Agreement relating to such Security or
under Section 5.8 of the Indenture.
Section 3.13 Agreed Tax Treatment.
Each Security issued hereunder shall provide that the Company and, by
its acceptance of a Security or a beneficial interest therein, the Holder of,
and any Person that acquires a beneficial interest in, such Security agree that
for United States Federal, state and local tax purposes it is intended that
such Security constitute indebtedness.
Section 3.14 Shortening of Stated Maturity.
If specified as contemplated by Section 2.1 or Section 3.1 with
respect to the Securities of a particular series, the Company shall have the
right to shorten the Stated Maturity of the
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principal of the Securities of such series at any time to any date not earlier
than the first date on which the Company has the right to redeem the Securities
of such series. In the event that the Company elects to shorten the Stated
Maturity of the Junior Subordinated Debentures, it shall give notice to the
Trustee, and the Trustee shall give notice of such shortening to the Holders of
the Securities no less than 60 days prior to the effectiveness thereof.
Section 3.15 CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers 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 numbers
either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be
affected by any defect in or omission of such numbers.
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.1 Satisfaction and Discharge of Indenture.
This Indenture shall, upon Company Request, cease to be of further
effect (except as to any surviving rights of registration of transfer or
exchange of securities herein expressly provided for and as otherwise provided
in this Section 4.1) 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 subject to the provisions of the last
paragraph of Section 10.3, all money deposited with the Trustee pursuant to
this Section 4.1 shall be held in trust and applied by the Trustee, if
(i) either
(a) all Securities theretofore authenticated and delivered (other
than (i) Securities which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 3.6 and (ii) Securities for whose
payment money has theretofore been deposited in trust or segregated and held in
trust by the Company and thereafter repaid to the Company or discharged from
such trust, as provided in Section 10.3), have been delivered to the Trustee
for cancellation; or
(b) all such Securities not theretofore delivered to the Trustee
for cancellation
1) have become due and payable, or
2) will become due and payable at their Stated Maturity
within one year of the date of deposit, or
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3) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the
giving of notice of redemption by the Trustee in the
name, and at the expense, of the Company,
and the Company, in the case of Clause (b) (1), (2) or (3) above, 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 Securities of such
series are payable sufficient to pay and discharge the entire indebtedness on
such Securities not theretofore delivered to the Trustee for cancellation, for
principal (and premium, if any) and interest (including any Additional
Interest) to the date of such deposit (in the case of Securities which have
become due and payable) or to the Stated Maturity or Redemption Date, as the
case may be;
(ii) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(iii) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that all conditions
precedent 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, the obligations of
the Trustee to any Authenticating Agent under Section 6.14 and, if money shall
have been deposited with the Trustee pursuant to subclause (b) of clause (i) 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 the Trustee, in accordance with the provisions of the Securities
and this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for the payment of which such money or obligations have been
deposited with or received by the Trustee.
ARTICLE V
REMEDIES
Section 5.1 Events of Default.
"Event of Default," wherever used herein with respect to the
Securities of any series, means any one of the following events (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or 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):
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(a) default in the payment of any interest upon any Security of
that series, 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); or
(b) default in the payment of the principal of (or premium, if
any, on) any Security of that series at its Maturity, upon redemption, by
declaration or otherwise; or
(c) default in the performance, or breach, in any material
respect, of any covenant of the Company in this Indenture (other than a
covenant, a default in the performance of which is elsewhere in this Section
5.1 specifically dealt with), and continuance of such default or breach for a
period of 90 days after there has been given, by registered or certified mail,
to the Company by the Trustee or to the Company and the Trustee by the Holders
of at least 25% in principal amount of the Outstanding Securities of that
series a written notice specifying such default or breach and requiring it to
be remedied; or
(d) the entry of a decree or order by a court having jurisdiction
in the premises adjudging the Company a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company under any applicable Federal or
State 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 90 consecutive
days; or
(e) the institution by the Company of proceedings to be
adjudicated a 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 for 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 a bankrupt, or the
taking of corporate action by the Company in furtherance of any such action; or
(f) any other Event of Default provided with respect to Securities
of that series.
Section 5.2 Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in
Section 5.1(d) or 5.1(e)) with respect to Securities of any series at the time
Outstanding occurs and is continuing, then and in every such case the Trustee
or the holders of not less than 25% in principal amount of the Outstanding
Securities of that series may declare the principal amount (or, if the
Securities of that series are discount securities, such portion of the
principal amount as may be specified in the terms of that series) of all the
Securities of that series to be due and payable immediately, by a
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notice in writing to the Company (and to the Trustee if given by Holders),
provided that, in the case of the Securities of a series issued to an American
Coin Merchandising Trust, if, upon an Event of Default, the Trustee and the
Holders of not less than 25% in principal amount of the Outstanding Securities
of that series fail to declare the principal of all the Securities of that
series to be immediately due and payable, the holders of at least 25% in
aggregate liquidation amount of the corresponding series of 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 portion thereof) of and the accrued interest (including any
Additional Interest) on all the Securities of such series shall become
immediately due and payable. Payment of principal and interest (including any
Additional Interest) on such Securities shall remain subordinated to the extent
provided in Article XIII notwithstanding that such amount shall become
immediately due and payable as herein provided. If an Event of Default
specified in Section 5.1(d) or 5.1(e) with respect to Securities of any series
at the time Outstanding occurs, the principal amount of all the Securities of
that series (or, if the Securities of that series are Discount Securities, such
portion of the principal amount of such Securities as may be specified by the
terms of that series) shall automatically, and without any declaration or other
action on the part of the Trustee or any holder, become immediately due and
payable.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in
this Article provided, the holders of a majority in principal amount of the
Outstanding Securities of that series, 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 all Securities of that series,
(ii) the principal of (and premium, if any, on) any
Securities of that series which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate borne by the
Securities, and
(iii) all sums paid or advanced by the Trustee hereunder
and the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
(b) all Events of Default with respect to Securities of that
series, other than the non-payment of the principal of Securities of that
series which has become due solely by such acceleration, have been cured or
waived as provided in Section 5.13.
In the case of Securities of a series issued to an American Coin
Merchandising Trust, the holders of a majority in aggregate Liquidation Amount
(as defined in the Trust Agreement under which such American Coin Merchandising
Trust is formed) of the related series of Preferred Securities issued by such
American Coin Merchandising Trust shall also have the right to rescind and
annul such declaration and its consequences by written notice to the Company
and the
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Trustee subject to the satisfaction of the conditions set forth in Clauses (a)
and (b) above of this Section 5.2.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
Section 5.3 Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if:
(a) default is made in the payment of any installment of interest
(including any Additional Interest) on any Security 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) any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to the Trustee, for the
benefit of the Holders of such Securities, the whole amount then due and
payable on such Securities for principal, including any sinking fund payment or
analogous obligations (and premium, if any) and interest (including any
Additional Interest); 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 judgment or final decree, and may enforce the same
against the Company or any other obligor upon the Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon the Securities, wherever
situated.
If an Event of Default with respect to Securities of any series occurs
and is continuing, the Trustee may in its discretion proceed to protect and
enforce its rights and the rights of the Holders of Securities of such series
by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to 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
Securities or the property of the Company or of such other obligor or their
creditors,
(a) the Trustee (irrespective of whether the principal of the
Securities of any series 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
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principal (and premium, if any) or interest (including any Additional
Interest)) shall be entitled and empowered, by intervention in such proceeding
or otherwise,
1) to file and prove a claim for the whole amount of principal
(and premium, if any) and interest (including any Additional Interest) owing
and unpaid in respect to the Securities 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, the Trustee and any predecessor to the Trustee under Section 6.7
allowed in any such judicial proceedings; and
2) in particular, the Trustee shall be authorized 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 Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding; 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 Securities.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto,
and any such proceeding instituted by the Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of 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 Securities in respect of which such
judgment 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 a series of Securities 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 Securities 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: Subject to Article XIII, to the payment of the amounts then
due and unpaid upon such series of Securities 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
such series of Securities 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 any Securities of any series shall have any right to
institute any proceeding, judicial or otherwise, with respect to this Indenture
or for the appointment of a receiver, 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 Event of Default with respect to the Securities of that series;
(b) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default in its own
name as Trustee hereunder;
(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 Securities of that series;
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 itself of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of Securities, 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; Direct Action by Holders of Preferred
Securities.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right which is absolute and unconditional to
receive payment of the principal of (and
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premium, if any) and (subject to Section 3.7) interest (including any
Additional Interest) on such Security on the respective Stated Maturities
expressed in such Security (or, in the case of redemption, on the Redemption
Date) and to institute suit for the enforcement of any such payment, and such
right shall not be impaired without the consent of such Holder. In the case of
Securities of a series issued to an American Coin Merchandising Trust, any
holder of the corresponding series of Preferred Securities issued by such
American Coin Merchandising Trust shall have the right, upon the occurrence of
an Event of Default described in Section 5.1(a) or 5.1(b), to institute a suit
directly against the Company for enforcement of payment to such holder of
principal of (and premium, if any) and (subject to Section 3.7) interest
(including any Additional Interest) on the Securities having a principal amount
equal to the aggregate Liquidation Amount (as defined in the Trust Agreement
under which such American Coin Merchandising Trust is created) of such
Preferred Securities of the corresponding series held by such holder.
Section 5.9 Restoration of Rights and Remedies.
If the Trustee, any Holder or any holder of Preferred Securities 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, such Holder or such holder of
Preferred Securities, then and in every such case the Company, the Trustee, the
Holders and such holder of Preferred Securities 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, the Holders and the holders of Preferred Securities 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, any Holder of any Security or any
holder of any Preferred Security to exercise any right or remedy accruing upon
any Event of Default shall impair any such right or remedy or constitute a
waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article or by law to the Trustee
or to the Holders and the right and remedy given to the holders of Preferred
Securities by Section 5.8 may be exercised from time to time, and as often as
may be deemed expedient, by the Trustee, the Holders or the holders of
Preferred Securities, as the case may be.
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Section 5.12 Control by Holders.
The Holders of a majority in principal amount of the Outstanding
Securities of any series shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee, with respect to the
Securities of such series, provided that:
(a) such direction shall not be in conflict with any rule of law
or with this Indenture,
(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 a Responsible Officer or
Officers of the Trustee shall, in good faith, 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.
Section 5.13 Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series and, in the case of any Securities of a
series issued to an American Coin Merchandising Trust, the holders of Preferred
Securities issued by such American Coin Merchandising Trust may waive any past
default hereunder and its consequences with respect to such series except a
default:
(a) in the payment of the principal of (or premium, if any) or
interest (including any Additional Interest) on any Security of such series, or
(b) in respect of a covenant or provision hereof which under
Article IX cannot be modified or amended without the consent of the Holder of
each Outstanding Security of such series affected.
Any such waiver shall be deemed to be on behalf of the Holders of all
the Securities of such series or, in the case of a waiver by holders of
Preferred Securities issued by such American Coin Merchandising Trust, by all
holders of Preferred Securities issued by such American Coin Merchandising
Trust.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
Section 5.14 Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security
by his acceptance thereof shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken
or omitted by it as Trustee, the filing by any party litigant in such suit of
an
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undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in principal amount of the Outstanding Securities
of any series, or to any suit instituted by any Holder for the enforcement of
the payment of the principal of (or premium, if any) or interest (including any
Additional Interest) on any Security on or after the respective Stated
Maturities expressed in such Security.
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 VI
THE TRUSTEE
Section 6.1 Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default:
(i) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the Trustee;
and
(ii) in the absence of 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.
(b) In case an Event of Default has occurred and is continuing,
the Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his own affairs.
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(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
with respect to the Securities of such series.
(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 6.1.
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 with respect to the
Securities of any series, the Trustee shall transmit by mail to all Holders of
Securities of such series, as their names and addresses appear in the
Securities Register, notice of such default, 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 any Security of such series, the Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee or 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 Securities of such series; and
provided, further, that, in the case of any default of the character specified
in Section 5.1(c), no such notice to Holders of Securities of such series shall
be given until at least 30 days after the occurrence thereof. For the purpose
of this Section, the term "default" means any event which is, or after notice
or lapse of time or both would become, an Event of Default with respect to
Securities of such series.
Section 6.3 Certain Rights of Trustee.
Subject to the provisions of Section 6.1:
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(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
security or other paper or document believed by it to be genuine and to have
been signed or presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a Board
Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its
part, rely upon an Officers' Certificate;
(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 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, security 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; and
(g) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
Section 6.4 Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and neither the Trustee nor any Authenticating Agent assumes any
responsibility for their correctness. The Trustee makes no representations as
to the validity or sufficiency of this Indenture or of the Securities. Neither
the Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Company of the Securities or the proceeds thereof.
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Section 6.5 May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any
Securities Registrar or any other agent of the Company, in its individual or
any other capacity, may become the owner or pledgee of Securities and, subject
to Sections 6.8 and 6.13, may otherwise deal with the Company with the same
rights it would have if it were not Trustee, Authenticating Agent, 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 for 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 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 to the extent such provision of law may be varied by contract);
(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),
except any such expense, disbursement or advance as may be attributable to its
negligence or bad faith; and
(c) to indemnify the Trustee 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.
To secure the Company's payment obligations in this Section 6.7, the
Company and the Holders agree that the Trustee shall have a lien prior to the
Securities on all money or property held or collected by the Trustee. Such
lien shall survive the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 5.1(d) or (e) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under the Bankruptcy Reform Act of 1978 or any successor
statute.
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Section 6.8 Disqualification; Conflicting Interests.
The Trustee for the Securities of any series issued hereunder 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 said Section
3.10(b).
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 or 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, for the purposes of this Section 6.9, 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 6.9, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article VI. Neither the Company nor any Person directly or indirectly
controlling, controlled by or under common control with the Company shall serve
as Trustee for the Securities of any series issued 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 VI shall become effective until
the acceptance of appointment by the successor Trustee under Section 6.11.
(b) The Trustee may resign at any time with respect to the
Securities of one or more series 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 with respect to the
Securities of such series.
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(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal
amount of the Outstanding Securities of such series, delivered to the Trustee
and to the Company.
(d) If at any time:
(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 Security 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 a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or control
of the Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, (i) the Company, acting pursuant to the
authority of a Board Resolution, may remove the Trustee with respect to all
Securities, or (ii) subject to Section 5.14, any Holder who has been a bona
fide Holder of a Security for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee with respect to all Securities and the appointment
of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause with
respect to the Securities of one or more series, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee with respect to the
Securities of that or those series. If, within one year after such
resignation, removal or incapability, or the occurrence of such vacancy, a
successor Trustee with respect to the Securities of any series shall be
appointed by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series delivered to the Company and the retiring
Trustee, the successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment, become the successor Trustee with respect to
the Securities of such series and supersede the successor Trustee appointed by
the Company. If no successor Trustee with respect to the Securities of any
series shall have been so appointed by the Company or the Holders and accepted
appointment in the manner hereinafter provided, any Holder who has been a bona
fide Holder of a Security 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 with respect
to the Securities of such series.
(f) The Company shall give notice of each resignation and each
removal of the Trustee with respect to the Securities of any series and each
appointment of a successor Trustee with respect to the Securities of any series
by mailing written notice of such event by first-class mail, postage prepaid,
to the Holders of Securities of such series as their names and addresses
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appear in the Securities Register. Each notice shall include the name of the
successor Trustee with respect to the Securities of such series and the address
of its Corporate Trust Office.
Section 6.11 Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Trustee
with respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on the request
of the Company or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee and
shall duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor Trustee
with respect to the Securities of one or more (but not all) series, the
Company, the retiring Trustee and each successor Trustee with respect to the
Securities of one or more series shall execute and deliver an indenture
supplemental hereto wherein each successor Trustee shall accept such
appointment and which (1) shall contain such provisions as shall be necessary
or desirable to transfer and confirm to, and to vest in, each successor Trustee
all the rights, powers, trusts and duties of the retiring Trustee with respect
to the Securities of that or those series to which the appointment of such
successor Trustee relates, (2) if the retiring Trustee is not retiring with
respect to all Securities, shall contain such provisions as shall be deemed
necessary or desirable to confirm that all the rights, powers, trusts and
duties of the retiring Trustee with respect to the Securities of that or those
series as to which the retiring Trustee is not retiring shall continue to be
vested in the retiring Trustee, and (3) shall add to or change any of the
provisions of this Indenture as shall be necessary to provide for or facilitate
the administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental indenture shall
constitute such Trustees co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such Trustee and upon
the execution and delivery of such supplemental indenture the resignation or
removal of the retiring Trustee shall become effective to the extent provided
therein and each such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts, and duties
of the retiring Trustee with respect to the Securities of that or those series
to which the appointment of such successor Trustee relates; but, on request of
the Company or any successor Trustee, such retiring Trustee shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder with respect to the Securities of that or those
series to which the appointment of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all rights, powers and trusts referred to
in paragraph (a) or (b) of this Section 6.11, as the case may be.
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(d) No successor Trustee shall accept its appointment unless at
the time of such acceptance such successor Trustee shall be qualified and
eligible under this Article VI.
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 VI, without the execution or filing of any paper or any further act on
the part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated, and in case
any Securities shall not have been authenticated, any successor to the Trustee
may authenticate such Securities 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
Securities or in this Indenture that the certificate of authentication 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 Securities), 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 with respect
to one or more series of Securities which shall be authorized to act on behalf
of the Trustee to authenticate Securities of such series issued upon original
issue and upon exchange, registration of transfer or partial redemption thereof
or pursuant to Section 3.6, and Securities so authenticated shall be entitled
to the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and 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 or 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 6.14 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
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this Section 6.14, such Authenticating Agent shall resign immediately in the
manner and with the effect specified in this Section 6.14.
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 6.14, 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 Securities of the series with respect to which such Authenticating Agent
will serve. 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 6.14.
The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section 6.14, and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 6.7.
If an appointment with respect to one or more series is made pursuant
to this Section 6.14, the Securities of such series 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 Securities referred to in the within mentioned
Indenture.
Dated:
[INSERT NAME OF TRUSTEE]
As Trustee
By:
----------------------------------
As Authenticating Agent
By:
----------------------------------
Authorized Officer
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ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 7.1 Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee:
(a) semi-annually, not more than 15 days after January 15 and July
15 in each year, commencing January 15, 1999, a list, in such form as the
Trustee may reasonably require, of the names and addresses of the Holders as of
January 1 and July 1 of such year, 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, excluding from any such list names and addresses
received by the Trustee in its capacity as Securities Registrar.
Section 7.2 Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in the
most recent list furnished to the Trustee as provided in Section 7.1 and the
names and addresses of Holders received by the Trustee in its capacity as
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 Securities, and the
corresponding rights and privileges of the Trustee, shall be as provided in the
Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of either of them shall be held accountable by reason of
the disclosure of 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 no later than July 15 in each
calendar year, commencing with the first July 15 after the first issuance of
Securities under this Indenture.
(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 upon
which any Securities are listed and also with
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the Commission. The Company will notify the Trustee when any Securities are
listed on any stock exchange.
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 Exchange Act shall be
filed with the Trustee within 15 days after the same is required to be filed
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
Exchange Act, the Company shall continue to file with the Commission and
provide the Trustee with the annual reports and the information, documents and
other reports which are specified in Sections 13 and 15(d) of the Exchange Act.
The Company also shall comply with the other provisions of Trust Indenture Act
Section 314(a).
ARTICLE VIII
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 corporation, partnership or
trust 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 Securities and the performance of every covenant of this Indenture on the
part of the Company to be performed or observed;
(b) immediately after giving effect to such transaction, no Event
of Default, and no event which, after notice or lapse of time, or both, would
become an Event of Default, shall have happened and be continuing; and
(c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger, conveyance, transfer or lease and any such supplemental indenture
comply with this Article and that all conditions precedent herein
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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
Person, 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 Person 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 such
successor Person 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 Securities and may be
dissolved and liquidated.
Such successor Person 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 Securities
issuable hereunder which theretofore shall not have been signed by the Company
and delivered to the Trustee; and, upon the order of such successor Person
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 Securities which previously shall have been signed and delivered by the
officers of the Company to the Trustee for authentication pursuant to such
provisions and any Securities which such successor Person thereafter shall
cause to be signed and delivered to the Trustee on its behalf for the purpose
pursuant to such provisions. All the Securities so issued shall in all
respects have the same legal rank and benefit under this Indenture as the
Securities theretofore or thereafter issued in accordance with the terms of
this Indenture as though all of such Securities 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 Securities thereafter
to be issued as may be appropriate.
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.1 Supplemental Indentures without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, provided, however, that the form and terms of Securities of any series
may be established by a Board Resolution, as set forth in the Officers'
Certificate delivered to the Trustee pursuant to Section 3.1, without entering
into a supplemental indenture for any of the following purposes:
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(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 Securities contained; or
(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; or
(c) to establish the form or terms of Securities of any series as
permitted by Sections 2.1 or 3.1; or
(d) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities (and if such covenants are to be for
the benefit of less than all series of Securities, stating that such covenants
are expressly being included solely for the benefit of such series) or to
surrender any right or power herein conferred upon the Company; or
(e) to add any additional Events of Default for the benefit of the
holders of all or any series of Securities (and if such additional Events of
Default are to be for the benefit of less than all series of Securities,
stating that such additional Events of Default are expressly being included
solely for the benefit of such series); or
(f) to change or eliminate any of the provisions of this
Indenture, provided that any such change or elimination shall become effective
only when there is no Security Outstanding of any series created prior to the
execution of such supplemental indenture which is entitled to the benefit of
such provision; or
(g) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or 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 (g)
shall not adversely affect the interest of the Holders of Securities of any
series in any material respect or, in the case of the Securities of a series
issued to an American Coin Merchandising Trust and for so long as any of the
corresponding series of Preferred Securities issued by such American Coin
Merchandising Trust shall remain outstanding, the holders of such Preferred
Securities; or
(h) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or more
series and to add to or change any of the provisions of this Indenture as shall
be necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, pursuant to the requirements of Section
6.11(b); or
(i) to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust
Indenture Act.
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 Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board
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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 Securities of such series
under this Indenture; provided, however, that no such supplemental indenture
shall, without the consent of the Holder of each Outstanding Security affected
thereby,
(a) except to the extent permitted by Sections 3.11 or 3.14 or as
otherwise specified as contemplated by Section 2.1 or Section 3.1 with respect
to the deferral of the payment of interest on the Securities of any series or
the shortening of the Stated Maturity of the Securities of any series, change
the Stated Maturity of the principal of, or any installment of interest
(including any Additional Interest) on, any Security, or reduce the principal
amount thereof or the rate of interest thereon or reduce any premium payable
upon the redemption thereof, or reduce the amount of principal of a Discount
Security that would be due and payable upon a declaration of acceleration of
the Maturity thereof pursuant to Section 5.2, or change the place of payment
where, or the coin or currency in which, any Security or interest thereon is
payable, or impair the right to institute suit for the enforcement of any such
payment on or after the Stated Maturity thereof (or, in the case of redemption,
on or after the Redemption Date), or
(b) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) provided for in this Indenture, or
(c) modify any of the provisions of this Section, Section 5.13 or
Section 10.5, 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 Security affected thereby; or
(d) modify the provisions in Article XIII of this Indenture with
respect to the subordination of Outstanding Securities of any series in a
manner adverse to the Holders thereof;
provided, further, that, in the case of the Securities of a series issued to an
American Coin Merchandising Trust, so long as any of the corresponding series
of Preferred Securities issued by such American Coin Merchandising Trust
remains outstanding, (i) no such amendment shall be made that adversely affects
the holders of such Preferred Securities in any material respect, and no
termination of this Indenture shall occur, and no waiver of any 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 preference of such Preferred Securities then
outstanding unless and until the principal (and premium, if any) of the
Securities of such series and all accrued and, subject to Section 3.7, unpaid
interest (including any Additional Interest) thereon have been paid in full and
(ii) no amendment shall be made to Section 5.8 of this Indenture that would
impair the rights of the holders of Preferred Securities provided therein
without the prior consent of the holders of each Preferred Security affected
thereby then outstanding unless and until the principal (and premium, if any)
of the Securities of
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such series and all accrued and (subject to Section 3.7) unpaid interest
(including any Additional Interest) thereon have been paid in full.
A supplemental indenture that changes or eliminates any covenant or
other provision of this Indenture that has expressly been included solely for
the benefit of one or more particular series of Securities or Preferred
Securities, or which modifies the rights of the Holders of Securities or
holders of Preferred Securities of such series with respect to such covenant or
other provision, shall be deemed not to affect the rights under this Indenture
of the Holders of Securities or holders of Preferred Securities of any other
series.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
Section 9.3 Execution of Supplemental Indentures.
In executing or accepting the additional series of Securities created
by any supplemental indenture permitted by this Article or the modifications
thereby of any series of Securities previously created by this Indenture, the
Trustee shall be entitled to receive, and (subject to Section 6.1) shall be
fully protected in relying upon, an 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 IX
or delivery to the Trustee of the Officers' Certificate pursuant to Section 3.1
hereof (which Officers' Certificate shall have the effect of a supplemental
indenture for all purposes hereunder), this Indenture shall be modified in
accordance therewith, and such supplemental indenture shall form a part of this
Indenture for all purposes; and every Holder of Securities theretofore or
thereafter authenticated and delivered hereunder shall be bound thereby.
Section 9.5 Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article IX and
every Officers' Certificate delivered to the trustee pursuant to Section 3.1
hereof shall conform to the requirements of the Trust Indenture Act as then in
effect.
Section 9.6 Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article IX or delivery to the Trustee
of the Officers' Certificate pursuant to Section 3.1 hereof (which Officers'
Certificate shall have the effect of a supplemental indenture for all purposes
hereunder) may, and shall if required by the Company, bear a notation in form
approved by the Company as to any matter provided for in such supplemental
indenture or such Officers' Certificate. If the Company shall so determine,
new Securities of any series so modified as to conform, in the opinion of the
Company, to any such supplemental indenture or such
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Officers' Certificate may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding
Securities of such series.
ARTICLE X
COVENANTS
Section 10.1 Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of (and premium,
if any) and interest on the Securities of that series in accordance with the
terms of such Securities and this Indenture.
Section 10.2 Maintenance of Office or Agency.
The Company will maintain in each Place of Payment for any series of
Securities, an office or agency where Securities of that series may be
presented or surrendered for payment and an office or agency where Securities
of that series may be surrendered for transfer or exchange and where notices
and demands to or upon the Company in respect of the Securities of that series
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 Securities 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 each Place of Payment for Securities of any series 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 Security Payments to be Held in Trust.
If the Company shall at any time act as its own Paying Agent with
respect to any series of Securities, it will, on or before each due date of the
principal of (and premium, if any) or interest on any of the Securities of such
series, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal (and premium, if any) or interest
so becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided, and will promptly notify the Trustee of its
failure so to act.
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Whenever the Company shall have one or more Paying Agents, it will,
prior to 10:00 a.m. Colorado time on each due date of the principal of or
interest on any Securities, deposit with a Paying Agent a sum sufficient to pay
the principal (and premium, if any) or interest so becoming due, such sum to be
held in trust for the benefit of the Persons entitled to such principal 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 10.3,
that such Paying Agent will:
(a) hold all sums held by it for the payment of the principal of
(and premium, if any) or interest on Securities 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 Securities) in the making of any payment of principal
(and 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
(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 terms as those upon which such sums were held by the
Company or such Paying Agent; and, upon such payment by any Paying Agent to the
Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of (and premium, if
any) or interest on any Security and remaining unclaimed for two years after
such principal (and 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 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 Security shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in the State of Colorado, notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the
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date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
Section 10.4 Statement as to Compliance.
The Company shall deliver to the Trustee, within 120 days after the
end of each calendar year of the Company ending after the date hereof, an
Officers' Certificate 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 10.4, compliance shall be determined without regard to any grace period
or requirement of notice provided pursuant to the terms of this Indenture.
Section 10.5 Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any
covenant or condition provided pursuant to Sections 3.1, 9.1(d), or 9.1(e) with
respect to the Securities of any series, if before or after the time for such
compliance the Holders of at least a majority in principal amount of the
Outstanding Securities of such series shall, by Act of such Holders, either
waive such compliance in such instance or generally waive compliance with such
covenant or condition, but no such waiver shall extend to or affect such
covenant or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company in respect of any
such covenant or condition shall remain in full force and effect.
Section 10.6 Additional Sums.
In the case of the Securities of a series issued to an American Coin
Merchandising Trust, so long as no Event of Default has occurred and is
continuing and except as otherwise specified as contemplated by Section 2.1 or
Section 3.1, in the event that (i) the Property Trustee of such American Coin
Merchandising Trust is the Holder of all of the Outstanding Securities of such
series, (ii) a Tax Event in respect of such American Coin Merchandising Trust
shall have occurred and be continuing and (iii) the Company shall not have (A)
redeemed the Securities of such series pursuant to Section 11.7 or (B)
dissolved such American Coin Merchandising Trust pursuant to Section 9.2(b) of
the related Trust Agreement, the Company shall pay to such American Coin
Merchandising Trust (and its permitted successors or assigns under the related
Trust Agreement) for so long as the Property Trustee of such American Coin
Merchandising Trust (or its permitted successor or assignee) is the registered
Holder of any Securities of such series, such additional amounts as may be
necessary in order that the amount of Distributions (including any Additional
Amounts (as defined in such Trust Agreement)) then due and payable by such
American Coin Merchandising Trust on the related Preferred Securities and
Common Securities that at any time remain outstanding in accordance with the
terms thereof shall not be reduced as a result of any Additional Taxes (the
"Additional Sums"). Whenever in this Indenture or the Securities there is a
reference in any context to the payment of principal of or interest on the
Securities, 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,
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however, that the deferral of the payment of interest pursuant to Section 3.11
on the Securities shall not defer the payment of any Additional Sums that may
be due and payable.
Section 10.7 Additional Covenants.
If at any time (i) there shall have occurred an Event of Default, (ii)
the Company shall have given notice of its election of an Extension Period as
provided herein and shall not have rescinded such notice, or such Extension
Period, or any extension thereof, shall be continuing, or (iii) while
Securities are held by an American Coin Merchandising Trust, the Company shall
be in default with respect to its payment of any obligation under the
Guarantee, then the Company covenants and agrees with each Holder of Securities
of any series that it shall not, and it shall not permit any Subsidiary of the
Company 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 (which includes common and preferred stock), (b)
make any payment of principal of or interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Company (including Securities
other than the Securities of such series) that rank pari passu in all respects
with or junior in interest to the Securities of such series or make any
guarantee payments with respect to any guarantee by the Company of debt
securities of any Subsidiary of the Company if such guarantee ranks pari passu
in all respects with or junior in interest to the Securities (other than (i)
dividends or distributions in capital stock (which includes common and
preferred stock), (ii) any declaration of a dividend in connection with the
implementation of a shareholders' rights plan, or the issuance of stock under
any such plan or the redemption or repurchase of any such rights pursuant
thereto, (iii) payments under the American Coin Merchandising Guarantee related
to the Preferred Securities issued by the American Coin Merchandising Trust
holding Securities of such series, and (iv) purchases of Common Stock related
to the issuance of Common Stock or rights under any of the Company's benefit
plans for its directors, officers, consultants or employees (in connection with
an optionee's or rightholder's use of Common Stock as consideration for the
exercise or purchase price of the related option or right)), or (c) redeem,
purchase or acquire less than all of the Securities of such series or any of
the Preferred Securities.
The Company also covenants with each Holder of Securities of a series
issued to an American Coin Merchandising Trust (i) to maintain directly or
indirectly 100% ownership of the Common Securities of such American Coin
Merchandising Trust; provided, however, that any permitted successor of the
Company hereunder may succeed to the Company's ownership of such Common
Securities, (ii) not to voluntarily terminate, wind-up or liquidate such
American Coin Merchandising Trust, except (a) in connection with a distribution
of the Securities of such series to the holders of Trust Securities in
liquidation of such American Coin Merchandising Trust or (b) in connection with
certain mergers, consolidations or amalgamations permitted by the related Trust
Agreement and (iii) to use its reasonable efforts, consistent with the terms
and provisions of such Trust Agreement, to cause such American Coin
Merchandising Trust to remain classified as a grantor trust and not an
association taxable as a corporation for United States federal income tax
purposes.
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ARTICLE XI
REDEMPTION OF SECURITIES
Section 11.1 Applicability of This Article.
Redemption of Securities of any series (whether by operation of a
sinking fund or otherwise) as permitted or required by any form of Security
issued pursuant to this Indenture shall be made in accordance with such form of
Security and this Article; provided, however, that if any provision of any such
form of Security shall conflict with any provision of this Article, the
provision of such form of Security shall govern. Except as otherwise set forth
in the form of Security for such series, each Security of such series shall be
subject to partial redemption only in the amount of $10 or, in the case of the
Securities of a series issued to an American Coin Merchandising Trust, $10, or
integral multiples of $10 in excess thereof.
Section 11.2 Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be
evidenced by or pursuant to a Board Resolution. In case of any redemption at
the election of the Company of less than all of the Securities of any
particular series and having the same terms, the Company shall, not less than
30 nor more than 60 days prior to the Redemption Date (unless a shorter notice
shall be satisfactory to the Trustee), notify the Trustee of such date and of
the principal amount of Securities of that series to be redeemed. In the case
of any redemption of Securities prior to the expiration of any restriction on
such redemption provided in the terms of such Securities, the Company shall
furnish the Trustee with an Officers' Certificate and an Opinion of Counsel
evidencing compliance with such restriction.
Section 11.3 Selection of Securities to be Redeemed.
If less than all the Securities of any series are to be redeemed
(unless all the Securities of such series and of a specified tenor are to be
redeemed or unless such redemption affects only a single Security), the
particular Securities to be redeemed shall be selected not more than 60 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities of
such series not previously called for redemption, by such 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 any Security of such series,
provided that the portion of the principal amount of any Security not redeemed
shall be in an authorized denomination (which shall not be less than the
minimum authorized denomination) for such Security. If less than all the
Securities of such series and of a specified tenor are to be redeemed (unless
such redemption affects only a single Security), the particular Securities to
be redeemed shall be selected not more than 60 days prior to the Redemption
Date by the Trustee, from the Outstanding Securities of such series and
specified tenor not previously called for redemption in accordance with the
preceding sentence.
The Trustee shall promptly notify the Company in writing of the
Securities 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
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Securities shall relate, in the case of any Security redeemed or to be redeemed
only in part, to the portion of the principal amount of such Security which has
been or is to be redeemed. If the Company shall so direct, Securities
registered in the name of the Company, any Affiliate or any Subsidiary thereof
shall not be included in the Securities selected for redemption.
Section 11.4 Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not later than the thirtieth day, and not earlier than the
sixtieth day, prior to the Redemption Date, to each Holder of Securities to be
redeemed, at the address of such Holder as it appears in the Securities
Register.
With respect to Securities of each series to be redeemed, each notice
of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) if less than all Outstanding Securities of such particular
series and having the same terms are to be redeemed, the identification (and,
in the case of partial redemption, the respective principal amounts) of the
particular Securities to be redeemed;
(d) that on the Redemption Date, the Redemption Price will become
due and payable upon each such Security or portion thereof, and that interest
thereon, if any, shall cease to accrue on and after said date;
(e) the place or places where such Securities are to be
surrendered for payment of the Redemption Price; and
(f) that the redemption is for a sinking fund, if such is the
case.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company. 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
Security designated for redemption as a whole or in part shall not affect the
validity of the proceedings for the redemption of any other Security.
Section 11.5 Deposit of Redemption Price.
Prior to 12:00 noon, Eastern time on the Redemption Date specified in
the notice of redemption given as provided in Section 11.4, 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, the Company will segregate and hold in trust
as provided in Section 10.3) an amount of money sufficient to pay
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the Redemption Price of, and any accrued interest (including Additional
Interest) on, all the Securities which are to be redeemed on that date.
Section 11.6 Payment of Securities Called for Redemption.
If any notice of redemption has been given as provided in Section
11.4, the Securities or portion of Securities with respect to which such notice
has been given shall become due and payable on the date and at the place or
places stated in such notice at the applicable Redemption Price. On
presentation and surrender of such Securities at a Place of Payment in said
notice specified, the said Securities or the specified portions thereof shall
be paid and redeemed by the Company at the applicable Redemption Price,
together with accrued interest (including any Additional Interest) to the
Redemption Date; provided, however, that, unless otherwise specified as
contemplated by Section 3.1, installments of interest whose Stated Maturity is
on or prior to the Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant Record Dates according to their terms and the
provisions of Section 3.7.
Upon presentation of any Security redeemed in part only, the Company
shall execute and the Trustee shall authenticate and deliver to the Holder
thereof, at the expense of the Company, a new Security or Securities of the
same series, of authorized denominations, in aggregate principal amount equal
to the portion of the Security not redeemed so presented and having the same
Original Issue Date, Stated Maturity and terms. If a Global Security is so
surrendered, such new Security will also be a new Global Security.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal of and premium, if any, on such
Security shall, until paid, bear interest from the Redemption Date at the rate
prescribed therefor in the Security.
Section 11.7 Right of Redemption of Securities Initially Issued to an
American Coin Merchandising Trust.
In the case of the Securities of a series initially issued to an
American Coin Merchandising Trust, except as otherwise specified as
contemplated by Section 3.1, the Company, at its option, may redeem such
Securities (i) on or after the date five years after the Original Issue Date of
such Securities, in whole at any time or in part from time to time, or (ii)
upon the occurrence and during the continuation of a Tax Event or Investment
Company Event, at any time within 90 days following the occurrence of such Tax
Event or Investment Company Event in respect of such American Coin
Merchandising Trust, in whole (but not in part), in each case at a Redemption
Price equal to 100% of the principal amount thereof.
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ARTICLE XII
SINKING FUNDS
Section 12.1 Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund
for the retirement of Securities of any series except as otherwise specified as
contemplated by Section 3.1 for such Securities.
The minimum amount of any sinking fund payment provided for by the
terms of any Securities of any series is herein referred to as a "mandatory
sinking fund payment", and any sinking fund payment in excess of such minimum
amount which is permitted to be made by the terms of such Securities of any
series is herein referred to as an "optional sinking fund payment." If provided
for by the terms of any Securities of any series, the cash amount of any
sinking fund payment may be subject to reduction as provided in Section 12.2.
Each sinking fund payment shall be applied to the redemption of Securities of
any series as provided for by the terms of such Securities.
Section 12.2 Satisfaction of Sinking Fund Payments with Securities.
In lieu of making all or any part of a mandatory sinking fund
payment with respect to any Securities of a series in cash, the Company may at
its option, at any time no more than 16 months and no less than 30 days prior
to the date on which such sinking fund payment is due, deliver to the Trustee
Securities of such series (together with the unmatured coupons, if any,
appertaining thereto) theretofore purchased or otherwise acquired by the
Company, except Securities of such series that have been redeemed through the
application of mandatory or optional sinking fund payments pursuant to the
terms of the Securities of such series, accompanied by a Company Order
instructing the Trustee to credit such obligations and stating that the
Securities of such series were originally issued by the Company by way of bona
fide sale or other negotiation for value; provided that the Securities to be so
credited have not been previously so credited. The Securities to be so
credited shall be received and credited for such purpose by the Trustee at the
redemption price for such Securities, as specified in the Securities so to be
redeemed, for redemption through operation of the sinking fund and the amount
of such sinking fund payment shall be reduced accordingly.
Section 12.3 Redemption of Securities for Sinking Fund.
Not less than 60 days prior to each sinking fund payment date for any
series of Securities, the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund payment for
such Securities pursuant to the terms of such Securities, the portion thereof,
if any, which is to be satisfied by payment of cash in the currency in which
the Securities of such series are payable (except as provided pursuant to
Section 3.1) and the portion thereof, if any, which is to be satisfied by
delivering and crediting Securities pursuant to Section 12.2 and will also
deliver to the Trustee any Securities to be so delivered. Such Officers'
Certificate shall be irrevocable and upon its delivery the Company shall be
obligated to make the
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cash payment or payments therein referred to, if any, on or before the
succeeding sinking fund payment date. In the case of the failure of the
Company to deliver such Officers' Certificate (or, as required by this
Indenture, the Securities and coupons, if any, specified in such Officers'
Certificate), the sinking fund payment due on the succeeding sinking fund
payment date for such series shall be paid entirely in cash and shall be
sufficient to redeem the principal amount of the Securities of such series
subject to a mandatory sinking fund payment without the right to deliver or
credit securities as provided in Section 12.2 and without the right to make the
optional sinking fund payment with respect to such series at such time.
Any sinking fund payment or payments (mandatory or optional) made in
cash plus any unused balance of any preceding sinking fund payments made with
respect to the Securities of any particular series shall be applied by the
Trustee (or by the Company if the Company is acting as its own Paying Agent) on
the sinking fund payment date on which such payment is made (or, if such
payment is made before a sinking fund payment date, on the sinking fund payment
date immediately following the date of such payment) to the redemption of
Securities of such series at the Redemption Price specified in such Securities
with respect to the sinking fund. Any sinking fund moneys not so applied or
allocated by the Trustee (or, if the Company is acting as its own Paying Agent,
segregated and held in trust by the Company as provided in Section 10.3) for
such series and together with such payment (or such amount so segregated) shall
be applied in accordance with the provisions of this Section 12.3. Any and all
sinking fund moneys with respect to the Securities of any particular series
held by the Trustee (or if the Company is acting as its own Paying Agent,
segregated and held in trust as provided in Section 10.3) on the last sinking
fund payment date with respect to Securities of such series and not held for
the payment or redemption of particular Securities of such series shall be
applied by the Trustee (or by the Company if the Company is acting as its own
Paying Agent), together with other moneys, if necessary, to be deposited (or
segregated) sufficient for the purpose, to the payment of the principal of the
Securities of such series at Maturity. The Trustee shall select the Securities
to be redeemed upon such sinking fund payment date in the manner specified in
Section 11.3 and cause notice of the redemption thereof to be given in the name
of and at the expense of the Company in the manner provided in Section 11.4.
Such notice having been duly given, the redemption of such Securities shall be
made upon the terms and in the manner stated in Section 11.6. On or before
each sinking fund payment date, the Company shall pay to the Trustee (or, if
the Company is acting as its own Paying Agent, the Company shall segregate and
hold in trust as provided in Section 10.3) in cash a sum in the currency in
which Securities of such series are payable (except as provided pursuant to
Section 3.1) equal to the principal and any interest accrued to the Redemption
Date for Securities or portions thereof to be redeemed on such sinking fund
payment date pursuant to this Section 12.3.
Neither the Trustee nor the Company shall redeem any Securities of a
series with sinking fund moneys or mail any notice of redemption of Securities
of such series by operation of the sinking fund for such series during the
continuance of a default in payment of interest, if any, on any Securities of
such series or of any Event of Default (other than an Event of Default
occurring as a consequence of this paragraph) with respect to the Securities of
such series, except that if the notice of redemption shall have been provided
in accordance with the provisions hereof, the Trustee (or the Company, if the
Company is then acting as its own Paying Agent) shall redeem such Securities if
cash sufficient for that purpose shall be deposited with the Trustee (or
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segregated by the Company) for that purpose in accordance with the terms of
this Article XII. Except as aforesaid, any moneys in the sinking fund for such
series at the time when any such default or Event of Default shall occur and
any moneys thereafter paid into such sinking fund shall, during the continuance
of such default or Event of Default, be held as security for the payment of the
Securities and coupons, if any, of such series; provided, however, that in case
such default or Event of Default shall have been cured or waived herein, such
moneys shall thereafter be applied on the next sinking fund payment date for
the Securities of such series on which such moneys may be applied pursuant to
the provisions of this Section 12.3.
ARTICLE XIII
SUBORDINATION OF SECURITIES
Section 13.1 Securities Subordinate to Senior Debt and Subordinated Debt.
The Company covenants and agrees, and each Holder of a Security, by
its acceptance thereof, likewise covenants and agrees, that, to the extent and
in the manner hereinafter set forth in this Article XIII, the payment of the
principal of (and premium, if any) and interest (including any Additional
Interest) on each and all of the Securities are hereby expressly made
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 and Subordinated
Debt.
Section 13.2 Payment Over of Proceeds Upon Dissolution, Etc.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company (each such event, if any, herein
sometimes referred to as a "Proceeding"), then the holders of Senior Debt and
Subordinated Debt shall be entitled to receive payment in full of such Senior
Debt and Subordinated Debt, 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 and Subordinated Debt, before the Holders of the Securities are
entitled to receive or retain any payment or distribution of any kind or
character, whether in cash, property or securities (including any payment or
distribution which may be payable or deliverable by reason of the payment of
any other Debt of the Company subordinated to the payment of the Securities,
such payment or distribution being hereinafter referred to as a "Junior
Subordinated Payment"), on account of principal of (or premium, if any) or
interest (including any Additional Interest) on the Securities or on account of
the purchase or other acquisition of Securities by the Company or any
Subsidiary and to that end the holders of Senior Debt and Subordinated Debt
shall be entitled to receive, for application to the payment thereof, any
payment or distribution of any kind or character, whether in cash, property or
securities, including any Junior Subordinated Payment, which may be payable or
deliverable in respect of the Securities in any such Proceeding.
In the event that, notwithstanding the foregoing provisions of this
Section 13.2, the Trustee or the Holder of any Security shall have received any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, including any Junior Subordinated
Payment, before all Senior Debt and Subordinated Debt are paid in full, or
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payment thereof is provided for, in cash or cash equivalents or otherwise in a
manner satisfactory to the holders of Senior Debt and Subordinated 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 and
Subordinated Debt remaining unpaid, to the extent necessary to pay all Senior
Debt and Subordinated Debt in full, after giving effect to any concurrent
payment or distribution to or for the holders of Senior Debt and Subordinated
Debt.
For purposes of this Article XIII 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 and Subordinated Debt
to substantially the same extent as the Securities are so subordinated as
provided in this Article XIII. 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 upon the terms and conditions set
forth in Article VIII shall not be deemed a Proceeding for the purposes of this
Section 13.2 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
VIII.
Section 13.3 Prior Payment to Senior Debt and Subordinated Debt Upon
Acceleration of Securities.
In the event that any Securities are declared due and payable before
their Stated Maturity by reason of the occurrence of an Event of Default, then
and in such event the holders of the Senior Debt and Subordinated Debt
outstanding at the time such Securities become due and payable shall be
entitled to receive payment in full of all amounts due on or in respect of such
Senior Debt and Subordinated 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
and Subordinated Debt, before the Holders of the Securities are entitled to
receive any payment or distribution of any kind or character, whether in cash,
property 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 Securities or on account of the
purchase or other acquisition of Securities by the Company or any Subsidiary;
provided, however, that nothing in this Section 13.3 shall prevent the
satisfaction of any sinking fund payment in accordance with this Indenture or
as otherwise specified as contemplated by Section 3.1 for the Securities of any
series by delivering and crediting pursuant to Section 12.2 or as otherwise
specified as contemplated by Section 3.1 for the Securities of any series
Securities which have been acquired (upon redemption or otherwise) prior to the
Event of Default upon which such declaration of acceleration is based.
66
<PAGE> 72
In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section 13.3, and if such fact shall, at or prior
to the time of such payment, have been made known to 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 13.3 shall not apply to any payment
with respect to which Section 13.2 would be applicable.
Section 13.4 No Payment When Senior Debt and Subordinated Debt in Default.
(a) In the event and during the continuation of any event of
default under any Senior Debt and Subordinated Debt, then from and after such
time as the Company and the Trustee receive notice of such default from any
person permitted to give such notice, no payment or distribution of any kind or
character, whether in cash, properties or securities (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 Securities or on account of the purchase or other acquisition of
Securities by the Company or any Subsidiary, in each case unless and until all
such Senior Debt and Subordinated Debt are paid in full; provided, however,
that nothing in this Section 13.4 shall prevent the satisfaction of any sinking
fund payment in accordance with this Indenture or as otherwise specified as
contemplated by Section 3.1 for the Securities of any series by delivering and
crediting pursuant to Section 12.2 or as otherwise specified as contemplated by
Section 3.1 for the Securities of any series Securities which have been
acquired (upon redemption or otherwise) prior to such default in payment or
event of default.
In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section 13.4, and if such fact shall, at or prior
to the time of such payment, have been made known to 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 13.4 shall not apply to any payment
with respect to which Section 13.2 would be applicable.
Section 13.5 Payment Permitted If No Default.
Nothing contained in this Article XIII or elsewhere in this Indenture
or in any of the Securities shall prevent (a) the Company, at any time except
during the pendency of any Proceeding referred to in Section 13.2 or under the
conditions described in Sections 13.3 and 13.4, from making payments at any
time of principal of (and premium, if any) or interest (including Additional
Interest) on the Securities, 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
(and premium, if any) or interest (including any Additional Interest) on the
Securities or the retention of such payment by the holders, if, at the time of
such application by the Trustee, it did not have knowledge that such payment
would have been prohibited by the provisions of this Article XIII.
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<PAGE> 73
Section 13.6 Subrogation to Rights of Holders of Senior Debt and
Subordinated Debt.
Subject to the payment in full of all amounts due or to become due on
all Senior Debt and Subordinated Debt, or the provision for such payment in
cash or cash equivalents or otherwise in a manner satisfactory to the holders
of Senior Debt and Subordinated Debt, the Holders of the Securities shall be
subrogated to the extent of the payments or distributions made to the holders
of such Senior Debt and Subordinated Debt pursuant to the provisions of this
Article XIII (equally and ratably with the holders of all indebtedness of the
Company which by its express terms is subordinated to Senior Debt and
Subordinated Debt of the Company to substantially the same extent as the
Securities are subordinated to the Senior Debt and Subordinated Debt and is
entitled to like rights of subrogation by reason of any payments or
distributions made to holders of such Senior Debt and Subordinated Debt) to the
rights of the holders of such Senior Debt and Subordinated Debt to receive
payments and distributions of cash, property and securities applicable to the
Senior Debt and Subordinated Debt until the principal of (and premium, if any)
and interest on the Securities shall be paid in full. For purposes of such
subrogation, no payments or distributions to the holders of the Senior Debt and
Subordinated Debt of any cash, property or securities to which the Holders of
the Securities or the Trustee would be entitled except for the provisions of
this Article, and no payments over pursuant to the provisions of this Article
XIII to the holders of Senior Debt and Subordinated Debt by Holders of the
Securities or the Trustee, shall, as among the Company, its creditors other
than holders of Senior Debt and Subordinated Debt, and the Holders of the
Securities, be deemed to be a payment or distribution by the Company to or on
account of the Senior Debt and Subordinated Debt.
Section 13.7 Provisions Solely to Define Relative Rights.
The provisions of this Article XIII are and are intended solely for
the purpose of defining the relative rights of the Holders of the Securities on
the one hand and the holders of Senior Debt and Subordinated Debt on the other
hand. Nothing contained in this Article XIII or elsewhere in this Indenture or
in the Securities is intended to or shall (a) impair, as between the Company
and the Holders of the Securities, the obligations of the Company, which are
absolute and unconditional, to pay to the holders of the Securities the
principal of (and premium, if any) and interest (including any Additional
Interest) on the Securities 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 Securities and creditors of the Company other
than their rights in relation to the holders of Senior Debt and Subordinated
Debt; or (c) prevent the Trustee or the Holder of any Security 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 XIII of the
holders of Senior Debt and Subordinated Debt to receive cash, property and
securities otherwise payable or deliverable to the Trustee or such Holder.
Section 13.8 Trustee to Effectuate Subordination.
Each Holder of a Security 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
68
<PAGE> 74
acknowledge or effectuate the subordination provided in this Article XIII and
appoints the Trustee his or her attorney-in-fact for any and all such purposes.
Section 13.9 No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior Debt and
Subordinated 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.
Without in any way limiting the generality of the immediately
preceding paragraph, the holders of Senior Debt and Subordinated Debt may, at
any time and from to time, without the consent of or notice to the Trustee or
the Holders of the Securities, without incurring responsibility to the Holders
of the Securities and without impairing or releasing the subordination provided
in this Article or the obligations hereunder of the Holders of the Securities
to the holders of Senior Debt and Subordinated Debt, do any one or more of the
following: (i) change the manner, place or terms of payment or extend the time
of payment of, or renew or alter, Senior Debt and Subordinated Debt, or
otherwise amend or supplement in any manner Senior Debt and Subordinated Debt
or any instrument evidencing the same or any agreement under which Senior Debt
and Subordinated Debt is outstanding; (ii) sell, exchange, release or otherwise
deal with any property pledged, mortgaged or otherwise securing Senior Debt and
Subordinated Debt; (iii) release any Person liable in any manner under, for or
in respect of Senior Debt and Subordinated Debt; and (iv) exercise or refrain
from exercising any rights against the Company and any other Person.
Section 13.10 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 Securities. Notwithstanding the provisions of
this Article XIII or any other provision of this Indenture, the Trustee shall
not be charged with knowledge of the existence of any facts which would
prohibit the making of any payment to or by the Trustee in respect of the
Securities, unless and until the Trustee shall have received written notice
thereof from the Company or a holder of Senior Debt and Subordinated Debt or
from any trustee, agent or representative therefor; provided, however, that if
the Trustee shall not have received the notice provided for in this Section
13.10 at least two Business Days prior to the date upon which by the terms
hereof any monies may become payable for any purpose (including, without
limitation, the payment of the principal of (and premium, if any) or interest
(including any Additional Interest) on any Security), then, anything herein
contained to the contrary notwithstanding, the Trustee shall have full power
and authority to receive such monies and to apply the same to the purpose for
which they were received and shall not be affected by any notice to the
contrary which may be received by it within two Business Days prior to such
date.
69
<PAGE> 75
Subject to the provisions of Section 6.1, the Trustee shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Debt and Subordinated Debt (or a
trustee therefor) to establish that such notice has been given by a holder of
Senior Debt and Subordinated Debt (or a trustee therefor). In the event that
the Trustee determines in good faith that further evidence is required with
respect to the right of any Person as a holder of Senior Debt and Subordinated
Debt to participate in any payment or distribution pursuant to this Article,
the Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Debt and Subordinated
Debt held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to
the rights of such Person under this Article, and if such evidence is not
furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
Section 13.11 Reliance on Judicial Order or Certificate of Liquidating
Agent.
Upon any payment or distribution of assets of the Company referred to
in this Article XIII, the Trustee, subject to the provisions of Section 6.1,
and the Holders of the Securities shall be entitled to rely upon any order or
decree entered by any court of competent jurisdiction in which such 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 Securities, for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the holders of the
Senior Debt and Subordinated 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 XIII.
Section 13.12 Trustee Not Fiduciary for Holders of Senior Debt and
Subordinated Debt.
The Trustee, in its capacity as trustee under this Indenture, shall
not be deemed to owe any fiduciary duty to the holders of Senior Debt and
Subordinated Debt and shall not be liable to any such holders if it shall in
good faith mistakenly pay over or distribute to Holders of Securities or to the
Company or to any other Person cash, property or securities to which any
holders of Senior Debt and Subordinated Debt shall be entitled by virtue of
this Article or otherwise.
Section 13.13 Rights of Trustee as Holder of Senior Debt and Subordinated
Debt; Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article XIII with respect to any Senior Debt and
Subordinated Debt which may at any time be held by it, to the same extent as
any other holder of Senior Debt and Subordinated Debt, and nothing in this
Indenture shall deprive the Trustee of any of its rights as such holder.
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Section 13.14 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 XIII 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 intents and purposes as if such Paying Agent were
named in this Article XIII in addition to or in place of the Trustee.
Section 13.15 Certain Conversions or Exchanges Deemed Payment.
For the purposes of this Article XIII only, (a) the issuance and
delivery of junior securities upon conversion or exchange of Securities 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 Securities or on account of the purchase or other acquisition of
Securities, and (b) the payment, issuance or delivery of cash, property or
securities (other than junior securities) upon conversion or exchange of a
Security shall be deemed to constitute payment on account of the principal of
such Security. For the purposes of this Section 13.15, 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 and Subordinated 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 Securities are so subordinated as provided in
this Article XIII.
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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the day and year first above written.
AMERICAN COIN MERCHANDISING, INC.
By:
----------------------------------
Its:
---------------------------------
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely
as Trustee
By:
----------------------------------
Its:
---------------------------------
72
<PAGE> 78
STATE OF COLORADO )
) SS.
COUNTY OF BOULDER )
On the ____ day of ____________, 1998 before me personally came
________________________ to me known, who, being by me duly sworn, did depose
and say that he is _____________________ of AMERICAN COIN MERCHANDISING, INC.
one of the corporations described in and which executed the foregoing
instrument; that he knows the seal of said corporation; that the seal affixed
to said instrument is such corporate seal; and that he signed his name thereto
by authority of the Board of Directors of said corporation.
[SEAL]
----------------------------------
Notary Public
STATE OF DELAWARE )
) SS.
COUNTY OF NEW CASTLE )
On the _____ day of ________________, 1998 before me personally came
___________________________ to me known, who, being by me duly sworn, did
depose and say that he is _______________________ of WILMINGTON TRUST COMPANY
one of the corporations described in and which executed the foregoing
instrument; that he knows the seal of said corporation; that the seal affixed
to said instrument is such corporate seal; and that he signed his name thereto
by authority of the Board of Directors of said corporation.
[SEAL]
----------------------------------
Notary Public
<PAGE> 1
EXHIBIT 4.11
GUARANTEE AGREEMENT
BETWEEN
AMERICAN COIN MERCHANDISING, INC.
(AS GUARANTOR)
AND
WILMINGTON TRUST COMPANY
(AS TRUSTEE)
DATED AS OF
__________________, 1998
<PAGE> 2
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
SECTION OF TRUST SECTION OF
INDENTURE ACT OF 1939, AS AMENDED GUARANTEE AGREEMENT
<S> <C>
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)
31l(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) 2.1, 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
316(c) 9.2
317(a) Inapplicable
317(b) Inapplicable
318(a) 2.1(b)
318(b) 2.1
318(c) 2.1(a)
</TABLE>
_________________
* 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.
i
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS ..................................................................... 1
Section 1.1 Definitions ........................................................ 1
ARTICLE II TRUST INDENTURE ACT ............................................................. 4
Section 2.1 Trust Indenture Act; Application ................................... 4
Section 2.2 List of Holders .................................................... 4
Section 2.3 Reports by the Guarantee Trustee ................................... 4
Section 2.4 Periodic Reports to the Guarantee Trustee .......................... 4
Section 2.5 Evidence of Compliance with Conditions Precedent ................... 5
Section 2.6 Events of Default; Waiver .......................................... 5
Section 2.7 Event of Default; Notice ........................................... 5
Section 2.8 Conflicting Interest ............................................... 5
ARTICLE III POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE .............................. 5
Section 3.1 Powers and Duties of the Guarantee Trustee ......................... 5
Section 3.2 Certain Rights of Guarantee Trustee ................................ 7
Section 3.3 Indemnity .......................................................... 8
ARTICLE IV GUARANTEE TRUSTEE ............................................................... 9
Section 4.1 Guarantee Trustee; Eligibility ..................................... 9
Section 4.2 Appointment, Removal and Resignation of the Guarantee Trustee ...... 9
ARTICLE V GUARANTEE ....................................................................... 10
Section 5.1 Guarantee .......................................................... 10
Section 5.2 Waiver of Notice and Demand ........................................ 10
Section 5.3 Obligations Not Affected ........................................... 10
Section 5.4 Rights of Holders .................................................. 11
Section 5.5 Guarantee of Payment ............................................... 11
Section 5.6 Subrogation ........................................................ 11
Section 5.7 Independent Obligations ............................................ 12
ARTICLE VI COVENANTS AND SUBORDINATION ..................................................... 12
Section 6.1 Subordination ...................................................... 12
Section 6.2 Pari Passu Guarantees .............................................. 12
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE VII CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE ............................ 12
Section 7.1 Guarantor May Consolidate, Etc., Only on Certain Terms ............. 12
Section 7.2 Successor Guarantor Substituted .................................... 13
ARTICLE VIII TERMINATION ..................................................................... 13
Section 8.1 Termination ........................................................ 13
ARTICLE IX MISCELLANEOUS ................................................................... 14
Section 9.1 Successors and Assigns ............................................. 14
Section 9.2 Amendments ......................................................... 14
Section 9.3 Notices ............................................................ 14
Section 9.4 Benefit ............................................................ 15
Section 9.5 Interpretation ..................................................... 15
Section 9.6 Governing Law ...................................................... 16
</TABLE>
iii
<PAGE> 5
GUARANTEE AGREEMENT
THIS GUARANTEE AGREEMENT, dated as of _____________________, 1998, is
executed and delivered by AMERICAN COIN MERCHANDISING, INC., a Delaware
corporation (the "Guarantor") having its principal office at 5660 Central
Avenue, Boulder, Colorado 80301, and WILMINGTON TRUST COMPANY, a Delaware
banking corporation, as trustee (the "Guarantee Trustee"), for the benefit of
the Holders from time to time of the Preferred Securities (as defined herein)
of American Coin Merchandising Trust I, a Delaware statutory business trust
(the "Trust").
WHEREAS, pursuant to an Amended and Restated Trust Agreement, dated as
of ________, 1998 (the "Trust Agreement"), among the Guarantor, as Depositor,
Wilmington Trust Company as Property Trustee, Wilmington Trust Company, as
Delaware Trustee, the Administrative Trustees named therein and the Holders
from time to time of undivided beneficial interests in the assets of the Trust,
the Trust issued [$50,000,000/ $57,500,000] aggregate Liquidation Amount (as
defined in the Trust Agreement) of its ____% Cumulative Trust Preferred
Securities, Liquidation Amount $10 per Trust Preferred Security (the "Preferred
Securities");
WHEREAS, the Preferred Securities will be issued by the Trust and the
proceeds thereof, together with the proceeds from the issuance of the Trust's
Common Securities (as defined below), will be used to purchase the Debentures
(as defined in the Trust Agreement) of the Guarantor which was deposited with
Wilmington Trust Company, as Property Trustee under the Trust Agreement, as
trust assets;
WHEREAS, as an incentive for the Holders to purchase the 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.
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 and
pursuant to Section 5.1 hereof extends the Guarantee for the benefit of the
Holders from time to time of the Preferred Securities.
ARTICLE I
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 and the
Indenture (as defined herein), each as in effect on the date hereof.
<PAGE> 6
"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
Guarantor shall not be deemed to be an Affiliate of the Trust. For 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.
"Board of Directors" means either the board of directors of the
Guarantor or any committee of that board duly authorized to act hereunder.
"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Trust.
"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 notice of default and shall not have cured
such default within 90 days after receipt of such notice.
"Guarantee" has the meaning set forth in Section 5.1.
"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 Trust: (i) any accrued and unpaid
Distributions (as defined in the Trust Agreement) required to be paid on the
Preferred Securities, to the extent the Trust shall have funds on hand
available therefor at such time, (ii) the applicable Redemption Price (as
defined in the Trust Agreement), to the extent the Trust shall have funds on
hand available therefor at such time, and (iii) upon a voluntary or involuntary
termination, winding up or liquidation of the Trust, unless Debentures are
distributed to the Holders, the lesser of (a) the aggregate of the Liquidation
Distribution (as defined in the Trust Agreement) and (b) the amount of assets
of the Trust remaining available for distribution to Holders of Preferred
Securities after satisfaction of liabilities to creditors of the Trust as
required by applicable law.
"Guarantee Trustee" means Wilmington Trust Company, 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 Trust, 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.
"Indenture" means the Junior Subordinated Indenture dated as of August
__, 1998, as supplemented and amended, between the Guarantor and Wilmington
Trust Company, as trustee.
"List of Holders" has the meaning specified in Section 2.2(a).
2
<PAGE> 7
"Majority in Liquidation Amount of the Preferred 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 Amount of all then
outstanding Preferred Securities issued by the Trust.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chairman or a Vice Chairman of the Board of Directors
of such Person or the President or a Vice President of such Person, and by the
Chief Financial Officer, 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 such 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.
"Other Guarantees" means any guarantees similar to the Guarantee
issued, from time to time, by the Guarantor on behalf of holders of one or more
series of Preferred Securities issued by any American Coin Merchandising Trust
(as defined in the Indenture) other than the Trust.
"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 of the Corporate Trust Department of the Guarantee Trustee and also
means, with respect to a particular corporate trust matter, any other officer
to whom such matter is referred because of that officer's knowledge of and
familiarity with the particular subject.
"Securities Act" means the Securities Act of 1933, as amended.
"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.
3
<PAGE> 8
ARTICLE II
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 (a) semiannually, on or before January 1 and July 1 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 (b) at such other
times as the Guarantee Trustee may request in writing, within 30 days after the
receipt by the Guarantor of any such 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 in its capacity as such. 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.
Not later than December 31 of each year, commencing December 31, 1998,
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 the 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.
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Section 2.5 Evidence of Compliance with Conditions Precedent.
The Guarantor shall provide to the Guarantee Trustee, on an annual
basis, such evidence of compliance with such conditions 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 Amount of the Preferred
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 known to 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 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
knowledge of any Event of Default unless the Guarantee Trustee shall have
received written notice, or a Responsible Officer charged with the
administration of this Guarantee Agreement shall have obtained written notice,
of such Event of Default.
Section 2.8 Conflicting Interest.
The Trust Agreement shall be deemed to be specifically described in
this Guarantee Agreement for the purpose of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
Section 3.1 Powers and Duties of the Guarantee Trustee.
(a) This Guarantee shall be held by the Guarantee Trustee
for the benefit of the Holders, and the Guarantee Trustee shall not transfer
this Guarantee to any Person except to a Holder exercising his or her rights
pursuant to Section 5.4(iv) or to a Successor Guarantee
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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.
(b) If an Event of Default has occurred and is
continuing, the Guarantee Trustee shall enforce this Guarantee 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 covenant 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), 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
(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;
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(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 Amount of the Preferred 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
(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 adequate indemnity
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 rely and shall be fully
protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document reasonably 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 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.
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(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 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.
(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 or attorneys, 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
instructions from the Holders, (B) may refrain from enforcing such
remedy or right or taking such other action until such instructions
are received, and (C) shall be 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 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.
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ARTICLE IV
GUARANTEE TRUSTEE
Section 4.1 Guarantee Trustee: Eligibility.
(a) There shall at all times be a Guarantee Trustee which
shall:
(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 4.1(a)(ii) 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 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
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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.
ARTICLE V
GUARANTEE
Section 5.1 Guarantee.
The Guarantor irrevocably and unconditionally agrees to pay in full on
a subordinated basis to the Holders the Guarantee Payments (without duplication
of amounts theretofore paid by or on behalf of the Trust), as and when due,
regardless of any defense, right of set-off or counterclaim which the Trust may
have or assert other than the defense of payment (the "Guarantee"). The
Guarantee is a continuing guarantee, and the Guarantor fully, knowingly and
unconditionally waives any right the Guarantor may have to revoke the Guarantee
as to any future transactions under Section 2815 of the California Civil Code
or otherwise. 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 Trust 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 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,
Trust 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 Trust of any express or
implied agreement, covenant, term or condition relating to the Preferred
Securities to be performed or observed by the Trust;
(b) the extension of time for the payment by the Trust 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 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
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pursuant to the terms of the Preferred Securities, or any action on the part of
the Trust 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 Trust or any of the assets of the Trust;
(e) any invalidity of, or defect or deficiency in, the
Preferred Securities;
(f) the settlement or compromise of any obligation
guaranteed hereby or hereby incurred; or
(g) any other circumstance whatsoever that might
otherwise constitute a legal or equitable discharge or defense of a guarantor,
it being the intent of this Section 5.3 that the obligations of the Guarantor
hereunder shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain 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 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 on behalf of
the Holders; (iii) the Holders of a Majority in Liquidation Amount of the
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of this Guarantee Agreement or exercising any trust or power conferred
upon the Guarantee Trustee under this Guarantee Agreement; and (iv) 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 Trust or any other Person.
Section 5.5 Guarantee of Payment.
This Guarantee creates a guarantee of payment and not of collection.
This Guarantee will not be discharged except by payment of the Guarantee
Payments in full (without duplication of amounts theretofore paid by the Trust)
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 Trust 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 Trust 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
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indemnity, reimbursement or other agreement, in all cases as a result of
payment under this Guarantee, if, at the time of any such payment, any amounts
are due and unpaid under this Guarantee. If any amount shall be paid to the
Guarantor in violation of the preceding sentence, the Guarantor agrees to hold
such amount in trust for the Holders and to pay over such amount to the
Holders.
Section 5.7 Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Trust 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 VI
COVENANTS AND SUBORDINATION
Section 6.1 Subordination.
The obligations of the Guarantor under this Guarantee will constitute
unsecured obligations of the Guarantor and will rank subordinate and junior in
right of payment to all Senior Debt and Subordinated Debt (as defined in the
Indenture) in the same manner as Debentures (as defined in the Trust
Agreement).
Section 6.2 Pari Passu Guarantees.
The obligations of the Guarantor under this Guarantee shall rank pari
passu with the obligations of the Guarantor under all Other Guarantees.
ARTICLE VII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 7.1 Guarantor May Consolidate, Etc., Only on Certain
Terms.
The Guarantor 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 Guarantor or convey, transfer or lease its properties and assets
substantially as an entirety to the Guarantor, unless:
(a) in case the Guarantor 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 Guarantor is merged or the Person which
acquires by conveyance or transfer, or which leases, the properties and assets
of the Guarantor substantially as an entirety shall be a corporation,
partnership or trust organized and existing under the laws of the United States
of America or any State or the District of Columbia, and shall expressly assume
the Guarantor's obligations under this Guarantee;
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(b) immediately after giving effect thereto, no Event of
Default, and no event which, after notice or lapse of time, or both, would
become an Event of Default, shall have happened and be continuing;
(c) such consolidation, merger, conveyance, transfer or
lease is permitted under the Trust Agreement and the Indenture and does not
give rise to any breach or violation of the Trust Agreement or the Indenture;
and
(d) the Guarantor has delivered to the Guarantee Trustee
an Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and assumption of the
Guarantor's obligations under this Guarantee Agreement comply with this Article
and that all conditions precedent herein provided for relating to such
transaction have been complied with; and the Guarantee Trustee, subject to
Section 3.1 hereof, may rely upon such Officers' Certificate and Opinion of
Counsel as conclusive evidence that such transaction complies with this Section
7.1.
Section 7.2 Successor Guarantor Substituted.
Upon any consolidation or merger by the Guarantor with or into any
other Person, or any conveyance, transfer or lease by the Guarantor of its
properties and assets substantially as an entirety to any Person in accordance
with Section 7.1, the successor Person formed by such consolidation or into
which the Guarantor 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 Guarantor under this Guarantee Agreement with the same effect as
if such successor Person had been named as the Guarantor herein; and in the
event of any such conveyance, transfer or lease the Guarantor shall be
discharged from all obligations and covenants under this Guarantee Agreement.
ARTICLE VIII
TERMINATION
Section 8.1 Termination.
This Guarantee Agreement shall terminate and be of no further force
and effect upon the earliest of (i) full payment of the applicable Redemption
Price of all Preferred Securities, (ii) the distribution of Debentures to the
Holders in exchange for all of the Preferred Securities or (iii) full payment
of the amounts payable in accordance with the Trust Agreement upon liquidation
of the Trust. Notwithstanding the foregoing clauses (i) through (iii), this
Guarantee Agreement will continue to be effective or will be reinstated if it
has been terminated pursuant to one of such clauses (i) through (iii), 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.
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ARTICLE IX
MISCELLANEOUS
Section 9.1 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 VII hereof and
Article VIII of the Indenture, the Guarantor shall not assign its obligations
hereunder.
Section 9.2 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 vote will be
required), this Guarantee Agreement may not be amended without the prior
approval of the Holders of not less than a Majority in Liquidation Amount of
the Preferred Securities. The provisions of Article VI of the Trust Agreement
concerning meetings of the Holders shall apply to the giving of such approval.
Section 9.3 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, facsimile number or to the attention of such other
Person as the Guarantor may give notice to the Holders:
American Coin Merchandising, Inc.
5660 Central Avenue
Boulder, Colorado 80301
Facsimile No.: (303) 443-2264
Attention: Jerome M. Lapin
(b) if given to the Trust, in care of the Guarantee
Trustee, at the Trust's (and the Guarantee Trustee's) address set forth below
or such other address as the Guarantee Trustee on behalf of the Trust may give
notice to the Holders:
American Coin Merchandising, Inc.
5660 Central Avenue
Boulder, Colorado 80301
Facsimile No.: (303) 443-2264
Attention: Jerome M. Lapin
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with a copy to:
Wilmington Trust Company
1100 North Market
Wilmington, Delaware 19890
Facsimile No.: (302) 651-1000
Attention: Corporate Trust Administration
(c) if given to any Holder, at the address set forth on
the books and records of the Trust.
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 9.4 Benefit.
This Guarantee is solely for the benefit of the Holders and is not
separately transferable from the Preferred Securities.
Section 9.5 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;
(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.
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Section 9.6 Governing Law.
THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT
REGARD TO THE CONFLICT OF LAWS 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.
[remainder of page intentionally left blank]
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THIS GUARANTEE AGREEMENT is executed as of the day and year first
above written.
AMERICAN COIN MERCHANDISING, INC.,
as Guarantor
By:
---------------------------------------------
Name: Jerome M. Lapin
Title: Chairman of the Board, Chief Executive
Officer and President
WILMINGTON TRUST COMPANY,
as Guarantee Trustee
By:
---------------------------------------------
Name:
Title:
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EXHIBIT 4.12
AGREEMENT AS TO EXPENSES AND LIABILITIES
Agreement As To Expenses And Liabilities (this "Agreement"), dated as
of ______, 1998, between AMERICAN COIN MERCHANDISING, INC., a Delaware
corporation (the "Company"), and AMERICAN COIN MERCHANDISING TRUST I, a Delaware
business trust (the "Trust").
WHEREAS, the Trust intends to issue its Common Securities (the "Common
Securities") to and receive Junior Subordinated Deferrable Interest Debentures
(the "Debentures") from the Company and to issue and sell __% Cumulative Trust
Preferred Securities (the "Trust Preferred Securities") with such powers,
preferences and special rights and restrictions as are set forth in the Amended
and Restated Trust Agreement of the Trust dated as of __________, 1998, as the
same may be amended from time to time (the "Trust Agreement");
WHEREAS, the Company will directly or indirectly own all of the
Common Securities of the Trust and will issue the Debentures;
NOW, THEREFORE, in consideration of the purchase by each holder of the
Trust Preferred Securities, which purchase the Company hereby agrees shall
benefit the Company and which purchase the Company acknowledges will be made in
reliance upon the execution and delivery of this Agreement, the Company and the
Trust hereby agree as follows:
ARTICLE I
Section 1.1 Guarantee by the Company. Subject to the terms and
conditions hereof, the Company hereby irrevocably and unconditionally guarantees
to each person or entity to whom the Trust is now or hereafter becomes indebted
or liable (the "Beneficiaries") the full payment, when and as due, of any and
all Obligations (as hereinafter defined) to such Beneficiaries. As used herein,
"Obligations" means any costs, expenses or liabilities of the Trust (including,
without limitation, expenses relating to the offering of the Trust Preferred
Securities and any expenses the Property Trustee may incur relating to the
enforcement of the rights of the holders of the Trust Preferred Securities or
the Debentures pursuant to the Trust Agreement and the Indenture relating to the
Debentures, respectively), other than obligations of the Trust to pay to holders
of any Trust Preferred Securities or other similar interests in the Trust the
amounts due such holders pursuant to the terms of the Trust Preferred Securities
or such other similar interests, as the case may be. This Agreement is intended
to be for the benefit of, and to be enforceable by, all such Beneficiaries,
whether or not such Beneficiaries have received notice hereof.
Section 1.2 Term of Agreement. This Agreement shall terminate and be of
no further force and effect upon the later of (a) the date on which full payment
has been made of all amounts payable to all holders of all the Trust Preferred
Securities (whether upon redemption, liquidation, exchange or otherwise) and (b)
the date on which there are no Beneficiaries remaining; provided, however, that
this Agreement shall continue to be effective or shall be
<PAGE> 2
reinstated, as the case may be, if at any time any holder of Trust Preferred
Securities or any Beneficiary must restore payment of any sums paid under the
Trust Preferred Securities, under any Obligation, under the Guarantee Agreement
dated the date hereof by the Company and Wilmington Trust Company, a Delaware
banking corporation, as guarantee trustee, or under this Agreement, for any
reason whatsoever. This Agreement is continuing, irrevocable, unconditional and
absolute and the Company fully, knowingly and unconditionally waives any right
to revoke the guarantee contained in this Agreement under Section 2815 of the
California Civil Code or otherwise.
Section 1.3 Waiver of Notice. The Company hereby waives notice of
acceptance of this Agreement and of any Obligation to which it applies or may
apply, and the Company hereby waives presentment, demand for payment, protest,
notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.
Section 1.4 No Impairment. The obligations, covenants, agreements and
duties of the Company under this 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 extension of time for the payment by the Trust of all
or any portion of the Obligations or for the performance of any other obligation
under, arising out of, or in connection with, the Obligations;
(b) any failure, omission, delay or lack of diligence on the
part of the Beneficiaries to enforce, assert or exercise any right, privilege,
power or remedy conferred on the Beneficiaries with respect to the Obligations
or any action on the part of the Trust granting indulgence or extension of any
kind; or
(c) 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 Trust or any of the
assets of the Trust.
There shall be no obligation of the Beneficiaries to give notice to, or
obtain the consent of, the Company with respect to the happening of any of the
foregoing.
Section 1.5 Enforcement. A Beneficiary may enforce this Agreement
directly against the Company and the Company waives any right or remedy to
require that any action be brought against the Trust or any other person or
entity before proceeding against the Company.
Section 1.6 Subrogation. The Company shall be subrogated to all (if
any) rights of the Trust in respect of any amounts paid to the Beneficiaries by
the Company under this Agreement; provided, however, that the Company 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 Agreement, if, at the time of any such payment, any amounts are due
and unpaid under this Agreement.
2
<PAGE> 3
ARTICLE II
Section 2.1 Binding Effect. All guarantees and agreements contained in
this Agreement shall bind the successors, assigns, receivers, trustees and
representatives of the Company and shall inure to the benefit of the
Beneficiaries.
Section 2.2 Amendment. So long as there remains any Beneficiary or any
Trust Preferred Securities are outstanding, this Agreement shall not be modified
or amended in any manner adverse to such Beneficiary or to the holders of the
Trust Preferred Securities.
Section 2.3 Notices. Any notice, request or other communication
required or permitted to be given hereunder shall be given in writing by
delivering the same against receipt therefor, by facsimile transmission
(confirmed by mail), or by registered or certified mail, addressed as follows
(and if so given, shall be deemed given when mailed):
AMERICAN COIN MERCHANDISING TRUST I
5660 Central Avenue
Boulder, Colorado 80301
Facsimile No.: (303) 443-2264
Attention: Jerome M. Lapin
AMERICAN COIN MERCHANDISING, INC.
5660 Central Avenue
Boulder, Colorado 80301
Facsimile No.: (303) 443-2264
Attention: Jerome M. Lapin
Section 2.4 Choice of Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA
(WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES).
3
<PAGE> 4
This Agreement is executed as of the day and year first above written.
AMERICAN COIN MERCHANDISING, INC.
By:
----------------------------------------------
Name: Jerome M. Lapin
Title: Chairman of the Board, Chief Executive
Officer and President
AMERICAN COIN MERCHANDISING TRUST I
By:
----------------------------------------------
Name: Jerome M. Lapin
Title: Administrative Trustee
4
<PAGE> 1
EXHIBIT 4.13
THIS TRUST PREFERRED SECURITY IS A PREFERRED SECURITIES CERTIFICATE WITHIN THE
MEANING OF THE TRUST AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE
NAME OF THE DEPOSITORY TRUST COMPANY (THE "DEPOSITARY") OR A NOMINEE OF THE
DEPOSITARY. THIS TRUST PREFERRED SECURITY IS EXCHANGEABLE FOR TRUST PREFERRED
SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS
NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE TRUST AGREEMENT AND
NO TRANSFER OF THIS TRUST PREFERRED SECURITY (OTHER THAN A TRANSFER OF THIS
TRUST PREFERRED SECURITY AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS TRUST PREFERRED SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITARY (55 WATER STREET, NEW YORK) TO AMERICAN COIN
MERCHANDISING TRUST I OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY TRUST PREFERRED SECURITY ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITARY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
CERTIFICATE NUMBER P-1 NUMBER OF TRUST
PREFERRED SECURITIES: [_________]
CUSIP NO. 025163 205
CERTIFICATE EVIDENCING TRUST PREFERRED SECURITIES
OF
AMERICAN COIN MERCHANDISING TRUST I
____% CUMULATIVE TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $10 PER TRUST PREFERRED SECURITY)
AMERICAN COIN MERCHANDISING TRUST I, a statutory business trust created under
the laws of the State of Delaware (the "Trust"), hereby certifies that Cede &
Co. (the "Holder") is the registered owner of _______________________________
__________ ([_________]) Trust Preferred Securities of the Trust representing an
undivided beneficial interest in the assets of the Trust and designated the
AMERICAN COIN MERCHANDISING TRUST I ___% Cumulative Trust
<PAGE> 2
Preferred Securities, (liquidation amount $10 per Trust Preferred Security) (the
"Trust Preferred Securities"). The Trust 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 Trust Preferred Securities are set forth in,
and this certificate and the Trust Preferred Securities represented hereby are
issued and shall in all respects be subject to the terms and provisions of, the
Amended and Restated Trust Agreement of the Trust dated as of ___________, 1998,
as the same may be amended from time to time (the "Trust Agreement"), including
the designation of the terms of Trust Preferred Securities as set forth therein.
The Holder is entitled to the benefits of the Guarantee Agreement entered into
by American Coin Merchandising, Inc., a Delaware corporation, and Wilmington
Trust Company, a Delaware banking corporation, as guarantee trustee, dated as of
________, 1998 (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.
[remainder of page intentionally left blank]
2
<PAGE> 3
IN WITNESS WHEREOF, an Administrative Trustee (as defined in the Trust
Agreement) of the Trust has executed this certificate this _____ day of ____
1998.
AMERICAN COIN MERCHANDISING TRUST I
By:
--------------------------------------------
Name: Jerome M. Lapin
Title: not in his individual capacity but
solely as Administrative Trustee
3
<PAGE> 4
ASSIGNMENT
For Value Received, the undersigned assigns and transfers this Trust
Preferred Security to:
-------------------------------------
(insert assignee's social security or tax identification number)
-------------------------------
-------------------------------
(insert address and zip code of assignee)
and irrevocably appoints ______________________________________________________
as agent to transfer this Trust Preferred Security Certificate on the books of
the Trust. The agent may substitute another to act for him or her.
Date:
------------------------
Signature:
---------------------------------------------------------------------
(Sign exactly as your name appears on the other side of this Trust
Preferred Security Certificate)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
Rule 17Ad-15 of the regulations promulgated under the Securities Exchange Act of
1934, as amended.
4
<PAGE> 1
EXHIBIT 4.14
THIS CERTIFICATE IS NOT TRANSFERABLE
EXCEPT IN ACCORDANCE WITH SECTION
5.10 OF THE TRUST AGREEMENT
CERTIFICATE NUMBER C-1 NUMBER OF COMMON SECURITIES: [________]
CERTIFICATE EVIDENCING COMMON SECURITIES
OF
AMERICAN COIN MERCHANDISING TRUST I
COMMON SECURITIES
(LIQUIDATION AMOUNT $10 PER COMMON SECURITY)
AMERICAN COIN MERCHANDISING TRUST I, a statutory business trust created
under the laws of the State of Delaware (the "Trust"), hereby certifies that
American Coin Merchandising, Inc. (the "Holder") is the registered owner of ___
______________________________________ ([______]) common securities of the Trust
representing an undivided beneficial interest in the assets of the Trust and
designated the Common Securities (liquidation amount $10 per Common Security)
(the "Common Securities"). EXCEPT IN ACCORDANCE WITH 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 Amended and Restated Trust Agreement of the Trust dated
as of _______, 1998, 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 Trust will furnish a copy of the Trust Agreement 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.
[remainder of page intentionally left blank]
<PAGE> 2
IN WITNESS WHEREOF, an Administrative Trustee (as defined in the Trust
Agreement) of the Trust has executed this certificate this ____ day of _______,
1998.
AMERICAN COIN MERCHANDISING TRUST I
By:
--------------------------------
Name: Jerome M. Lapin
Title: Administrative Trustee
2
<PAGE> 1
EXHIBIT 4.15
AMERICAN COIN MERCHANDISING, INC.
_______ % JUNIOR SUBORDINATED DEFERRABLE
INTEREST DEBENTURE DUE _________________, 2028
Registered No. D-1 Principal Amount: $___________________
AMERICAN COIN MERCHANDISING, INC., a corporation organized and existing
under the laws of Delaware (hereinafter called the "Company", which term
includes any successor corporation under the Indenture hereinafter referred
to), for value received, hereby promises to pay to Wilmington Trust Company, as
Property Trustee, for AMERICAN COIN MERCHANDISING TRUST I, or registered
assigns, the principal sum of ______________________________________________
___________ ($_________) on __________________, 2028; provided that the Company
may shorten the Stated Maturity of the principal of this Security to a date not
earlier than _______________, 2003. The Company further promises to pay
interest, compounded quarterly, on said principal sum from the date of original
issuance 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 (subject to deferral as set forth herein) in arrears on the 15th day
of each January, April, July and October of each year commencing October 15,
1998 at the rate of ____% per annum, until the principal hereof shall have
become due and payable, plus Additional Interest, if any, until the principal
hereof is paid or duly provided for or made available for payment and on any
overdue principal and (without duplication and to the extent that payment of
such interest is enforceable under applicable law) on any overdue installment
of interest at the rate of ____% per annum, compounded quarterly. The amount
of interest payable for any period shall be computed on the basis of twelve 30-
day months and a 360-day year. The amount of interest payable for any partial
period shall be computed on the basis of the number of days elapsed in a 360-
day year of twelve 30-day months. In the event that any date on which interest
is payable on this Security is not a Business Day, then a payment of the
interest payable on such date will be made on the next succeeding day which is
a Business Day (and without any interest or other payment in respect of any
such delay), with the same force and effect as if made on the date the payment
was originally payable. A "Business Day" shall mean any day other than a
Saturday or Sunday or a day on which banking institutions in the State of
Colorado are authorized or required by law or executive order to remain closed
or on a day on which the Corporate Trust Office of the Trustee, or the
principal office of the Property Trustee under the Trust Agreement (hereinafter
referred to) for AMERICAN COIN MERCHANDISING TRUST I is closed for business.
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 Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest installment, which shall be the next Business Day 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
Security (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to holders of Securities
of this series not less
<PAGE> 2
than 10 days prior to such Special Record Date, or be paid at any time in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities of this series may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in said
Indenture.
So long as no Event of Default has occurred and is continuing, the
Company shall have the right at any time during the term of this Security to
defer payment of interest on this Security, at any time or from time to time,
for up to 20 consecutive quarterly interest payment periods with respect to
each deferral period (each an "Extension Period"), (during which Extension
Periods the Company shall have the right to make partial 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 thereon to
the extent permitted by applicable law)); provided, however, that no Extension
Period shall extend beyond the Stated Maturity of the principal of this
Security; provided, further, that during any such Extension Period, the Company
shall not, and shall not permit any Subsidiary of the Company 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 Company's capital stock
(which includes common and preferred stock), (ii) make any payment of principal
of or interest or premium, if any, on or repay, repurchase or redeem any debt
security of the Company (including Securities issued by the Company pursuant to
the Indenture other than the Securities represented by this certificate) that
ranks pari passu with or junior in interest to this Security, or make any
guarantee payments with respect to any guarantee by the Company of the debt
securities of any Subsidiaries of the Company if such guarantee ranks pari
passu in all respects with or junior in interest to this Security (other than
(a) dividends or distributions in capital stock of the Company (which includes
common and preferred stock), (b) any declaration of a dividend in connection
with the implementation of a stockholders' rights plan, or the issuance of
stock under any such plan in the future or the redemption or repurchase of any
such rights pursuant thereto, (c) payments under the American Coin
Merchandising Guarantee related to the Trust Preferred Securities issued by
AMERICAN COIN MERCHANDISING TRUST I, and (d) purchases of Common Stock related
to the issuance of Common Stock or rights under any of the Company's benefit
plans for its directors, officers, employees or consultants), or (iv) redeem,
purchase or acquire less than all of the Securities represented by this
certificate or any of the Preferred Securities. Prior to the termination of
any such Extension Period, the Company may further extend such Extension
Period, provided that such extension does not cause such Extension Period to
exceed 20 consecutive quarterly interest payment periods or to extend beyond
the Stated Maturity. Upon the termination of any such Extension Period and
upon the payment of all amounts then due on any Interest Payment Date, and
subject to the foregoing limitation, the Company may elect to begin a new
Extension Period. 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 of AMERICAN COIN MERCHANDISING
TRUST I notice of its election to begin any Extension Period (or an extension
thereof) at least one Business Day prior to the earlier of (i) the date on
which Distributions on the Preferred Securities would be payable except for the
election to begin or extend such Extension Period, or (ii) the date the
Administrative Trustees are required to give notice to the American Stock
Exchange, the New York Stock Exchange, the Nasdaq Stock Market or other
applicable stock exchange or automated quotation system on which the Preferred
Securities are then listed or quoted or to
2
<PAGE> 3
holders of such Preferred Securities on the record date, or (iii) the date such
Distributions are payable, but in any event not less than one Business Day
prior to such record date. The Trustee shall give notice of the Company's
election to begin a new Extension Period to the holders of the Securities.
There is no limitation on the number of times that the Company may elect to
begin an Extension Period.
Payment of the principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Trustee or at the office
of such paying agent or paying agents as the Company may designate from time to
time, maintained for that purpose in the United states, 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 (i) by check mailed to
the address of the Person entitled thereto as such address shall appear in the
Securities Register or (ii) by transfer to an account maintained by the Person
entitled thereto, 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 Security is, to the extent provided
in the Indenture, unsecured and will rank junior and subordinate and subject in
right of payments to the prior payment in full of all Senior Debt and
Subordinated Debt, and this Security is issued subject to the provisions of the
Indenture with respect thereto. Each Holder of this Security, 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 and Subordinated Debt, whether now outstanding or hereafter
incurred, and waives reliance by each such holder upon said provisions.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
Terms used but not defined herein have the meanings set forth in the
Indenture.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
3
<PAGE> 4
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
AMERICAN COIN MERCHANDISING, INC.,
a Delaware corporation
By:
----------------------------------
Name: Jerome M. Lapin
Title: President and Chief
Executive Officer
Attest:
- ------------------------------
Name: Randall J. Fagundo
Title: Secretary
4
<PAGE> 5
REVERSE OF SECURITY
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or
more series under a Junior Subordinated Indenture, dated as of [______] __, 1998
(herein called the "Indenture"), between the Company and Wilmington Trust
Company, as Trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Trustee,
the Company and the Holders of the Securities, and of the terms upon which the
Securities are, and are to be, authenticated and delivered. This Security is
one of the series designated on the face hereof, limited in aggregate principal
amount to $_________.
All terms used in this Security that are defined in the Indenture and in
the Amended and Restated Trust Agreement, dated as of _________________, 1998,
as amended (the "Trust Agreement"), for AMERICAN COIN MERCHANDISING TRUST I
among the Company, as depositor, the Trustees named therein and the holders,
from time to time, of undivided beneficial interests in the assets of AMERICAN
COIN MERCHANDISING TRUST I, shall have the meanings assigned to them in the
Indenture or the Trust Agreement, as the case may be.
The Company may at any time, at its option, on or after _______________,
2003, and subject to the terms and conditions of Article XI of the Indenture,
redeem this Security in whole at any time or in part from time to time, without
premium or penalty, at a redemption price equal to the accrued and unpaid
interest on the Security so redeemed to the Redemption Date, plus 100% of the
principal amount thereof.
Upon the occurrence and during the continuation of a Tax Event or
Investment Company Event in respect of AMERICAN COIN MERCHANDISING TRUST I, the
Company may, at its option, at any time within 90 days of the occurrence of
such Tax Event or Investment Company Event, redeem this Security, in whole but
not in part, subject to the provisions of Section 11.7 and the other provisions
of Article XI of the Indenture, at a redemption price equal to the accrued and
unpaid interest on the Security so redeemed to the Redemption Date, plus 100%
of the principal amount thereof.
In the event of redemption of this Security in part only, a new Security
or Securities of this series for the portion hereof not redeemed will be issued
in the name of the Holder hereof upon the cancellation hereof.
The Indenture contains provisions for satisfaction and discharge of the
entire indebtedness of this Security upon compliance by the Company with
certain conditions set forth in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
Company and the Trustee at any time to enter into a supplemental indenture or
indentures for the purpose of modifying in any manner the rights and
obligations of the Company and of the Holders of the Securities, with the
consent of the Holders of not less than a majority in principal amount of the
5
<PAGE> 6
Outstanding Securities of each series to be affected by such supplemental
indenture. The Indenture also contains provisions permitting Holders of
specified percentages in principal amount of the Securities of each series at
the time Outstanding, on behalf of the Holders of all Securities of such
series, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Security shall be conclusive
and binding upon such Holder and upon all future Holders of this Security and
of any Security issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Security.
As provided in and subject to the provisions of the Indenture, if an
Event of Default with respect to the Securities of this series at the time
Outstanding occurs and is continuing, then and in every such case the Trustee
or the Holders of not less than 25% in principal amount of the Outstanding
Securities of this series may declare the principal amount of all the
Securities of this series to be due and payable immediately, by a notice in
writing to the Company (and to the Trustee if given by Holders), provided that,
in the case of the Securities of this series issued to AMERICAN COIN
MERCHANDISING TRUST I, if upon an Event of Default, the Trustee or the Holders
of not less than 25% in principal amount of the Outstanding Securities of this
series fails to declare the principal of all the Securities of this series 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 the principal amount of and the accrued interest (including any
Additional Interest) on all the Securities of this series shall become
immediately due and payable, provided that the payment of principal and
interest (including any Additional Interest) on such Securities shall remain
subordinated to the extent provided in Article XIII of the Indenture.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of (and premium, if any)
and interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Securities
Register, upon surrender of this Security 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 Securities of this series, 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 Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Security is registered as the owner hereof for
all purposes, whether or not this Security be
6
<PAGE> 7
overdue, and neither the Company, the Trustee nor any such agent shall be
affected by notice to the contrary.
The Securities of this series are issuable only in registered form
without coupons in minimum denominations of $10 and any integral multiples of
$10 in excess thereof. As provided in the Indenture and subject to certain
limitations therein set forth, Securities of this series are exchangeable for a
like aggregate principal amount of Securities of such series of a different
authorized denomination, as requested by the Holder surrendering the same.
The Company and, by its acceptance of this Security or a beneficial
interest therein, the Holder of, and any Person that acquires a beneficial
interest in, this Security agree that for United States Federal, state and
local tax purposes it is intended that this Security constitute indebtedness.
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO CONFLICT
OF LAWS PRINCIPLES THEREOF.
This is one of the Securities referred to in the within mentioned
Indenture.
Dated: , 1998
--------------------
WILMINGTON TRUST COMPANY,
as Trustee
By:
------------------------------
Authorized Officer
7
<PAGE> 1
EXHIBIT 4.16
AMERICAN COIN MERCHANDISING, INC.
__% JUNIOR SUBORDINATED DEFERRABLE INTEREST
DEBENTURES DUE _______, 2028
OFFICERS' CERTIFICATE AND COMPANY ORDER
Pursuant to the Indenture dated as of August ___, 1998 (the
"Indenture"), between American Coin Merchandising, Inc., a Delaware corporation
(the "Company") and Wilmington Trust Company, as Trustee (the "Debenture
Trustee") and action of the Company's Board of Directors on ______, 1998; this
Officers' Certificate is being delivered to the Debenture Trustee to establish
the terms of one series of securities (the "Securities") in accordance with
Section 3.1 of the Indenture, to establish the form of the Securities of such
series in accordance with Section 2.1 of the Indenture, to request the
authentication and delivery of the Securities of such series pursuant to Section
3.3 of the Indenture and to comply with the provisions of Section 1.2 of the
Indenture. This Officers' Certificate shall be treated for all purposes under
the Indenture as a supplemental indenture thereto.
All conditions precedent provided for in the Indenture relating to the
establishment of (i) a series of Securities and (ii) the form of Securities of
such series have been complied with.
Capitalized terms used but not otherwise defined herein shall have the
meanings assigned to them in the Indenture.
I. Establishment of Series of Securities Pursuant to Section 3.1
of the Indenture.
There are hereby established pursuant to Section 3.1 of the Indenture a
series of Securities which shall have the following terms:
A. The Securities of such series shall bear the title ______%
Junior Subordinated Deferrable Interest Debentures Due ______, 2028.
B. The aggregate principal amount of such series of Securities
to be issued pursuant to this Officers' Certificate and Company Order shall be
limited to the sum of (i) $____________ (except for Securities authenticated
and delivered upon registration of, transfer of, or in exchange for, or in lieu
of, other Securities of such series pursuant to Section 3.4, 3.5, 3.6, 9.6 or
11.6 of the Indenture and except for any Securities which, pursuant to Section
3.3 of the Indenture, are deemed never to have been authenticated and delivered
thereunder).
C. The date on which the principal of the Securities is due
and payable shall be ______, 2028.
D. The Securities shall bear interest at the rate of % per
annum (based upon a 360-day year of twelve 30-day months), compounded quarterly,
from and including the date of original issuance or from and including the most
recent Interest Payment Date to which
<PAGE> 2
interest has been paid or duly provided for, as the case may be, payable
quarterly in arrears on the 15th day of each January, April, July and October of
each year (each, an "Interest Payment Date"), commencing October 15, 1998, until
the principal thereof is paid or made available for payment. The Business Day
next preceding an Interest Payment Date shall be the "Regular Record Date" for
the interest payable on such Interest Payment Date. Accrued interest that is not
paid on such applicable Interest Payment Date will bear additional interest on
the amount thereof (to the extent permitted by law) at a rate per annum of %
thereof compounded quarterly.
In addition, so long as no Event of Default with respect to
the Securities has occurred or is continuing, the Company has the right under
the Indenture at any time during the term of such Securities to defer the
payment of interest at any time or from time to time for a period not exceeding
20 consecutive quarterly periods with respect to each Extension Period, provided
that no Extension Period may extend beyond the Stated Maturity. At the end of
such Extension Period, the Company must pay all interest then accrued and unpaid
(together with interest thereon at the annual rate of %, compounded quarterly,
to the extent permitted by applicable law).
E. Principal of (and premium, if any) and interest on the
Securities will be payable, and, except as provided in Section 3.5 of the
Indenture with respect to a Global Security (as defined below), the transfer of
the Securities will be registrable and Securities (except as provided in
paragraph (O) hereof) will be exchangeable for Securities bearing identical
terms and provisions at the corporate trust office of Wilmington Trust Company
in the City of Wilmington, Delaware.
F. The Securities will be redeemable in whole at any time and
in part from time to time, at the option of the Company at any time on or after
______, 2003, at a redemption price equal to the accrued and unpaid interest on
the Securities so redeemed to the date fixed for redemption, plus 100% of the
principal amount thereof.
In addition, upon the occurrence of a Tax Event or an
Investment Company Event (as each such term is defined below) the Company may,
at its option, prepay the Securities in whole (but not in part) at any time
within 90 days of the occurrence of such Tax Event or Investment Company Event,
at a redemption price equal to the accrued and unpaid interest on the Securities
so redeemed to the date fixed for redemption, plus 100% of the principal amount
thereof.
"Tax Event" means the receipt by the Company and the Trust of
an opinion of counsel experienced in such matters 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, 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
which pronouncement or decision is announced on or after the date of issuance of
the Preferred Securities of the Trust, there is more than an insubstantial risk
that (i) the Trust is, or will be within 90 days of the
2
<PAGE> 3
date of such opinion, subject to United States Federal income tax with respect
to income received or accrued on the Securities, (ii) interest payable by the
Company on the Securities is not, or within 90 days of the date of such opinion,
will not be, deductible by the Company, 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 of such opinion, subject to more than a de minimis amount of other
taxes, duties or other governmental charges.
"Investment Company Event" means, in respect of the Trust, the
receipt by the Company and the Trust of an Opinion of Counsel, rendered by a law
firm experienced in such matters, to the extent 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, the Trust is or will be considered an "investment company" that is
required to be registered under the 1940 Act, which change becomes effective on
or after the date of original issuance of the Preferred Securities of the Trust.
G. The Company shall not be obligated to redeem or purchase
any Securities pursuant to any sinking fund or analogous provisions or at the
option of the Holder.
H. The Securities will be issued only in fully registered form
and the authorized minimum denomination of the Securities shall be $10.00 and
any integral multiple of $10.00 in excess thereof.
I. The Securities shall be denominated, and payments of
principal of (and premium, if any) and interest on the Securities of such series
will be made, in United States dollars.
J. The Securities shall be subject to the Events of Default
specified in Section 5.1, paragraphs (a) through (e), of the Indenture.
K. The Securities will be issued in fully registered form,
without coupons. The Securities will not be issued in bearer form.
L. The amount of payments of principal of and any premium or
interest on the Securities will not be determined with reference to an index.
M. The Securities will initially be in certificated form
registered in the name of Wilmington Trust Company as Property Trustee for the
Trust (the "Certificated Securities"). The Securities may, in the sole
discretion of the Company, be deposited with, and on behalf of, The Depository
Trust Company, New York, New York, as Depositary, and will be represented by a
global security (a "Global Security") registered in the name of a nominee of the
Depositary. If and so long as the Depositary or its nominee is the registered
holder of any Global Security, the Depositary or its nominee, as the case may
be, will be considered the sole Holder of the Securities of such series
represented by such Global Security for all purposes under the Indenture and the
Securities. The Certificated Securities shall bear no legends.
N. The Trustee shall be Paying Agent.
O. The Securities will not be convertible into any other
securities or property of the Company. The Securities may not be exchanged for
securities of any other series.
3
<PAGE> 4
P. The Trust Agreement, the Amended and Restated Trust
Agreement and the Guarantee Agreement are in the forms attached hereto as
Exhibits A, B and C respectively.
Q. The Securities are 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 and Subordinated Debt, as provided in the Indenture.
II. Establishment of Forms of Securities Pursuant to Section 2.1
of Indenture.
It is hereby established pursuant to Section 2.1 of the Indenture that
the Securities shall be substantially in the form attached as Exhibit D hereto.
III. Order for the Authentication and Delivery of Securities
Pursuant to Section 3.3 of the Indenture.
It is hereby ordered pursuant to Section 3.3 of the Indenture that the
Trustee authenticate, in the manner provided by the Indenture, Securities in the
aggregate principal amount of $____________ registered in the name of Wilmington
Trust Company, as Property Trustee, which Securities have been heretofore duly
executed by the proper officers of the Company and delivered to you as provided
in the Indenture, and to deliver said authenticated Securities to Wilmington
Trust Company or its custodian on or before 9:30 a.m., Colorado time, on
__________, 1998.
IV. Other Matters.
Attached as Exhibits ______ hereto are true and correct copies of
[insert any consents or Board action] adopting the issuance of the Securities.
Such consents and action have not been further amended, modified or rescinded
and remain in full force and effect; and such consents and action (together with
this Officers' Certificate) are the only resolutions or other action adopted by
the Company's Board of Directors or any committee thereof or by any authorized
officers relating to the offering and sale of the Securities.
The undersigned have read the pertinent sections of the Indenture
including the related definitions contained therein. The undersigned have
examined the resolutions adopted by the Board of Directors of the Company. In
the opinion of the undersigned, the undersigned have made such examination or
investigation as is necessary to enable the undersigned to express an informed
opinion as to whether or not the conditions precedent to the establishment of
(i) a series of Securities, (ii) the forms of such Securities and (iii)
authentication of such series of Securities, contained in the Indenture have
been complied with. In the opinion of the undersigned, such conditions have been
complied with.
4
<PAGE> 5
IN WITNESS WHEREOF, the undersigned have executed this Certificate this
______ day of ______ 1998.
AMERICAN COIN MERCHANDISING, INC.
By:
--------------------------------------------
Name: Jerome M. Lapin
Title: President and Chief Executive Officer
By:
--------------------------------------------
Name: Randall J. Fagundo
Title: Vice President and Secretary
5
<PAGE> 1
EXHIBIT 5.1
[Letterhead of Cooley Godward LLP]
August 18, 1998
American Coin Merchandising, Inc.
5660 Central Avenue
Boulder, Colorado 80301
Re: American Coin Merchandising, Inc. Registration Statement on Form S-3
Dear Sir or Madam:
We have acted as counsel for American Coin Merchandising, Inc. (the "Company"),
in connection with the preparation and filing with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, of the Registration
Statement on Form S-3, Registration No. 333-60267 (as amended, the "Registration
Statement"). The Registration Statement relates to, among other things, (i) the
offer and sale of up to 5,750,000 Cumulative Trust Preferred Securities (the
"Trust Preferred Securities") of American Merchandising Trust I, a Delaware
statutory business trust (the "Trust"), (ii) certain Junior Subordinated
Debentures to be issued by the Company to the Trust in connection with the
issuance of the Trust Preferred Securities, and (iii) a Guarantee Agreement to
be made by Company in favor of Wilmington Trust Company (the "Trustee"), for the
benefit of the holders of the Trust Preferred Securities (the "Guarantee"). We
are rendering this opinion at the request of Company. Except as otherwise
defined herein, capitalized terms used but not defined herein have the meanings
given to them in the Registration Statement.
We have examined the Registration Statement, the form of Indenture governing the
Junior Subordinated Debentures, the form of Junior Subordinated Debentures and
the form of the Guarantee. We have also examined such other documents as we have
deemed necessary to render our opinions expressed below. In our examination, we
have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, and the conformity to originals of all
documents submitted to us as copies.
In rendering the opinions expressed below, we have assumed that (a) all of the
documents referred to in this opinion letter have been or will be duly executed
delivered and authenticated by and (except to the extent set forth below as to
the Company) constitute legal, binding and enforceable obligations of all of the
parties to such documents, (b) all of the signatories to such documents have
been or will be duly authorized and (c) all the parties to such documents have
(except to the extent set forth below as to the Company) been duly organized and
are validly existing and have the power and authority (corporate and otherwise)
to execute and perform such documents.
<PAGE> 2
American Coin Merchandising, Inc.
Page Two
On the basis of the foregoing assumptions, and subject to the qualifications set
forth below, we are of the opinion that:
1. The Company is a validly existing corporation under the laws of the
State of Delaware.
2. The Guarantee, when executed and delivered as set forth in the
Registration Statement, and the Junior Subordinated Debentures, when issued,
sold and paid for as set forth in the Registration Statement, will constitute
valid and binding obligations of Company, enforceable against Company according
to their terms.
-------------------------
Our opinion in paragraph 2 above is subject to and limited by the qualification
that the enforcement of the Guarantee may be limited by (a) general equity
principles and the limitations on the availability of equitable relief,
including, without limitation, specific performance; (b) the effect of
applicable bankruptcy, insolvency, fraudulent transfer or conveyance,
reorganization, arrangement, suretyship, dissolution, moratorium, receivership
or other similar laws relating to or affecting creditor's rights generally; (c)
limitations created by or arising under statute or case law on a debtor's or
surety's ability to waive rights or benefits, including without limitation, the
possible right of exoneration of a guarantor if the creditor materially alters
the original obligation of the principal without the consent of the guarantor,
elects remedies for default that impair the subrogation or reimbursement rights
of the guarantor against the principal, or otherwise takes, without notifying
the guarantor, any action that materially prejudices such guarantor; (d)
limitations created by or arising under statute or case law on the
enforceability of certain covenants and provisions of agreements where (i) the
breach of such covenants or provisions imposes restrictions or burdens upon the
debtor or surety and it cannot be demonstrated that the enforcement of such
restrictions or burdens is reasonably necessary for the protection of the
creditor or (ii) the creditor's enforcement of such covenants or provisions
under the circumstances would violate the creditor's implied covenant of good
faith and fair dealing; (e) limitations on the right of a lender to impose added
charges for late payments or defaults by the borrower, where it is determined
that such charges bear no reasonable relation to the damage suffered by the
lender as a result of such late payments or defaults or where the requirements
of California Civil Code Section 2954.5 are not met; (f) the effect of
California Civil Code Section 1717 on the recovery of attorneys' fees in
contract actions; (g) the effect of California Civil Code Section 3433; (h)
limitations imposed by law and public policy on indemnification and exculpation;
(i) defenses available to guarantors generally; and (j) any other limitations
which, in the event of any default by the Company in its obligations under the
Junior Subordinated Debentures or the Guarantee, would act as a limitation on
the rights of the Trustee in accordance with California law, but which would not
prevent the Trustee from exercising legally adequate remedies for realization of
the principal benefits intended to be provided by the Junior Subordinated
Debentures or the Guarantee.
<PAGE> 3
American Coin Merchandising, Inc.
Page Three
We advise you that, under certain circumstances, a guaranty executed by a
corporate shareholder of a corporate borrower may not be enforced as an
obligation separate from the obligation guaranteed if it is determined that the
borrower is merely an alter ego or nominee of the Company and that the "true"
borrower is the Company. If the Company is deemed to be liable as a primary
obligor, it is likely that the Company will also be entitled to the rights and
defenses otherwise available to a primary obligor.
Our opinions are expressed with respect only to the laws of the State of
California and the General Corporation Law of the State of Delaware, and we do
not express any opinion as to the laws of any other jurisdiction. This opinion
letter may not be relied upon for any purpose other than in connection with the
transactions contemplated by the Registration Statement without our prior
written consent in each instance. We hereby consent to the filing of this
opinion letter as an exhibit to the Registration Statement and further consent
to the references to our name in the Registration Statement and any amendments
thereto.
Very truly yours,
Cooley Godward LLP
By /s/ James H. Carroll
-------------------------------
James H. Carroll
<PAGE> 1
EXHIBIT 5.2
[Letterhead of Richards, Layton & Finger, P.A.]
August 18, 1998
American Coin Merchandising, Inc.
5660 Central Avenue
Boulder, CO 80301
Re: American Coin Merchandising Trust I
Ladies and Gentlemen:
We have acted as special Delaware counsel for American Coin
Merchandising, Inc. (the "Company") and American Coin Merchandising Trust I, a
Delaware business trust ("Trust I"), in connection with the matters set forth
herein. At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of Trust I, as filed with
the office of the Secretary of State of the State of
Delaware (the "Secretary of State") on July 22, 1998;
(b) The Trust Agreement of Trust I, dated as of July 22,
1998 among the Company and the trustees named
therein;
(c) The Registration Statement (the "Registration
Statement") on Form S-3, including a preliminary
prospectus with respect to the Trusts (the
"Prospectus"), relating to the Trust Preferred
Securities of the Trust representing preferred
undivided beneficial interests in the assets of the
Trusts (each, a "Trust Preferred Security" and
collectively, the "Trust Preferred Securities"),
filed by the Company and the Trust with the
Securities and Exchange Commission;
<PAGE> 2
American Coin Merchandising, Inc.
August 18, 1998
Page 2
(d) A form of Amended and Restated Trust Agreement for
the Trust, to be entered into between the Company,
the trustees of the Trust named therein, and the
holders, from time to time, of the undivided
beneficial interests in the assets of such Trust (the
"Trust Agreement", attached as an exhibit to the
Registration Statement; and
(e) A Certificate of Good Standing for the Trust, dated
August 18, 1998, obtained from the Secretary of
State.
Initially capitalized terms used herein and not otherwise
defined are used as defined in the Trust Agreement.
For purposes of this opinion, we have not reviewed any
documents other than the documents listed in paragraphs (a) through (e) above.
In particular, we have not reviewed any document (other than the documents
listed in paragraphs (a) through (e) above) that is referred to in or
incorporated by reference into the documents reviewed by us. We have assumed
that there exists no provision in any document that we have not reviewed that is
inconsistent with the opinions stated herein. We have conducted no independent
factual investigation of our own but rather have relied solely upon the
foregoing documents, the statements and information set forth therein and the
additional matters recited or assumed herein, all of which we have assumed to be
true, complete and accurate in all material respects.
With respect to all documents examined by us, we have assumed
(i) the authenticity of all documents submitted to us as authentic originals,
(ii) the conformity with the originals of all documents submitted to us as
copies or forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the
Trust Agreement will constitute the entire agreement among the parties thereto
with respect to the subject matter thereof, including with respect to the
creation, operation and termination of the Trust, and that the Trust Agreement
and the Certificate of Trust will be in full force and effect and will not be
amended, (ii) except to the extent provided in paragraph 1 below, the due
organization or due formation, as the case may be, and valid existence in good
standing of each party to the documents examined by us under the laws of the
jurisdiction governing its organization or formation, (iii) the legal capacity
of natural persons who are parties to the documents examined by us, (iv) that
each of the parties to the documents examined by us has the power and authority
to execute and deliver, and to perform its obligations under, such documents,
(v) the due authorization, execution and delivery by all parties thereto of all
documents examined by us, (vi) the receipt by each Person to whom a Trust
Preferred Security is to be issued by the Trust (collectively, the "Trust
Preferred Security Holders") of a Trust Preferred Security Certificate for
<PAGE> 3
American Coin Merchandising, Inc.
August 18, 1998
Page 3
such Trust Preferred Security and the payment for such Trust Preferred Security,
in accordance with the Trust Agreement and the Registration Statement, and (vii)
that the Trust Preferred Securities are authenticated, issued and sold to the
Trust Preferred Security Holders in accordance with the Trust Agreement and the
Registration Statement. We have not participated in the preparation of the
Registration Statement or the Prospectus and assume no responsibility for their
contents.
This opinion is limited to the laws of the State of Delaware
(excluding the securities laws of the State of Delaware), and we have not
considered and express no opinion on the laws of any other jurisdiction,
including federal laws and rules and regulations relating thereto. Our opinions
are rendered only with respect to Delaware laws and rules, regulations and
orders thereunder which are currently in effect.
Based upon the foregoing, and upon our examination of such
questions of law and statutes of the State of Delaware as we have considered
necessary or appropriate, and subject to the assumptions, qualifications,
limitations and exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in
good standing as a business trust under the Delaware Business Trust Act (12 Del.
C. Section 3801 et seq.).
2. The Trust Preferred Securities of the Trust will represent
valid and, subject to the qualifications set forth in paragraph 3 below, fully
paid and nonassessable undivided beneficial interests in the assets of the
Trust.
3. The Trust Preferred Security Holders, 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. We note that the Trust
Preferred Security Holders may be obligated to make payments as set forth in the
Trust Agreement.
<PAGE> 4
American Coin Merchandising, Inc.
August 18, 1998
Page 4
We consent to the filing of this opinion with the Securities
and Exchange Commission as an exhibit to the Registration Statement. In
addition, we hereby consent to the use of our name under the heading "Legal
Matters" in the Prospectus. In giving the foregoing consents, we do not thereby
admit that we come within the category of persons whose consent is required
under Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission thereunder. Except as
stated above, without our prior written consent, this opinion may not be
furnished or quoted to, or relied upon by, any other person for any purpose.
Very truly yours,
/s/ Richards, Layton & Finger, P.A.
GCK
<PAGE> 1
EXHIBIT 8
[Letterhead of Cooley Godward LLP]
August 18, 1998
American Coin Merchandising, Inc.
5660 Central Avenue
Boulder, Colorado 80301
Ladies and Gentlemen:
We have acted as counsel for American Coin Merchandising, Inc. (the "Company"),
in connection with the preparation and filing with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, of the Registration
Statement on Form S-3, Registration No. 333-60267 (as amended, the "Registration
Statement"). The Registration Statement relates to, among other things, (i) the
offering and sale of up to 5,750,000 Cumulative Trust Preferred Securities (the
"Trust Preferred Securities") of American Merchandising Trust I, a Delaware
statutory business trust (the "Trust"), (ii) certain Junior Subordinated
Debentures to be issued by the Company to the Trust in connection with the
issuance of the Trust Preferred Securities, and (iii) a Guarantee Agreement to
be made by Company in favor of Wilmington Trust Company (the "Trustee"), for the
benefit of the holders of the Trust Preferred Securities (the "Guarantee").
At your request, we have reviewed the discussion entitled "Material Federal
Income Tax Consequences" contained in the Registration Statement and are of the
opinion that, subject to the qualifications and limitations contained therein,
such information fairly presents the current United States federal income tax
law applicable to the Trust and the material United States federal tax
consequences to a United States person of the purchase, ownership and
disposition of the Trust Preferred Securities and insofar as it relates to
statements of law or legal conclusions is correct in all material respects.
We consent to the reference to our firm under the caption "Material Federal
Income Tax Consequences" and to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
Cooley Godward LLP
/s/ Webb B. Morrow III
Webb B. Morrow III
<PAGE> 1
EXHIBIT 12
American Coin Merchandising, Inc.
Calculation of Ratios of Earnings to Combined Fixed Charges and
Preferred Stock Dividends
(amounts in thousands, except for ratios)
(unaudited)
<TABLE>
<CAPTION>
Six Months
Year Ended December 31, Ended June 30,
--------------------------------- ---------------
1997 1996 1995 1994 1993 1997 1998
--------------------------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings before income taxes $ 6,685 3,897 2,904 1,082 321 2,804 3,935
Add:
Interest on debt, including interest to
related parties 612 375 383 228 115 267 479
Interest portion of rentals 163 92 63 43 23 82 108
Losses of less than 50%- owned affiliate - - 27 29 24 - -
--------------------------------- -------------
Earnings available for combined fixed charges
and preferred stock dividends $ 7,460 4,364 3,377 1,382 483 3,153 4,522
================================= =============
Fixed charges:
Interest on debt 612 375 383 228 115 267 479
Interest portion of rentals 163 92 63 43 23 82 108
--------------------------------- -------------
Total Combined Fixed Charges $ 775 467 446 271 138 349 587
================================= =============
Ratio of earnings to combined fixed charges
and preferred stock dividends 9.6 9.3 7.6 5.1 3.5 9.0 7.7
</TABLE>
<PAGE> 1
EXHIBIT 23.1
Consent of Independent Auditors
-------------------------------
The Board of Directors
American Coin Merchandising, Inc.:
We consent to the use of our report included herein and to the references to
our firm under the heading "Experts" in the prospectus and prospectus
supplement.
/s/ KPMG Peat Marwick LLP
--------------------------
KPMG Peat Marwick LLP
Boulder, Colorado
August 18, 1998
<PAGE> 1
EXHIBIT 23.2
Consent of Independent Accountants
We consent to the inclusion and incorporation by reference in the registration
statement of American Coin Merchandising, Inc. on Form S-3 of our report dated
May 20, 1998, on our audits of the combined financial statements of Suncoast
Toys, Inc., NW Toys Co., and Oregon Coin Company as of December 31, 1997 and
1996 and for the years ended December 31, 1997, 1996 and 1995, which report is
also included in Amendment No. 1 to the current report on Form 8-K/A of American
Coin Merchandising, Inc., dated July 23, 1998. We also consent to the reference
to our firm under the caption "Experts."
/s/ PricewaterhouseCoopers LLP
August 18, 1998
<PAGE> 1
EXHIBIT 25.1
Registration No.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2) X
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
AMERICAN COIN MERCHANDISING, INC.
d/b/a SUGARLOAF CREATIONS, INC.
(Exact name of obligor as specified in its charter)
Delaware 84-1093721
(State of incorporation (I.R.S. employer identification no.)
or formation)
5660 Central Avenue
Boulder, Colorado 77002
(Address of principal executive offices) (Zip Code)
Junior Subordinated Debentures of American Coin Merchandising, Inc.
(Title of the indenture securities)
================================================================================
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the
obligor is not an affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which
includes the certificate of authority of Wilmington Trust
Company to commence business and the authorization of
Wilmington Trust Company to exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section
321(b) of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, Wilmington Trust Company, a corporation organized and existing under
the laws of Delaware, has duly caused this Statement of Eligibility to be
signed on its behalf by the undersigned, thereunto duly authorized, all in the
City of Wilmington and State of Delaware on the 14th day of August, 1998.
[SEAL] WILMINGTON TRUST COMPANY
Attest: /s/ Donald G. MacKelcan By: /s/ Emmett R. Harmon
----------------------- ---------------------
Assistant Secretary Name: Emmett R. Harmon
Title: Vice President
<PAGE> 3
EXHIBIT A
AMENDED CHARTER
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON MAY 9, 1987
<PAGE> 4
AMENDED CHARTER
OR
ACT OF INCORPORATION
OF
WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, originally incorporated by an Act of the General
Assembly of the State of Delaware, entitled "An Act to Incorporate the Delaware
Guarantee and Trust Company", approved March 2, A.D. 1901, and the name of
which company was changed to "WILMINGTON TRUST COMPANY" by an amendment filed
in the Office of the Secretary of State on March 18, A.D. 1903, and the Charter
or Act of Incorporation of which company has been from time to time amended and
changed by merger agreements pursuant to the corporation law for state banks
and trust companies of the State of Delaware, does hereby alter and amend its
Charter or Act of Incorporation so that the same as so altered and amended
shall in its entirety read as follows:
FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.
SECOND: - The location of its principal office in the State of Delaware is
at Rodney Square North, in the City of Wilmington, County of New Castle;
the name of its resident agent is WILMINGTON TRUST COMPANY whose address is
Rodney Square North, in said City. In addition to such principal office,
the said corporation maintains and operates branch offices in the City of
Newark, New Castle County, Delaware, the Town of Newport, New Castle
County, Delaware, at Claymont, New Castle County, Delaware, at Greenville,
New Castle County Delaware, and at Milford Cross Roads, New Castle County,
Delaware, and shall be empowered to open, maintain and operate branch
offices at Ninth and Shipley Streets, 418 Delaware Avenue, 2120 Market
Street, and 3605 Market Street, all in the City of Wilmington, New Castle
County, Delaware, and such other branch offices or places of business as
may be authorized from time to time by the agency or agencies of the
government of the State of Delaware empowered to confer such authority.
THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this Corporation are
to do any or all of the things herein mentioned as fully and to the same
extent as natural persons might or could do and in any part of the world,
viz.:
(1) To sue and be sued, complain and defend in any Court of law or
equity and to make and use a common seal, and alter the seal at
pleasure, to hold, purchase, convey, mortgage or otherwise deal in real
and personal estate and property, and to appoint such officers and
agents as the business of the Corporation shall require, to make
by-laws not inconsistent with the Constitution or laws of the
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United States or of this State, to discount bills, notes or other
evidences of debt, to receive deposits of money, or securities for
money, to buy gold and silver bullion and foreign coins, to buy and
sell bills of exchange, and generally to use, exercise and enjoy all
the powers, rights, privileges and franchises incident to a corporation
which are proper or necessary for the transaction of the business of
the Corporation hereby created.
(2) To insure titles to real and personal property, or any estate or
interests therein, and to guarantee the holder of such property, real
or personal, against any claim or claims, adverse to his interest
therein, and to prepare and give certificates of title for any lands or
premises in the State of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the receipt,
collection, custody, investment and management of funds, and the
purchase, sale, management and disposal of property of all
descriptions, and to prepare and execute all papers which may be
necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds, leases,
conveyances, mortgages, bonds and legal papers of every description,
and to carry on the business of conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money, jewelry, plate,
deeds, bonds and any and all other personal property of every sort and
kind, from executors, administrators, guardians, public officers,
courts, receivers, assignees, trustees, and from all fiduciaries, and
from all other persons and individuals, and from all corporations
whether state, municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such property.
(6) To act as agent or otherwise for the purpose of registering,
issuing, certificating, countersigning, transferring or underwriting
the stock, bonds or other obligations of any corporation, association,
state or municipality, and may receive and manage any sinking fund
therefor on such terms as may be agreed upon between the two parties,
and in like manner may act as Treasurer of any corporation or
municipality.
(7) To act as Trustee under any deed of trust, mortgage, bond or other
instrument issued by any state, municipality, body politic,
corporation, association or person, either alone or in conjunction with
any other person or persons, corporation or corporations.
(8) To guarantee the validity, performance or effect of any contract
or agreement, and the fidelity of persons holding places of
responsibility or trust; to become surety for any person, or persons,
for the faithful performance of any
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trust, office, duty, contract or agreement, either by itself or in
conjunction with any other person, or persons, corporation, or
corporations, or in like manner become surety upon any bond,
recognizance, obligation, judgment, suit, order, or decree to be
entered in any court of record within the State of Delaware or
elsewhere, or which may now or hereafter be required by any law, judge,
officer or court in the State of Delaware or elsewhere.
(9) To act by any and every method of appointment as trustee, trustee
in bankruptcy, receiver, assignee, assignee in bankruptcy, executor,
administrator, guardian, bailee, or in any other trust capacity in the
receiving, holding, managing, and disposing of any and all estates and
property, real, personal or mixed, and to be appointed as such trustee,
trustee in bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian or bailee by any persons,
corporations, court, officer, or authority, in the State of Delaware or
elsewhere; and whenever this Corporation is so appointed by any person,
corporation, court, officer or authority such trustee, trustee in
bankruptcy, receiver, assignee, assignee in bankruptcy, executor,
administrator, guardian, bailee, or in any other trust capacity, it
shall not be required to give bond with surety, but its capital stock
shall be taken and held as security for the performance of the duties
devolving upon it by such appointment.
(10) And for its care, management and trouble, and the exercise of any
of its powers hereby given, or for the performance of any of the duties
which it may undertake or be called upon to perform, or for the
assumption of any responsibility the said Corporation may be entitled
to receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages, debentures,
shares of capital stock, and other securities, obligations, contracts
and evidences of indebtedness, of any private, public or municipal
corporation within and without the State of Delaware, or of the
Government of the United States, or of any state, territory, colony, or
possession thereof, or of any foreign government or country; to
receive, collect, receipt for, and dispose of interest, dividends and
income upon and from any of the bonds, mortgages, debentures, notes,
shares of capital stock, securities, obligations, contracts, evidences
of indebtedness and other property held and owned by it, and to
exercise in respect of all such bonds, mortgages, debentures, notes,
shares of capital stock, securities, obligations, contracts, evidences
of indebtedness and other property, any and all the rights, powers and
privileges of individual owners thereof, including the right to vote
thereon; to invest and deal in and with any of the moneys of the
Corporation upon such securities and in such manner as it may think fit
and proper, and from time to time to vary or realize such investments;
to issue bonds and secure the same by pledges or deeds of trust or
mortgages of or upon the whole or any part of the property held or
owned by the Corporation, and to sell and pledge such bonds,
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as and when the Board of Directors shall determine, and in the
promotion of its said corporate business of investment and to the
extent authorized by law, to lease, purchase, hold, sell, assign,
transfer, pledge, mortgage and convey real and personal property of any
name and nature and any estate or interest therein.
(b) In furtherance of, and not in limitation, of the powers conferred by
the laws of the State of Delaware, it is hereby expressly provided that the
said Corporation shall also have the following powers:
(1) To do any or all of the things herein set forth, to the same
extent as natural persons might or could do, and in any part of the
world.
(2) To acquire the good will, rights, property and franchises and to
undertake the whole or any part of the assets and liabilities of any
person, firm, association or corporation, and to pay for the same in
cash, stock of this Corporation, bonds or otherwise; to hold or in any
manner to dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any part of any
business so acquired, and to exercise all the powers necessary or
convenient in and about the conduct and management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien, and to
lease, sell, exchange, transfer, or in any manner whatever dispose of
property, real, personal or mixed, wherever situated.
(4) To enter into, make, perform and carry out contracts of every kind
with any person, firm, association or corporation, and, without limit
as to amount, to draw, make, accept, endorse, discount, execute and
issue promissory notes, drafts, bills of exchange, warrants, bonds,
debentures, and other negotiable or transferable instruments.
(5) To have one or more offices, to carry on all or any of its
operations and businesses, without restriction to the same extent as
natural persons might or could do, to purchase or otherwise acquire, to
hold, own, to mortgage, sell, convey or otherwise dispose of, real and
personal property, of every class and description, in any State,
District, Territory or Colony of the United States, and in any foreign
country or place.
(6) It is the intention that the objects, purposes and powers
specified and clauses contained in this paragraph shall (except where
otherwise expressed in said paragraph) be nowise limited or restricted
by reference to or inference from the terms of any other clause of this
or any other paragraph in this charter, but that the objects, purposes
and powers specified in each of the clauses of this paragraph shall be
regarded as independent objects, purposes and powers.
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FOURTH: - (a) The total number of shares of all classes of stock which the
Corporation shall have authority to issue is forty-one million (41,000,000)
shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par value
$10.00 per share (hereinafter referred to as "Preferred Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par value $1.00
per share (hereinafter referred to as "Common Stock").
(b) Shares of Preferred Stock may be issued from time to time in one or
more series as may from time to time be determined by the Board of
Directors each of said series to be distinctly designated. All shares of
any one series of Preferred Stock shall be alike in every particular,
except that there may be different dates from which dividends, if any,
thereon shall be cumulative, if made cumulative. The voting powers and the
preferences and relative, participating, optional and other special rights
of each such series, and the qualifications, limitations or restrictions
thereof, if any, may differ from those of any and all other series at any
time outstanding; and, subject to the provisions of subparagraph 1 of
Paragraph (c) of this Article FOURTH, the Board of Directors of the
Corporation is hereby expressly granted authority to fix by resolution or
resolutions adopted prior to the issuance of any shares of a particular
series of Preferred Stock, the voting powers and the designations,
preferences and relative, optional and other special rights, and the
qualifications, limitations and restrictions of such series, including, but
without limiting the generality of the foregoing, the following:
(1) The distinctive designation of, and the number of shares of
Preferred Stock which shall constitute such series, which number may be
increased (except where otherwise provided by the Board of Directors)
or decreased (but not below the number of shares thereof then
outstanding) from time to time by like action of the Board of
Directors;
(2) The rate and times at which, and the terms and conditions on
which, dividends, if any, on Preferred Stock of such series shall be
paid, the extent of the preference or relation, if any, of such
dividends to the dividends payable on any other class or classes, or
series of the same or other class of stock and whether such dividends
shall be cumulative or non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of such
series to convert the same into or exchange the same for, shares of any
other class or classes or of any series of the same or any other class
or classes of stock of the Corporation and the terms and conditions of
such conversion or exchange;
(4) Whether or not Preferred Stock of such series shall be subject to
redemption, and the redemption price or prices and the time or times at
which, and the terms and conditions on which, Preferred Stock of such
series may be redeemed.
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(5) The rights, if any, of the holders of Preferred Stock of such
series upon the voluntary or involuntary liquidation, merger,
consolidation, distribution or sale of assets, dissolution or winding-
up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase account,
if any, to be provided for the Preferred Stock of such series; and
(7) The voting powers, if any, of the holders of such series of
Preferred Stock which may, without limiting the generality of the
foregoing include the right, voting as a series or by itself or
together with other series of Preferred Stock or all series of
Preferred Stock as a class, to elect one or more directors of the
Corporation if there shall have been a default in the payment of
dividends on any one or more series of Preferred Stock or under such
circumstances and on such conditions as the Board of Directors may
determine.
(c) (1) After the requirements with respect to preferential dividends on
the Preferred Stock (fixed in accordance with the provisions of section (b)
of this Article FOURTH), if any, shall have been met and after the
Corporation shall have complied with all the requirements, if any, with
respect to the setting aside of sums as sinking funds or redemption or
purchase accounts (fixed in accordance with the provisions of section (b)
of this Article FOURTH), and subject further to any conditions which may be
fixed in accordance with the provisions of section (b) of this Article
FOURTH, then and not otherwise the holders of Common Stock shall be
entitled to receive such dividends as may be declared from time to time by
the Board of Directors.
(2) After distribution in full of the preferential amount, if any,
(fixed in accordance with the provisions of section (b) of this Article
FOURTH), to be distributed to the holders of Preferred Stock in the
event of voluntary or involuntary liquidation, distribution or sale of
assets, dissolution or winding-up, of the Corporation, the holders of
the Common Stock shall be entitled to receive all of the remaining
assets of the Corporation, tangible and intangible, of whatever kind
available for distribution to stockholders ratably in proportion to the
number of shares of Common Stock held by them respectively.
(3) Except as may otherwise be required by law or by the provisions of
such resolution or resolutions as may be adopted by the Board of
Directors pursuant to section (b) of this Article FOURTH, each holder
of Common Stock shall have one vote in respect of each share of Common
Stock held on all matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock or of
options, warrants or other rights to purchase shares of any class or series
of stock or of other securities of the Corporation shall have any
preemptive right to purchase or subscribe for any unissued stock of any
class or series or any additional shares of any class or series to be
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issued by reason of any increase of the authorized capital stock of the
Corporation of any class or series, or bonds, certificates of indebtedness,
debentures or other securities convertible into or exchangeable for stock
of the Corporation of any class or series, or carrying any right to
purchase stock of any class or series, but any such unissued stock,
additional authorized issue of shares of any class or series of stock or
securities convertible into or exchangeable for stock, or carrying any
right to purchase stock, may be issued and disposed of pursuant to
resolution of the Board of Directors to such persons, firms, corporations
or associations, whether such holders or others, and upon such terms as may
be deemed advisable by the Board of Directors in the exercise of its sole
discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and rights
of each other series of Preferred Stock shall, in each case, be as fixed
from time to time by the Board of Directors in the resolution or
resolutions adopted pursuant to authority granted in section (b) of this
Article FOURTH and the consent, by class or series vote or otherwise, of
the holders of such of the series of Preferred Stock as are from time to
time outstanding shall not be required for the issuance by the Board of
Directors of any other series of Preferred Stock whether or not the powers,
preferences and rights of such other series shall be fixed by the Board of
Directors as senior to, or on a parity with, the powers, preferences and
rights of such outstanding series, or any of them; provided, however, that
the Board of Directors may provide in the resolution or resolutions as to
any series of Preferred Stock adopted pursuant to section (b) of this
Article FOURTH that the consent of the holders of a majority (or such
greater proportion as shall be therein fixed) of the outstanding shares of
such series voting thereon shall be required for the issuance of any or all
other series of Preferred Stock.
(f) Subject to the provisions of section (e), shares of any series of
Preferred Stock may be issued from time to time as the Board of Directors
of the Corporation shall determine and on such terms and for such
consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and for such
consideration as shall be fixed by the Board of Directors.
(h) The authorized amount of shares of Common Stock and of Preferred Stock
may, without a class or series vote, be increased or decreased from time to
time by the affirmative vote of the holders of a majority of the stock of
the Corporation entitled to vote thereon.
FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of directors
constituting the entire Board shall be not less than five nor more than
twenty-five as fixed from time to time by vote of a majority of the whole
Board, provided, however, that the number of directors shall not
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be reduced so as to shorten the term of any director at the time in office,
and provided further, that the number of directors constituting the whole
Board shall be twenty-four until otherwise fixed by a majority of the whole
Board.
(b) The Board of Directors shall be divided into three classes, as nearly
equal in number as the then total number of directors constituting the
whole Board permits, with the term of office of one class expiring each
year. At the annual meeting of stockholders in 1982, directors of the
first class shall be elected to hold office for a term expiring at the next
succeeding annual meeting, directors of the second class shall be elected
to hold office for a term expiring at the second succeeding annual meeting
and directors of the third class shall be elected to hold office for a term
expiring at the third succeeding annual meeting. Any vacancies in the
Board of Directors for any reason, and any newly created directorships
resulting from any increase in the directors, may be filled by the Board of
Directors, acting by a majority of the directors then in office, although
less than a quorum, and any directors so chosen shall hold office until the
next annual election of directors. At such election, the stockholders
shall elect a successor to such director to hold office until the next
election of the class for which such director shall have been chosen and
until his successor shall be elected and qualified. No decrease in the
number of directors shall shorten the term of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding the
fact that some lesser percentage may be specified by law, this Charter or
Act of Incorporation or the By-Laws of the Corporation), any director or
the entire Board of Directors of the Corporation may be removed at any time
without cause, but only by the affirmative vote of the holders of two-
thirds or more of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) cast at a meeting of the
stockholders called for that purpose.
(d) Nominations for the election of directors may be made by the Board of
Directors or by any stockholder entitled to vote for the election of
directors. Such nominations shall be made by notice in writing, delivered
or mailed by first class United States mail, postage prepaid, to the
Secretary of the Corporation not less than 14 days nor more than 50 days
prior to any meeting of the stockholders called for the election of
directors; provided, however, that if less than 21 days' notice of the
meeting is given to stockholders, such written notice shall be delivered or
mailed, as prescribed, to the Secretary of the Corporation not later than
the close of the seventh day following the day on which notice of the
meeting was mailed to stockholders. Notice of nominations which are
proposed by the Board of Directors shall be given by the Chairman on behalf
of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name, age,
business address and, if known, residence address of each nominee proposed
in such notice, (ii) the principal occupation or employment of such nominee
and (iii) the number of shares of
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stock of the Corporation which are beneficially owned by each such nominee.
(f) The Chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with
the foregoing procedure, and if he should so determine, he shall so declare
to the meeting and the defective nomination shall be disregarded.
(g) No action required to be taken or which may be taken at any annual or
special meeting of stockholders of the Corporation may be taken without a
meeting, and the power of stockholders to consent in writing, without a
meeting, to the taking of any action is specifically denied.
SIXTH: - The Directors shall choose such officers, agent and servants as
may be provided in the By-Laws as they may from time to time find necessary
or proper.
SEVENTH: - The Corporation hereby created is hereby given the same powers,
rights and privileges as may be conferred upon corporations organized under
the Act entitled "An Act Providing a General Corporation Law", approved
March 10, 1899, as from time to time amended.
EIGHTH: - This Act shall be deemed and taken to be a private Act.
NINTH: - This Corporation is to have perpetual existence.
TENTH: - The Board of Directors, by resolution passed by a majority of the
whole Board, may designate any of their number to constitute an Executive
Committee, which Committee, to the extent provided in said resolution, or
in the By-Laws of the Company, shall have and may exercise all of the
powers of the Board of Directors in the management of the business and
affairs of the Corporation, and shall have power to authorize the seal of
the Corporation to be affixed to all papers which may require it.
ELEVENTH: - The private property of the stockholders shall not be liable
for the payment of corporate debts to any extent whatever.
TWELFTH: - The Corporation may transact business in any part of the world.
THIRTEENTH: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation by a
vote of the majority of the entire Board. The stockholders may make, alter
or repeal any By-Law whether or not adopted by them, provided however, that
any such additional By-Laws, alterations or repeal may be adopted only by
the affirmative vote of the holders of two-thirds or more of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors (considered for this purpose as one
class).
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FOURTEENTH: - Meetings of the Directors may be held outside of the State of
Delaware at such places as may be from time to time designated by the
Board, and the Directors may keep the books of the Company outside of the
State of Delaware at such places as may be from time to time designated by
them.
FIFTEENTH: - (a) In addition to any affirmative vote required by law, and
except as otherwise expressly provided in sections (b) and (c) of this
Article FIFTEENTH:
(A) any merger or consolidation of the Corporation or any Subsidiary
(as hereinafter defined) with or into (i) any Interested Stockholder
(as hereinafter defined) or (ii) any other corporation (whether or not
itself an Interested Stockholder), which, after such merger or
consolidation, would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of related transactions) to
or with any Interested Stockholder or any Affiliate of any Interested
Stockholder of any assets of the Corporation or any Subsidiary having
an aggregate fair market value of $1,000,000 or more, or
(C) the issuance or transfer by the Corporation or any Subsidiary (in
one transaction or a series of related transactions) of any securities
of the Corporation or any Subsidiary to any Interested Stockholder or
any Affiliate of any Interested Stockholder in exchange for cash,
securities or other property (or a combination thereof) having an
aggregate fair market value of $1,000,000 or more, or
(D) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation, or
(E) any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or any
similar transaction (whether or not with or into or otherwise involving
an Interested Stockholder) which has the effect, directly or
indirectly, of increasing the proportionate share of the outstanding
shares of any class of equity or convertible securities of the
Corporation or any Subsidiary which is directly or indirectly owned by
any Interested Stockholder, or any Affiliate of any Interested
Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article FIFTEENTH as one class ("Voting Shares"). Such affirmative vote shall
be required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
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(2) The term "business combination" as used in this Article
FIFTEENTH shall mean any transaction which is referred to any
one or more of clauses (A) through (E) of paragraph 1 of the
section (a).
(b) The provisions of section (a) of this Article FIFTEENTH shall not
be applicable to any particular business combination and such business
combination shall require only such affirmative vote as is required by
law and any other provisions of the Charter or Act of Incorporation of
By-Laws if such business combination has been approved by a majority of
the whole Board.
(c) For the purposes of this Article FIFTEENTH:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any Subsidiary) who
or which as of the record date for the determination of stockholders
entitled to notice of and to vote on such business combination, or
immediately prior to the consummation of any such transaction:
(A) is the beneficial owner, directly or indirectly, of more than 10%
of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time within two
years prior thereto was the beneficial owner, directly or indirectly,
of not less than 10% of the then outstanding voting Shares, or
(C) is an assignee of or has otherwise succeeded in any share of
capital stock of the Corporation which were at any time within two
years prior thereto beneficially owned by any Interested Stockholder,
and such assignment or succession shall have occurred in the course of
a transaction or series of transactions not involving a public offering
within the meaning of the Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and Associates (as
hereafter defined) beneficially own, directly or indirectly, or
(B) which such person or any of its Affiliates or Associates has (i)
the right to acquire (whether such right is exercisable immediately or
only after the passage of time), pursuant to any agreement, arrangement
or understanding or upon the exercise of conversion rights, exchange
rights, warrants or options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or understanding, or
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(C) which are beneficially owned, directly or indirectly, by any other
person with which such first mentioned person or any of its Affiliates
or Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any shares of
capital stock of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any other
Voting Shares which may be issuable pursuant to any agreement, or upon
exercise of conversion rights, warrants or options or otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings given
those terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect on December 31, 1981.
(6) "Subsidiary" shall mean any corporation of which a majority of any
class of equity security (as defined in Rule 3a11-1 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as in effect in
December 31, 1981) is owned, directly or indirectly, by the Corporation;
provided, however, that for the purposes of the definition of Investment
Stockholder set forth in paragraph (2) of this section (c), the term
"Subsidiary" shall mean only a corporation of which a majority of each
class of equity security is owned, directly or indirectly, by the
Corporation.
(d) majority of the directors shall have the power and duty to
determine for the purposes of this Article FIFTEENTH on the basis of
information known to them, (1) the number of Voting Shares beneficially
owned by any person (2) whether a person is an Affiliate or Associate
of another, (3) whether a person has an agreement, arrangement or
understanding with another as to the matters referred to in paragraph
(3) of section (c), or (4) whether the assets subject to any business
combination or the consideration received for the issuance or transfer
of securities by the Corporation, or any Subsidiary has an aggregate
fair market value of $1,000,000 or more.
(e) Nothing contained in this Article FIFTEENTH shall be construed to
relieve any Interested Stockholder from any fiduciary obligation
imposed by law.
SIXTEENTH: Notwithstanding any other provision of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and in addition to any
other vote that may be required by law, this Charter or Act of
Incorporation by the By-Laws), the affirmative vote of the holders of at
least two-thirds of the outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) shall be required to amend,
alter or repeal any provision of Articles FIFTH, THIRTEENTH, FIFTEENTH or
SIXTEENTH of this Charter or Act of Incorporation.
SEVENTEENTH: (a) a Director of this Corporation shall not be liable to the
Corporation
12
<PAGE> 16
or its stockholders for monetary damages for breach of fiduciary duty as a
Director, except to the extent such exemption from liability or limitation
thereof is not permitted under the Delaware General Corporation Laws as the
same exists or may hereafter be amended.
(b) Any repeal or modification of the foregoing paragraph shall not
adversely affect any right or protection of a Director of the
Corporation existing hereunder with respect to any act or omission
occurring prior to the time of such repeal or modification."
13
<PAGE> 17
EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON JANUARY 16, 1997
<PAGE> 18
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. The Annual Meeting of Stockholders shall be held on the
third Thursday in April each year at the principal office at the Company or at
such other date, time, or place as may be designated by resolution by the Board
of Directors.
Section 2. Special meetings of all stockholders may be called at any
time by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be given
by mailing to each stockholder at least ten (10) days before said meeting, at
his last known address, a written or printed notice fixing the time and place
of such meeting.
Section 4. A majority in the amount of the capital stock of the
Company issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one
vote, either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
DIRECTORS
Section 1. The number and classification of the Board of Directors
shall be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72)
years shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed
and conducted by the Board of Directors.
Section 5. The Board of Directors shall meet at the principal office
of the Company or elsewhere in its discretion at such times to be determined by
a majority of its members, or at the call of the Chairman of the Board of
Directors or the President.
<PAGE> 19
Section 6. Special meetings of the Board of Directors may be called
at any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of
any special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal, inability
to act, or disqualification of any director, the Board of Directors, although
less than a quorum, shall have the right to elect the successor who shall hold
office for the remainder of the full term of the class of directors in which
the vacancy occurred, and until such director's successor shall have been duly
elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect
from its own members a Chairman of the Board of Directors and a President who
may be the same person. The Board of Directors shall also elect at such
meeting a Secretary and a Treasurer, who may be the same person, may appoint at
any time such other committees and elect or appoint such other officers as it
may deem advisable. The Board of Directors may also elect at such meeting one
or more Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be in
charge of such of the departments or division of the Company as it may deem
advisable.
ARTICLE III
COMMITTEES
Section 1. Executive Committee
(A) The Executive Committee shall be composed of
not more than nine members who shall be selected by the Board of Directors from
its own members and who shall hold office during the pleasure of the Board.
2
<PAGE> 20
(B) The Executive Committee shall have all the
powers of the Board of Directors when it is not in session to transact all
business for and in behalf of the Company that may be brought before it.
(C) The Executive Committee shall meet at the
principal office of the Company or elsewhere in its discretion at such times to
be determined by a majority of its members, or at the call of the Chairman of
the Executive Committee or at the call of the Chairman of the Board of
Directors. The majority of its members shall be necessary to constitute a
quorum for the transaction of business. Special meetings of the Executive
Committee may be held at any time when a quorum is present.
(D) Minutes of each meeting of the Executive
Committee shall be kept and submitted to the Board of Directors at its next
meeting.
(E) The Executive Committee shall advise and
superintend all investments that may be made of the funds of the Company, and
shall direct the disposal of the same, in accordance with such rules and
regulations as the Board of Directors from time to time make.
(F) In the event of a state of disaster of
sufficient severity to prevent the conduct and management of the affairs and
business of the Company by its directors and officers as contemplated by these
By-Laws any two available members of the Executive Committee as constituted
immediately prior to such disaster shall constitute a quorum of that Committee
for the full conduct and management of the affairs and business of the Company
in accordance with the provisions of Article III of these By-Laws; and if less
than three members of the Trust Committee is constituted immediately prior to
such disaster shall be available for the transaction of its business, such
Executive Committee shall also be empowered to exercise all of the powers
reserved to the Trust Committee under Article III Section 2 hereof. In the
event of the unavailability, at such time, of a minimum of two members of such
Executive Committee, any three available directors shall constitute the
Executive Committee for the full conduct and management of the affairs and
business of the Company in accordance with the foregoing provisions of this
Section. This By-Law shall be subject to implementation by Resolutions of the
Board of Directors presently existing or hereafter passed from time to time for
that purpose, and any provisions of these By-Laws (other than this Section) and
any resolutions which are contrary to the provisions of this Section or to the
provisions of any such implementary Resolutions shall be suspended during such
a disaster period until it shall be determined by any interim Executive
Committee acting under this section that it shall be to the advantage of the
Company to resume the conduct and management of its affairs and business under
all of the other provisions of these By-Laws.
3
<PAGE> 21
Section 2. Trust Committee
(A) The Trust Committee shall be composed of not
more than thirteen members who shall be selected by the Board of Directors, a
majority of whom shall be members of the Board of Directors and who shall hold
office during the pleasure of the Board.
(B) The Trust Committee shall have general
supervision over the Trust Department and the investment of trust funds, in all
matters, however, being subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the
principal office of the Company or elsewhere in its discretion at such times to
be determined by a majority of its members or at the call of its chairman. A
majority of its members shall be necessary to constitute a quorum for the
transaction of business.
(D) Minutes of each meeting of the Trust Committee
shall be kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to
appoint Committees and/or designate officers or employees of the Company to
whom supervision over the investment of trust funds may be delegated when the
Trust Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five
members who shall be selected by the Board of Directors from its own members,
none of whom shall be an officer of the Company, and shall hold office at the
pleasure of the Board.
(B) The Audit Committee shall have general
supervision over the Audit Division in all matters however subject to the
approval of the Board of Directors; it shall consider all matters brought to
its attention by the officer in charge of the Audit Division, review all
reports of examination of the Company made by any governmental agency or such
independent auditor employed for that purpose, and make such recommendations to
the Board of Directors with respect thereto or with respect to any other
matters pertaining to auditing the Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and
wherever the majority of its members shall deem it to be proper for the
transaction of its business, and a majority of its Committee shall constitute a
quorum.
4
<PAGE> 22
Section 4. Compensation Committee
(A) The Compensation Committee shall be composed
of not more than five (5) members who shall be selected by the Board of
Directors from its own members who are not officers of the Company and who
shall hold office during the pleasure of the Board.
(B) The Compensation Committee shall in general
advise upon all matters of policy concerning the Company brought to its
attention by the management and from time to time review the management of the
Company, major organizational matters, including salaries and employee benefits
and specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be
called at any time by the Chairman of the Compensation Committee, the Chairman
of the Board of Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be
elected by the Board of Directors as an associate director, to serve during the
pleasure of the Board.
(B) An associate director shall be entitled to
attend all directors meetings and participate in the discussion of all matters
brought to the Board, with the exception that he would have no right to vote.
An associate director will be eligible for appointment to Committees of the
Company, with the exception of the Executive Committee, Audit Committee and
Compensation Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any
member of any Committee created under Article III of the By-Laws of this
Company, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absence or disqualified member.
ARTICLE IV
OFFICERS
Section 1. The Chairman of the Board of Directors shall preside at
all meetings of the Board and shall have such further authority and powers and
shall perform such duties as the Board of Directors may from time to time
confer and direct. He shall also exercise such powers
5
<PAGE> 23
and perform such duties as may from time to time be agreed upon between himself
and the President of the Company.
Section 2. The Vice Chairman of the Board. The Vice Chairman of the
Board of Directors shall preside at all meetings of the Board of Directors at
which the Chairman of the Board shall not be present and shall have such
further authority and powers and shall perform such duties as the Board of
Directors or the Chairman of the Board may from time to time confer and direct.
Section 3. The President shall have the powers and duties pertaining
to the office of the President conferred or imposed upon him by statute or
assigned to him by the Board of Directors in the absence of the Chairman of the
Board the President shall have the powers and duties of the Chairman of the
Board.
Section 4. The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and such
other powers and duties as may from time to time be assigned to them by the
Board of Directors, the Executive Committee, the Chairman of the Board or the
President and by the officer in charge of the department or division to which
they are assigned.
Section 6. The Secretary shall attend to the giving of notice of
meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings and
to recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all
assets and liabilities of the Company. He shall be custodian of and
responsible for all monies, funds and valuables of the Company and for the
keeping of proper records of the evidence of property or indebtedness and of
all the transactions of the Company. He shall have general supervision of the
expenditures of the Company and shall report to the Board of Directors at each
regular meeting of the condition of the Company, and perform such other duties
as may be assigned to him from time to time by the Board of Directors of the
Executive Committee.
6
<PAGE> 24
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.
Section 10. There may be one or more officers, subordinate in rank to
all Vice Presidents with such functional titles as shall be determined from
time to time by the Board of Directors, who shall ex officio hold the office
Assistant Secretary of this Company and who may perform such duties as may be
prescribed by the officer in charge of the department or division to whom they
are assigned.
Section 11. The powers and duties of all other officers of the
Company shall be those usually pertaining to their respective offices, subject
to the direction of the Board of Directors, the Executive Committee, Chairman
of the Board of Directors or the President and the officer in charge of the
department or division to which they are assigned.
ARTICLE V
STOCK AND STOCK CERTIFICATES
Section 1. Shares of stock shall be transferrable on the books of the
Company and a transfer book shall be kept in which all transfers of stock shall
be recorded.
Section 2. Certificate of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new
certificate or certificates shall be issued in lieu thereof.
7
<PAGE> 25
Duplicate certificates of stock shall be issued only upon giving such security
as may be satisfactory to the Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to fix
in advance a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the
date for the payment of any dividend, or the date for the allotment of rights,
or the date when any change or conversion or exchange of capital stock shall go
into effect, or a date in connection with obtaining such consent.
ARTICLE VI
SEAL
Section 1. The corporate seal of the Company shall be in the
following form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."
ARTICLE VII
FISCAL YEAR
Section 1. The fiscal year of the Company shall be the calendar year.
ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver
and the Secretary or any Assistant Secretary shall have full power and
authority to attest and affix the corporate seal of the Company to any and all
deeds, conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or
8
<PAGE> 26
confirmation by the Board of Directors or the Executive Committee, and any and
all such instruments shall have the same force and validity as though expressly
authorized by the Board of Directors and/or the Executive Committee.
ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES
Section 1. Directors and associate directors of the Company, other
than salaried officers of the Company, shall be paid such reasonable honoraria
or fees for attending meetings of the Board of Directors as the Board of
Directors may from time to time determine. Directors and associate directors
who serve as members of committees, other than salaried employees of the
Company, shall be paid such reasonable honoraria or fees for services as
members of committees as the Board of Directors shall from time to time
determine and directors and associate directors may be employed by the Company
for such special services as the Board of Directors may from time to time
determine and shall be paid for such special services so performed reasonable
compensation as may be determined by the Board of Directors.
ARTICLE X
INDEMNIFICATION
Section 1. (A) The Corporation shall indemnify and hold harmless, to
the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or
was a director, officer, employee or agent of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee,
fiduciary or agent of another corporation or of a partnership, joint venture,
trust, enterprise or non-profit entity, including service with respect to
employee benefit plans, against all liability and loss suffered and expenses
reasonably incurred by such person. The Corporation shall indemnify a person
in connection with a proceeding initiated by such person only if the proceeding
was authorized by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses
incurred in defending any proceeding in advance of its final disposition,
provided, however, that the payment of expenses incurred by a Director officer
in his capacity as a Director or officer in advance of the final disposition of
the proceeding shall be made only upon receipt of an undertaking by the
Director or officer to repay all amounts advanced if it should be ultimately
determined that the Director or officer is not entitled to be indemnified under
this Article or otherwise.
9
<PAGE> 27
(C) If a claim for indemnification or payment of
expenses, under this Article X is not paid in full within ninety days after a
written claim therefor has been received by the Corporation the claimant may
file suit to recover the unpaid amount of such claim and, if successful in
whole or in part, shall be entitled to be paid the expense of prosecuting such
claim. In any such action the Corporation shall have the burden of proving
that the claimant was not entitled to the requested indemnification of payment
of expenses under applicable law.
(D) The rights conferred on any person by this
Article X shall not be exclusive of any other rights which such person may have
or hereafter acquire under any statute, provision of the Charter or Act of
Incorporation, these By-Laws, agreement, vote of stockholders or disinterested
Directors or otherwise.
(E) Any repeal or modification of the foregoing
provisions of this Article X shall not adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring prior to
the time of such repeal or modification.
ARTICLE XI
AMENDMENTS TO THE BY-LAWS
Section 1. These By-Laws may be altered, amended or repealed, in
whole or in part, and any new By-Law or By-Laws adopted at any regular or
special meeting of the Board of Directors by a vote of the majority of all the
members of the Board of Directors then in office.
10
<PAGE> 28
EXHIBIT C
SECTION 321(b) CONSENT
Pursuant to Section 321(b) of the Trust Indenture Act of 1939,
Wilmington Trust Company hereby consents that reports of examinations by
Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: August 14, 1998 By: /s/ Emmett R. Harmon
---------------------
Name: Emmett R. Harmon
Title: Vice President
<PAGE> 29
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings banks with
state publication requirements. It has not been approved by any state banking
authorities. Refer to your appropriate state banking authorities for your
state publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
------------------------ ----------
Name of Bank City
in the State of DELAWARE, at the close of business on March 31, 1998.
ASSETS
<TABLE>
<CAPTION>
Thousands of dollars
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins . . . . . . . . . . . . . . . . . . . . . . . . . 180,015
Interest-bearing balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Held-to-maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 287,798
Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,355,745
Federal funds sold and securities purchased under agreements to resell . . . . . . . . . . . . . . . . . . . . 124,500
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . . 3,896,238
LESS: Allowance for loan and lease losses. . . . . . 61,635
LESS: Allocated transfer risk reserve. . . . . . . . 0
Loans and leases, net of unearned income, allowance, and reserve . . . . . . . . . . . . . . . . . . . 3,834,603
Assets held in trading accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Premises and fixed assets (including capitalized leases) . . . . . . . . . . . . . . . . . . . . . . . . . . . 134,016
Other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,444
Investments in unconsolidated subsidiaries and associated companies . . . . . . . . . . . . . . . . . . . . . . 10
Customers' liability to this bank on acceptances outstanding . . . . . . . . . . . . . . . . . . . . . . . . . 0
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,264
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215,048
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,189,443
</TABLE>
CONTINUED ON NEXT PAGE
<PAGE> 30
LIABILITIES
<TABLE>
<S> <C> <C>
Deposits:
In domestic offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,183,321
Noninterest-bearing . . . . . . . . 904,511
Interest-bearing. . . . . . . . . . 3,278,810
Federal funds purchased and Securities sold under agreements to repurchase . . . . . . . . . . . . . . . . . 558,553
Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,761
Trading liabilities (from Schedule RC-D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other borrowed money: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ///////
With original maturity of one year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 788,000
With original maturity of more than one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,000
Bank's liability on acceptances executed and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Subordinated notes and debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other liabilities (from Schedule RC-G) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99,777
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,730,412
</TABLE>
EQUITY CAPITAL
<TABLE>
<S> <C>
Perpetual preferred stock and related surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500
Surplus (exclude all surplus related to preferred stock) . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,118
Undivided profits and capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 388,458
Net unrealized holding gains (losses) on available-for-sale securities . . . . . . . . . . . . . . . . . . . . 7,955
Total equity capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 459,031
Total liabilities, limited-life preferred stock, and equity capital . . . . . . . . . . . . . . . . . . . . . . 6,189,443
</TABLE>
2
<PAGE> 1
EXHIBIT 25.2
Registration No.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) X
---
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
AMERICAN COIN MERCHANDISING, INC.
d/b/a SUGARLOAF CREATIONS, INC.
AMERICAN COIN MERCHANDISING TRUST I
(Exact name of obligor as specified in its charter)
Delaware 84-1093721
Delaware To be applied for
(State of incorporation (I.R.S. employer identification no.)
or formation)
5660 Central Avenue
Boulder, Colorado 77002
(Address of principal executive offices) (Zip Code)
American Coin Merchandising Trust I Trust Preferred Securities
(Title of the indenture securities)
================================================================================
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust
powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the
obligor is not an affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which
includes the certificate of authority of Wilmington Trust
Company to commence business and the authorization of
Wilmington Trust Company to exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section
321(b) of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, Wilmington Trust Company, a corporation organized and existing under
the laws of Delaware, has duly caused this Statement of Eligibility to be signed
on its behalf by the undersigned, thereunto duly authorized, all in the City of
Wilmington and State of Delaware on the 14th day of August, 1998.
[SEAL] WILMINGTON TRUST COMPANY
Attest: /s/ Donald G. MacKelcan By: /s/ Emmett R. Harmon
----------------------- --------------------
Assistant Secretary Name: Emmett R. Harmon
Title: Vice President
<PAGE> 3
EXHIBIT A
AMENDED CHARTER
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON MAY 9, 1987
<PAGE> 4
AMENDED CHARTER
OR
ACT OF INCORPORATION
OF
WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, originally incorporated by an Act of the General
Assembly of the State of Delaware, entitled "An Act to Incorporate the Delaware
Guarantee and Trust Company", approved March 2, A.D. 1901, and the name of
which company was changed to "WILMINGTON TRUST COMPANY" by an amendment filed
in the Office of the Secretary of State on March 18, A.D. 1903, and the Charter
or Act of Incorporation of which company has been from time to time amended and
changed by merger agreements pursuant to the corporation law for state banks
and trust companies of the State of Delaware, does hereby alter and amend its
Charter or Act of Incorporation so that the same as so altered and amended
shall in its entirety read as follows:
FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.
SECOND: - The location of its principal office in the State of Delaware is
at Rodney Square North, in the City of Wilmington, County of New Castle;
the name of its resident agent is WILMINGTON TRUST COMPANY whose address is
Rodney Square North, in said City. In addition to such principal office,
the said corporation maintains and operates branch offices in the City of
Newark, New Castle County, Delaware, the Town of Newport, New Castle
County, Delaware, at Claymont, New Castle County, Delaware, at Greenville,
New Castle County Delaware, and at Milford Cross Roads, New Castle County,
Delaware, and shall be empowered to open, maintain and operate branch
offices at Ninth and Shipley Streets, 418 Delaware Avenue, 2120 Market
Street, and 3605 Market Street, all in the City of Wilmington, New Castle
County, Delaware, and such other branch offices or places of business as
may be authorized from time to time by the agency or agencies of the
government of the State of Delaware empowered to confer such authority.
THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this Corporation are
to do any or all of the things herein mentioned as fully and to the same
extent as natural persons might or could do and in any part of the world,
viz.:
(1) To sue and be sued, complain and defend in any Court of law or
equity and to make and use a common seal, and alter the seal at
pleasure, to hold, purchase, convey, mortgage or otherwise deal in real
and personal estate and property, and to appoint such officers and
agents as the business of the Corporation shall require, to make
by-laws not inconsistent with the Constitution or laws of the
<PAGE> 5
United States or of this State, to discount bills, notes or other
evidences of debt, to receive deposits of money, or securities for
money, to buy gold and silver bullion and foreign coins, to buy and
sell bills of exchange, and generally to use, exercise and enjoy all
the powers, rights, privileges and franchises incident to a corporation
which are proper or necessary for the transaction of the business of
the Corporation hereby created.
(2) To insure titles to real and personal property, or any estate or
interests therein, and to guarantee the holder of such property, real
or personal, against any claim or claims, adverse to his interest
therein, and to prepare and give certificates of title for any lands or
premises in the State of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the receipt,
collection, custody, investment and management of funds, and the
purchase, sale, management and disposal of property of all
descriptions, and to prepare and execute all papers which may be
necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds, leases,
conveyances, mortgages, bonds and legal papers of every description,
and to carry on the business of conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money, jewelry, plate,
deeds, bonds and any and all other personal property of every sort and
kind, from executors, administrators, guardians, public officers,
courts, receivers, assignees, trustees, and from all fiduciaries, and
from all other persons and individuals, and from all corporations
whether state, municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such property.
(6) To act as agent or otherwise for the purpose of registering,
issuing, certificating, countersigning, transferring or underwriting
the stock, bonds or other obligations of any corporation, association,
state or municipality, and may receive and manage any sinking fund
therefor on such terms as may be agreed upon between the two parties,
and in like manner may act as Treasurer of any corporation or
municipality.
(7) To act as Trustee under any deed of trust, mortgage, bond or other
instrument issued by any state, municipality, body politic,
corporation, association or person, either alone or in conjunction with
any other person or persons, corporation or corporations.
(8) To guarantee the validity, performance or effect of any contract
or agreement, and the fidelity of persons holding places of
responsibility or trust; to become surety for any person, or persons,
for the faithful performance of any
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<PAGE> 6
trust, office, duty, contract or agreement, either by itself or in
conjunction with any other person, or persons, corporation, or
corporations, or in like manner become surety upon any bond,
recognizance, obligation, judgment, suit, order, or decree to be
entered in any court of record within the State of Delaware or
elsewhere, or which may now or hereafter be required by any law, judge,
officer or court in the State of Delaware or elsewhere.
(9) To act by any and every method of appointment as trustee, trustee
in bankruptcy, receiver, assignee, assignee in bankruptcy, executor,
administrator, guardian, bailee, or in any other trust capacity in the
receiving, holding, managing, and disposing of any and all estates and
property, real, personal or mixed, and to be appointed as such trustee,
trustee in bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian or bailee by any persons,
corporations, court, officer, or authority, in the State of Delaware or
elsewhere; and whenever this Corporation is so appointed by any person,
corporation, court, officer or authority such trustee, trustee in
bankruptcy, receiver, assignee, assignee in bankruptcy, executor,
administrator, guardian, bailee, or in any other trust capacity, it
shall not be required to give bond with surety, but its capital stock
shall be taken and held as security for the performance of the duties
devolving upon it by such appointment.
(10) And for its care, management and trouble, and the exercise of any
of its powers hereby given, or for the performance of any of the duties
which it may undertake or be called upon to perform, or for the
assumption of any responsibility the said Corporation may be entitled
to receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages, debentures,
shares of capital stock, and other securities, obligations, contracts
and evidences of indebtedness, of any private, public or municipal
corporation within and without the State of Delaware, or of the
Government of the United States, or of any state, territory, colony, or
possession thereof, or of any foreign government or country; to
receive, collect, receipt for, and dispose of interest, dividends and
income upon and from any of the bonds, mortgages, debentures, notes,
shares of capital stock, securities, obligations, contracts, evidences
of indebtedness and other property held and owned by it, and to
exercise in respect of all such bonds, mortgages, debentures, notes,
shares of capital stock, securities, obligations, contracts, evidences
of indebtedness and other property, any and all the rights, powers and
privileges of individual owners thereof, including the right to vote
thereon; to invest and deal in and with any of the moneys of the
Corporation upon such securities and in such manner as it may think fit
and proper, and from time to time to vary or realize such investments;
to issue bonds and secure the same by pledges or deeds of trust or
mortgages of or upon the whole or any part of the property held or
owned by the Corporation, and to sell and pledge such bonds,
3
<PAGE> 7
as and when the Board of Directors shall determine, and in the
promotion of its said corporate business of investment and to the
extent authorized by law, to lease, purchase, hold, sell, assign,
transfer, pledge, mortgage and convey real and personal property of any
name and nature and any estate or interest therein.
(b) In furtherance of, and not in limitation, of the powers conferred by
the laws of the State of Delaware, it is hereby expressly provided that the
said Corporation shall also have the following powers:
(1) To do any or all of the things herein set forth, to the same
extent as natural persons might or could do, and in any part of the
world.
(2) To acquire the good will, rights, property and franchises and to
undertake the whole or any part of the assets and liabilities of any
person, firm, association or corporation, and to pay for the same in
cash, stock of this Corporation, bonds or otherwise; to hold or in any
manner to dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any part of any
business so acquired, and to exercise all the powers necessary or
convenient in and about the conduct and management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien, and to
lease, sell, exchange, transfer, or in any manner whatever dispose of
property, real, personal or mixed, wherever situated.
(4) To enter into, make, perform and carry out contracts of every kind
with any person, firm, association or corporation, and, without limit
as to amount, to draw, make, accept, endorse, discount, execute and
issue promissory notes, drafts, bills of exchange, warrants, bonds,
debentures, and other negotiable or transferable instruments.
(5) To have one or more offices, to carry on all or any of its
operations and businesses, without restriction to the same extent as
natural persons might or could do, to purchase or otherwise acquire, to
hold, own, to mortgage, sell, convey or otherwise dispose of, real and
personal property, of every class and description, in any State,
District, Territory or Colony of the United States, and in any foreign
country or place.
(6) It is the intention that the objects, purposes and powers
specified and clauses contained in this paragraph shall (except where
otherwise expressed in said paragraph) be nowise limited or restricted
by reference to or inference from the terms of any other clause of this
or any other paragraph in this charter, but that the objects, purposes
and powers specified in each of the clauses of this paragraph shall be
regarded as independent objects, purposes and powers.
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<PAGE> 8
FOURTH: - (a) The total number of shares of all classes of stock which the
Corporation shall have authority to issue is forty-one million (41,000,000)
shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par value
$10.00 per share (hereinafter referred to as "Preferred Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par value $1.00
per share (hereinafter referred to as "Common Stock").
(b) Shares of Preferred Stock may be issued from time to time in one or
more series as may from time to time be determined by the Board of
Directors each of said series to be distinctly designated. All shares of
any one series of Preferred Stock shall be alike in every particular,
except that there may be different dates from which dividends, if any,
thereon shall be cumulative, if made cumulative. The voting powers and the
preferences and relative, participating, optional and other special rights
of each such series, and the qualifications, limitations or restrictions
thereof, if any, may differ from those of any and all other series at any
time outstanding; and, subject to the provisions of subparagraph 1 of
Paragraph (c) of this Article FOURTH, the Board of Directors of the
Corporation is hereby expressly granted authority to fix by resolution or
resolutions adopted prior to the issuance of any shares of a particular
series of Preferred Stock, the voting powers and the designations,
preferences and relative, optional and other special rights, and the
qualifications, limitations and restrictions of such series, including, but
without limiting the generality of the foregoing, the following:
(1) The distinctive designation of, and the number of shares of
Preferred Stock which shall constitute such series, which number may be
increased (except where otherwise provided by the Board of Directors)
or decreased (but not below the number of shares thereof then
outstanding) from time to time by like action of the Board of
Directors;
(2) The rate and times at which, and the terms and conditions on
which, dividends, if any, on Preferred Stock of such series shall be
paid, the extent of the preference or relation, if any, of such
dividends to the dividends payable on any other class or classes, or
series of the same or other class of stock and whether such dividends
shall be cumulative or non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of such
series to convert the same into or exchange the same for, shares of any
other class or classes or of any series of the same or any other class
or classes of stock of the Corporation and the terms and conditions of
such conversion or exchange;
(4) Whether or not Preferred Stock of such series shall be subject to
redemption, and the redemption price or prices and the time or times at
which, and the terms and conditions on which, Preferred Stock of such
series may be redeemed.
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<PAGE> 9
(5) The rights, if any, of the holders of Preferred Stock of such
series upon the voluntary or involuntary liquidation, merger,
consolidation, distribution or sale of assets, dissolution or winding-
up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase account,
if any, to be provided for the Preferred Stock of such series; and
(7) The voting powers, if any, of the holders of such series of
Preferred Stock which may, without limiting the generality of the
foregoing include the right, voting as a series or by itself or
together with other series of Preferred Stock or all series of
Preferred Stock as a class, to elect one or more directors of the
Corporation if there shall have been a default in the payment of
dividends on any one or more series of Preferred Stock or under such
circumstances and on such conditions as the Board of Directors may
determine.
(c) (1) After the requirements with respect to preferential dividends on
the Preferred Stock (fixed in accordance with the provisions of section (b)
of this Article FOURTH), if any, shall have been met and after the
Corporation shall have complied with all the requirements, if any, with
respect to the setting aside of sums as sinking funds or redemption or
purchase accounts (fixed in accordance with the provisions of section (b)
of this Article FOURTH), and subject further to any conditions which may be
fixed in accordance with the provisions of section (b) of this Article
FOURTH, then and not otherwise the holders of Common Stock shall be
entitled to receive such dividends as may be declared from time to time by
the Board of Directors.
(2) After distribution in full of the preferential amount, if any,
(fixed in accordance with the provisions of section (b) of this Article
FOURTH), to be distributed to the holders of Preferred Stock in the
event of voluntary or involuntary liquidation, distribution or sale of
assets, dissolution or winding-up, of the Corporation, the holders of
the Common Stock shall be entitled to receive all of the remaining
assets of the Corporation, tangible and intangible, of whatever kind
available for distribution to stockholders ratably in proportion to the
number of shares of Common Stock held by them respectively.
(3) Except as may otherwise be required by law or by the provisions of
such resolution or resolutions as may be adopted by the Board of
Directors pursuant to section (b) of this Article FOURTH, each holder
of Common Stock shall have one vote in respect of each share of Common
Stock held on all matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock or of
options, warrants or other rights to purchase shares of any class or series
of stock or of other securities of the Corporation shall have any
preemptive right to purchase or subscribe for any unissued stock of any
class or series or any additional shares of any class or series to be
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<PAGE> 10
issued by reason of any increase of the authorized capital stock of the
Corporation of any class or series, or bonds, certificates of indebtedness,
debentures or other securities convertible into or exchangeable for stock
of the Corporation of any class or series, or carrying any right to
purchase stock of any class or series, but any such unissued stock,
additional authorized issue of shares of any class or series of stock or
securities convertible into or exchangeable for stock, or carrying any
right to purchase stock, may be issued and disposed of pursuant to
resolution of the Board of Directors to such persons, firms, corporations
or associations, whether such holders or others, and upon such terms as may
be deemed advisable by the Board of Directors in the exercise of its sole
discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and rights
of each other series of Preferred Stock shall, in each case, be as fixed
from time to time by the Board of Directors in the resolution or
resolutions adopted pursuant to authority granted in section (b) of this
Article FOURTH and the consent, by class or series vote or otherwise, of
the holders of such of the series of Preferred Stock as are from time to
time outstanding shall not be required for the issuance by the Board of
Directors of any other series of Preferred Stock whether or not the powers,
preferences and rights of such other series shall be fixed by the Board of
Directors as senior to, or on a parity with, the powers, preferences and
rights of such outstanding series, or any of them; provided, however, that
the Board of Directors may provide in the resolution or resolutions as to
any series of Preferred Stock adopted pursuant to section (b) of this
Article FOURTH that the consent of the holders of a majority (or such
greater proportion as shall be therein fixed) of the outstanding shares of
such series voting thereon shall be required for the issuance of any or all
other series of Preferred Stock.
(f) Subject to the provisions of section (e), shares of any series of
Preferred Stock may be issued from time to time as the Board of Directors
of the Corporation shall determine and on such terms and for such
consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and for such
consideration as shall be fixed by the Board of Directors.
(h) The authorized amount of shares of Common Stock and of Preferred Stock
may, without a class or series vote, be increased or decreased from time to
time by the affirmative vote of the holders of a majority of the stock of
the Corporation entitled to vote thereon.
FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of directors
constituting the entire Board shall be not less than five nor more than
twenty-five as fixed from time to time by vote of a majority of the whole
Board, provided, however, that the number of directors shall not
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<PAGE> 11
be reduced so as to shorten the term of any director at the time in office,
and provided further, that the number of directors constituting the whole
Board shall be twenty-four until otherwise fixed by a majority of the whole
Board.
(b) The Board of Directors shall be divided into three classes, as nearly
equal in number as the then total number of directors constituting the
whole Board permits, with the term of office of one class expiring each
year. At the annual meeting of stockholders in 1982, directors of the
first class shall be elected to hold office for a term expiring at the next
succeeding annual meeting, directors of the second class shall be elected
to hold office for a term expiring at the second succeeding annual meeting
and directors of the third class shall be elected to hold office for a term
expiring at the third succeeding annual meeting. Any vacancies in the
Board of Directors for any reason, and any newly created directorships
resulting from any increase in the directors, may be filled by the Board of
Directors, acting by a majority of the directors then in office, although
less than a quorum, and any directors so chosen shall hold office until the
next annual election of directors. At such election, the stockholders
shall elect a successor to such director to hold office until the next
election of the class for which such director shall have been chosen and
until his successor shall be elected and qualified. No decrease in the
number of directors shall shorten the term of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding the
fact that some lesser percentage may be specified by law, this Charter or
Act of Incorporation or the By-Laws of the Corporation), any director or
the entire Board of Directors of the Corporation may be removed at any time
without cause, but only by the affirmative vote of the holders of two-
thirds or more of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) cast at a meeting of the
stockholders called for that purpose.
(d) Nominations for the election of directors may be made by the Board of
Directors or by any stockholder entitled to vote for the election of
directors. Such nominations shall be made by notice in writing, delivered
or mailed by first class United States mail, postage prepaid, to the
Secretary of the Corporation not less than 14 days nor more than 50 days
prior to any meeting of the stockholders called for the election of
directors; provided, however, that if less than 21 days' notice of the
meeting is given to stockholders, such written notice shall be delivered or
mailed, as prescribed, to the Secretary of the Corporation not later than
the close of the seventh day following the day on which notice of the
meeting was mailed to stockholders. Notice of nominations which are
proposed by the Board of Directors shall be given by the Chairman on behalf
of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name, age,
business address and, if known, residence address of each nominee proposed
in such notice, (ii) the principal occupation or employment of such nominee
and (iii) the number of shares of
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<PAGE> 12
stock of the Corporation which are beneficially owned by each such nominee.
(f) The Chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with
the foregoing procedure, and if he should so determine, he shall so declare
to the meeting and the defective nomination shall be disregarded.
(g) No action required to be taken or which may be taken at any annual or
special meeting of stockholders of the Corporation may be taken without a
meeting, and the power of stockholders to consent in writing, without a
meeting, to the taking of any action is specifically denied.
SIXTH: - The Directors shall choose such officers, agent and servants as
may be provided in the By-Laws as they may from time to time find necessary
or proper.
SEVENTH: - The Corporation hereby created is hereby given the same powers,
rights and privileges as may be conferred upon corporations organized under
the Act entitled "An Act Providing a General Corporation Law", approved
March 10, 1899, as from time to time amended.
EIGHTH: - This Act shall be deemed and taken to be a private Act.
NINTH: - This Corporation is to have perpetual existence.
TENTH: - The Board of Directors, by resolution passed by a majority of the
whole Board, may designate any of their number to constitute an Executive
Committee, which Committee, to the extent provided in said resolution, or
in the By-Laws of the Company, shall have and may exercise all of the
powers of the Board of Directors in the management of the business and
affairs of the Corporation, and shall have power to authorize the seal of
the Corporation to be affixed to all papers which may require it.
ELEVENTH: - The private property of the stockholders shall not be liable
for the payment of corporate debts to any extent whatever.
TWELFTH: - The Corporation may transact business in any part of the world.
THIRTEENTH: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation by a
vote of the majority of the entire Board. The stockholders may make, alter
or repeal any By-Law whether or not adopted by them, provided however, that
any such additional By-Laws, alterations or repeal may be adopted only by
the affirmative vote of the holders of two-thirds or more of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors (considered for this purpose as one
class).
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FOURTEENTH: - Meetings of the Directors may be held outside of the State of
Delaware at such places as may be from time to time designated by the
Board, and the Directors may keep the books of the Company outside of the
State of Delaware at such places as may be from time to time designated by
them.
FIFTEENTH: - (a) In addition to any affirmative vote required by law, and
except as otherwise expressly provided in sections (b) and (c) of this
Article FIFTEENTH:
(A) any merger or consolidation of the Corporation or any Subsidiary
(as hereinafter defined) with or into (i) any Interested Stockholder
(as hereinafter defined) or (ii) any other corporation (whether or not
itself an Interested Stockholder), which, after such merger or
consolidation, would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of related transactions) to
or with any Interested Stockholder or any Affiliate of any Interested
Stockholder of any assets of the Corporation or any Subsidiary having
an aggregate fair market value of $1,000,000 or more, or
(C) the issuance or transfer by the Corporation or any Subsidiary (in
one transaction or a series of related transactions) of any securities
of the Corporation or any Subsidiary to any Interested Stockholder or
any Affiliate of any Interested Stockholder in exchange for cash,
securities or other property (or a combination thereof) having an
aggregate fair market value of $1,000,000 or more, or
(D) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation, or
(E) any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or any
similar transaction (whether or not with or into or otherwise involving
an Interested Stockholder) which has the effect, directly or
indirectly, of increasing the proportionate share of the outstanding
shares of any class of equity or convertible securities of the
Corporation or any Subsidiary which is directly or indirectly owned by
any Interested Stockholder, or any Affiliate of any Interested
Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article FIFTEENTH as one class ("Voting Shares"). Such affirmative vote shall
be required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
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(2) The term "business combination" as used in this Article
FIFTEENTH shall mean any transaction which is referred to any
one or more of clauses (A) through (E) of paragraph 1 of the
section (a).
(b) The provisions of section (a) of this Article FIFTEENTH shall not
be applicable to any particular business combination and such business
combination shall require only such affirmative vote as is required by
law and any other provisions of the Charter or Act of Incorporation of
By-Laws if such business combination has been approved by a majority of
the whole Board.
(c) For the purposes of this Article FIFTEENTH:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any Subsidiary) who
or which as of the record date for the determination of stockholders
entitled to notice of and to vote on such business combination, or
immediately prior to the consummation of any such transaction:
(A) is the beneficial owner, directly or indirectly, of more than 10%
of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time within two
years prior thereto was the beneficial owner, directly or indirectly,
of not less than 10% of the then outstanding voting Shares, or
(C) is an assignee of or has otherwise succeeded in any share of
capital stock of the Corporation which were at any time within two
years prior thereto beneficially owned by any Interested Stockholder,
and such assignment or succession shall have occurred in the course of
a transaction or series of transactions not involving a public offering
within the meaning of the Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and Associates (as
hereafter defined) beneficially own, directly or indirectly, or
(B) which such person or any of its Affiliates or Associates has (i)
the right to acquire (whether such right is exercisable immediately or
only after the passage of time), pursuant to any agreement, arrangement
or understanding or upon the exercise of conversion rights, exchange
rights, warrants or options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or understanding, or
11
<PAGE> 15
(C) which are beneficially owned, directly or indirectly, by any other
person with which such first mentioned person or any of its Affiliates
or Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any shares of
capital stock of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any other
Voting Shares which may be issuable pursuant to any agreement, or upon
exercise of conversion rights, warrants or options or otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings given
those terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect on December 31, 1981.
(6) "Subsidiary" shall mean any corporation of which a majority of any
class of equity security (as defined in Rule 3a11-1 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as in effect in
December 31, 1981) is owned, directly or indirectly, by the Corporation;
provided, however, that for the purposes of the definition of Investment
Stockholder set forth in paragraph (2) of this section (c), the term
"Subsidiary" shall mean only a corporation of which a majority of each
class of equity security is owned, directly or indirectly, by the
Corporation.
(d) majority of the directors shall have the power and duty to
determine for the purposes of this Article FIFTEENTH on the basis of
information known to them, (1) the number of Voting Shares beneficially
owned by any person (2) whether a person is an Affiliate or Associate
of another, (3) whether a person has an agreement, arrangement or
understanding with another as to the matters referred to in paragraph
(3) of section (c), or (4) whether the assets subject to any business
combination or the consideration received for the issuance or transfer
of securities by the Corporation, or any Subsidiary has an aggregate
fair market value of $1,000,000 or more.
(e) Nothing contained in this Article FIFTEENTH shall be construed to
relieve any Interested Stockholder from any fiduciary obligation
imposed by law.
SIXTEENTH: Notwithstanding any other provision of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and in addition to any
other vote that may be required by law, this Charter or Act of
Incorporation by the By-Laws), the affirmative vote of the holders of at
least two-thirds of the outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) shall be required to amend,
alter or repeal any provision of Articles FIFTH, THIRTEENTH, FIFTEENTH or
SIXTEENTH of this Charter or Act of Incorporation.
SEVENTEENTH: (a) a Director of this Corporation shall not be liable to the
Corporation
12
<PAGE> 16
or its stockholders for monetary damages for breach of fiduciary duty as a
Director, except to the extent such exemption from liability or limitation
thereof is not permitted under the Delaware General Corporation Laws as the
same exists or may hereafter be amended.
(b) Any repeal or modification of the foregoing paragraph shall not
adversely affect any right or protection of a Director of the
Corporation existing hereunder with respect to any act or omission
occurring prior to the time of such repeal or modification."
13
<PAGE> 17
EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON JANUARY 16, 1997
<PAGE> 18
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. The Annual Meeting of Stockholders shall be held on the
third Thursday in April each year at the principal office at the Company or at
such other date, time, or place as may be designated by resolution by the Board
of Directors.
Section 2. Special meetings of all stockholders may be called at any
time by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be given
by mailing to each stockholder at least ten (10) days before said meeting, at
his last known address, a written or printed notice fixing the time and place
of such meeting.
Section 4. A majority in the amount of the capital stock of the
Company issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one
vote, either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
DIRECTORS
Section 1. The number and classification of the Board of Directors
shall be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72)
years shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed
and conducted by the Board of Directors.
Section 5. The Board of Directors shall meet at the principal office
of the Company or elsewhere in its discretion at such times to be determined by
a majority of its members, or at the call of the Chairman of the Board of
Directors or the President.
<PAGE> 19
Section 6. Special meetings of the Board of Directors may be called
at any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of
any special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal, inability
to act, or disqualification of any director, the Board of Directors, although
less than a quorum, shall have the right to elect the successor who shall hold
office for the remainder of the full term of the class of directors in which
the vacancy occurred, and until such director's successor shall have been duly
elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect
from its own members a Chairman of the Board of Directors and a President who
may be the same person. The Board of Directors shall also elect at such
meeting a Secretary and a Treasurer, who may be the same person, may appoint at
any time such other committees and elect or appoint such other officers as it
may deem advisable. The Board of Directors may also elect at such meeting one
or more Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be in
charge of such of the departments or division of the Company as it may deem
advisable.
ARTICLE III
COMMITTEES
Section 1. Executive Committee
(A) The Executive Committee shall be composed of
not more than nine members who shall be selected by the Board of Directors from
its own members and who shall hold office during the pleasure of the Board.
2
<PAGE> 20
(B) The Executive Committee shall have all the
powers of the Board of Directors when it is not in session to transact all
business for and in behalf of the Company that may be brought before it.
(C) The Executive Committee shall meet at the
principal office of the Company or elsewhere in its discretion at such times to
be determined by a majority of its members, or at the call of the Chairman of
the Executive Committee or at the call of the Chairman of the Board of
Directors. The majority of its members shall be necessary to constitute a
quorum for the transaction of business. Special meetings of the Executive
Committee may be held at any time when a quorum is present.
(D) Minutes of each meeting of the Executive
Committee shall be kept and submitted to the Board of Directors at its next
meeting.
(E) The Executive Committee shall advise and
superintend all investments that may be made of the funds of the Company, and
shall direct the disposal of the same, in accordance with such rules and
regulations as the Board of Directors from time to time make.
(F) In the event of a state of disaster of
sufficient severity to prevent the conduct and management of the affairs and
business of the Company by its directors and officers as contemplated by these
By-Laws any two available members of the Executive Committee as constituted
immediately prior to such disaster shall constitute a quorum of that Committee
for the full conduct and management of the affairs and business of the Company
in accordance with the provisions of Article III of these By-Laws; and if less
than three members of the Trust Committee is constituted immediately prior to
such disaster shall be available for the transaction of its business, such
Executive Committee shall also be empowered to exercise all of the powers
reserved to the Trust Committee under Article III Section 2 hereof. In the
event of the unavailability, at such time, of a minimum of two members of such
Executive Committee, any three available directors shall constitute the
Executive Committee for the full conduct and management of the affairs and
business of the Company in accordance with the foregoing provisions of this
Section. This By-Law shall be subject to implementation by Resolutions of the
Board of Directors presently existing or hereafter passed from time to time for
that purpose, and any provisions of these By-Laws (other than this Section) and
any resolutions which are contrary to the provisions of this Section or to the
provisions of any such implementary Resolutions shall be suspended during such
a disaster period until it shall be determined by any interim Executive
Committee acting under this section that it shall be to the advantage of the
Company to resume the conduct and management of its affairs and business under
all of the other provisions of these By-Laws.
3
<PAGE> 21
Section 2. Trust Committee
(A) The Trust Committee shall be composed of not
more than thirteen members who shall be selected by the Board of Directors, a
majority of whom shall be members of the Board of Directors and who shall hold
office during the pleasure of the Board.
(B) The Trust Committee shall have general
supervision over the Trust Department and the investment of trust funds, in all
matters, however, being subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the
principal office of the Company or elsewhere in its discretion at such times to
be determined by a majority of its members or at the call of its chairman. A
majority of its members shall be necessary to constitute a quorum for the
transaction of business.
(D) Minutes of each meeting of the Trust Committee
shall be kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to
appoint Committees and/or designate officers or employees of the Company to
whom supervision over the investment of trust funds may be delegated when the
Trust Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five
members who shall be selected by the Board of Directors from its own members,
none of whom shall be an officer of the Company, and shall hold office at the
pleasure of the Board.
(B) The Audit Committee shall have general
supervision over the Audit Division in all matters however subject to the
approval of the Board of Directors; it shall consider all matters brought to
its attention by the officer in charge of the Audit Division, review all
reports of examination of the Company made by any governmental agency or such
independent auditor employed for that purpose, and make such recommendations to
the Board of Directors with respect thereto or with respect to any other
matters pertaining to auditing the Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and
wherever the majority of its members shall deem it to be proper for the
transaction of its business, and a majority of its Committee shall constitute a
quorum.
4
<PAGE> 22
Section 4. Compensation Committee
(A) The Compensation Committee shall be composed
of not more than five (5) members who shall be selected by the Board of
Directors from its own members who are not officers of the Company and who
shall hold office during the pleasure of the Board.
(B) The Compensation Committee shall in general
advise upon all matters of policy concerning the Company brought to its
attention by the management and from time to time review the management of the
Company, major organizational matters, including salaries and employee benefits
and specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be
called at any time by the Chairman of the Compensation Committee, the Chairman
of the Board of Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be
elected by the Board of Directors as an associate director, to serve during the
pleasure of the Board.
(B) An associate director shall be entitled to
attend all directors meetings and participate in the discussion of all matters
brought to the Board, with the exception that he would have no right to vote.
An associate director will be eligible for appointment to Committees of the
Company, with the exception of the Executive Committee, Audit Committee and
Compensation Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any
member of any Committee created under Article III of the By-Laws of this
Company, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absence or disqualified member.
ARTICLE IV
OFFICERS
Section 1. The Chairman of the Board of Directors shall preside at
all meetings of the Board and shall have such further authority and powers and
shall perform such duties as the Board of Directors may from time to time
confer and direct. He shall also exercise such powers
5
<PAGE> 23
and perform such duties as may from time to time be agreed upon between himself
and the President of the Company.
Section 2. The Vice Chairman of the Board. The Vice Chairman of the
Board of Directors shall preside at all meetings of the Board of Directors at
which the Chairman of the Board shall not be present and shall have such
further authority and powers and shall perform such duties as the Board of
Directors or the Chairman of the Board may from time to time confer and direct.
Section 3. The President shall have the powers and duties pertaining
to the office of the President conferred or imposed upon him by statute or
assigned to him by the Board of Directors in the absence of the Chairman of the
Board the President shall have the powers and duties of the Chairman of the
Board.
Section 4. The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and such
other powers and duties as may from time to time be assigned to them by the
Board of Directors, the Executive Committee, the Chairman of the Board or the
President and by the officer in charge of the department or division to which
they are assigned.
Section 6. The Secretary shall attend to the giving of notice of
meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings and
to recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all
assets and liabilities of the Company. He shall be custodian of and
responsible for all monies, funds and valuables of the Company and for the
keeping of proper records of the evidence of property or indebtedness and of
all the transactions of the Company. He shall have general supervision of the
expenditures of the Company and shall report to the Board of Directors at each
regular meeting of the condition of the Company, and perform such other duties
as may be assigned to him from time to time by the Board of Directors of the
Executive Committee.
6
<PAGE> 24
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.
Section 10. There may be one or more officers, subordinate in rank to
all Vice Presidents with such functional titles as shall be determined from
time to time by the Board of Directors, who shall ex officio hold the office
Assistant Secretary of this Company and who may perform such duties as may be
prescribed by the officer in charge of the department or division to whom they
are assigned.
Section 11. The powers and duties of all other officers of the
Company shall be those usually pertaining to their respective offices, subject
to the direction of the Board of Directors, the Executive Committee, Chairman
of the Board of Directors or the President and the officer in charge of the
department or division to which they are assigned.
ARTICLE V
STOCK AND STOCK CERTIFICATES
Section 1. Shares of stock shall be transferrable on the books of the
Company and a transfer book shall be kept in which all transfers of stock shall
be recorded.
Section 2. Certificate of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new
certificate or certificates shall be issued in lieu thereof.
7
<PAGE> 25
Duplicate certificates of stock shall be issued only upon giving such security
as may be satisfactory to the Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to fix
in advance a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the
date for the payment of any dividend, or the date for the allotment of rights,
or the date when any change or conversion or exchange of capital stock shall go
into effect, or a date in connection with obtaining such consent.
ARTICLE VI
SEAL
Section 1. The corporate seal of the Company shall be in the
following form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."
ARTICLE VII
FISCAL YEAR
Section 1. The fiscal year of the Company shall be the calendar year.
ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver
and the Secretary or any Assistant Secretary shall have full power and
authority to attest and affix the corporate seal of the Company to any and all
deeds, conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or
8
<PAGE> 26
confirmation by the Board of Directors or the Executive Committee, and any and
all such instruments shall have the same force and validity as though expressly
authorized by the Board of Directors and/or the Executive Committee.
ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES
Section 1. Directors and associate directors of the Company, other
than salaried officers of the Company, shall be paid such reasonable honoraria
or fees for attending meetings of the Board of Directors as the Board of
Directors may from time to time determine. Directors and associate directors
who serve as members of committees, other than salaried employees of the
Company, shall be paid such reasonable honoraria or fees for services as
members of committees as the Board of Directors shall from time to time
determine and directors and associate directors may be employed by the Company
for such special services as the Board of Directors may from time to time
determine and shall be paid for such special services so performed reasonable
compensation as may be determined by the Board of Directors.
ARTICLE X
INDEMNIFICATION
Section 1. (A) The Corporation shall indemnify and hold harmless, to
the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or
was a director, officer, employee or agent of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee,
fiduciary or agent of another corporation or of a partnership, joint venture,
trust, enterprise or non-profit entity, including service with respect to
employee benefit plans, against all liability and loss suffered and expenses
reasonably incurred by such person. The Corporation shall indemnify a person
in connection with a proceeding initiated by such person only if the proceeding
was authorized by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses
incurred in defending any proceeding in advance of its final disposition,
provided, however, that the payment of expenses incurred by a Director officer
in his capacity as a Director or officer in advance of the final disposition of
the proceeding shall be made only upon receipt of an undertaking by the
Director or officer to repay all amounts advanced if it should be ultimately
determined that the Director or officer is not entitled to be indemnified under
this Article or otherwise.
9
<PAGE> 27
(C) If a claim for indemnification or payment of
expenses, under this Article X is not paid in full within ninety days after a
written claim therefor has been received by the Corporation the claimant may
file suit to recover the unpaid amount of such claim and, if successful in
whole or in part, shall be entitled to be paid the expense of prosecuting such
claim. In any such action the Corporation shall have the burden of proving
that the claimant was not entitled to the requested indemnification of payment
of expenses under applicable law.
(D) The rights conferred on any person by this
Article X shall not be exclusive of any other rights which such person may have
or hereafter acquire under any statute, provision of the Charter or Act of
Incorporation, these By-Laws, agreement, vote of stockholders or disinterested
Directors or otherwise.
(E) Any repeal or modification of the foregoing
provisions of this Article X shall not adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring prior to
the time of such repeal or modification.
ARTICLE XI
AMENDMENTS TO THE BY-LAWS
Section 1. These By-Laws may be altered, amended or repealed, in
whole or in part, and any new By-Law or By-Laws adopted at any regular or
special meeting of the Board of Directors by a vote of the majority of all the
members of the Board of Directors then in office.
10
<PAGE> 28
EXHIBIT C
SECTION 321(b) CONSENT
Pursuant to Section 321(b) of the Trust Indenture Act of 1939,
Wilmington Trust Company hereby consents that reports of examinations by
Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: August 14, 1998 By: /s/ Emmett R. Harmon
--------------------
Name: Emmett R. Harmon
Title: Vice President
<PAGE> 29
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings banks with
state publication requirements. It has not been approved by any state banking
authorities. Refer to your appropriate state banking authorities for your
state publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
------------------------ ----------
Name of Bank City
in the State of DELAWARE, at the close of business on March 31, 1998.
ASSETS
<TABLE>
<CAPTION>
Thousands of dollars
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins . . . . . . . . . . . . . . . . . . . . . . . . . 180,015
Interest-bearing balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Held-to-maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 287,798
Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,355,745
Federal funds sold and securities purchased under agreements to resell . . . . . . . . . . . . . . . . . . . . 124,500
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . . 3,896,238
LESS: Allowance for loan and lease losses. . . . . . 61,635
LESS: Allocated transfer risk reserve. . . . . . . . 0
Loans and leases, net of unearned income, allowance, and reserve . . . . . . . . . . . . . . . . . . . 3,834,603
Assets held in trading accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Premises and fixed assets (including capitalized leases) . . . . . . . . . . . . . . . . . . . . . . . . . . . 134,016
Other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,444
Investments in unconsolidated subsidiaries and associated companies . . . . . . . . . . . . . . . . . . . . . . 10
Customers' liability to this bank on acceptances outstanding . . . . . . . . . . . . . . . . . . . . . . . . . 0
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,264
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215,048
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,189,443
</TABLE>
CONTINUED ON NEXT PAGE
<PAGE> 30
LIABILITIES
<TABLE>
<S> <C> <C>
Deposits:
In domestic offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,183,321
Noninterest-bearing . . . . . . . . 904,511
Interest-bearing. . . . . . . . . . 3,278,810
Federal funds purchased and Securities sold under agreements to repurchase . . . . . . . . . . . . . . . . . 558,553
Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,761
Trading liabilities (from Schedule RC-D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other borrowed money: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ///////
With original maturity of one year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 788,000
With original maturity of more than one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,000
Bank's liability on acceptances executed and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Subordinated notes and debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other liabilities (from Schedule RC-G) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99,777
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,730,412
</TABLE>
EQUITY CAPITAL
<TABLE>
<S> <C>
Perpetual preferred stock and related surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500
Surplus (exclude all surplus related to preferred stock) . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,118
Undivided profits and capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 388,458
Net unrealized holding gains (losses) on available-for-sale securities . . . . . . . . . . . . . . . . . . . . 7,955
Total equity capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 459,031
Total liabilities, limited-life preferred stock, and equity capital . . . . . . . . . . . . . . . . . . . . . . 6,189,443
</TABLE>
2
<PAGE> 1
EXHIBIT 25.3
Registration No.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) X
---
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
AMERICAN COIN MERCHANDISING, INC.
d/b/a SUGARLOAF CREATIONS, INC.
AMERICAN COIN MERCHANDISING TRUST II
(Exact name of obligor as specified in its charter)
84-1093721
Delaware To be applied for
(State of incorporation (I.R.S. employer identification no.)
or formation)
5660 Central Avenue
Boulder, Colorado 77002
(Address of principal executive offices) (Zip Code)
American Coin Merchandising Trust II Trust Preferred Securities
(Title of the indenture securities)
================================================================================
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust
powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the
obligor is not an affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which
includes the certificate of authority of Wilmington Trust
Company to commence business and the authorization of
Wilmington Trust Company to exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section
321(b) of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington
Trust Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, Wilmington Trust Company, a corporation organized and existing under
the laws of Delaware, has duly caused this Statement of Eligibility to be signed
on its behalf by the undersigned, thereunto duly authorized, all in the City of
Wilmington and State of Delaware on the 14th day of August, 1998.
[SEAL] WILMINGTON TRUST COMPANY
Attest: /s/ Donald G. MacKelcan By: /s/ Emmett R. Harmon
----------------------- -----------------------------------
Assistant Secretary Name: Emmett R. Harmon
Title: Vice President
<PAGE> 3
EXHIBIT A
AMENDED CHARTER
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON MAY 9, 1987
<PAGE> 4
AMENDED CHARTER
OR
ACT OF INCORPORATION
OF
WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, originally incorporated by an Act of the General
Assembly of the State of Delaware, entitled "An Act to Incorporate the Delaware
Guarantee and Trust Company", approved March 2, A.D. 1901, and the name of
which company was changed to "WILMINGTON TRUST COMPANY" by an amendment filed
in the Office of the Secretary of State on March 18, A.D. 1903, and the Charter
or Act of Incorporation of which company has been from time to time amended and
changed by merger agreements pursuant to the corporation law for state banks
and trust companies of the State of Delaware, does hereby alter and amend its
Charter or Act of Incorporation so that the same as so altered and amended
shall in its entirety read as follows:
FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.
SECOND: - The location of its principal office in the State of Delaware is
at Rodney Square North, in the City of Wilmington, County of New Castle;
the name of its resident agent is WILMINGTON TRUST COMPANY whose address is
Rodney Square North, in said City. In addition to such principal office,
the said corporation maintains and operates branch offices in the City of
Newark, New Castle County, Delaware, the Town of Newport, New Castle
County, Delaware, at Claymont, New Castle County, Delaware, at Greenville,
New Castle County Delaware, and at Milford Cross Roads, New Castle County,
Delaware, and shall be empowered to open, maintain and operate branch
offices at Ninth and Shipley Streets, 418 Delaware Avenue, 2120 Market
Street, and 3605 Market Street, all in the City of Wilmington, New Castle
County, Delaware, and such other branch offices or places of business as
may be authorized from time to time by the agency or agencies of the
government of the State of Delaware empowered to confer such authority.
THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this Corporation are
to do any or all of the things herein mentioned as fully and to the same
extent as natural persons might or could do and in any part of the world,
viz.:
(1) To sue and be sued, complain and defend in any Court of law or
equity and to make and use a common seal, and alter the seal at
pleasure, to hold, purchase, convey, mortgage or otherwise deal in real
and personal estate and property, and to appoint such officers and
agents as the business of the Corporation shall require, to make
by-laws not inconsistent with the Constitution or laws of the
<PAGE> 5
United States or of this State, to discount bills, notes or other
evidences of debt, to receive deposits of money, or securities for
money, to buy gold and silver bullion and foreign coins, to buy and
sell bills of exchange, and generally to use, exercise and enjoy all
the powers, rights, privileges and franchises incident to a corporation
which are proper or necessary for the transaction of the business of
the Corporation hereby created.
(2) To insure titles to real and personal property, or any estate or
interests therein, and to guarantee the holder of such property, real
or personal, against any claim or claims, adverse to his interest
therein, and to prepare and give certificates of title for any lands or
premises in the State of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the receipt,
collection, custody, investment and management of funds, and the
purchase, sale, management and disposal of property of all
descriptions, and to prepare and execute all papers which may be
necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds, leases,
conveyances, mortgages, bonds and legal papers of every description,
and to carry on the business of conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money, jewelry, plate,
deeds, bonds and any and all other personal property of every sort and
kind, from executors, administrators, guardians, public officers,
courts, receivers, assignees, trustees, and from all fiduciaries, and
from all other persons and individuals, and from all corporations
whether state, municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such property.
(6) To act as agent or otherwise for the purpose of registering,
issuing, certificating, countersigning, transferring or underwriting
the stock, bonds or other obligations of any corporation, association,
state or municipality, and may receive and manage any sinking fund
therefor on such terms as may be agreed upon between the two parties,
and in like manner may act as Treasurer of any corporation or
municipality.
(7) To act as Trustee under any deed of trust, mortgage, bond or other
instrument issued by any state, municipality, body politic,
corporation, association or person, either alone or in conjunction with
any other person or persons, corporation or corporations.
(8) To guarantee the validity, performance or effect of any contract
or agreement, and the fidelity of persons holding places of
responsibility or trust; to become surety for any person, or persons,
for the faithful performance of any
2
<PAGE> 6
trust, office, duty, contract or agreement, either by itself or in
conjunction with any other person, or persons, corporation, or
corporations, or in like manner become surety upon any bond,
recognizance, obligation, judgment, suit, order, or decree to be
entered in any court of record within the State of Delaware or
elsewhere, or which may now or hereafter be required by any law, judge,
officer or court in the State of Delaware or elsewhere.
(9) To act by any and every method of appointment as trustee, trustee
in bankruptcy, receiver, assignee, assignee in bankruptcy, executor,
administrator, guardian, bailee, or in any other trust capacity in the
receiving, holding, managing, and disposing of any and all estates and
property, real, personal or mixed, and to be appointed as such trustee,
trustee in bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian or bailee by any persons,
corporations, court, officer, or authority, in the State of Delaware or
elsewhere; and whenever this Corporation is so appointed by any person,
corporation, court, officer or authority such trustee, trustee in
bankruptcy, receiver, assignee, assignee in bankruptcy, executor,
administrator, guardian, bailee, or in any other trust capacity, it
shall not be required to give bond with surety, but its capital stock
shall be taken and held as security for the performance of the duties
devolving upon it by such appointment.
(10) And for its care, management and trouble, and the exercise of any
of its powers hereby given, or for the performance of any of the duties
which it may undertake or be called upon to perform, or for the
assumption of any responsibility the said Corporation may be entitled
to receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages, debentures,
shares of capital stock, and other securities, obligations, contracts
and evidences of indebtedness, of any private, public or municipal
corporation within and without the State of Delaware, or of the
Government of the United States, or of any state, territory, colony, or
possession thereof, or of any foreign government or country; to
receive, collect, receipt for, and dispose of interest, dividends and
income upon and from any of the bonds, mortgages, debentures, notes,
shares of capital stock, securities, obligations, contracts, evidences
of indebtedness and other property held and owned by it, and to
exercise in respect of all such bonds, mortgages, debentures, notes,
shares of capital stock, securities, obligations, contracts, evidences
of indebtedness and other property, any and all the rights, powers and
privileges of individual owners thereof, including the right to vote
thereon; to invest and deal in and with any of the moneys of the
Corporation upon such securities and in such manner as it may think fit
and proper, and from time to time to vary or realize such investments;
to issue bonds and secure the same by pledges or deeds of trust or
mortgages of or upon the whole or any part of the property held or
owned by the Corporation, and to sell and pledge such bonds,
3
<PAGE> 7
as and when the Board of Directors shall determine, and in the
promotion of its said corporate business of investment and to the
extent authorized by law, to lease, purchase, hold, sell, assign,
transfer, pledge, mortgage and convey real and personal property of any
name and nature and any estate or interest therein.
(b) In furtherance of, and not in limitation, of the powers conferred by
the laws of the State of Delaware, it is hereby expressly provided that the
said Corporation shall also have the following powers:
(1) To do any or all of the things herein set forth, to the same
extent as natural persons might or could do, and in any part of the
world.
(2) To acquire the good will, rights, property and franchises and to
undertake the whole or any part of the assets and liabilities of any
person, firm, association or corporation, and to pay for the same in
cash, stock of this Corporation, bonds or otherwise; to hold or in any
manner to dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any part of any
business so acquired, and to exercise all the powers necessary or
convenient in and about the conduct and management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien, and to
lease, sell, exchange, transfer, or in any manner whatever dispose of
property, real, personal or mixed, wherever situated.
(4) To enter into, make, perform and carry out contracts of every kind
with any person, firm, association or corporation, and, without limit
as to amount, to draw, make, accept, endorse, discount, execute and
issue promissory notes, drafts, bills of exchange, warrants, bonds,
debentures, and other negotiable or transferable instruments.
(5) To have one or more offices, to carry on all or any of its
operations and businesses, without restriction to the same extent as
natural persons might or could do, to purchase or otherwise acquire, to
hold, own, to mortgage, sell, convey or otherwise dispose of, real and
personal property, of every class and description, in any State,
District, Territory or Colony of the United States, and in any foreign
country or place.
(6) It is the intention that the objects, purposes and powers
specified and clauses contained in this paragraph shall (except where
otherwise expressed in said paragraph) be nowise limited or restricted
by reference to or inference from the terms of any other clause of this
or any other paragraph in this charter, but that the objects, purposes
and powers specified in each of the clauses of this paragraph shall be
regarded as independent objects, purposes and powers.
4
<PAGE> 8
FOURTH: - (a) The total number of shares of all classes of stock which the
Corporation shall have authority to issue is forty-one million (41,000,000)
shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par value
$10.00 per share (hereinafter referred to as "Preferred Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par value $1.00
per share (hereinafter referred to as "Common Stock").
(b) Shares of Preferred Stock may be issued from time to time in one or
more series as may from time to time be determined by the Board of
Directors each of said series to be distinctly designated. All shares of
any one series of Preferred Stock shall be alike in every particular,
except that there may be different dates from which dividends, if any,
thereon shall be cumulative, if made cumulative. The voting powers and the
preferences and relative, participating, optional and other special rights
of each such series, and the qualifications, limitations or restrictions
thereof, if any, may differ from those of any and all other series at any
time outstanding; and, subject to the provisions of subparagraph 1 of
Paragraph (c) of this Article FOURTH, the Board of Directors of the
Corporation is hereby expressly granted authority to fix by resolution or
resolutions adopted prior to the issuance of any shares of a particular
series of Preferred Stock, the voting powers and the designations,
preferences and relative, optional and other special rights, and the
qualifications, limitations and restrictions of such series, including, but
without limiting the generality of the foregoing, the following:
(1) The distinctive designation of, and the number of shares of
Preferred Stock which shall constitute such series, which number may be
increased (except where otherwise provided by the Board of Directors)
or decreased (but not below the number of shares thereof then
outstanding) from time to time by like action of the Board of
Directors;
(2) The rate and times at which, and the terms and conditions on
which, dividends, if any, on Preferred Stock of such series shall be
paid, the extent of the preference or relation, if any, of such
dividends to the dividends payable on any other class or classes, or
series of the same or other class of stock and whether such dividends
shall be cumulative or non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of such
series to convert the same into or exchange the same for, shares of any
other class or classes or of any series of the same or any other class
or classes of stock of the Corporation and the terms and conditions of
such conversion or exchange;
(4) Whether or not Preferred Stock of such series shall be subject to
redemption, and the redemption price or prices and the time or times at
which, and the terms and conditions on which, Preferred Stock of such
series may be redeemed.
5
<PAGE> 9
(5) The rights, if any, of the holders of Preferred Stock of such
series upon the voluntary or involuntary liquidation, merger,
consolidation, distribution or sale of assets, dissolution or winding-
up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase account,
if any, to be provided for the Preferred Stock of such series; and
(7) The voting powers, if any, of the holders of such series of
Preferred Stock which may, without limiting the generality of the
foregoing include the right, voting as a series or by itself or
together with other series of Preferred Stock or all series of
Preferred Stock as a class, to elect one or more directors of the
Corporation if there shall have been a default in the payment of
dividends on any one or more series of Preferred Stock or under such
circumstances and on such conditions as the Board of Directors may
determine.
(c) (1) After the requirements with respect to preferential dividends on
the Preferred Stock (fixed in accordance with the provisions of section (b)
of this Article FOURTH), if any, shall have been met and after the
Corporation shall have complied with all the requirements, if any, with
respect to the setting aside of sums as sinking funds or redemption or
purchase accounts (fixed in accordance with the provisions of section (b)
of this Article FOURTH), and subject further to any conditions which may be
fixed in accordance with the provisions of section (b) of this Article
FOURTH, then and not otherwise the holders of Common Stock shall be
entitled to receive such dividends as may be declared from time to time by
the Board of Directors.
(2) After distribution in full of the preferential amount, if any,
(fixed in accordance with the provisions of section (b) of this Article
FOURTH), to be distributed to the holders of Preferred Stock in the
event of voluntary or involuntary liquidation, distribution or sale of
assets, dissolution or winding-up, of the Corporation, the holders of
the Common Stock shall be entitled to receive all of the remaining
assets of the Corporation, tangible and intangible, of whatever kind
available for distribution to stockholders ratably in proportion to the
number of shares of Common Stock held by them respectively.
(3) Except as may otherwise be required by law or by the provisions of
such resolution or resolutions as may be adopted by the Board of
Directors pursuant to section (b) of this Article FOURTH, each holder
of Common Stock shall have one vote in respect of each share of Common
Stock held on all matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock or of
options, warrants or other rights to purchase shares of any class or series
of stock or of other securities of the Corporation shall have any
preemptive right to purchase or subscribe for any unissued stock of any
class or series or any additional shares of any class or series to be
6
<PAGE> 10
issued by reason of any increase of the authorized capital stock of the
Corporation of any class or series, or bonds, certificates of indebtedness,
debentures or other securities convertible into or exchangeable for stock
of the Corporation of any class or series, or carrying any right to
purchase stock of any class or series, but any such unissued stock,
additional authorized issue of shares of any class or series of stock or
securities convertible into or exchangeable for stock, or carrying any
right to purchase stock, may be issued and disposed of pursuant to
resolution of the Board of Directors to such persons, firms, corporations
or associations, whether such holders or others, and upon such terms as may
be deemed advisable by the Board of Directors in the exercise of its sole
discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and rights
of each other series of Preferred Stock shall, in each case, be as fixed
from time to time by the Board of Directors in the resolution or
resolutions adopted pursuant to authority granted in section (b) of this
Article FOURTH and the consent, by class or series vote or otherwise, of
the holders of such of the series of Preferred Stock as are from time to
time outstanding shall not be required for the issuance by the Board of
Directors of any other series of Preferred Stock whether or not the powers,
preferences and rights of such other series shall be fixed by the Board of
Directors as senior to, or on a parity with, the powers, preferences and
rights of such outstanding series, or any of them; provided, however, that
the Board of Directors may provide in the resolution or resolutions as to
any series of Preferred Stock adopted pursuant to section (b) of this
Article FOURTH that the consent of the holders of a majority (or such
greater proportion as shall be therein fixed) of the outstanding shares of
such series voting thereon shall be required for the issuance of any or all
other series of Preferred Stock.
(f) Subject to the provisions of section (e), shares of any series of
Preferred Stock may be issued from time to time as the Board of Directors
of the Corporation shall determine and on such terms and for such
consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and for such
consideration as shall be fixed by the Board of Directors.
(h) The authorized amount of shares of Common Stock and of Preferred Stock
may, without a class or series vote, be increased or decreased from time to
time by the affirmative vote of the holders of a majority of the stock of
the Corporation entitled to vote thereon.
FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of directors
constituting the entire Board shall be not less than five nor more than
twenty-five as fixed from time to time by vote of a majority of the whole
Board, provided, however, that the number of directors shall not
7
<PAGE> 11
be reduced so as to shorten the term of any director at the time in office,
and provided further, that the number of directors constituting the whole
Board shall be twenty-four until otherwise fixed by a majority of the whole
Board.
(b) The Board of Directors shall be divided into three classes, as nearly
equal in number as the then total number of directors constituting the
whole Board permits, with the term of office of one class expiring each
year. At the annual meeting of stockholders in 1982, directors of the
first class shall be elected to hold office for a term expiring at the next
succeeding annual meeting, directors of the second class shall be elected
to hold office for a term expiring at the second succeeding annual meeting
and directors of the third class shall be elected to hold office for a term
expiring at the third succeeding annual meeting. Any vacancies in the
Board of Directors for any reason, and any newly created directorships
resulting from any increase in the directors, may be filled by the Board of
Directors, acting by a majority of the directors then in office, although
less than a quorum, and any directors so chosen shall hold office until the
next annual election of directors. At such election, the stockholders
shall elect a successor to such director to hold office until the next
election of the class for which such director shall have been chosen and
until his successor shall be elected and qualified. No decrease in the
number of directors shall shorten the term of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding the
fact that some lesser percentage may be specified by law, this Charter or
Act of Incorporation or the By-Laws of the Corporation), any director or
the entire Board of Directors of the Corporation may be removed at any time
without cause, but only by the affirmative vote of the holders of two-
thirds or more of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) cast at a meeting of the
stockholders called for that purpose.
(d) Nominations for the election of directors may be made by the Board of
Directors or by any stockholder entitled to vote for the election of
directors. Such nominations shall be made by notice in writing, delivered
or mailed by first class United States mail, postage prepaid, to the
Secretary of the Corporation not less than 14 days nor more than 50 days
prior to any meeting of the stockholders called for the election of
directors; provided, however, that if less than 21 days' notice of the
meeting is given to stockholders, such written notice shall be delivered or
mailed, as prescribed, to the Secretary of the Corporation not later than
the close of the seventh day following the day on which notice of the
meeting was mailed to stockholders. Notice of nominations which are
proposed by the Board of Directors shall be given by the Chairman on behalf
of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name, age,
business address and, if known, residence address of each nominee proposed
in such notice, (ii) the principal occupation or employment of such nominee
and (iii) the number of shares of
8
<PAGE> 12
stock of the Corporation which are beneficially owned by each such nominee.
(f) The Chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with
the foregoing procedure, and if he should so determine, he shall so declare
to the meeting and the defective nomination shall be disregarded.
(g) No action required to be taken or which may be taken at any annual or
special meeting of stockholders of the Corporation may be taken without a
meeting, and the power of stockholders to consent in writing, without a
meeting, to the taking of any action is specifically denied.
SIXTH: - The Directors shall choose such officers, agent and servants as
may be provided in the By-Laws as they may from time to time find necessary
or proper.
SEVENTH: - The Corporation hereby created is hereby given the same powers,
rights and privileges as may be conferred upon corporations organized under
the Act entitled "An Act Providing a General Corporation Law", approved
March 10, 1899, as from time to time amended.
EIGHTH: - This Act shall be deemed and taken to be a private Act.
NINTH: - This Corporation is to have perpetual existence.
TENTH: - The Board of Directors, by resolution passed by a majority of the
whole Board, may designate any of their number to constitute an Executive
Committee, which Committee, to the extent provided in said resolution, or
in the By-Laws of the Company, shall have and may exercise all of the
powers of the Board of Directors in the management of the business and
affairs of the Corporation, and shall have power to authorize the seal of
the Corporation to be affixed to all papers which may require it.
ELEVENTH: - The private property of the stockholders shall not be liable
for the payment of corporate debts to any extent whatever.
TWELFTH: - The Corporation may transact business in any part of the world.
THIRTEENTH: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation by a
vote of the majority of the entire Board. The stockholders may make, alter
or repeal any By-Law whether or not adopted by them, provided however, that
any such additional By-Laws, alterations or repeal may be adopted only by
the affirmative vote of the holders of two-thirds or more of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors (considered for this purpose as one
class).
9
<PAGE> 13
FOURTEENTH: - Meetings of the Directors may be held outside of the State of
Delaware at such places as may be from time to time designated by the
Board, and the Directors may keep the books of the Company outside of the
State of Delaware at such places as may be from time to time designated by
them.
FIFTEENTH: - (a) In addition to any affirmative vote required by law, and
except as otherwise expressly provided in sections (b) and (c) of this
Article FIFTEENTH:
(A) any merger or consolidation of the Corporation or any Subsidiary
(as hereinafter defined) with or into (i) any Interested Stockholder
(as hereinafter defined) or (ii) any other corporation (whether or not
itself an Interested Stockholder), which, after such merger or
consolidation, would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of related transactions) to
or with any Interested Stockholder or any Affiliate of any Interested
Stockholder of any assets of the Corporation or any Subsidiary having
an aggregate fair market value of $1,000,000 or more, or
(C) the issuance or transfer by the Corporation or any Subsidiary (in
one transaction or a series of related transactions) of any securities
of the Corporation or any Subsidiary to any Interested Stockholder or
any Affiliate of any Interested Stockholder in exchange for cash,
securities or other property (or a combination thereof) having an
aggregate fair market value of $1,000,000 or more, or
(D) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation, or
(E) any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or any
similar transaction (whether or not with or into or otherwise involving
an Interested Stockholder) which has the effect, directly or
indirectly, of increasing the proportionate share of the outstanding
shares of any class of equity or convertible securities of the
Corporation or any Subsidiary which is directly or indirectly owned by
any Interested Stockholder, or any Affiliate of any Interested
Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article FIFTEENTH as one class ("Voting Shares"). Such affirmative vote shall
be required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
10
<PAGE> 14
(2) The term "business combination" as used in this Article
FIFTEENTH shall mean any transaction which is referred to any
one or more of clauses (A) through (E) of paragraph 1 of the
section (a).
(b) The provisions of section (a) of this Article FIFTEENTH shall not
be applicable to any particular business combination and such business
combination shall require only such affirmative vote as is required by
law and any other provisions of the Charter or Act of Incorporation of
By-Laws if such business combination has been approved by a majority of
the whole Board.
(c) For the purposes of this Article FIFTEENTH:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any Subsidiary) who
or which as of the record date for the determination of stockholders
entitled to notice of and to vote on such business combination, or
immediately prior to the consummation of any such transaction:
(A) is the beneficial owner, directly or indirectly, of more than 10%
of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time within two
years prior thereto was the beneficial owner, directly or indirectly,
of not less than 10% of the then outstanding voting Shares, or
(C) is an assignee of or has otherwise succeeded in any share of
capital stock of the Corporation which were at any time within two
years prior thereto beneficially owned by any Interested Stockholder,
and such assignment or succession shall have occurred in the course of
a transaction or series of transactions not involving a public offering
within the meaning of the Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and Associates (as
hereafter defined) beneficially own, directly or indirectly, or
(B) which such person or any of its Affiliates or Associates has (i)
the right to acquire (whether such right is exercisable immediately or
only after the passage of time), pursuant to any agreement, arrangement
or understanding or upon the exercise of conversion rights, exchange
rights, warrants or options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or understanding, or
11
<PAGE> 15
(C) which are beneficially owned, directly or indirectly, by any other
person with which such first mentioned person or any of its Affiliates
or Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any shares of
capital stock of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any other
Voting Shares which may be issuable pursuant to any agreement, or upon
exercise of conversion rights, warrants or options or otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings given
those terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect on December 31, 1981.
(6) "Subsidiary" shall mean any corporation of which a majority of any
class of equity security (as defined in Rule 3a11-1 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as in effect in
December 31, 1981) is owned, directly or indirectly, by the Corporation;
provided, however, that for the purposes of the definition of Investment
Stockholder set forth in paragraph (2) of this section (c), the term
"Subsidiary" shall mean only a corporation of which a majority of each
class of equity security is owned, directly or indirectly, by the
Corporation.
(d) majority of the directors shall have the power and duty to
determine for the purposes of this Article FIFTEENTH on the basis of
information known to them, (1) the number of Voting Shares beneficially
owned by any person (2) whether a person is an Affiliate or Associate
of another, (3) whether a person has an agreement, arrangement or
understanding with another as to the matters referred to in paragraph
(3) of section (c), or (4) whether the assets subject to any business
combination or the consideration received for the issuance or transfer
of securities by the Corporation, or any Subsidiary has an aggregate
fair market value of $1,000,000 or more.
(e) Nothing contained in this Article FIFTEENTH shall be construed to
relieve any Interested Stockholder from any fiduciary obligation
imposed by law.
SIXTEENTH: Notwithstanding any other provision of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and in addition to any
other vote that may be required by law, this Charter or Act of
Incorporation by the By-Laws), the affirmative vote of the holders of at
least two-thirds of the outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) shall be required to amend,
alter or repeal any provision of Articles FIFTH, THIRTEENTH, FIFTEENTH or
SIXTEENTH of this Charter or Act of Incorporation.
SEVENTEENTH: (a) a Director of this Corporation shall not be liable to the
Corporation
12
<PAGE> 16
or its stockholders for monetary damages for breach of fiduciary duty as a
Director, except to the extent such exemption from liability or limitation
thereof is not permitted under the Delaware General Corporation Laws as the
same exists or may hereafter be amended.
(b) Any repeal or modification of the foregoing paragraph shall not
adversely affect any right or protection of a Director of the
Corporation existing hereunder with respect to any act or omission
occurring prior to the time of such repeal or modification."
13
<PAGE> 17
EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON JANUARY 16, 1997
<PAGE> 18
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. The Annual Meeting of Stockholders shall be held on the
third Thursday in April each year at the principal office at the Company or at
such other date, time, or place as may be designated by resolution by the Board
of Directors.
Section 2. Special meetings of all stockholders may be called at any
time by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be given
by mailing to each stockholder at least ten (10) days before said meeting, at
his last known address, a written or printed notice fixing the time and place
of such meeting.
Section 4. A majority in the amount of the capital stock of the
Company issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one
vote, either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
DIRECTORS
Section 1. The number and classification of the Board of Directors
shall be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72)
years shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed
and conducted by the Board of Directors.
Section 5. The Board of Directors shall meet at the principal office
of the Company or elsewhere in its discretion at such times to be determined by
a majority of its members, or at the call of the Chairman of the Board of
Directors or the President.
<PAGE> 19
Section 6. Special meetings of the Board of Directors may be called
at any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of
any special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal, inability
to act, or disqualification of any director, the Board of Directors, although
less than a quorum, shall have the right to elect the successor who shall hold
office for the remainder of the full term of the class of directors in which
the vacancy occurred, and until such director's successor shall have been duly
elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect
from its own members a Chairman of the Board of Directors and a President who
may be the same person. The Board of Directors shall also elect at such
meeting a Secretary and a Treasurer, who may be the same person, may appoint at
any time such other committees and elect or appoint such other officers as it
may deem advisable. The Board of Directors may also elect at such meeting one
or more Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be in
charge of such of the departments or division of the Company as it may deem
advisable.
ARTICLE III
COMMITTEES
Section 1. Executive Committee
(A) The Executive Committee shall be composed of
not more than nine members who shall be selected by the Board of Directors from
its own members and who shall hold office during the pleasure of the Board.
2
<PAGE> 20
(B) The Executive Committee shall have all the
powers of the Board of Directors when it is not in session to transact all
business for and in behalf of the Company that may be brought before it.
(C) The Executive Committee shall meet at the
principal office of the Company or elsewhere in its discretion at such times to
be determined by a majority of its members, or at the call of the Chairman of
the Executive Committee or at the call of the Chairman of the Board of
Directors. The majority of its members shall be necessary to constitute a
quorum for the transaction of business. Special meetings of the Executive
Committee may be held at any time when a quorum is present.
(D) Minutes of each meeting of the Executive
Committee shall be kept and submitted to the Board of Directors at its next
meeting.
(E) The Executive Committee shall advise and
superintend all investments that may be made of the funds of the Company, and
shall direct the disposal of the same, in accordance with such rules and
regulations as the Board of Directors from time to time make.
(F) In the event of a state of disaster of
sufficient severity to prevent the conduct and management of the affairs and
business of the Company by its directors and officers as contemplated by these
By-Laws any two available members of the Executive Committee as constituted
immediately prior to such disaster shall constitute a quorum of that Committee
for the full conduct and management of the affairs and business of the Company
in accordance with the provisions of Article III of these By-Laws; and if less
than three members of the Trust Committee is constituted immediately prior to
such disaster shall be available for the transaction of its business, such
Executive Committee shall also be empowered to exercise all of the powers
reserved to the Trust Committee under Article III Section 2 hereof. In the
event of the unavailability, at such time, of a minimum of two members of such
Executive Committee, any three available directors shall constitute the
Executive Committee for the full conduct and management of the affairs and
business of the Company in accordance with the foregoing provisions of this
Section. This By-Law shall be subject to implementation by Resolutions of the
Board of Directors presently existing or hereafter passed from time to time for
that purpose, and any provisions of these By-Laws (other than this Section) and
any resolutions which are contrary to the provisions of this Section or to the
provisions of any such implementary Resolutions shall be suspended during such
a disaster period until it shall be determined by any interim Executive
Committee acting under this section that it shall be to the advantage of the
Company to resume the conduct and management of its affairs and business under
all of the other provisions of these By-Laws.
3
<PAGE> 21
Section 2. Trust Committee
(A) The Trust Committee shall be composed of not
more than thirteen members who shall be selected by the Board of Directors, a
majority of whom shall be members of the Board of Directors and who shall hold
office during the pleasure of the Board.
(B) The Trust Committee shall have general
supervision over the Trust Department and the investment of trust funds, in all
matters, however, being subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the
principal office of the Company or elsewhere in its discretion at such times to
be determined by a majority of its members or at the call of its chairman. A
majority of its members shall be necessary to constitute a quorum for the
transaction of business.
(D) Minutes of each meeting of the Trust Committee
shall be kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to
appoint Committees and/or designate officers or employees of the Company to
whom supervision over the investment of trust funds may be delegated when the
Trust Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five
members who shall be selected by the Board of Directors from its own members,
none of whom shall be an officer of the Company, and shall hold office at the
pleasure of the Board.
(B) The Audit Committee shall have general
supervision over the Audit Division in all matters however subject to the
approval of the Board of Directors; it shall consider all matters brought to
its attention by the officer in charge of the Audit Division, review all
reports of examination of the Company made by any governmental agency or such
independent auditor employed for that purpose, and make such recommendations to
the Board of Directors with respect thereto or with respect to any other
matters pertaining to auditing the Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and
wherever the majority of its members shall deem it to be proper for the
transaction of its business, and a majority of its Committee shall constitute a
quorum.
4
<PAGE> 22
Section 4. Compensation Committee
(A) The Compensation Committee shall be composed
of not more than five (5) members who shall be selected by the Board of
Directors from its own members who are not officers of the Company and who
shall hold office during the pleasure of the Board.
(B) The Compensation Committee shall in general
advise upon all matters of policy concerning the Company brought to its
attention by the management and from time to time review the management of the
Company, major organizational matters, including salaries and employee benefits
and specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be
called at any time by the Chairman of the Compensation Committee, the Chairman
of the Board of Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be
elected by the Board of Directors as an associate director, to serve during the
pleasure of the Board.
(B) An associate director shall be entitled to
attend all directors meetings and participate in the discussion of all matters
brought to the Board, with the exception that he would have no right to vote.
An associate director will be eligible for appointment to Committees of the
Company, with the exception of the Executive Committee, Audit Committee and
Compensation Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any
member of any Committee created under Article III of the By-Laws of this
Company, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absence or disqualified member.
ARTICLE IV
OFFICERS
Section 1. The Chairman of the Board of Directors shall preside at
all meetings of the Board and shall have such further authority and powers and
shall perform such duties as the Board of Directors may from time to time
confer and direct. He shall also exercise such powers
5
<PAGE> 23
and perform such duties as may from time to time be agreed upon between himself
and the President of the Company.
Section 2. The Vice Chairman of the Board. The Vice Chairman of the
Board of Directors shall preside at all meetings of the Board of Directors at
which the Chairman of the Board shall not be present and shall have such
further authority and powers and shall perform such duties as the Board of
Directors or the Chairman of the Board may from time to time confer and direct.
Section 3. The President shall have the powers and duties pertaining
to the office of the President conferred or imposed upon him by statute or
assigned to him by the Board of Directors in the absence of the Chairman of the
Board the President shall have the powers and duties of the Chairman of the
Board.
Section 4. The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and such
other powers and duties as may from time to time be assigned to them by the
Board of Directors, the Executive Committee, the Chairman of the Board or the
President and by the officer in charge of the department or division to which
they are assigned.
Section 6. The Secretary shall attend to the giving of notice of
meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings and
to recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all
assets and liabilities of the Company. He shall be custodian of and
responsible for all monies, funds and valuables of the Company and for the
keeping of proper records of the evidence of property or indebtedness and of
all the transactions of the Company. He shall have general supervision of the
expenditures of the Company and shall report to the Board of Directors at each
regular meeting of the condition of the Company, and perform such other duties
as may be assigned to him from time to time by the Board of Directors of the
Executive Committee.
6
<PAGE> 24
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.
Section 10. There may be one or more officers, subordinate in rank to
all Vice Presidents with such functional titles as shall be determined from
time to time by the Board of Directors, who shall ex officio hold the office
Assistant Secretary of this Company and who may perform such duties as may be
prescribed by the officer in charge of the department or division to whom they
are assigned.
Section 11. The powers and duties of all other officers of the
Company shall be those usually pertaining to their respective offices, subject
to the direction of the Board of Directors, the Executive Committee, Chairman
of the Board of Directors or the President and the officer in charge of the
department or division to which they are assigned.
ARTICLE V
STOCK AND STOCK CERTIFICATES
Section 1. Shares of stock shall be transferrable on the books of the
Company and a transfer book shall be kept in which all transfers of stock shall
be recorded.
Section 2. Certificate of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new
certificate or certificates shall be issued in lieu thereof.
7
<PAGE> 25
Duplicate certificates of stock shall be issued only upon giving such security
as may be satisfactory to the Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to fix
in advance a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the
date for the payment of any dividend, or the date for the allotment of rights,
or the date when any change or conversion or exchange of capital stock shall go
into effect, or a date in connection with obtaining such consent.
ARTICLE VI
SEAL
Section 1. The corporate seal of the Company shall be in the
following form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."
ARTICLE VII
FISCAL YEAR
Section 1. The fiscal year of the Company shall be the calendar year.
ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver
and the Secretary or any Assistant Secretary shall have full power and
authority to attest and affix the corporate seal of the Company to any and all
deeds, conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or
8
<PAGE> 26
confirmation by the Board of Directors or the Executive Committee, and any and
all such instruments shall have the same force and validity as though expressly
authorized by the Board of Directors and/or the Executive Committee.
ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES
Section 1. Directors and associate directors of the Company, other
than salaried officers of the Company, shall be paid such reasonable honoraria
or fees for attending meetings of the Board of Directors as the Board of
Directors may from time to time determine. Directors and associate directors
who serve as members of committees, other than salaried employees of the
Company, shall be paid such reasonable honoraria or fees for services as
members of committees as the Board of Directors shall from time to time
determine and directors and associate directors may be employed by the Company
for such special services as the Board of Directors may from time to time
determine and shall be paid for such special services so performed reasonable
compensation as may be determined by the Board of Directors.
ARTICLE X
INDEMNIFICATION
Section 1. (A) The Corporation shall indemnify and hold harmless, to
the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or
was a director, officer, employee or agent of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee,
fiduciary or agent of another corporation or of a partnership, joint venture,
trust, enterprise or non-profit entity, including service with respect to
employee benefit plans, against all liability and loss suffered and expenses
reasonably incurred by such person. The Corporation shall indemnify a person
in connection with a proceeding initiated by such person only if the proceeding
was authorized by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses
incurred in defending any proceeding in advance of its final disposition,
provided, however, that the payment of expenses incurred by a Director officer
in his capacity as a Director or officer in advance of the final disposition of
the proceeding shall be made only upon receipt of an undertaking by the
Director or officer to repay all amounts advanced if it should be ultimately
determined that the Director or officer is not entitled to be indemnified under
this Article or otherwise.
9
<PAGE> 27
(C) If a claim for indemnification or payment of
expenses, under this Article X is not paid in full within ninety days after a
written claim therefor has been received by the Corporation the claimant may
file suit to recover the unpaid amount of such claim and, if successful in
whole or in part, shall be entitled to be paid the expense of prosecuting such
claim. In any such action the Corporation shall have the burden of proving
that the claimant was not entitled to the requested indemnification of payment
of expenses under applicable law.
(D) The rights conferred on any person by this
Article X shall not be exclusive of any other rights which such person may have
or hereafter acquire under any statute, provision of the Charter or Act of
Incorporation, these By-Laws, agreement, vote of stockholders or disinterested
Directors or otherwise.
(E) Any repeal or modification of the foregoing
provisions of this Article X shall not adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring prior to
the time of such repeal or modification.
ARTICLE XI
AMENDMENTS TO THE BY-LAWS
Section 1. These By-Laws may be altered, amended or repealed, in
whole or in part, and any new By-Law or By-Laws adopted at any regular or
special meeting of the Board of Directors by a vote of the majority of all the
members of the Board of Directors then in office.
10
<PAGE> 28
EXHIBIT C
SECTION 321(b) CONSENT
Pursuant to Section 321(b) of the Trust Indenture Act of 1939,
Wilmington Trust Company hereby consents that reports of examinations by
Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: August 14, 1998 By: /s/ Emmett R. Harmon
----------------------------------------
Name: Emmett R. Harmon
Title: Vice President
<PAGE> 29
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings banks with
state publication requirements. It has not been approved by any state banking
authorities. Refer to your appropriate state banking authorities for your
state publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
------------------------ ----------
Name of Bank City
in the State of DELAWARE, at the close of business on March 31, 1998.
ASSETS
<TABLE>
<CAPTION>
Thousands of dollars
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins . . . . . . . . . . . . . . . . . . . . . . . . . 180,015
Interest-bearing balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Held-to-maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 287,798
Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,355,745
Federal funds sold and securities purchased under agreements to resell . . . . . . . . . . . . . . . . . . . . 124,500
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . . 3,896,238
LESS: Allowance for loan and lease losses. . . . . . 61,635
LESS: Allocated transfer risk reserve. . . . . . . . 0
Loans and leases, net of unearned income, allowance, and reserve . . . . . . . . . . . . . . . . . . . 3,834,603
Assets held in trading accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Premises and fixed assets (including capitalized leases) . . . . . . . . . . . . . . . . . . . . . . . . . . . 134,016
Other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,444
Investments in unconsolidated subsidiaries and associated companies . . . . . . . . . . . . . . . . . . . . . . 10
Customers' liability to this bank on acceptances outstanding . . . . . . . . . . . . . . . . . . . . . . . . . 0
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,264
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215,048
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,189,443
</TABLE>
CONTINUED ON NEXT PAGE
<PAGE> 30
LIABILITIES
<TABLE>
<S> <C> <C>
Deposits:
In domestic offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,183,321
Noninterest-bearing . . . . . . . . 904,511
Interest-bearing. . . . . . . . . . 3,278,810
Federal funds purchased and Securities sold under agreements to repurchase . . . . . . . . . . . . . . . . . 558,553
Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,761
Trading liabilities (from Schedule RC-D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other borrowed money: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ///////
With original maturity of one year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 788,000
With original maturity of more than one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,000
Bank's liability on acceptances executed and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Subordinated notes and debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other liabilities (from Schedule RC-G) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99,777
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,730,412
</TABLE>
EQUITY CAPITAL
<TABLE>
<S> <C>
Perpetual preferred stock and related surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500
Surplus (exclude all surplus related to preferred stock) . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,118
Undivided profits and capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 388,458
Net unrealized holding gains (losses) on available-for-sale securities . . . . . . . . . . . . . . . . . . . . 7,955
Total equity capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 459,031
Total liabilities, limited-life preferred stock, and equity capital . . . . . . . . . . . . . . . . . . . . . . 6,189,443
</TABLE>
2
<PAGE> 1
EXHIBIT 25.4
Registration No.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) X
---
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
AMERICAN COIN MERCHANDISING, INC.
d/b/a SUGARLOAF CREATIONS, INC.
AMERICAN COIN MERCHANDISING TRUST III
(Exact name of obligor as specified in its charter)
Delaware 84-1093721
Delaware To be applied for
(State of incorporation (I.R.S. employer identification no.)
or formation)
5660 Central Avenue
Boulder, Colorado 77002
(Address of principal executive offices) (Zip Code)
American Coin Merchandising Trust III Trust Preferred Securities
(Title of the indenture securities)
================================================================================
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the
obligor is not an affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which
includes the certificate of authority of Wilmington Trust
Company to commence business and the authorization of
Wilmington Trust Company to exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section
321(b) of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, Wilmington Trust Company, a corporation organized and existing under
the laws of Delaware, has duly caused this Statement of Eligibility to be
signed on its behalf by the undersigned, thereunto duly authorized, all in the
City of Wilmington and State of Delaware on the 14th day of August, 1998.
[SEAL] WILMINGTON TRUST COMPANY
Attest: /s/ Donald G. MacKelcan By: /s/ Emmett R. Harmon
---------------------------- -----------------------------
Assistant Secretary Name: Emmett R. Harmon
Title: Vice President
<PAGE> 3
EXHIBIT A
AMENDED CHARTER
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON MAY 9, 1987
<PAGE> 4
AMENDED CHARTER
OR
ACT OF INCORPORATION
OF
WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, originally incorporated by an Act of the General
Assembly of the State of Delaware, entitled "An Act to Incorporate the Delaware
Guarantee and Trust Company", approved March 2, A.D. 1901, and the name of
which company was changed to "WILMINGTON TRUST COMPANY" by an amendment filed
in the Office of the Secretary of State on March 18, A.D. 1903, and the Charter
or Act of Incorporation of which company has been from time to time amended and
changed by merger agreements pursuant to the corporation law for state banks
and trust companies of the State of Delaware, does hereby alter and amend its
Charter or Act of Incorporation so that the same as so altered and amended
shall in its entirety read as follows:
FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.
SECOND: - The location of its principal office in the State of Delaware is
at Rodney Square North, in the City of Wilmington, County of New Castle;
the name of its resident agent is WILMINGTON TRUST COMPANY whose address is
Rodney Square North, in said City. In addition to such principal office,
the said corporation maintains and operates branch offices in the City of
Newark, New Castle County, Delaware, the Town of Newport, New Castle
County, Delaware, at Claymont, New Castle County, Delaware, at Greenville,
New Castle County Delaware, and at Milford Cross Roads, New Castle County,
Delaware, and shall be empowered to open, maintain and operate branch
offices at Ninth and Shipley Streets, 418 Delaware Avenue, 2120 Market
Street, and 3605 Market Street, all in the City of Wilmington, New Castle
County, Delaware, and such other branch offices or places of business as
may be authorized from time to time by the agency or agencies of the
government of the State of Delaware empowered to confer such authority.
THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this Corporation are
to do any or all of the things herein mentioned as fully and to the same
extent as natural persons might or could do and in any part of the world,
viz.:
(1) To sue and be sued, complain and defend in any Court of law or
equity and to make and use a common seal, and alter the seal at
pleasure, to hold, purchase, convey, mortgage or otherwise deal in real
and personal estate and property, and to appoint such officers and
agents as the business of the Corporation shall require, to make
by-laws not inconsistent with the Constitution or laws of the
<PAGE> 5
United States or of this State, to discount bills, notes or other
evidences of debt, to receive deposits of money, or securities for
money, to buy gold and silver bullion and foreign coins, to buy and
sell bills of exchange, and generally to use, exercise and enjoy all
the powers, rights, privileges and franchises incident to a corporation
which are proper or necessary for the transaction of the business of
the Corporation hereby created.
(2) To insure titles to real and personal property, or any estate or
interests therein, and to guarantee the holder of such property, real
or personal, against any claim or claims, adverse to his interest
therein, and to prepare and give certificates of title for any lands or
premises in the State of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the receipt,
collection, custody, investment and management of funds, and the
purchase, sale, management and disposal of property of all
descriptions, and to prepare and execute all papers which may be
necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds, leases,
conveyances, mortgages, bonds and legal papers of every description,
and to carry on the business of conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money, jewelry, plate,
deeds, bonds and any and all other personal property of every sort and
kind, from executors, administrators, guardians, public officers,
courts, receivers, assignees, trustees, and from all fiduciaries, and
from all other persons and individuals, and from all corporations
whether state, municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such property.
(6) To act as agent or otherwise for the purpose of registering,
issuing, certificating, countersigning, transferring or underwriting
the stock, bonds or other obligations of any corporation, association,
state or municipality, and may receive and manage any sinking fund
therefor on such terms as may be agreed upon between the two parties,
and in like manner may act as Treasurer of any corporation or
municipality.
(7) To act as Trustee under any deed of trust, mortgage, bond or other
instrument issued by any state, municipality, body politic,
corporation, association or person, either alone or in conjunction with
any other person or persons, corporation or corporations.
(8) To guarantee the validity, performance or effect of any contract
or agreement, and the fidelity of persons holding places of
responsibility or trust; to become surety for any person, or persons,
for the faithful performance of any
2
<PAGE> 6
trust, office, duty, contract or agreement, either by itself or in
conjunction with any other person, or persons, corporation, or
corporations, or in like manner become surety upon any bond,
recognizance, obligation, judgment, suit, order, or decree to be
entered in any court of record within the State of Delaware or
elsewhere, or which may now or hereafter be required by any law, judge,
officer or court in the State of Delaware or elsewhere.
(9) To act by any and every method of appointment as trustee, trustee
in bankruptcy, receiver, assignee, assignee in bankruptcy, executor,
administrator, guardian, bailee, or in any other trust capacity in the
receiving, holding, managing, and disposing of any and all estates and
property, real, personal or mixed, and to be appointed as such trustee,
trustee in bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian or bailee by any persons,
corporations, court, officer, or authority, in the State of Delaware or
elsewhere; and whenever this Corporation is so appointed by any person,
corporation, court, officer or authority such trustee, trustee in
bankruptcy, receiver, assignee, assignee in bankruptcy, executor,
administrator, guardian, bailee, or in any other trust capacity, it
shall not be required to give bond with surety, but its capital stock
shall be taken and held as security for the performance of the duties
devolving upon it by such appointment.
(10) And for its care, management and trouble, and the exercise of any
of its powers hereby given, or for the performance of any of the duties
which it may undertake or be called upon to perform, or for the
assumption of any responsibility the said Corporation may be entitled
to receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages, debentures,
shares of capital stock, and other securities, obligations, contracts
and evidences of indebtedness, of any private, public or municipal
corporation within and without the State of Delaware, or of the
Government of the United States, or of any state, territory, colony, or
possession thereof, or of any foreign government or country; to
receive, collect, receipt for, and dispose of interest, dividends and
income upon and from any of the bonds, mortgages, debentures, notes,
shares of capital stock, securities, obligations, contracts, evidences
of indebtedness and other property held and owned by it, and to
exercise in respect of all such bonds, mortgages, debentures, notes,
shares of capital stock, securities, obligations, contracts, evidences
of indebtedness and other property, any and all the rights, powers and
privileges of individual owners thereof, including the right to vote
thereon; to invest and deal in and with any of the moneys of the
Corporation upon such securities and in such manner as it may think fit
and proper, and from time to time to vary or realize such investments;
to issue bonds and secure the same by pledges or deeds of trust or
mortgages of or upon the whole or any part of the property held or
owned by the Corporation, and to sell and pledge such bonds,
3
<PAGE> 7
as and when the Board of Directors shall determine, and in the
promotion of its said corporate business of investment and to the
extent authorized by law, to lease, purchase, hold, sell, assign,
transfer, pledge, mortgage and convey real and personal property of any
name and nature and any estate or interest therein.
(b) In furtherance of, and not in limitation, of the powers conferred by
the laws of the State of Delaware, it is hereby expressly provided that the
said Corporation shall also have the following powers:
(1) To do any or all of the things herein set forth, to the same
extent as natural persons might or could do, and in any part of the
world.
(2) To acquire the good will, rights, property and franchises and to
undertake the whole or any part of the assets and liabilities of any
person, firm, association or corporation, and to pay for the same in
cash, stock of this Corporation, bonds or otherwise; to hold or in any
manner to dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any part of any
business so acquired, and to exercise all the powers necessary or
convenient in and about the conduct and management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien, and to
lease, sell, exchange, transfer, or in any manner whatever dispose of
property, real, personal or mixed, wherever situated.
(4) To enter into, make, perform and carry out contracts of every kind
with any person, firm, association or corporation, and, without limit
as to amount, to draw, make, accept, endorse, discount, execute and
issue promissory notes, drafts, bills of exchange, warrants, bonds,
debentures, and other negotiable or transferable instruments.
(5) To have one or more offices, to carry on all or any of its
operations and businesses, without restriction to the same extent as
natural persons might or could do, to purchase or otherwise acquire, to
hold, own, to mortgage, sell, convey or otherwise dispose of, real and
personal property, of every class and description, in any State,
District, Territory or Colony of the United States, and in any foreign
country or place.
(6) It is the intention that the objects, purposes and powers
specified and clauses contained in this paragraph shall (except where
otherwise expressed in said paragraph) be nowise limited or restricted
by reference to or inference from the terms of any other clause of this
or any other paragraph in this charter, but that the objects, purposes
and powers specified in each of the clauses of this paragraph shall be
regarded as independent objects, purposes and powers.
4
<PAGE> 8
FOURTH: - (a) The total number of shares of all classes of stock which the
Corporation shall have authority to issue is forty-one million (41,000,000)
shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par value
$10.00 per share (hereinafter referred to as "Preferred Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par value $1.00
per share (hereinafter referred to as "Common Stock").
(b) Shares of Preferred Stock may be issued from time to time in one or
more series as may from time to time be determined by the Board of
Directors each of said series to be distinctly designated. All shares of
any one series of Preferred Stock shall be alike in every particular,
except that there may be different dates from which dividends, if any,
thereon shall be cumulative, if made cumulative. The voting powers and the
preferences and relative, participating, optional and other special rights
of each such series, and the qualifications, limitations or restrictions
thereof, if any, may differ from those of any and all other series at any
time outstanding; and, subject to the provisions of subparagraph 1 of
Paragraph (c) of this Article FOURTH, the Board of Directors of the
Corporation is hereby expressly granted authority to fix by resolution or
resolutions adopted prior to the issuance of any shares of a particular
series of Preferred Stock, the voting powers and the designations,
preferences and relative, optional and other special rights, and the
qualifications, limitations and restrictions of such series, including, but
without limiting the generality of the foregoing, the following:
(1) The distinctive designation of, and the number of shares of
Preferred Stock which shall constitute such series, which number may be
increased (except where otherwise provided by the Board of Directors)
or decreased (but not below the number of shares thereof then
outstanding) from time to time by like action of the Board of
Directors;
(2) The rate and times at which, and the terms and conditions on
which, dividends, if any, on Preferred Stock of such series shall be
paid, the extent of the preference or relation, if any, of such
dividends to the dividends payable on any other class or classes, or
series of the same or other class of stock and whether such dividends
shall be cumulative or non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of such
series to convert the same into or exchange the same for, shares of any
other class or classes or of any series of the same or any other class
or classes of stock of the Corporation and the terms and conditions of
such conversion or exchange;
(4) Whether or not Preferred Stock of such series shall be subject to
redemption, and the redemption price or prices and the time or times at
which, and the terms and conditions on which, Preferred Stock of such
series may be redeemed.
5
<PAGE> 9
(5) The rights, if any, of the holders of Preferred Stock of such
series upon the voluntary or involuntary liquidation, merger,
consolidation, distribution or sale of assets, dissolution or winding-
up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase account,
if any, to be provided for the Preferred Stock of such series; and
(7) The voting powers, if any, of the holders of such series of
Preferred Stock which may, without limiting the generality of the
foregoing include the right, voting as a series or by itself or
together with other series of Preferred Stock or all series of
Preferred Stock as a class, to elect one or more directors of the
Corporation if there shall have been a default in the payment of
dividends on any one or more series of Preferred Stock or under such
circumstances and on such conditions as the Board of Directors may
determine.
(c) (1) After the requirements with respect to preferential dividends on
the Preferred Stock (fixed in accordance with the provisions of section (b)
of this Article FOURTH), if any, shall have been met and after the
Corporation shall have complied with all the requirements, if any, with
respect to the setting aside of sums as sinking funds or redemption or
purchase accounts (fixed in accordance with the provisions of section (b)
of this Article FOURTH), and subject further to any conditions which may be
fixed in accordance with the provisions of section (b) of this Article
FOURTH, then and not otherwise the holders of Common Stock shall be
entitled to receive such dividends as may be declared from time to time by
the Board of Directors.
(2) After distribution in full of the preferential amount, if any,
(fixed in accordance with the provisions of section (b) of this Article
FOURTH), to be distributed to the holders of Preferred Stock in the
event of voluntary or involuntary liquidation, distribution or sale of
assets, dissolution or winding-up, of the Corporation, the holders of
the Common Stock shall be entitled to receive all of the remaining
assets of the Corporation, tangible and intangible, of whatever kind
available for distribution to stockholders ratably in proportion to the
number of shares of Common Stock held by them respectively.
(3) Except as may otherwise be required by law or by the provisions of
such resolution or resolutions as may be adopted by the Board of
Directors pursuant to section (b) of this Article FOURTH, each holder
of Common Stock shall have one vote in respect of each share of Common
Stock held on all matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock or of
options, warrants or other rights to purchase shares of any class or series
of stock or of other securities of the Corporation shall have any
preemptive right to purchase or subscribe for any unissued stock of any
class or series or any additional shares of any class or series to be
6
<PAGE> 10
issued by reason of any increase of the authorized capital stock of the
Corporation of any class or series, or bonds, certificates of indebtedness,
debentures or other securities convertible into or exchangeable for stock
of the Corporation of any class or series, or carrying any right to
purchase stock of any class or series, but any such unissued stock,
additional authorized issue of shares of any class or series of stock or
securities convertible into or exchangeable for stock, or carrying any
right to purchase stock, may be issued and disposed of pursuant to
resolution of the Board of Directors to such persons, firms, corporations
or associations, whether such holders or others, and upon such terms as may
be deemed advisable by the Board of Directors in the exercise of its sole
discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and rights
of each other series of Preferred Stock shall, in each case, be as fixed
from time to time by the Board of Directors in the resolution or
resolutions adopted pursuant to authority granted in section (b) of this
Article FOURTH and the consent, by class or series vote or otherwise, of
the holders of such of the series of Preferred Stock as are from time to
time outstanding shall not be required for the issuance by the Board of
Directors of any other series of Preferred Stock whether or not the powers,
preferences and rights of such other series shall be fixed by the Board of
Directors as senior to, or on a parity with, the powers, preferences and
rights of such outstanding series, or any of them; provided, however, that
the Board of Directors may provide in the resolution or resolutions as to
any series of Preferred Stock adopted pursuant to section (b) of this
Article FOURTH that the consent of the holders of a majority (or such
greater proportion as shall be therein fixed) of the outstanding shares of
such series voting thereon shall be required for the issuance of any or all
other series of Preferred Stock.
(f) Subject to the provisions of section (e), shares of any series of
Preferred Stock may be issued from time to time as the Board of Directors
of the Corporation shall determine and on such terms and for such
consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and for such
consideration as shall be fixed by the Board of Directors.
(h) The authorized amount of shares of Common Stock and of Preferred Stock
may, without a class or series vote, be increased or decreased from time to
time by the affirmative vote of the holders of a majority of the stock of
the Corporation entitled to vote thereon.
FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of directors
constituting the entire Board shall be not less than five nor more than
twenty-five as fixed from time to time by vote of a majority of the whole
Board, provided, however, that the number of directors shall not
7
<PAGE> 11
be reduced so as to shorten the term of any director at the time in office,
and provided further, that the number of directors constituting the whole
Board shall be twenty-four until otherwise fixed by a majority of the whole
Board.
(b) The Board of Directors shall be divided into three classes, as nearly
equal in number as the then total number of directors constituting the
whole Board permits, with the term of office of one class expiring each
year. At the annual meeting of stockholders in 1982, directors of the
first class shall be elected to hold office for a term expiring at the next
succeeding annual meeting, directors of the second class shall be elected
to hold office for a term expiring at the second succeeding annual meeting
and directors of the third class shall be elected to hold office for a term
expiring at the third succeeding annual meeting. Any vacancies in the
Board of Directors for any reason, and any newly created directorships
resulting from any increase in the directors, may be filled by the Board of
Directors, acting by a majority of the directors then in office, although
less than a quorum, and any directors so chosen shall hold office until the
next annual election of directors. At such election, the stockholders
shall elect a successor to such director to hold office until the next
election of the class for which such director shall have been chosen and
until his successor shall be elected and qualified. No decrease in the
number of directors shall shorten the term of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding the
fact that some lesser percentage may be specified by law, this Charter or
Act of Incorporation or the By-Laws of the Corporation), any director or
the entire Board of Directors of the Corporation may be removed at any time
without cause, but only by the affirmative vote of the holders of two-
thirds or more of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) cast at a meeting of the
stockholders called for that purpose.
(d) Nominations for the election of directors may be made by the Board of
Directors or by any stockholder entitled to vote for the election of
directors. Such nominations shall be made by notice in writing, delivered
or mailed by first class United States mail, postage prepaid, to the
Secretary of the Corporation not less than 14 days nor more than 50 days
prior to any meeting of the stockholders called for the election of
directors; provided, however, that if less than 21 days' notice of the
meeting is given to stockholders, such written notice shall be delivered or
mailed, as prescribed, to the Secretary of the Corporation not later than
the close of the seventh day following the day on which notice of the
meeting was mailed to stockholders. Notice of nominations which are
proposed by the Board of Directors shall be given by the Chairman on behalf
of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name, age,
business address and, if known, residence address of each nominee proposed
in such notice, (ii) the principal occupation or employment of such nominee
and (iii) the number of shares of
8
<PAGE> 12
stock of the Corporation which are beneficially owned by each such nominee.
(f) The Chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with
the foregoing procedure, and if he should so determine, he shall so declare
to the meeting and the defective nomination shall be disregarded.
(g) No action required to be taken or which may be taken at any annual or
special meeting of stockholders of the Corporation may be taken without a
meeting, and the power of stockholders to consent in writing, without a
meeting, to the taking of any action is specifically denied.
SIXTH: - The Directors shall choose such officers, agent and servants as
may be provided in the By-Laws as they may from time to time find necessary
or proper.
SEVENTH: - The Corporation hereby created is hereby given the same powers,
rights and privileges as may be conferred upon corporations organized under
the Act entitled "An Act Providing a General Corporation Law", approved
March 10, 1899, as from time to time amended.
EIGHTH: - This Act shall be deemed and taken to be a private Act.
NINTH: - This Corporation is to have perpetual existence.
TENTH: - The Board of Directors, by resolution passed by a majority of the
whole Board, may designate any of their number to constitute an Executive
Committee, which Committee, to the extent provided in said resolution, or
in the By-Laws of the Company, shall have and may exercise all of the
powers of the Board of Directors in the management of the business and
affairs of the Corporation, and shall have power to authorize the seal of
the Corporation to be affixed to all papers which may require it.
ELEVENTH: - The private property of the stockholders shall not be liable
for the payment of corporate debts to any extent whatever.
TWELFTH: - The Corporation may transact business in any part of the world.
THIRTEENTH: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation by a
vote of the majority of the entire Board. The stockholders may make, alter
or repeal any By-Law whether or not adopted by them, provided however, that
any such additional By-Laws, alterations or repeal may be adopted only by
the affirmative vote of the holders of two-thirds or more of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors (considered for this purpose as one
class).
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FOURTEENTH: - Meetings of the Directors may be held outside of the State of
Delaware at such places as may be from time to time designated by the
Board, and the Directors may keep the books of the Company outside of the
State of Delaware at such places as may be from time to time designated by
them.
FIFTEENTH: - (a) In addition to any affirmative vote required by law, and
except as otherwise expressly provided in sections (b) and (c) of this
Article FIFTEENTH:
(A) any merger or consolidation of the Corporation or any Subsidiary
(as hereinafter defined) with or into (i) any Interested Stockholder
(as hereinafter defined) or (ii) any other corporation (whether or not
itself an Interested Stockholder), which, after such merger or
consolidation, would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of related transactions) to
or with any Interested Stockholder or any Affiliate of any Interested
Stockholder of any assets of the Corporation or any Subsidiary having
an aggregate fair market value of $1,000,000 or more, or
(C) the issuance or transfer by the Corporation or any Subsidiary (in
one transaction or a series of related transactions) of any securities
of the Corporation or any Subsidiary to any Interested Stockholder or
any Affiliate of any Interested Stockholder in exchange for cash,
securities or other property (or a combination thereof) having an
aggregate fair market value of $1,000,000 or more, or
(D) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation, or
(E) any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or any
similar transaction (whether or not with or into or otherwise involving
an Interested Stockholder) which has the effect, directly or
indirectly, of increasing the proportionate share of the outstanding
shares of any class of equity or convertible securities of the
Corporation or any Subsidiary which is directly or indirectly owned by
any Interested Stockholder, or any Affiliate of any Interested
Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article FIFTEENTH as one class ("Voting Shares"). Such affirmative vote shall
be required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
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(2) The term "business combination" as used in this Article
FIFTEENTH shall mean any transaction which is referred to any
one or more of clauses (A) through (E) of paragraph 1 of the
section (a).
(b) The provisions of section (a) of this Article FIFTEENTH shall not
be applicable to any particular business combination and such business
combination shall require only such affirmative vote as is required by
law and any other provisions of the Charter or Act of Incorporation of
By-Laws if such business combination has been approved by a majority of
the whole Board.
(c) For the purposes of this Article FIFTEENTH:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any Subsidiary) who
or which as of the record date for the determination of stockholders
entitled to notice of and to vote on such business combination, or
immediately prior to the consummation of any such transaction:
(A) is the beneficial owner, directly or indirectly, of more than 10%
of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time within two
years prior thereto was the beneficial owner, directly or indirectly,
of not less than 10% of the then outstanding voting Shares, or
(C) is an assignee of or has otherwise succeeded in any share of
capital stock of the Corporation which were at any time within two
years prior thereto beneficially owned by any Interested Stockholder,
and such assignment or succession shall have occurred in the course of
a transaction or series of transactions not involving a public offering
within the meaning of the Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and Associates (as
hereafter defined) beneficially own, directly or indirectly, or
(B) which such person or any of its Affiliates or Associates has (i)
the right to acquire (whether such right is exercisable immediately or
only after the passage of time), pursuant to any agreement, arrangement
or understanding or upon the exercise of conversion rights, exchange
rights, warrants or options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or understanding, or
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(C) which are beneficially owned, directly or indirectly, by any other
person with which such first mentioned person or any of its Affiliates
or Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any shares of
capital stock of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any other
Voting Shares which may be issuable pursuant to any agreement, or upon
exercise of conversion rights, warrants or options or otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings given
those terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect on December 31, 1981.
(6) "Subsidiary" shall mean any corporation of which a majority of any
class of equity security (as defined in Rule 3a11-1 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as in effect in
December 31, 1981) is owned, directly or indirectly, by the Corporation;
provided, however, that for the purposes of the definition of Investment
Stockholder set forth in paragraph (2) of this section (c), the term
"Subsidiary" shall mean only a corporation of which a majority of each
class of equity security is owned, directly or indirectly, by the
Corporation.
(d) majority of the directors shall have the power and duty to
determine for the purposes of this Article FIFTEENTH on the basis of
information known to them, (1) the number of Voting Shares beneficially
owned by any person (2) whether a person is an Affiliate or Associate
of another, (3) whether a person has an agreement, arrangement or
understanding with another as to the matters referred to in paragraph
(3) of section (c), or (4) whether the assets subject to any business
combination or the consideration received for the issuance or transfer
of securities by the Corporation, or any Subsidiary has an aggregate
fair market value of $1,000,000 or more.
(e) Nothing contained in this Article FIFTEENTH shall be construed to
relieve any Interested Stockholder from any fiduciary obligation
imposed by law.
SIXTEENTH: Notwithstanding any other provision of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and in addition to any
other vote that may be required by law, this Charter or Act of
Incorporation by the By-Laws), the affirmative vote of the holders of at
least two-thirds of the outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) shall be required to amend,
alter or repeal any provision of Articles FIFTH, THIRTEENTH, FIFTEENTH or
SIXTEENTH of this Charter or Act of Incorporation.
SEVENTEENTH: (a) a Director of this Corporation shall not be liable to the
Corporation
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or its stockholders for monetary damages for breach of fiduciary duty as a
Director, except to the extent such exemption from liability or limitation
thereof is not permitted under the Delaware General Corporation Laws as the
same exists or may hereafter be amended.
(b) Any repeal or modification of the foregoing paragraph shall not
adversely affect any right or protection of a Director of the
Corporation existing hereunder with respect to any act or omission
occurring prior to the time of such repeal or modification."
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EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON JANUARY 16, 1997
<PAGE> 18
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. The Annual Meeting of Stockholders shall be held on the
third Thursday in April each year at the principal office at the Company or at
such other date, time, or place as may be designated by resolution by the Board
of Directors.
Section 2. Special meetings of all stockholders may be called at any
time by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be given
by mailing to each stockholder at least ten (10) days before said meeting, at
his last known address, a written or printed notice fixing the time and place
of such meeting.
Section 4. A majority in the amount of the capital stock of the
Company issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one
vote, either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
DIRECTORS
Section 1. The number and classification of the Board of Directors
shall be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72)
years shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed
and conducted by the Board of Directors.
Section 5. The Board of Directors shall meet at the principal office
of the Company or elsewhere in its discretion at such times to be determined by
a majority of its members, or at the call of the Chairman of the Board of
Directors or the President.
<PAGE> 19
Section 6. Special meetings of the Board of Directors may be called
at any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of
any special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal, inability
to act, or disqualification of any director, the Board of Directors, although
less than a quorum, shall have the right to elect the successor who shall hold
office for the remainder of the full term of the class of directors in which
the vacancy occurred, and until such director's successor shall have been duly
elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect
from its own members a Chairman of the Board of Directors and a President who
may be the same person. The Board of Directors shall also elect at such
meeting a Secretary and a Treasurer, who may be the same person, may appoint at
any time such other committees and elect or appoint such other officers as it
may deem advisable. The Board of Directors may also elect at such meeting one
or more Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be in
charge of such of the departments or division of the Company as it may deem
advisable.
ARTICLE III
COMMITTEES
Section 1. Executive Committee
(A) The Executive Committee shall be composed of
not more than nine members who shall be selected by the Board of Directors from
its own members and who shall hold office during the pleasure of the Board.
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(B) The Executive Committee shall have all the
powers of the Board of Directors when it is not in session to transact all
business for and in behalf of the Company that may be brought before it.
(C) The Executive Committee shall meet at the
principal office of the Company or elsewhere in its discretion at such times to
be determined by a majority of its members, or at the call of the Chairman of
the Executive Committee or at the call of the Chairman of the Board of
Directors. The majority of its members shall be necessary to constitute a
quorum for the transaction of business. Special meetings of the Executive
Committee may be held at any time when a quorum is present.
(D) Minutes of each meeting of the Executive
Committee shall be kept and submitted to the Board of Directors at its next
meeting.
(E) The Executive Committee shall advise and
superintend all investments that may be made of the funds of the Company, and
shall direct the disposal of the same, in accordance with such rules and
regulations as the Board of Directors from time to time make.
(F) In the event of a state of disaster of
sufficient severity to prevent the conduct and management of the affairs and
business of the Company by its directors and officers as contemplated by these
By-Laws any two available members of the Executive Committee as constituted
immediately prior to such disaster shall constitute a quorum of that Committee
for the full conduct and management of the affairs and business of the Company
in accordance with the provisions of Article III of these By-Laws; and if less
than three members of the Trust Committee is constituted immediately prior to
such disaster shall be available for the transaction of its business, such
Executive Committee shall also be empowered to exercise all of the powers
reserved to the Trust Committee under Article III Section 2 hereof. In the
event of the unavailability, at such time, of a minimum of two members of such
Executive Committee, any three available directors shall constitute the
Executive Committee for the full conduct and management of the affairs and
business of the Company in accordance with the foregoing provisions of this
Section. This By-Law shall be subject to implementation by Resolutions of the
Board of Directors presently existing or hereafter passed from time to time for
that purpose, and any provisions of these By-Laws (other than this Section) and
any resolutions which are contrary to the provisions of this Section or to the
provisions of any such implementary Resolutions shall be suspended during such
a disaster period until it shall be determined by any interim Executive
Committee acting under this section that it shall be to the advantage of the
Company to resume the conduct and management of its affairs and business under
all of the other provisions of these By-Laws.
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Section 2. Trust Committee
(A) The Trust Committee shall be composed of not
more than thirteen members who shall be selected by the Board of Directors, a
majority of whom shall be members of the Board of Directors and who shall hold
office during the pleasure of the Board.
(B) The Trust Committee shall have general
supervision over the Trust Department and the investment of trust funds, in all
matters, however, being subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the
principal office of the Company or elsewhere in its discretion at such times to
be determined by a majority of its members or at the call of its chairman. A
majority of its members shall be necessary to constitute a quorum for the
transaction of business.
(D) Minutes of each meeting of the Trust Committee
shall be kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to
appoint Committees and/or designate officers or employees of the Company to
whom supervision over the investment of trust funds may be delegated when the
Trust Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five
members who shall be selected by the Board of Directors from its own members,
none of whom shall be an officer of the Company, and shall hold office at the
pleasure of the Board.
(B) The Audit Committee shall have general
supervision over the Audit Division in all matters however subject to the
approval of the Board of Directors; it shall consider all matters brought to
its attention by the officer in charge of the Audit Division, review all
reports of examination of the Company made by any governmental agency or such
independent auditor employed for that purpose, and make such recommendations to
the Board of Directors with respect thereto or with respect to any other
matters pertaining to auditing the Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and
wherever the majority of its members shall deem it to be proper for the
transaction of its business, and a majority of its Committee shall constitute a
quorum.
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Section 4. Compensation Committee
(A) The Compensation Committee shall be composed
of not more than five (5) members who shall be selected by the Board of
Directors from its own members who are not officers of the Company and who
shall hold office during the pleasure of the Board.
(B) The Compensation Committee shall in general
advise upon all matters of policy concerning the Company brought to its
attention by the management and from time to time review the management of the
Company, major organizational matters, including salaries and employee benefits
and specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be
called at any time by the Chairman of the Compensation Committee, the Chairman
of the Board of Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be
elected by the Board of Directors as an associate director, to serve during the
pleasure of the Board.
(B) An associate director shall be entitled to
attend all directors meetings and participate in the discussion of all matters
brought to the Board, with the exception that he would have no right to vote.
An associate director will be eligible for appointment to Committees of the
Company, with the exception of the Executive Committee, Audit Committee and
Compensation Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any
member of any Committee created under Article III of the By-Laws of this
Company, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absence or disqualified member.
ARTICLE IV
OFFICERS
Section 1. The Chairman of the Board of Directors shall preside at
all meetings of the Board and shall have such further authority and powers and
shall perform such duties as the Board of Directors may from time to time
confer and direct. He shall also exercise such powers
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and perform such duties as may from time to time be agreed upon between himself
and the President of the Company.
Section 2. The Vice Chairman of the Board. The Vice Chairman of the
Board of Directors shall preside at all meetings of the Board of Directors at
which the Chairman of the Board shall not be present and shall have such
further authority and powers and shall perform such duties as the Board of
Directors or the Chairman of the Board may from time to time confer and direct.
Section 3. The President shall have the powers and duties pertaining
to the office of the President conferred or imposed upon him by statute or
assigned to him by the Board of Directors in the absence of the Chairman of the
Board the President shall have the powers and duties of the Chairman of the
Board.
Section 4. The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and such
other powers and duties as may from time to time be assigned to them by the
Board of Directors, the Executive Committee, the Chairman of the Board or the
President and by the officer in charge of the department or division to which
they are assigned.
Section 6. The Secretary shall attend to the giving of notice of
meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings and
to recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all
assets and liabilities of the Company. He shall be custodian of and
responsible for all monies, funds and valuables of the Company and for the
keeping of proper records of the evidence of property or indebtedness and of
all the transactions of the Company. He shall have general supervision of the
expenditures of the Company and shall report to the Board of Directors at each
regular meeting of the condition of the Company, and perform such other duties
as may be assigned to him from time to time by the Board of Directors of the
Executive Committee.
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Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.
Section 10. There may be one or more officers, subordinate in rank to
all Vice Presidents with such functional titles as shall be determined from
time to time by the Board of Directors, who shall ex officio hold the office
Assistant Secretary of this Company and who may perform such duties as may be
prescribed by the officer in charge of the department or division to whom they
are assigned.
Section 11. The powers and duties of all other officers of the
Company shall be those usually pertaining to their respective offices, subject
to the direction of the Board of Directors, the Executive Committee, Chairman
of the Board of Directors or the President and the officer in charge of the
department or division to which they are assigned.
ARTICLE V
STOCK AND STOCK CERTIFICATES
Section 1. Shares of stock shall be transferrable on the books of the
Company and a transfer book shall be kept in which all transfers of stock shall
be recorded.
Section 2. Certificate of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new
certificate or certificates shall be issued in lieu thereof.
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Duplicate certificates of stock shall be issued only upon giving such security
as may be satisfactory to the Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to fix
in advance a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the
date for the payment of any dividend, or the date for the allotment of rights,
or the date when any change or conversion or exchange of capital stock shall go
into effect, or a date in connection with obtaining such consent.
ARTICLE VI
SEAL
Section 1. The corporate seal of the Company shall be in the
following form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."
ARTICLE VII
FISCAL YEAR
Section 1. The fiscal year of the Company shall be the calendar year.
ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver
and the Secretary or any Assistant Secretary shall have full power and
authority to attest and affix the corporate seal of the Company to any and all
deeds, conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or
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confirmation by the Board of Directors or the Executive Committee, and any and
all such instruments shall have the same force and validity as though expressly
authorized by the Board of Directors and/or the Executive Committee.
ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES
Section 1. Directors and associate directors of the Company, other
than salaried officers of the Company, shall be paid such reasonable honoraria
or fees for attending meetings of the Board of Directors as the Board of
Directors may from time to time determine. Directors and associate directors
who serve as members of committees, other than salaried employees of the
Company, shall be paid such reasonable honoraria or fees for services as
members of committees as the Board of Directors shall from time to time
determine and directors and associate directors may be employed by the Company
for such special services as the Board of Directors may from time to time
determine and shall be paid for such special services so performed reasonable
compensation as may be determined by the Board of Directors.
ARTICLE X
INDEMNIFICATION
Section 1. (A) The Corporation shall indemnify and hold harmless, to
the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or
was a director, officer, employee or agent of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee,
fiduciary or agent of another corporation or of a partnership, joint venture,
trust, enterprise or non-profit entity, including service with respect to
employee benefit plans, against all liability and loss suffered and expenses
reasonably incurred by such person. The Corporation shall indemnify a person
in connection with a proceeding initiated by such person only if the proceeding
was authorized by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses
incurred in defending any proceeding in advance of its final disposition,
provided, however, that the payment of expenses incurred by a Director officer
in his capacity as a Director or officer in advance of the final disposition of
the proceeding shall be made only upon receipt of an undertaking by the
Director or officer to repay all amounts advanced if it should be ultimately
determined that the Director or officer is not entitled to be indemnified under
this Article or otherwise.
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(C) If a claim for indemnification or payment of
expenses, under this Article X is not paid in full within ninety days after a
written claim therefor has been received by the Corporation the claimant may
file suit to recover the unpaid amount of such claim and, if successful in
whole or in part, shall be entitled to be paid the expense of prosecuting such
claim. In any such action the Corporation shall have the burden of proving
that the claimant was not entitled to the requested indemnification of payment
of expenses under applicable law.
(D) The rights conferred on any person by this
Article X shall not be exclusive of any other rights which such person may have
or hereafter acquire under any statute, provision of the Charter or Act of
Incorporation, these By-Laws, agreement, vote of stockholders or disinterested
Directors or otherwise.
(E) Any repeal or modification of the foregoing
provisions of this Article X shall not adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring prior to
the time of such repeal or modification.
ARTICLE XI
AMENDMENTS TO THE BY-LAWS
Section 1. These By-Laws may be altered, amended or repealed, in
whole or in part, and any new By-Law or By-Laws adopted at any regular or
special meeting of the Board of Directors by a vote of the majority of all the
members of the Board of Directors then in office.
10
<PAGE> 28
EXHIBIT C
SECTION 321(b) CONSENT
Pursuant to Section 321(b) of the Trust Indenture Act of 1939,
Wilmington Trust Company hereby consents that reports of examinations by
Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: August 14, 1998 By: /s/ Emmett R. Harmon
---------------------------
Name: Emmett R. Harmon
Title: Vice President
<PAGE> 29
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings banks with
state publication requirements. It has not been approved by any state banking
authorities. Refer to your appropriate state banking authorities for your
state publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
------------------------ ----------
Name of Bank City
in the State of DELAWARE, at the close of business on March 31, 1998.
ASSETS
<TABLE>
<CAPTION>
Thousands of dollars
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins . . . . . . . . . . . . . . . . . . . . . . . . . 180,015
Interest-bearing balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Held-to-maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 287,798
Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,355,745
Federal funds sold and securities purchased under agreements to resell . . . . . . . . . . . . . . . . . . . . 124,500
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . . 3,896,238
LESS: Allowance for loan and lease losses. . . . . . 61,635
LESS: Allocated transfer risk reserve. . . . . . . . 0
Loans and leases, net of unearned income, allowance, and reserve . . . . . . . . . . . . . . . . . . . 3,834,603
Assets held in trading accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Premises and fixed assets (including capitalized leases) . . . . . . . . . . . . . . . . . . . . . . . . . . . 134,016
Other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,444
Investments in unconsolidated subsidiaries and associated companies . . . . . . . . . . . . . . . . . . . . . . 10
Customers' liability to this bank on acceptances outstanding . . . . . . . . . . . . . . . . . . . . . . . . . 0
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,264
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215,048
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,189,443
</TABLE>
CONTINUED ON NEXT PAGE
<PAGE> 30
LIABILITIES
<TABLE>
<S> <C> <C>
Deposits:
In domestic offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,183,321
Noninterest-bearing . . . . . . . . 904,511
Interest-bearing. . . . . . . . . . 3,278,810
Federal funds purchased and Securities sold under agreements to repurchase . . . . . . . . . . . . . . . . . 558,553
Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,761
Trading liabilities (from Schedule RC-D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other borrowed money: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ///////
With original maturity of one year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 788,000
With original maturity of more than one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,000
Bank's liability on acceptances executed and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Subordinated notes and debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other liabilities (from Schedule RC-G) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99,777
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,730,412
</TABLE>
EQUITY CAPITAL
<TABLE>
<S> <C>
Perpetual preferred stock and related surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500
Surplus (exclude all surplus related to preferred stock) . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,118
Undivided profits and capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 388,458
Net unrealized holding gains (losses) on available-for-sale securities . . . . . . . . . . . . . . . . . . . . 7,955
Total equity capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 459,031
Total liabilities, limited-life preferred stock, and equity capital . . . . . . . . . . . . . . . . . . . . . . 6,189,443
</TABLE>
2
<PAGE> 1
EXHIBIT 25.5
Registration No.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) X
---
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
AMERICAN COIN MERCHANDISING, INC.
d/b/a SUGARLOAF CREATIONS, INC.
AMERICAN COIN MERCHANDISING TRUST IV
(Exact name of obligor as specified in its charter)
Delaware 84-1093721
Delaware To be applied for
(State of incorporation (I.R.S. employer identification no.)
or formation)
5660 Central Avenue
Boulder, Colorado 77002
(Address of principal executive offices) (Zip Code)
American Coin Merchandising Trust IV Trust Preferred Securities
(Title of the indenture securities)
===============================================================================
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust
powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the
obligor is not an affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which
includes the certificate of authority of Wilmington Trust
Company to commence business and the authorization of
Wilmington Trust Company to exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section
321(b) of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington
Trust Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, Wilmington Trust Company, a corporation organized and existing under
the laws of Delaware, has duly caused this Statement of Eligibility to be signed
on its behalf by the undersigned, thereunto duly authorized, all in the City of
Wilmington and State of Delaware on the 14th day of August, 1998.
[SEAL] WILMINGTON TRUST COMPANY
Attest: /s/ Donald G. MacKelcan By: /s/ Emmett R. Harmon
------------------------- ----------------------
Assistant Secretary Name: Emmett R. Harmon
Title: Vice President
<PAGE> 3
EXHIBIT A
AMENDED CHARTER
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON MAY 9, 1987
<PAGE> 4
AMENDED CHARTER
OR
ACT OF INCORPORATION
OF
WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, originally incorporated by an Act of the General
Assembly of the State of Delaware, entitled "An Act to Incorporate the Delaware
Guarantee and Trust Company", approved March 2, A.D. 1901, and the name of
which company was changed to "WILMINGTON TRUST COMPANY" by an amendment filed
in the Office of the Secretary of State on March 18, A.D. 1903, and the Charter
or Act of Incorporation of which company has been from time to time amended and
changed by merger agreements pursuant to the corporation law for state banks
and trust companies of the State of Delaware, does hereby alter and amend its
Charter or Act of Incorporation so that the same as so altered and amended
shall in its entirety read as follows:
FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.
SECOND: - The location of its principal office in the State of Delaware is
at Rodney Square North, in the City of Wilmington, County of New Castle;
the name of its resident agent is WILMINGTON TRUST COMPANY whose address is
Rodney Square North, in said City. In addition to such principal office,
the said corporation maintains and operates branch offices in the City of
Newark, New Castle County, Delaware, the Town of Newport, New Castle
County, Delaware, at Claymont, New Castle County, Delaware, at Greenville,
New Castle County Delaware, and at Milford Cross Roads, New Castle County,
Delaware, and shall be empowered to open, maintain and operate branch
offices at Ninth and Shipley Streets, 418 Delaware Avenue, 2120 Market
Street, and 3605 Market Street, all in the City of Wilmington, New Castle
County, Delaware, and such other branch offices or places of business as
may be authorized from time to time by the agency or agencies of the
government of the State of Delaware empowered to confer such authority.
THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this Corporation are
to do any or all of the things herein mentioned as fully and to the same
extent as natural persons might or could do and in any part of the world,
viz.:
(1) To sue and be sued, complain and defend in any Court of law or
equity and to make and use a common seal, and alter the seal at
pleasure, to hold, purchase, convey, mortgage or otherwise deal in real
and personal estate and property, and to appoint such officers and
agents as the business of the Corporation shall require, to make
by-laws not inconsistent with the Constitution or laws of the
<PAGE> 5
United States or of this State, to discount bills, notes or other
evidences of debt, to receive deposits of money, or securities for
money, to buy gold and silver bullion and foreign coins, to buy and
sell bills of exchange, and generally to use, exercise and enjoy all
the powers, rights, privileges and franchises incident to a corporation
which are proper or necessary for the transaction of the business of
the Corporation hereby created.
(2) To insure titles to real and personal property, or any estate or
interests therein, and to guarantee the holder of such property, real
or personal, against any claim or claims, adverse to his interest
therein, and to prepare and give certificates of title for any lands or
premises in the State of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the receipt,
collection, custody, investment and management of funds, and the
purchase, sale, management and disposal of property of all
descriptions, and to prepare and execute all papers which may be
necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds, leases,
conveyances, mortgages, bonds and legal papers of every description,
and to carry on the business of conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money, jewelry, plate,
deeds, bonds and any and all other personal property of every sort and
kind, from executors, administrators, guardians, public officers,
courts, receivers, assignees, trustees, and from all fiduciaries, and
from all other persons and individuals, and from all corporations
whether state, municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such property.
(6) To act as agent or otherwise for the purpose of registering,
issuing, certificating, countersigning, transferring or underwriting
the stock, bonds or other obligations of any corporation, association,
state or municipality, and may receive and manage any sinking fund
therefor on such terms as may be agreed upon between the two parties,
and in like manner may act as Treasurer of any corporation or
municipality.
(7) To act as Trustee under any deed of trust, mortgage, bond or other
instrument issued by any state, municipality, body politic,
corporation, association or person, either alone or in conjunction with
any other person or persons, corporation or corporations.
(8) To guarantee the validity, performance or effect of any contract
or agreement, and the fidelity of persons holding places of
responsibility or trust; to become surety for any person, or persons,
for the faithful performance of any
2
<PAGE> 6
trust, office, duty, contract or agreement, either by itself or in
conjunction with any other person, or persons, corporation, or
corporations, or in like manner become surety upon any bond,
recognizance, obligation, judgment, suit, order, or decree to be
entered in any court of record within the State of Delaware or
elsewhere, or which may now or hereafter be required by any law, judge,
officer or court in the State of Delaware or elsewhere.
(9) To act by any and every method of appointment as trustee, trustee
in bankruptcy, receiver, assignee, assignee in bankruptcy, executor,
administrator, guardian, bailee, or in any other trust capacity in the
receiving, holding, managing, and disposing of any and all estates and
property, real, personal or mixed, and to be appointed as such trustee,
trustee in bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian or bailee by any persons,
corporations, court, officer, or authority, in the State of Delaware or
elsewhere; and whenever this Corporation is so appointed by any person,
corporation, court, officer or authority such trustee, trustee in
bankruptcy, receiver, assignee, assignee in bankruptcy, executor,
administrator, guardian, bailee, or in any other trust capacity, it
shall not be required to give bond with surety, but its capital stock
shall be taken and held as security for the performance of the duties
devolving upon it by such appointment.
(10) And for its care, management and trouble, and the exercise of any
of its powers hereby given, or for the performance of any of the duties
which it may undertake or be called upon to perform, or for the
assumption of any responsibility the said Corporation may be entitled
to receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages, debentures,
shares of capital stock, and other securities, obligations, contracts
and evidences of indebtedness, of any private, public or municipal
corporation within and without the State of Delaware, or of the
Government of the United States, or of any state, territory, colony, or
possession thereof, or of any foreign government or country; to
receive, collect, receipt for, and dispose of interest, dividends and
income upon and from any of the bonds, mortgages, debentures, notes,
shares of capital stock, securities, obligations, contracts, evidences
of indebtedness and other property held and owned by it, and to
exercise in respect of all such bonds, mortgages, debentures, notes,
shares of capital stock, securities, obligations, contracts, evidences
of indebtedness and other property, any and all the rights, powers and
privileges of individual owners thereof, including the right to vote
thereon; to invest and deal in and with any of the moneys of the
Corporation upon such securities and in such manner as it may think fit
and proper, and from time to time to vary or realize such investments;
to issue bonds and secure the same by pledges or deeds of trust or
mortgages of or upon the whole or any part of the property held or
owned by the Corporation, and to sell and pledge such bonds,
3
<PAGE> 7
as and when the Board of Directors shall determine, and in the
promotion of its said corporate business of investment and to the
extent authorized by law, to lease, purchase, hold, sell, assign,
transfer, pledge, mortgage and convey real and personal property of any
name and nature and any estate or interest therein.
(b) In furtherance of, and not in limitation, of the powers conferred by
the laws of the State of Delaware, it is hereby expressly provided that the
said Corporation shall also have the following powers:
(1) To do any or all of the things herein set forth, to the same
extent as natural persons might or could do, and in any part of the
world.
(2) To acquire the good will, rights, property and franchises and to
undertake the whole or any part of the assets and liabilities of any
person, firm, association or corporation, and to pay for the same in
cash, stock of this Corporation, bonds or otherwise; to hold or in any
manner to dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any part of any
business so acquired, and to exercise all the powers necessary or
convenient in and about the conduct and management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien, and to
lease, sell, exchange, transfer, or in any manner whatever dispose of
property, real, personal or mixed, wherever situated.
(4) To enter into, make, perform and carry out contracts of every kind
with any person, firm, association or corporation, and, without limit
as to amount, to draw, make, accept, endorse, discount, execute and
issue promissory notes, drafts, bills of exchange, warrants, bonds,
debentures, and other negotiable or transferable instruments.
(5) To have one or more offices, to carry on all or any of its
operations and businesses, without restriction to the same extent as
natural persons might or could do, to purchase or otherwise acquire, to
hold, own, to mortgage, sell, convey or otherwise dispose of, real and
personal property, of every class and description, in any State,
District, Territory or Colony of the United States, and in any foreign
country or place.
(6) It is the intention that the objects, purposes and powers
specified and clauses contained in this paragraph shall (except where
otherwise expressed in said paragraph) be nowise limited or restricted
by reference to or inference from the terms of any other clause of this
or any other paragraph in this charter, but that the objects, purposes
and powers specified in each of the clauses of this paragraph shall be
regarded as independent objects, purposes and powers.
4
<PAGE> 8
FOURTH: - (a) The total number of shares of all classes of stock which the
Corporation shall have authority to issue is forty-one million (41,000,000)
shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par value
$10.00 per share (hereinafter referred to as "Preferred Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par value $1.00
per share (hereinafter referred to as "Common Stock").
(b) Shares of Preferred Stock may be issued from time to time in one or
more series as may from time to time be determined by the Board of
Directors each of said series to be distinctly designated. All shares of
any one series of Preferred Stock shall be alike in every particular,
except that there may be different dates from which dividends, if any,
thereon shall be cumulative, if made cumulative. The voting powers and the
preferences and relative, participating, optional and other special rights
of each such series, and the qualifications, limitations or restrictions
thereof, if any, may differ from those of any and all other series at any
time outstanding; and, subject to the provisions of subparagraph 1 of
Paragraph (c) of this Article FOURTH, the Board of Directors of the
Corporation is hereby expressly granted authority to fix by resolution or
resolutions adopted prior to the issuance of any shares of a particular
series of Preferred Stock, the voting powers and the designations,
preferences and relative, optional and other special rights, and the
qualifications, limitations and restrictions of such series, including, but
without limiting the generality of the foregoing, the following:
(1) The distinctive designation of, and the number of shares of
Preferred Stock which shall constitute such series, which number may be
increased (except where otherwise provided by the Board of Directors)
or decreased (but not below the number of shares thereof then
outstanding) from time to time by like action of the Board of
Directors;
(2) The rate and times at which, and the terms and conditions on
which, dividends, if any, on Preferred Stock of such series shall be
paid, the extent of the preference or relation, if any, of such
dividends to the dividends payable on any other class or classes, or
series of the same or other class of stock and whether such dividends
shall be cumulative or non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of such
series to convert the same into or exchange the same for, shares of any
other class or classes or of any series of the same or any other class
or classes of stock of the Corporation and the terms and conditions of
such conversion or exchange;
(4) Whether or not Preferred Stock of such series shall be subject to
redemption, and the redemption price or prices and the time or times at
which, and the terms and conditions on which, Preferred Stock of such
series may be redeemed.
5
<PAGE> 9
(5) The rights, if any, of the holders of Preferred Stock of such
series upon the voluntary or involuntary liquidation, merger,
consolidation, distribution or sale of assets, dissolution or winding-
up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase account,
if any, to be provided for the Preferred Stock of such series; and
(7) The voting powers, if any, of the holders of such series of
Preferred Stock which may, without limiting the generality of the
foregoing include the right, voting as a series or by itself or
together with other series of Preferred Stock or all series of
Preferred Stock as a class, to elect one or more directors of the
Corporation if there shall have been a default in the payment of
dividends on any one or more series of Preferred Stock or under such
circumstances and on such conditions as the Board of Directors may
determine.
(c) (1) After the requirements with respect to preferential dividends on
the Preferred Stock (fixed in accordance with the provisions of section (b)
of this Article FOURTH), if any, shall have been met and after the
Corporation shall have complied with all the requirements, if any, with
respect to the setting aside of sums as sinking funds or redemption or
purchase accounts (fixed in accordance with the provisions of section (b)
of this Article FOURTH), and subject further to any conditions which may be
fixed in accordance with the provisions of section (b) of this Article
FOURTH, then and not otherwise the holders of Common Stock shall be
entitled to receive such dividends as may be declared from time to time by
the Board of Directors.
(2) After distribution in full of the preferential amount, if any,
(fixed in accordance with the provisions of section (b) of this Article
FOURTH), to be distributed to the holders of Preferred Stock in the
event of voluntary or involuntary liquidation, distribution or sale of
assets, dissolution or winding-up, of the Corporation, the holders of
the Common Stock shall be entitled to receive all of the remaining
assets of the Corporation, tangible and intangible, of whatever kind
available for distribution to stockholders ratably in proportion to the
number of shares of Common Stock held by them respectively.
(3) Except as may otherwise be required by law or by the provisions of
such resolution or resolutions as may be adopted by the Board of
Directors pursuant to section (b) of this Article FOURTH, each holder
of Common Stock shall have one vote in respect of each share of Common
Stock held on all matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock or of
options, warrants or other rights to purchase shares of any class or series
of stock or of other securities of the Corporation shall have any
preemptive right to purchase or subscribe for any unissued stock of any
class or series or any additional shares of any class or series to be
6
<PAGE> 10
issued by reason of any increase of the authorized capital stock of the
Corporation of any class or series, or bonds, certificates of indebtedness,
debentures or other securities convertible into or exchangeable for stock
of the Corporation of any class or series, or carrying any right to
purchase stock of any class or series, but any such unissued stock,
additional authorized issue of shares of any class or series of stock or
securities convertible into or exchangeable for stock, or carrying any
right to purchase stock, may be issued and disposed of pursuant to
resolution of the Board of Directors to such persons, firms, corporations
or associations, whether such holders or others, and upon such terms as may
be deemed advisable by the Board of Directors in the exercise of its sole
discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and rights
of each other series of Preferred Stock shall, in each case, be as fixed
from time to time by the Board of Directors in the resolution or
resolutions adopted pursuant to authority granted in section (b) of this
Article FOURTH and the consent, by class or series vote or otherwise, of
the holders of such of the series of Preferred Stock as are from time to
time outstanding shall not be required for the issuance by the Board of
Directors of any other series of Preferred Stock whether or not the powers,
preferences and rights of such other series shall be fixed by the Board of
Directors as senior to, or on a parity with, the powers, preferences and
rights of such outstanding series, or any of them; provided, however, that
the Board of Directors may provide in the resolution or resolutions as to
any series of Preferred Stock adopted pursuant to section (b) of this
Article FOURTH that the consent of the holders of a majority (or such
greater proportion as shall be therein fixed) of the outstanding shares of
such series voting thereon shall be required for the issuance of any or all
other series of Preferred Stock.
(f) Subject to the provisions of section (e), shares of any series of
Preferred Stock may be issued from time to time as the Board of Directors
of the Corporation shall determine and on such terms and for such
consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and for such
consideration as shall be fixed by the Board of Directors.
(h) The authorized amount of shares of Common Stock and of Preferred Stock
may, without a class or series vote, be increased or decreased from time to
time by the affirmative vote of the holders of a majority of the stock of
the Corporation entitled to vote thereon.
FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of directors
constituting the entire Board shall be not less than five nor more than
twenty-five as fixed from time to time by vote of a majority of the whole
Board, provided, however, that the number of directors shall not
7
<PAGE> 11
be reduced so as to shorten the term of any director at the time in office,
and provided further, that the number of directors constituting the whole
Board shall be twenty-four until otherwise fixed by a majority of the whole
Board.
(b) The Board of Directors shall be divided into three classes, as nearly
equal in number as the then total number of directors constituting the
whole Board permits, with the term of office of one class expiring each
year. At the annual meeting of stockholders in 1982, directors of the
first class shall be elected to hold office for a term expiring at the next
succeeding annual meeting, directors of the second class shall be elected
to hold office for a term expiring at the second succeeding annual meeting
and directors of the third class shall be elected to hold office for a term
expiring at the third succeeding annual meeting. Any vacancies in the
Board of Directors for any reason, and any newly created directorships
resulting from any increase in the directors, may be filled by the Board of
Directors, acting by a majority of the directors then in office, although
less than a quorum, and any directors so chosen shall hold office until the
next annual election of directors. At such election, the stockholders
shall elect a successor to such director to hold office until the next
election of the class for which such director shall have been chosen and
until his successor shall be elected and qualified. No decrease in the
number of directors shall shorten the term of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding the
fact that some lesser percentage may be specified by law, this Charter or
Act of Incorporation or the By-Laws of the Corporation), any director or
the entire Board of Directors of the Corporation may be removed at any time
without cause, but only by the affirmative vote of the holders of two-
thirds or more of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) cast at a meeting of the
stockholders called for that purpose.
(d) Nominations for the election of directors may be made by the Board of
Directors or by any stockholder entitled to vote for the election of
directors. Such nominations shall be made by notice in writing, delivered
or mailed by first class United States mail, postage prepaid, to the
Secretary of the Corporation not less than 14 days nor more than 50 days
prior to any meeting of the stockholders called for the election of
directors; provided, however, that if less than 21 days' notice of the
meeting is given to stockholders, such written notice shall be delivered or
mailed, as prescribed, to the Secretary of the Corporation not later than
the close of the seventh day following the day on which notice of the
meeting was mailed to stockholders. Notice of nominations which are
proposed by the Board of Directors shall be given by the Chairman on behalf
of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name, age,
business address and, if known, residence address of each nominee proposed
in such notice, (ii) the principal occupation or employment of such nominee
and (iii) the number of shares of
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stock of the Corporation which are beneficially owned by each such nominee.
(f) The Chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with
the foregoing procedure, and if he should so determine, he shall so declare
to the meeting and the defective nomination shall be disregarded.
(g) No action required to be taken or which may be taken at any annual or
special meeting of stockholders of the Corporation may be taken without a
meeting, and the power of stockholders to consent in writing, without a
meeting, to the taking of any action is specifically denied.
SIXTH: - The Directors shall choose such officers, agent and servants as
may be provided in the By-Laws as they may from time to time find necessary
or proper.
SEVENTH: - The Corporation hereby created is hereby given the same powers,
rights and privileges as may be conferred upon corporations organized under
the Act entitled "An Act Providing a General Corporation Law", approved
March 10, 1899, as from time to time amended.
EIGHTH: - This Act shall be deemed and taken to be a private Act.
NINTH: - This Corporation is to have perpetual existence.
TENTH: - The Board of Directors, by resolution passed by a majority of the
whole Board, may designate any of their number to constitute an Executive
Committee, which Committee, to the extent provided in said resolution, or
in the By-Laws of the Company, shall have and may exercise all of the
powers of the Board of Directors in the management of the business and
affairs of the Corporation, and shall have power to authorize the seal of
the Corporation to be affixed to all papers which may require it.
ELEVENTH: - The private property of the stockholders shall not be liable
for the payment of corporate debts to any extent whatever.
TWELFTH: - The Corporation may transact business in any part of the world.
THIRTEENTH: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation by a
vote of the majority of the entire Board. The stockholders may make, alter
or repeal any By-Law whether or not adopted by them, provided however, that
any such additional By-Laws, alterations or repeal may be adopted only by
the affirmative vote of the holders of two-thirds or more of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors (considered for this purpose as one
class).
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FOURTEENTH: - Meetings of the Directors may be held outside of the State of
Delaware at such places as may be from time to time designated by the
Board, and the Directors may keep the books of the Company outside of the
State of Delaware at such places as may be from time to time designated by
them.
FIFTEENTH: - (a) In addition to any affirmative vote required by law, and
except as otherwise expressly provided in sections (b) and (c) of this
Article FIFTEENTH:
(A) any merger or consolidation of the Corporation or any Subsidiary
(as hereinafter defined) with or into (i) any Interested Stockholder
(as hereinafter defined) or (ii) any other corporation (whether or not
itself an Interested Stockholder), which, after such merger or
consolidation, would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of related transactions) to
or with any Interested Stockholder or any Affiliate of any Interested
Stockholder of any assets of the Corporation or any Subsidiary having
an aggregate fair market value of $1,000,000 or more, or
(C) the issuance or transfer by the Corporation or any Subsidiary (in
one transaction or a series of related transactions) of any securities
of the Corporation or any Subsidiary to any Interested Stockholder or
any Affiliate of any Interested Stockholder in exchange for cash,
securities or other property (or a combination thereof) having an
aggregate fair market value of $1,000,000 or more, or
(D) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation, or
(E) any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or any
similar transaction (whether or not with or into or otherwise involving
an Interested Stockholder) which has the effect, directly or
indirectly, of increasing the proportionate share of the outstanding
shares of any class of equity or convertible securities of the
Corporation or any Subsidiary which is directly or indirectly owned by
any Interested Stockholder, or any Affiliate of any Interested
Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article FIFTEENTH as one class ("Voting Shares"). Such affirmative vote shall
be required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
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(2) The term "business combination" as used in this Article
FIFTEENTH shall mean any transaction which is referred to any
one or more of clauses (A) through (E) of paragraph 1 of the
section (a).
(b) The provisions of section (a) of this Article FIFTEENTH shall not
be applicable to any particular business combination and such business
combination shall require only such affirmative vote as is required by
law and any other provisions of the Charter or Act of Incorporation of
By-Laws if such business combination has been approved by a majority of
the whole Board.
(c) For the purposes of this Article FIFTEENTH:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any Subsidiary) who
or which as of the record date for the determination of stockholders
entitled to notice of and to vote on such business combination, or
immediately prior to the consummation of any such transaction:
(A) is the beneficial owner, directly or indirectly, of more than 10%
of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time within two
years prior thereto was the beneficial owner, directly or indirectly,
of not less than 10% of the then outstanding voting Shares, or
(C) is an assignee of or has otherwise succeeded in any share of
capital stock of the Corporation which were at any time within two
years prior thereto beneficially owned by any Interested Stockholder,
and such assignment or succession shall have occurred in the course of
a transaction or series of transactions not involving a public offering
within the meaning of the Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and Associates (as
hereafter defined) beneficially own, directly or indirectly, or
(B) which such person or any of its Affiliates or Associates has (i)
the right to acquire (whether such right is exercisable immediately or
only after the passage of time), pursuant to any agreement, arrangement
or understanding or upon the exercise of conversion rights, exchange
rights, warrants or options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or understanding, or
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(C) which are beneficially owned, directly or indirectly, by any other
person with which such first mentioned person or any of its Affiliates
or Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any shares of
capital stock of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any other
Voting Shares which may be issuable pursuant to any agreement, or upon
exercise of conversion rights, warrants or options or otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings given
those terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect on December 31, 1981.
(6) "Subsidiary" shall mean any corporation of which a majority of any
class of equity security (as defined in Rule 3a11-1 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as in effect in
December 31, 1981) is owned, directly or indirectly, by the Corporation;
provided, however, that for the purposes of the definition of Investment
Stockholder set forth in paragraph (2) of this section (c), the term
"Subsidiary" shall mean only a corporation of which a majority of each
class of equity security is owned, directly or indirectly, by the
Corporation.
(d) majority of the directors shall have the power and duty to
determine for the purposes of this Article FIFTEENTH on the basis of
information known to them, (1) the number of Voting Shares beneficially
owned by any person (2) whether a person is an Affiliate or Associate
of another, (3) whether a person has an agreement, arrangement or
understanding with another as to the matters referred to in paragraph
(3) of section (c), or (4) whether the assets subject to any business
combination or the consideration received for the issuance or transfer
of securities by the Corporation, or any Subsidiary has an aggregate
fair market value of $1,000,000 or more.
(e) Nothing contained in this Article FIFTEENTH shall be construed to
relieve any Interested Stockholder from any fiduciary obligation
imposed by law.
SIXTEENTH: Notwithstanding any other provision of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and in addition to any
other vote that may be required by law, this Charter or Act of
Incorporation by the By-Laws), the affirmative vote of the holders of at
least two-thirds of the outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) shall be required to amend,
alter or repeal any provision of Articles FIFTH, THIRTEENTH, FIFTEENTH or
SIXTEENTH of this Charter or Act of Incorporation.
SEVENTEENTH: (a) a Director of this Corporation shall not be liable to the
Corporation
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or its stockholders for monetary damages for breach of fiduciary duty as a
Director, except to the extent such exemption from liability or limitation
thereof is not permitted under the Delaware General Corporation Laws as the
same exists or may hereafter be amended.
(b) Any repeal or modification of the foregoing paragraph shall not
adversely affect any right or protection of a Director of the
Corporation existing hereunder with respect to any act or omission
occurring prior to the time of such repeal or modification."
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EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON JANUARY 16, 1997
<PAGE> 18
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. The Annual Meeting of Stockholders shall be held on the
third Thursday in April each year at the principal office at the Company or at
such other date, time, or place as may be designated by resolution by the Board
of Directors.
Section 2. Special meetings of all stockholders may be called at any
time by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be given
by mailing to each stockholder at least ten (10) days before said meeting, at
his last known address, a written or printed notice fixing the time and place
of such meeting.
Section 4. A majority in the amount of the capital stock of the
Company issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one
vote, either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
DIRECTORS
Section 1. The number and classification of the Board of Directors
shall be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72)
years shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed
and conducted by the Board of Directors.
Section 5. The Board of Directors shall meet at the principal office
of the Company or elsewhere in its discretion at such times to be determined by
a majority of its members, or at the call of the Chairman of the Board of
Directors or the President.
<PAGE> 19
Section 6. Special meetings of the Board of Directors may be called
at any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of
any special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal, inability
to act, or disqualification of any director, the Board of Directors, although
less than a quorum, shall have the right to elect the successor who shall hold
office for the remainder of the full term of the class of directors in which
the vacancy occurred, and until such director's successor shall have been duly
elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect
from its own members a Chairman of the Board of Directors and a President who
may be the same person. The Board of Directors shall also elect at such
meeting a Secretary and a Treasurer, who may be the same person, may appoint at
any time such other committees and elect or appoint such other officers as it
may deem advisable. The Board of Directors may also elect at such meeting one
or more Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be in
charge of such of the departments or division of the Company as it may deem
advisable.
ARTICLE III
COMMITTEES
Section 1. Executive Committee
(A) The Executive Committee shall be composed of
not more than nine members who shall be selected by the Board of Directors from
its own members and who shall hold office during the pleasure of the Board.
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(B) The Executive Committee shall have all the
powers of the Board of Directors when it is not in session to transact all
business for and in behalf of the Company that may be brought before it.
(C) The Executive Committee shall meet at the
principal office of the Company or elsewhere in its discretion at such times to
be determined by a majority of its members, or at the call of the Chairman of
the Executive Committee or at the call of the Chairman of the Board of
Directors. The majority of its members shall be necessary to constitute a
quorum for the transaction of business. Special meetings of the Executive
Committee may be held at any time when a quorum is present.
(D) Minutes of each meeting of the Executive
Committee shall be kept and submitted to the Board of Directors at its next
meeting.
(E) The Executive Committee shall advise and
superintend all investments that may be made of the funds of the Company, and
shall direct the disposal of the same, in accordance with such rules and
regulations as the Board of Directors from time to time make.
(F) In the event of a state of disaster of
sufficient severity to prevent the conduct and management of the affairs and
business of the Company by its directors and officers as contemplated by these
By-Laws any two available members of the Executive Committee as constituted
immediately prior to such disaster shall constitute a quorum of that Committee
for the full conduct and management of the affairs and business of the Company
in accordance with the provisions of Article III of these By-Laws; and if less
than three members of the Trust Committee is constituted immediately prior to
such disaster shall be available for the transaction of its business, such
Executive Committee shall also be empowered to exercise all of the powers
reserved to the Trust Committee under Article III Section 2 hereof. In the
event of the unavailability, at such time, of a minimum of two members of such
Executive Committee, any three available directors shall constitute the
Executive Committee for the full conduct and management of the affairs and
business of the Company in accordance with the foregoing provisions of this
Section. This By-Law shall be subject to implementation by Resolutions of the
Board of Directors presently existing or hereafter passed from time to time for
that purpose, and any provisions of these By-Laws (other than this Section) and
any resolutions which are contrary to the provisions of this Section or to the
provisions of any such implementary Resolutions shall be suspended during such
a disaster period until it shall be determined by any interim Executive
Committee acting under this section that it shall be to the advantage of the
Company to resume the conduct and management of its affairs and business under
all of the other provisions of these By-Laws.
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Section 2. Trust Committee
(A) The Trust Committee shall be composed of not
more than thirteen members who shall be selected by the Board of Directors, a
majority of whom shall be members of the Board of Directors and who shall hold
office during the pleasure of the Board.
(B) The Trust Committee shall have general
supervision over the Trust Department and the investment of trust funds, in all
matters, however, being subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the
principal office of the Company or elsewhere in its discretion at such times to
be determined by a majority of its members or at the call of its chairman. A
majority of its members shall be necessary to constitute a quorum for the
transaction of business.
(D) Minutes of each meeting of the Trust Committee
shall be kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to
appoint Committees and/or designate officers or employees of the Company to
whom supervision over the investment of trust funds may be delegated when the
Trust Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five
members who shall be selected by the Board of Directors from its own members,
none of whom shall be an officer of the Company, and shall hold office at the
pleasure of the Board.
(B) The Audit Committee shall have general
supervision over the Audit Division in all matters however subject to the
approval of the Board of Directors; it shall consider all matters brought to
its attention by the officer in charge of the Audit Division, review all
reports of examination of the Company made by any governmental agency or such
independent auditor employed for that purpose, and make such recommendations to
the Board of Directors with respect thereto or with respect to any other
matters pertaining to auditing the Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and
wherever the majority of its members shall deem it to be proper for the
transaction of its business, and a majority of its Committee shall constitute a
quorum.
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Section 4. Compensation Committee
(A) The Compensation Committee shall be composed
of not more than five (5) members who shall be selected by the Board of
Directors from its own members who are not officers of the Company and who
shall hold office during the pleasure of the Board.
(B) The Compensation Committee shall in general
advise upon all matters of policy concerning the Company brought to its
attention by the management and from time to time review the management of the
Company, major organizational matters, including salaries and employee benefits
and specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be
called at any time by the Chairman of the Compensation Committee, the Chairman
of the Board of Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be
elected by the Board of Directors as an associate director, to serve during the
pleasure of the Board.
(B) An associate director shall be entitled to
attend all directors meetings and participate in the discussion of all matters
brought to the Board, with the exception that he would have no right to vote.
An associate director will be eligible for appointment to Committees of the
Company, with the exception of the Executive Committee, Audit Committee and
Compensation Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any
member of any Committee created under Article III of the By-Laws of this
Company, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absence or disqualified member.
ARTICLE IV
OFFICERS
Section 1. The Chairman of the Board of Directors shall preside at
all meetings of the Board and shall have such further authority and powers and
shall perform such duties as the Board of Directors may from time to time
confer and direct. He shall also exercise such powers
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and perform such duties as may from time to time be agreed upon between himself
and the President of the Company.
Section 2. The Vice Chairman of the Board. The Vice Chairman of the
Board of Directors shall preside at all meetings of the Board of Directors at
which the Chairman of the Board shall not be present and shall have such
further authority and powers and shall perform such duties as the Board of
Directors or the Chairman of the Board may from time to time confer and direct.
Section 3. The President shall have the powers and duties pertaining
to the office of the President conferred or imposed upon him by statute or
assigned to him by the Board of Directors in the absence of the Chairman of the
Board the President shall have the powers and duties of the Chairman of the
Board.
Section 4. The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and such
other powers and duties as may from time to time be assigned to them by the
Board of Directors, the Executive Committee, the Chairman of the Board or the
President and by the officer in charge of the department or division to which
they are assigned.
Section 6. The Secretary shall attend to the giving of notice of
meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings and
to recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all
assets and liabilities of the Company. He shall be custodian of and
responsible for all monies, funds and valuables of the Company and for the
keeping of proper records of the evidence of property or indebtedness and of
all the transactions of the Company. He shall have general supervision of the
expenditures of the Company and shall report to the Board of Directors at each
regular meeting of the condition of the Company, and perform such other duties
as may be assigned to him from time to time by the Board of Directors of the
Executive Committee.
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Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.
Section 10. There may be one or more officers, subordinate in rank to
all Vice Presidents with such functional titles as shall be determined from
time to time by the Board of Directors, who shall ex officio hold the office
Assistant Secretary of this Company and who may perform such duties as may be
prescribed by the officer in charge of the department or division to whom they
are assigned.
Section 11. The powers and duties of all other officers of the
Company shall be those usually pertaining to their respective offices, subject
to the direction of the Board of Directors, the Executive Committee, Chairman
of the Board of Directors or the President and the officer in charge of the
department or division to which they are assigned.
ARTICLE V
STOCK AND STOCK CERTIFICATES
Section 1. Shares of stock shall be transferrable on the books of the
Company and a transfer book shall be kept in which all transfers of stock shall
be recorded.
Section 2. Certificate of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new
certificate or certificates shall be issued in lieu thereof.
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Duplicate certificates of stock shall be issued only upon giving such security
as may be satisfactory to the Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to fix
in advance a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the
date for the payment of any dividend, or the date for the allotment of rights,
or the date when any change or conversion or exchange of capital stock shall go
into effect, or a date in connection with obtaining such consent.
ARTICLE VI
SEAL
Section 1. The corporate seal of the Company shall be in the
following form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."
ARTICLE VII
FISCAL YEAR
Section 1. The fiscal year of the Company shall be the calendar year.
ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver
and the Secretary or any Assistant Secretary shall have full power and
authority to attest and affix the corporate seal of the Company to any and all
deeds, conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or
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confirmation by the Board of Directors or the Executive Committee, and any and
all such instruments shall have the same force and validity as though expressly
authorized by the Board of Directors and/or the Executive Committee.
ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES
Section 1. Directors and associate directors of the Company, other
than salaried officers of the Company, shall be paid such reasonable honoraria
or fees for attending meetings of the Board of Directors as the Board of
Directors may from time to time determine. Directors and associate directors
who serve as members of committees, other than salaried employees of the
Company, shall be paid such reasonable honoraria or fees for services as
members of committees as the Board of Directors shall from time to time
determine and directors and associate directors may be employed by the Company
for such special services as the Board of Directors may from time to time
determine and shall be paid for such special services so performed reasonable
compensation as may be determined by the Board of Directors.
ARTICLE X
INDEMNIFICATION
Section 1. (A) The Corporation shall indemnify and hold harmless, to
the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or
was a director, officer, employee or agent of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee,
fiduciary or agent of another corporation or of a partnership, joint venture,
trust, enterprise or non-profit entity, including service with respect to
employee benefit plans, against all liability and loss suffered and expenses
reasonably incurred by such person. The Corporation shall indemnify a person
in connection with a proceeding initiated by such person only if the proceeding
was authorized by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses
incurred in defending any proceeding in advance of its final disposition,
provided, however, that the payment of expenses incurred by a Director officer
in his capacity as a Director or officer in advance of the final disposition of
the proceeding shall be made only upon receipt of an undertaking by the
Director or officer to repay all amounts advanced if it should be ultimately
determined that the Director or officer is not entitled to be indemnified under
this Article or otherwise.
9
<PAGE> 27
(C) If a claim for indemnification or payment of
expenses, under this Article X is not paid in full within ninety days after a
written claim therefor has been received by the Corporation the claimant may
file suit to recover the unpaid amount of such claim and, if successful in
whole or in part, shall be entitled to be paid the expense of prosecuting such
claim. In any such action the Corporation shall have the burden of proving
that the claimant was not entitled to the requested indemnification of payment
of expenses under applicable law.
(D) The rights conferred on any person by this
Article X shall not be exclusive of any other rights which such person may have
or hereafter acquire under any statute, provision of the Charter or Act of
Incorporation, these By-Laws, agreement, vote of stockholders or disinterested
Directors or otherwise.
(E) Any repeal or modification of the foregoing
provisions of this Article X shall not adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring prior to
the time of such repeal or modification.
ARTICLE XI
AMENDMENTS TO THE BY-LAWS
Section 1. These By-Laws may be altered, amended or repealed, in
whole or in part, and any new By-Law or By-Laws adopted at any regular or
special meeting of the Board of Directors by a vote of the majority of all the
members of the Board of Directors then in office.
10
<PAGE> 28
EXHIBIT C
SECTION 321(b) CONSENT
Pursuant to Section 321(b) of the Trust Indenture Act of 1939,
Wilmington Trust Company hereby consents that reports of examinations by
Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: August 14, 1998 By: /s/ Emmett R. Harmon
-------------------
Name: Emmett R. Harmon
Title: Vice President
<PAGE> 29
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings banks with
state publication requirements. It has not been approved by any state banking
authorities. Refer to your appropriate state banking authorities for your
state publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
------------------------ ----------
Name of Bank City
in the State of DELAWARE, at the close of business on March 31, 1998.
ASSETS
<TABLE>
<CAPTION>
Thousands of dollars
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins . . . . . . . . . . . . . . . . . . . . . . . . . 180,015
Interest-bearing balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Held-to-maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 287,798
Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,355,745
Federal funds sold and securities purchased under agreements to resell . . . . . . . . . . . . . . . . . . . . 124,500
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . . 3,896,238
LESS: Allowance for loan and lease losses. . . . . . 61,635
LESS: Allocated transfer risk reserve. . . . . . . . 0
Loans and leases, net of unearned income, allowance, and reserve . . . . . . . . . . . . . . . . . . . 3,834,603
Assets held in trading accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Premises and fixed assets (including capitalized leases) . . . . . . . . . . . . . . . . . . . . . . . . . . . 134,016
Other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,444
Investments in unconsolidated subsidiaries and associated companies . . . . . . . . . . . . . . . . . . . . . . 10
Customers' liability to this bank on acceptances outstanding . . . . . . . . . . . . . . . . . . . . . . . . . 0
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,264
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215,048
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,189,443
</TABLE>
CONTINUED ON NEXT PAGE
<PAGE> 30
LIABILITIES
<TABLE>
<S> <C> <C>
Deposits:
In domestic offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,183,321
Noninterest-bearing . . . . . . . . 904,511
Interest-bearing. . . . . . . . . . 3,278,810
Federal funds purchased and Securities sold under agreements to repurchase . . . . . . . . . . . . . . . . . 558,553
Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,761
Trading liabilities (from Schedule RC-D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other borrowed money: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ///////
With original maturity of one year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 788,000
With original maturity of more than one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,000
Bank's liability on acceptances executed and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Subordinated notes and debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other liabilities (from Schedule RC-G) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99,777
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,730,412
</TABLE>
EQUITY CAPITAL
<TABLE>
<S> <C>
Perpetual preferred stock and related surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500
Surplus (exclude all surplus related to preferred stock) . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,118
Undivided profits and capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 388,458
Net unrealized holding gains (losses) on available-for-sale securities . . . . . . . . . . . . . . . . . . . . 7,955
Total equity capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 459,031
Total liabilities, limited-life preferred stock, and equity capital . . . . . . . . . . . . . . . . . . . . . . 6,189,443
</TABLE>
2
<PAGE> 1
EXHIBIT 25.6
Registration No.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) X
---
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
AMERICAN COIN MERCHANDISING, INC.
d/b/a SUGARLOAF CREATIONS, INC.
(Exact name of obligor as specified in its charter)
Delaware 84-1093721
(State of incorporation (I.R.S. employer identification no.)
or formation)
5660 Central Avenue
Boulder, Colorado 77002
(Address of principal executive offices) (Zip Code)
Guarantee of Trust Preferred Securities of American Coin Merchandising Trust I
(Title of the indenture securities)
================================================================================
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust
powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the
obligor is not an affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which
includes the certificate of authority of Wilmington Trust
Company to commence business and the authorization of
Wilmington Trust Company to exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section
321(b) of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington
Trust Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, Wilmington Trust Company, a corporation organized and existing under
the laws of Delaware, has duly caused this Statement of Eligibility to be signed
on its behalf by the undersigned, thereunto duly authorized, all in the City of
Wilmington and State of Delaware on the 14th day of August, 1998.
[SEAL] WILMINGTON TRUST COMPANY
Attest: /s/ Donald G. MacKelcan By: /s/ Emmett R. Harmon
----------------------- -----------------------------------
Assistant Secretary Name: Emmett R. Harmon
Title: Vice President
<PAGE> 3
EXHIBIT A
AMENDED CHARTER
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON MAY 9, 1987
<PAGE> 4
AMENDED CHARTER
OR
ACT OF INCORPORATION
OF
WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, originally incorporated by an Act of the General
Assembly of the State of Delaware, entitled "An Act to Incorporate the Delaware
Guarantee and Trust Company", approved March 2, A.D. 1901, and the name of
which company was changed to "WILMINGTON TRUST COMPANY" by an amendment filed
in the Office of the Secretary of State on March 18, A.D. 1903, and the Charter
or Act of Incorporation of which company has been from time to time amended and
changed by merger agreements pursuant to the corporation law for state banks
and trust companies of the State of Delaware, does hereby alter and amend its
Charter or Act of Incorporation so that the same as so altered and amended
shall in its entirety read as follows:
FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.
SECOND: - The location of its principal office in the State of Delaware is
at Rodney Square North, in the City of Wilmington, County of New Castle;
the name of its resident agent is WILMINGTON TRUST COMPANY whose address is
Rodney Square North, in said City. In addition to such principal office,
the said corporation maintains and operates branch offices in the City of
Newark, New Castle County, Delaware, the Town of Newport, New Castle
County, Delaware, at Claymont, New Castle County, Delaware, at Greenville,
New Castle County Delaware, and at Milford Cross Roads, New Castle County,
Delaware, and shall be empowered to open, maintain and operate branch
offices at Ninth and Shipley Streets, 418 Delaware Avenue, 2120 Market
Street, and 3605 Market Street, all in the City of Wilmington, New Castle
County, Delaware, and such other branch offices or places of business as
may be authorized from time to time by the agency or agencies of the
government of the State of Delaware empowered to confer such authority.
THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this Corporation are
to do any or all of the things herein mentioned as fully and to the same
extent as natural persons might or could do and in any part of the world,
viz.:
(1) To sue and be sued, complain and defend in any Court of law or
equity and to make and use a common seal, and alter the seal at
pleasure, to hold, purchase, convey, mortgage or otherwise deal in real
and personal estate and property, and to appoint such officers and
agents as the business of the Corporation shall require, to make
by-laws not inconsistent with the Constitution or laws of the
<PAGE> 5
United States or of this State, to discount bills, notes or other
evidences of debt, to receive deposits of money, or securities for
money, to buy gold and silver bullion and foreign coins, to buy and
sell bills of exchange, and generally to use, exercise and enjoy all
the powers, rights, privileges and franchises incident to a corporation
which are proper or necessary for the transaction of the business of
the Corporation hereby created.
(2) To insure titles to real and personal property, or any estate or
interests therein, and to guarantee the holder of such property, real
or personal, against any claim or claims, adverse to his interest
therein, and to prepare and give certificates of title for any lands or
premises in the State of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the receipt,
collection, custody, investment and management of funds, and the
purchase, sale, management and disposal of property of all
descriptions, and to prepare and execute all papers which may be
necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds, leases,
conveyances, mortgages, bonds and legal papers of every description,
and to carry on the business of conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money, jewelry, plate,
deeds, bonds and any and all other personal property of every sort and
kind, from executors, administrators, guardians, public officers,
courts, receivers, assignees, trustees, and from all fiduciaries, and
from all other persons and individuals, and from all corporations
whether state, municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such property.
(6) To act as agent or otherwise for the purpose of registering,
issuing, certificating, countersigning, transferring or underwriting
the stock, bonds or other obligations of any corporation, association,
state or municipality, and may receive and manage any sinking fund
therefor on such terms as may be agreed upon between the two parties,
and in like manner may act as Treasurer of any corporation or
municipality.
(7) To act as Trustee under any deed of trust, mortgage, bond or other
instrument issued by any state, municipality, body politic,
corporation, association or person, either alone or in conjunction with
any other person or persons, corporation or corporations.
(8) To guarantee the validity, performance or effect of any contract
or agreement, and the fidelity of persons holding places of
responsibility or trust; to become surety for any person, or persons,
for the faithful performance of any
2
<PAGE> 6
trust, office, duty, contract or agreement, either by itself or in
conjunction with any other person, or persons, corporation, or
corporations, or in like manner become surety upon any bond,
recognizance, obligation, judgment, suit, order, or decree to be
entered in any court of record within the State of Delaware or
elsewhere, or which may now or hereafter be required by any law, judge,
officer or court in the State of Delaware or elsewhere.
(9) To act by any and every method of appointment as trustee, trustee
in bankruptcy, receiver, assignee, assignee in bankruptcy, executor,
administrator, guardian, bailee, or in any other trust capacity in the
receiving, holding, managing, and disposing of any and all estates and
property, real, personal or mixed, and to be appointed as such trustee,
trustee in bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian or bailee by any persons,
corporations, court, officer, or authority, in the State of Delaware or
elsewhere; and whenever this Corporation is so appointed by any person,
corporation, court, officer or authority such trustee, trustee in
bankruptcy, receiver, assignee, assignee in bankruptcy, executor,
administrator, guardian, bailee, or in any other trust capacity, it
shall not be required to give bond with surety, but its capital stock
shall be taken and held as security for the performance of the duties
devolving upon it by such appointment.
(10) And for its care, management and trouble, and the exercise of any
of its powers hereby given, or for the performance of any of the duties
which it may undertake or be called upon to perform, or for the
assumption of any responsibility the said Corporation may be entitled
to receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages, debentures,
shares of capital stock, and other securities, obligations, contracts
and evidences of indebtedness, of any private, public or municipal
corporation within and without the State of Delaware, or of the
Government of the United States, or of any state, territory, colony, or
possession thereof, or of any foreign government or country; to
receive, collect, receipt for, and dispose of interest, dividends and
income upon and from any of the bonds, mortgages, debentures, notes,
shares of capital stock, securities, obligations, contracts, evidences
of indebtedness and other property held and owned by it, and to
exercise in respect of all such bonds, mortgages, debentures, notes,
shares of capital stock, securities, obligations, contracts, evidences
of indebtedness and other property, any and all the rights, powers and
privileges of individual owners thereof, including the right to vote
thereon; to invest and deal in and with any of the moneys of the
Corporation upon such securities and in such manner as it may think fit
and proper, and from time to time to vary or realize such investments;
to issue bonds and secure the same by pledges or deeds of trust or
mortgages of or upon the whole or any part of the property held or
owned by the Corporation, and to sell and pledge such bonds,
3
<PAGE> 7
as and when the Board of Directors shall determine, and in the
promotion of its said corporate business of investment and to the
extent authorized by law, to lease, purchase, hold, sell, assign,
transfer, pledge, mortgage and convey real and personal property of any
name and nature and any estate or interest therein.
(b) In furtherance of, and not in limitation, of the powers conferred by
the laws of the State of Delaware, it is hereby expressly provided that the
said Corporation shall also have the following powers:
(1) To do any or all of the things herein set forth, to the same
extent as natural persons might or could do, and in any part of the
world.
(2) To acquire the good will, rights, property and franchises and to
undertake the whole or any part of the assets and liabilities of any
person, firm, association or corporation, and to pay for the same in
cash, stock of this Corporation, bonds or otherwise; to hold or in any
manner to dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any part of any
business so acquired, and to exercise all the powers necessary or
convenient in and about the conduct and management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien, and to
lease, sell, exchange, transfer, or in any manner whatever dispose of
property, real, personal or mixed, wherever situated.
(4) To enter into, make, perform and carry out contracts of every kind
with any person, firm, association or corporation, and, without limit
as to amount, to draw, make, accept, endorse, discount, execute and
issue promissory notes, drafts, bills of exchange, warrants, bonds,
debentures, and other negotiable or transferable instruments.
(5) To have one or more offices, to carry on all or any of its
operations and businesses, without restriction to the same extent as
natural persons might or could do, to purchase or otherwise acquire, to
hold, own, to mortgage, sell, convey or otherwise dispose of, real and
personal property, of every class and description, in any State,
District, Territory or Colony of the United States, and in any foreign
country or place.
(6) It is the intention that the objects, purposes and powers
specified and clauses contained in this paragraph shall (except where
otherwise expressed in said paragraph) be nowise limited or restricted
by reference to or inference from the terms of any other clause of this
or any other paragraph in this charter, but that the objects, purposes
and powers specified in each of the clauses of this paragraph shall be
regarded as independent objects, purposes and powers.
4
<PAGE> 8
FOURTH: - (a) The total number of shares of all classes of stock which the
Corporation shall have authority to issue is forty-one million (41,000,000)
shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par value
$10.00 per share (hereinafter referred to as "Preferred Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par value $1.00
per share (hereinafter referred to as "Common Stock").
(b) Shares of Preferred Stock may be issued from time to time in one or
more series as may from time to time be determined by the Board of
Directors each of said series to be distinctly designated. All shares of
any one series of Preferred Stock shall be alike in every particular,
except that there may be different dates from which dividends, if any,
thereon shall be cumulative, if made cumulative. The voting powers and the
preferences and relative, participating, optional and other special rights
of each such series, and the qualifications, limitations or restrictions
thereof, if any, may differ from those of any and all other series at any
time outstanding; and, subject to the provisions of subparagraph 1 of
Paragraph (c) of this Article FOURTH, the Board of Directors of the
Corporation is hereby expressly granted authority to fix by resolution or
resolutions adopted prior to the issuance of any shares of a particular
series of Preferred Stock, the voting powers and the designations,
preferences and relative, optional and other special rights, and the
qualifications, limitations and restrictions of such series, including, but
without limiting the generality of the foregoing, the following:
(1) The distinctive designation of, and the number of shares of
Preferred Stock which shall constitute such series, which number may be
increased (except where otherwise provided by the Board of Directors)
or decreased (but not below the number of shares thereof then
outstanding) from time to time by like action of the Board of
Directors;
(2) The rate and times at which, and the terms and conditions on
which, dividends, if any, on Preferred Stock of such series shall be
paid, the extent of the preference or relation, if any, of such
dividends to the dividends payable on any other class or classes, or
series of the same or other class of stock and whether such dividends
shall be cumulative or non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of such
series to convert the same into or exchange the same for, shares of any
other class or classes or of any series of the same or any other class
or classes of stock of the Corporation and the terms and conditions of
such conversion or exchange;
(4) Whether or not Preferred Stock of such series shall be subject to
redemption, and the redemption price or prices and the time or times at
which, and the terms and conditions on which, Preferred Stock of such
series may be redeemed.
5
<PAGE> 9
(5) The rights, if any, of the holders of Preferred Stock of such
series upon the voluntary or involuntary liquidation, merger,
consolidation, distribution or sale of assets, dissolution or winding-
up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase account,
if any, to be provided for the Preferred Stock of such series; and
(7) The voting powers, if any, of the holders of such series of
Preferred Stock which may, without limiting the generality of the
foregoing include the right, voting as a series or by itself or
together with other series of Preferred Stock or all series of
Preferred Stock as a class, to elect one or more directors of the
Corporation if there shall have been a default in the payment of
dividends on any one or more series of Preferred Stock or under such
circumstances and on such conditions as the Board of Directors may
determine.
(c) (1) After the requirements with respect to preferential dividends on
the Preferred Stock (fixed in accordance with the provisions of section (b)
of this Article FOURTH), if any, shall have been met and after the
Corporation shall have complied with all the requirements, if any, with
respect to the setting aside of sums as sinking funds or redemption or
purchase accounts (fixed in accordance with the provisions of section (b)
of this Article FOURTH), and subject further to any conditions which may be
fixed in accordance with the provisions of section (b) of this Article
FOURTH, then and not otherwise the holders of Common Stock shall be
entitled to receive such dividends as may be declared from time to time by
the Board of Directors.
(2) After distribution in full of the preferential amount, if any,
(fixed in accordance with the provisions of section (b) of this Article
FOURTH), to be distributed to the holders of Preferred Stock in the
event of voluntary or involuntary liquidation, distribution or sale of
assets, dissolution or winding-up, of the Corporation, the holders of
the Common Stock shall be entitled to receive all of the remaining
assets of the Corporation, tangible and intangible, of whatever kind
available for distribution to stockholders ratably in proportion to the
number of shares of Common Stock held by them respectively.
(3) Except as may otherwise be required by law or by the provisions of
such resolution or resolutions as may be adopted by the Board of
Directors pursuant to section (b) of this Article FOURTH, each holder
of Common Stock shall have one vote in respect of each share of Common
Stock held on all matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock or of
options, warrants or other rights to purchase shares of any class or series
of stock or of other securities of the Corporation shall have any
preemptive right to purchase or subscribe for any unissued stock of any
class or series or any additional shares of any class or series to be
6
<PAGE> 10
issued by reason of any increase of the authorized capital stock of the
Corporation of any class or series, or bonds, certificates of indebtedness,
debentures or other securities convertible into or exchangeable for stock
of the Corporation of any class or series, or carrying any right to
purchase stock of any class or series, but any such unissued stock,
additional authorized issue of shares of any class or series of stock or
securities convertible into or exchangeable for stock, or carrying any
right to purchase stock, may be issued and disposed of pursuant to
resolution of the Board of Directors to such persons, firms, corporations
or associations, whether such holders or others, and upon such terms as may
be deemed advisable by the Board of Directors in the exercise of its sole
discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and rights
of each other series of Preferred Stock shall, in each case, be as fixed
from time to time by the Board of Directors in the resolution or
resolutions adopted pursuant to authority granted in section (b) of this
Article FOURTH and the consent, by class or series vote or otherwise, of
the holders of such of the series of Preferred Stock as are from time to
time outstanding shall not be required for the issuance by the Board of
Directors of any other series of Preferred Stock whether or not the powers,
preferences and rights of such other series shall be fixed by the Board of
Directors as senior to, or on a parity with, the powers, preferences and
rights of such outstanding series, or any of them; provided, however, that
the Board of Directors may provide in the resolution or resolutions as to
any series of Preferred Stock adopted pursuant to section (b) of this
Article FOURTH that the consent of the holders of a majority (or such
greater proportion as shall be therein fixed) of the outstanding shares of
such series voting thereon shall be required for the issuance of any or all
other series of Preferred Stock.
(f) Subject to the provisions of section (e), shares of any series of
Preferred Stock may be issued from time to time as the Board of Directors
of the Corporation shall determine and on such terms and for such
consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and for such
consideration as shall be fixed by the Board of Directors.
(h) The authorized amount of shares of Common Stock and of Preferred Stock
may, without a class or series vote, be increased or decreased from time to
time by the affirmative vote of the holders of a majority of the stock of
the Corporation entitled to vote thereon.
FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of directors
constituting the entire Board shall be not less than five nor more than
twenty-five as fixed from time to time by vote of a majority of the whole
Board, provided, however, that the number of directors shall not
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<PAGE> 11
be reduced so as to shorten the term of any director at the time in office,
and provided further, that the number of directors constituting the whole
Board shall be twenty-four until otherwise fixed by a majority of the whole
Board.
(b) The Board of Directors shall be divided into three classes, as nearly
equal in number as the then total number of directors constituting the
whole Board permits, with the term of office of one class expiring each
year. At the annual meeting of stockholders in 1982, directors of the
first class shall be elected to hold office for a term expiring at the next
succeeding annual meeting, directors of the second class shall be elected
to hold office for a term expiring at the second succeeding annual meeting
and directors of the third class shall be elected to hold office for a term
expiring at the third succeeding annual meeting. Any vacancies in the
Board of Directors for any reason, and any newly created directorships
resulting from any increase in the directors, may be filled by the Board of
Directors, acting by a majority of the directors then in office, although
less than a quorum, and any directors so chosen shall hold office until the
next annual election of directors. At such election, the stockholders
shall elect a successor to such director to hold office until the next
election of the class for which such director shall have been chosen and
until his successor shall be elected and qualified. No decrease in the
number of directors shall shorten the term of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding the
fact that some lesser percentage may be specified by law, this Charter or
Act of Incorporation or the By-Laws of the Corporation), any director or
the entire Board of Directors of the Corporation may be removed at any time
without cause, but only by the affirmative vote of the holders of two-
thirds or more of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) cast at a meeting of the
stockholders called for that purpose.
(d) Nominations for the election of directors may be made by the Board of
Directors or by any stockholder entitled to vote for the election of
directors. Such nominations shall be made by notice in writing, delivered
or mailed by first class United States mail, postage prepaid, to the
Secretary of the Corporation not less than 14 days nor more than 50 days
prior to any meeting of the stockholders called for the election of
directors; provided, however, that if less than 21 days' notice of the
meeting is given to stockholders, such written notice shall be delivered or
mailed, as prescribed, to the Secretary of the Corporation not later than
the close of the seventh day following the day on which notice of the
meeting was mailed to stockholders. Notice of nominations which are
proposed by the Board of Directors shall be given by the Chairman on behalf
of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name, age,
business address and, if known, residence address of each nominee proposed
in such notice, (ii) the principal occupation or employment of such nominee
and (iii) the number of shares of
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stock of the Corporation which are beneficially owned by each such nominee.
(f) The Chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with
the foregoing procedure, and if he should so determine, he shall so declare
to the meeting and the defective nomination shall be disregarded.
(g) No action required to be taken or which may be taken at any annual or
special meeting of stockholders of the Corporation may be taken without a
meeting, and the power of stockholders to consent in writing, without a
meeting, to the taking of any action is specifically denied.
SIXTH: - The Directors shall choose such officers, agent and servants as
may be provided in the By-Laws as they may from time to time find necessary
or proper.
SEVENTH: - The Corporation hereby created is hereby given the same powers,
rights and privileges as may be conferred upon corporations organized under
the Act entitled "An Act Providing a General Corporation Law", approved
March 10, 1899, as from time to time amended.
EIGHTH: - This Act shall be deemed and taken to be a private Act.
NINTH: - This Corporation is to have perpetual existence.
TENTH: - The Board of Directors, by resolution passed by a majority of the
whole Board, may designate any of their number to constitute an Executive
Committee, which Committee, to the extent provided in said resolution, or
in the By-Laws of the Company, shall have and may exercise all of the
powers of the Board of Directors in the management of the business and
affairs of the Corporation, and shall have power to authorize the seal of
the Corporation to be affixed to all papers which may require it.
ELEVENTH: - The private property of the stockholders shall not be liable
for the payment of corporate debts to any extent whatever.
TWELFTH: - The Corporation may transact business in any part of the world.
THIRTEENTH: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation by a
vote of the majority of the entire Board. The stockholders may make, alter
or repeal any By-Law whether or not adopted by them, provided however, that
any such additional By-Laws, alterations or repeal may be adopted only by
the affirmative vote of the holders of two-thirds or more of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors (considered for this purpose as one
class).
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FOURTEENTH: - Meetings of the Directors may be held outside of the State of
Delaware at such places as may be from time to time designated by the
Board, and the Directors may keep the books of the Company outside of the
State of Delaware at such places as may be from time to time designated by
them.
FIFTEENTH: - (a) In addition to any affirmative vote required by law, and
except as otherwise expressly provided in sections (b) and (c) of this
Article FIFTEENTH:
(A) any merger or consolidation of the Corporation or any Subsidiary
(as hereinafter defined) with or into (i) any Interested Stockholder
(as hereinafter defined) or (ii) any other corporation (whether or not
itself an Interested Stockholder), which, after such merger or
consolidation, would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of related transactions) to
or with any Interested Stockholder or any Affiliate of any Interested
Stockholder of any assets of the Corporation or any Subsidiary having
an aggregate fair market value of $1,000,000 or more, or
(C) the issuance or transfer by the Corporation or any Subsidiary (in
one transaction or a series of related transactions) of any securities
of the Corporation or any Subsidiary to any Interested Stockholder or
any Affiliate of any Interested Stockholder in exchange for cash,
securities or other property (or a combination thereof) having an
aggregate fair market value of $1,000,000 or more, or
(D) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation, or
(E) any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or any
similar transaction (whether or not with or into or otherwise involving
an Interested Stockholder) which has the effect, directly or
indirectly, of increasing the proportionate share of the outstanding
shares of any class of equity or convertible securities of the
Corporation or any Subsidiary which is directly or indirectly owned by
any Interested Stockholder, or any Affiliate of any Interested
Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article FIFTEENTH as one class ("Voting Shares"). Such affirmative vote shall
be required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
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(2) The term "business combination" as used in this Article
FIFTEENTH shall mean any transaction which is referred to any
one or more of clauses (A) through (E) of paragraph 1 of the
section (a).
(b) The provisions of section (a) of this Article FIFTEENTH shall not
be applicable to any particular business combination and such business
combination shall require only such affirmative vote as is required by
law and any other provisions of the Charter or Act of Incorporation of
By-Laws if such business combination has been approved by a majority of
the whole Board.
(c) For the purposes of this Article FIFTEENTH:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any Subsidiary) who
or which as of the record date for the determination of stockholders
entitled to notice of and to vote on such business combination, or
immediately prior to the consummation of any such transaction:
(A) is the beneficial owner, directly or indirectly, of more than 10%
of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time within two
years prior thereto was the beneficial owner, directly or indirectly,
of not less than 10% of the then outstanding voting Shares, or
(C) is an assignee of or has otherwise succeeded in any share of
capital stock of the Corporation which were at any time within two
years prior thereto beneficially owned by any Interested Stockholder,
and such assignment or succession shall have occurred in the course of
a transaction or series of transactions not involving a public offering
within the meaning of the Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and Associates (as
hereafter defined) beneficially own, directly or indirectly, or
(B) which such person or any of its Affiliates or Associates has (i)
the right to acquire (whether such right is exercisable immediately or
only after the passage of time), pursuant to any agreement, arrangement
or understanding or upon the exercise of conversion rights, exchange
rights, warrants or options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or understanding, or
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(C) which are beneficially owned, directly or indirectly, by any other
person with which such first mentioned person or any of its Affiliates
or Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any shares of
capital stock of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any other
Voting Shares which may be issuable pursuant to any agreement, or upon
exercise of conversion rights, warrants or options or otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings given
those terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect on December 31, 1981.
(6) "Subsidiary" shall mean any corporation of which a majority of any
class of equity security (as defined in Rule 3a11-1 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as in effect in
December 31, 1981) is owned, directly or indirectly, by the Corporation;
provided, however, that for the purposes of the definition of Investment
Stockholder set forth in paragraph (2) of this section (c), the term
"Subsidiary" shall mean only a corporation of which a majority of each
class of equity security is owned, directly or indirectly, by the
Corporation.
(d) majority of the directors shall have the power and duty to
determine for the purposes of this Article FIFTEENTH on the basis of
information known to them, (1) the number of Voting Shares beneficially
owned by any person (2) whether a person is an Affiliate or Associate
of another, (3) whether a person has an agreement, arrangement or
understanding with another as to the matters referred to in paragraph
(3) of section (c), or (4) whether the assets subject to any business
combination or the consideration received for the issuance or transfer
of securities by the Corporation, or any Subsidiary has an aggregate
fair market value of $1,000,000 or more.
(e) Nothing contained in this Article FIFTEENTH shall be construed to
relieve any Interested Stockholder from any fiduciary obligation
imposed by law.
SIXTEENTH: Notwithstanding any other provision of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and in addition to any
other vote that may be required by law, this Charter or Act of
Incorporation by the By-Laws), the affirmative vote of the holders of at
least two-thirds of the outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) shall be required to amend,
alter or repeal any provision of Articles FIFTH, THIRTEENTH, FIFTEENTH or
SIXTEENTH of this Charter or Act of Incorporation.
SEVENTEENTH: (a) a Director of this Corporation shall not be liable to the
Corporation
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or its stockholders for monetary damages for breach of fiduciary duty as a
Director, except to the extent such exemption from liability or limitation
thereof is not permitted under the Delaware General Corporation Laws as the
same exists or may hereafter be amended.
(b) Any repeal or modification of the foregoing paragraph shall not
adversely affect any right or protection of a Director of the
Corporation existing hereunder with respect to any act or omission
occurring prior to the time of such repeal or modification."
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EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON JANUARY 16, 1997
<PAGE> 18
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. The Annual Meeting of Stockholders shall be held on the
third Thursday in April each year at the principal office at the Company or at
such other date, time, or place as may be designated by resolution by the Board
of Directors.
Section 2. Special meetings of all stockholders may be called at any
time by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be given
by mailing to each stockholder at least ten (10) days before said meeting, at
his last known address, a written or printed notice fixing the time and place
of such meeting.
Section 4. A majority in the amount of the capital stock of the
Company issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one
vote, either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
DIRECTORS
Section 1. The number and classification of the Board of Directors
shall be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72)
years shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed
and conducted by the Board of Directors.
Section 5. The Board of Directors shall meet at the principal office
of the Company or elsewhere in its discretion at such times to be determined by
a majority of its members, or at the call of the Chairman of the Board of
Directors or the President.
<PAGE> 19
Section 6. Special meetings of the Board of Directors may be called
at any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of
any special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal, inability
to act, or disqualification of any director, the Board of Directors, although
less than a quorum, shall have the right to elect the successor who shall hold
office for the remainder of the full term of the class of directors in which
the vacancy occurred, and until such director's successor shall have been duly
elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect
from its own members a Chairman of the Board of Directors and a President who
may be the same person. The Board of Directors shall also elect at such
meeting a Secretary and a Treasurer, who may be the same person, may appoint at
any time such other committees and elect or appoint such other officers as it
may deem advisable. The Board of Directors may also elect at such meeting one
or more Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be in
charge of such of the departments or division of the Company as it may deem
advisable.
ARTICLE III
COMMITTEES
Section 1. Executive Committee
(A) The Executive Committee shall be composed of
not more than nine members who shall be selected by the Board of Directors from
its own members and who shall hold office during the pleasure of the Board.
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(B) The Executive Committee shall have all the
powers of the Board of Directors when it is not in session to transact all
business for and in behalf of the Company that may be brought before it.
(C) The Executive Committee shall meet at the
principal office of the Company or elsewhere in its discretion at such times to
be determined by a majority of its members, or at the call of the Chairman of
the Executive Committee or at the call of the Chairman of the Board of
Directors. The majority of its members shall be necessary to constitute a
quorum for the transaction of business. Special meetings of the Executive
Committee may be held at any time when a quorum is present.
(D) Minutes of each meeting of the Executive
Committee shall be kept and submitted to the Board of Directors at its next
meeting.
(E) The Executive Committee shall advise and
superintend all investments that may be made of the funds of the Company, and
shall direct the disposal of the same, in accordance with such rules and
regulations as the Board of Directors from time to time make.
(F) In the event of a state of disaster of
sufficient severity to prevent the conduct and management of the affairs and
business of the Company by its directors and officers as contemplated by these
By-Laws any two available members of the Executive Committee as constituted
immediately prior to such disaster shall constitute a quorum of that Committee
for the full conduct and management of the affairs and business of the Company
in accordance with the provisions of Article III of these By-Laws; and if less
than three members of the Trust Committee is constituted immediately prior to
such disaster shall be available for the transaction of its business, such
Executive Committee shall also be empowered to exercise all of the powers
reserved to the Trust Committee under Article III Section 2 hereof. In the
event of the unavailability, at such time, of a minimum of two members of such
Executive Committee, any three available directors shall constitute the
Executive Committee for the full conduct and management of the affairs and
business of the Company in accordance with the foregoing provisions of this
Section. This By-Law shall be subject to implementation by Resolutions of the
Board of Directors presently existing or hereafter passed from time to time for
that purpose, and any provisions of these By-Laws (other than this Section) and
any resolutions which are contrary to the provisions of this Section or to the
provisions of any such implementary Resolutions shall be suspended during such
a disaster period until it shall be determined by any interim Executive
Committee acting under this section that it shall be to the advantage of the
Company to resume the conduct and management of its affairs and business under
all of the other provisions of these By-Laws.
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Section 2. Trust Committee
(A) The Trust Committee shall be composed of not
more than thirteen members who shall be selected by the Board of Directors, a
majority of whom shall be members of the Board of Directors and who shall hold
office during the pleasure of the Board.
(B) The Trust Committee shall have general
supervision over the Trust Department and the investment of trust funds, in all
matters, however, being subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the
principal office of the Company or elsewhere in its discretion at such times to
be determined by a majority of its members or at the call of its chairman. A
majority of its members shall be necessary to constitute a quorum for the
transaction of business.
(D) Minutes of each meeting of the Trust Committee
shall be kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to
appoint Committees and/or designate officers or employees of the Company to
whom supervision over the investment of trust funds may be delegated when the
Trust Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five
members who shall be selected by the Board of Directors from its own members,
none of whom shall be an officer of the Company, and shall hold office at the
pleasure of the Board.
(B) The Audit Committee shall have general
supervision over the Audit Division in all matters however subject to the
approval of the Board of Directors; it shall consider all matters brought to
its attention by the officer in charge of the Audit Division, review all
reports of examination of the Company made by any governmental agency or such
independent auditor employed for that purpose, and make such recommendations to
the Board of Directors with respect thereto or with respect to any other
matters pertaining to auditing the Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and
wherever the majority of its members shall deem it to be proper for the
transaction of its business, and a majority of its Committee shall constitute a
quorum.
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Section 4. Compensation Committee
(A) The Compensation Committee shall be composed
of not more than five (5) members who shall be selected by the Board of
Directors from its own members who are not officers of the Company and who
shall hold office during the pleasure of the Board.
(B) The Compensation Committee shall in general
advise upon all matters of policy concerning the Company brought to its
attention by the management and from time to time review the management of the
Company, major organizational matters, including salaries and employee benefits
and specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be
called at any time by the Chairman of the Compensation Committee, the Chairman
of the Board of Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be
elected by the Board of Directors as an associate director, to serve during the
pleasure of the Board.
(B) An associate director shall be entitled to
attend all directors meetings and participate in the discussion of all matters
brought to the Board, with the exception that he would have no right to vote.
An associate director will be eligible for appointment to Committees of the
Company, with the exception of the Executive Committee, Audit Committee and
Compensation Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any
member of any Committee created under Article III of the By-Laws of this
Company, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absence or disqualified member.
ARTICLE IV
OFFICERS
Section 1. The Chairman of the Board of Directors shall preside at
all meetings of the Board and shall have such further authority and powers and
shall perform such duties as the Board of Directors may from time to time
confer and direct. He shall also exercise such powers
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and perform such duties as may from time to time be agreed upon between himself
and the President of the Company.
Section 2. The Vice Chairman of the Board. The Vice Chairman of the
Board of Directors shall preside at all meetings of the Board of Directors at
which the Chairman of the Board shall not be present and shall have such
further authority and powers and shall perform such duties as the Board of
Directors or the Chairman of the Board may from time to time confer and direct.
Section 3. The President shall have the powers and duties pertaining
to the office of the President conferred or imposed upon him by statute or
assigned to him by the Board of Directors in the absence of the Chairman of the
Board the President shall have the powers and duties of the Chairman of the
Board.
Section 4. The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and such
other powers and duties as may from time to time be assigned to them by the
Board of Directors, the Executive Committee, the Chairman of the Board or the
President and by the officer in charge of the department or division to which
they are assigned.
Section 6. The Secretary shall attend to the giving of notice of
meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings and
to recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all
assets and liabilities of the Company. He shall be custodian of and
responsible for all monies, funds and valuables of the Company and for the
keeping of proper records of the evidence of property or indebtedness and of
all the transactions of the Company. He shall have general supervision of the
expenditures of the Company and shall report to the Board of Directors at each
regular meeting of the condition of the Company, and perform such other duties
as may be assigned to him from time to time by the Board of Directors of the
Executive Committee.
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Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.
Section 10. There may be one or more officers, subordinate in rank to
all Vice Presidents with such functional titles as shall be determined from
time to time by the Board of Directors, who shall ex officio hold the office
Assistant Secretary of this Company and who may perform such duties as may be
prescribed by the officer in charge of the department or division to whom they
are assigned.
Section 11. The powers and duties of all other officers of the
Company shall be those usually pertaining to their respective offices, subject
to the direction of the Board of Directors, the Executive Committee, Chairman
of the Board of Directors or the President and the officer in charge of the
department or division to which they are assigned.
ARTICLE V
STOCK AND STOCK CERTIFICATES
Section 1. Shares of stock shall be transferrable on the books of the
Company and a transfer book shall be kept in which all transfers of stock shall
be recorded.
Section 2. Certificate of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new
certificate or certificates shall be issued in lieu thereof.
7
<PAGE> 25
Duplicate certificates of stock shall be issued only upon giving such security
as may be satisfactory to the Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to fix
in advance a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the
date for the payment of any dividend, or the date for the allotment of rights,
or the date when any change or conversion or exchange of capital stock shall go
into effect, or a date in connection with obtaining such consent.
ARTICLE VI
SEAL
Section 1. The corporate seal of the Company shall be in the
following form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."
ARTICLE VII
FISCAL YEAR
Section 1. The fiscal year of the Company shall be the calendar year.
ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver
and the Secretary or any Assistant Secretary shall have full power and
authority to attest and affix the corporate seal of the Company to any and all
deeds, conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or
8
<PAGE> 26
confirmation by the Board of Directors or the Executive Committee, and any and
all such instruments shall have the same force and validity as though expressly
authorized by the Board of Directors and/or the Executive Committee.
ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES
Section 1. Directors and associate directors of the Company, other
than salaried officers of the Company, shall be paid such reasonable honoraria
or fees for attending meetings of the Board of Directors as the Board of
Directors may from time to time determine. Directors and associate directors
who serve as members of committees, other than salaried employees of the
Company, shall be paid such reasonable honoraria or fees for services as
members of committees as the Board of Directors shall from time to time
determine and directors and associate directors may be employed by the Company
for such special services as the Board of Directors may from time to time
determine and shall be paid for such special services so performed reasonable
compensation as may be determined by the Board of Directors.
ARTICLE X
INDEMNIFICATION
Section 1. (A) The Corporation shall indemnify and hold harmless, to
the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or
was a director, officer, employee or agent of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee,
fiduciary or agent of another corporation or of a partnership, joint venture,
trust, enterprise or non-profit entity, including service with respect to
employee benefit plans, against all liability and loss suffered and expenses
reasonably incurred by such person. The Corporation shall indemnify a person
in connection with a proceeding initiated by such person only if the proceeding
was authorized by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses
incurred in defending any proceeding in advance of its final disposition,
provided, however, that the payment of expenses incurred by a Director officer
in his capacity as a Director or officer in advance of the final disposition of
the proceeding shall be made only upon receipt of an undertaking by the
Director or officer to repay all amounts advanced if it should be ultimately
determined that the Director or officer is not entitled to be indemnified under
this Article or otherwise.
9
<PAGE> 27
(C) If a claim for indemnification or payment of
expenses, under this Article X is not paid in full within ninety days after a
written claim therefor has been received by the Corporation the claimant may
file suit to recover the unpaid amount of such claim and, if successful in
whole or in part, shall be entitled to be paid the expense of prosecuting such
claim. In any such action the Corporation shall have the burden of proving
that the claimant was not entitled to the requested indemnification of payment
of expenses under applicable law.
(D) The rights conferred on any person by this
Article X shall not be exclusive of any other rights which such person may have
or hereafter acquire under any statute, provision of the Charter or Act of
Incorporation, these By-Laws, agreement, vote of stockholders or disinterested
Directors or otherwise.
(E) Any repeal or modification of the foregoing
provisions of this Article X shall not adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring prior to
the time of such repeal or modification.
ARTICLE XI
AMENDMENTS TO THE BY-LAWS
Section 1. These By-Laws may be altered, amended or repealed, in
whole or in part, and any new By-Law or By-Laws adopted at any regular or
special meeting of the Board of Directors by a vote of the majority of all the
members of the Board of Directors then in office.
10
<PAGE> 28
EXHIBIT C
SECTION 321(b) CONSENT
Pursuant to Section 321(b) of the Trust Indenture Act of 1939,
Wilmington Trust Company hereby consents that reports of examinations by
Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: August 14, 1998 By: /s/ Emmett R. Harmon
----------------------------------------
Name: Emmett R. Harmon
Title: Vice President
<PAGE> 29
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings banks with
state publication requirements. It has not been approved by any state banking
authorities. Refer to your appropriate state banking authorities for your
state publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
------------------------ ----------
Name of Bank City
in the State of DELAWARE, at the close of business on March 31, 1998.
ASSETS
<TABLE>
<CAPTION>
Thousands of dollars
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins . . . . . . . . . . . . . . . . . . . . . . . . . 180,015
Interest-bearing balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Held-to-maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 287,798
Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,355,745
Federal funds sold and securities purchased under agreements to resell . . . . . . . . . . . . . . . . . . . . 124,500
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . . 3,896,238
LESS: Allowance for loan and lease losses. . . . . . 61,635
LESS: Allocated transfer risk reserve. . . . . . . . 0
Loans and leases, net of unearned income, allowance, and reserve . . . . . . . . . . . . . . . . . . . 3,834,603
Assets held in trading accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Premises and fixed assets (including capitalized leases) . . . . . . . . . . . . . . . . . . . . . . . . . . . 134,016
Other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,444
Investments in unconsolidated subsidiaries and associated companies . . . . . . . . . . . . . . . . . . . . . . 10
Customers' liability to this bank on acceptances outstanding . . . . . . . . . . . . . . . . . . . . . . . . . 0
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,264
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215,048
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,189,443
</TABLE>
CONTINUED ON NEXT PAGE
<PAGE> 30
LIABILITIES
<TABLE>
<S> <C> <C>
Deposits:
In domestic offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,183,321
Noninterest-bearing . . . . . . . . 904,511
Interest-bearing. . . . . . . . . . 3,278,810
Federal funds purchased and Securities sold under agreements to repurchase . . . . . . . . . . . . . . . . . 558,553
Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,761
Trading liabilities (from Schedule RC-D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other borrowed money: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ///////
With original maturity of one year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 788,000
With original maturity of more than one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,000
Bank's liability on acceptances executed and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Subordinated notes and debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other liabilities (from Schedule RC-G) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99,777
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,730,412
</TABLE>
EQUITY CAPITAL
<TABLE>
<S> <C>
Perpetual preferred stock and related surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500
Surplus (exclude all surplus related to preferred stock) . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,118
Undivided profits and capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 388,458
Net unrealized holding gains (losses) on available-for-sale securities . . . . . . . . . . . . . . . . . . . . 7,955
Total equity capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 459,031
Total liabilities, limited-life preferred stock, and equity capital . . . . . . . . . . . . . . . . . . . . . . 6,189,443
</TABLE>
2
<PAGE> 1
EXHIBIT 25.7
Registration No.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2) X
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
AMERICAN COIN MERCHANDISING, INC.
d/b/a SUGARLOAF CREATIONS, INC.
(Exact name of obligor as specified in its charter)
Delaware 84-1093721
(State of incorporation (I.R.S. employer identification no.)
or formation)
5660 Central Avenue
Boulder, Colorado 77002
(Address of principal executive offices) (Zip Code)
Guarantee of Trust Preferred Securities of
American Coin Merchandising Trust II
(Title of the indenture securities)
================================================================================
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust
powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the
obligor is not an affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which
includes the certificate of authority of Wilmington Trust
Company to commence business and the authorization of
Wilmington Trust Company to exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section
321(b) of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington
Trust Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, Wilmington Trust Company, a corporation organized and existing under
the laws of Delaware, has duly caused this Statement of Eligibility to be signed
on its behalf by the undersigned, thereunto duly authorized, all in the City of
Wilmington and State of Delaware on the 14th day of August, 1998.
[SEAL] WILMINGTON TRUST COMPANY
Attest:/s/ Donald G. MacKelcan By:/s/ Emmett R. Harmon
----------------------- ----------------------
Assistant Secretary Name: Emmett R. Harmon
Title: Vice President
<PAGE> 3
EXHIBIT A
AMENDED CHARTER
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON MAY 9, 1987
<PAGE> 4
AMENDED CHARTER
OR
ACT OF INCORPORATION
OF
WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, originally incorporated by an Act of the General
Assembly of the State of Delaware, entitled "An Act to Incorporate the Delaware
Guarantee and Trust Company", approved March 2, A.D. 1901, and the name of
which company was changed to "WILMINGTON TRUST COMPANY" by an amendment filed
in the Office of the Secretary of State on March 18, A.D. 1903, and the Charter
or Act of Incorporation of which company has been from time to time amended and
changed by merger agreements pursuant to the corporation law for state banks
and trust companies of the State of Delaware, does hereby alter and amend its
Charter or Act of Incorporation so that the same as so altered and amended
shall in its entirety read as follows:
FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.
SECOND: - The location of its principal office in the State of Delaware is
at Rodney Square North, in the City of Wilmington, County of New Castle;
the name of its resident agent is WILMINGTON TRUST COMPANY whose address is
Rodney Square North, in said City. In addition to such principal office,
the said corporation maintains and operates branch offices in the City of
Newark, New Castle County, Delaware, the Town of Newport, New Castle
County, Delaware, at Claymont, New Castle County, Delaware, at Greenville,
New Castle County Delaware, and at Milford Cross Roads, New Castle County,
Delaware, and shall be empowered to open, maintain and operate branch
offices at Ninth and Shipley Streets, 418 Delaware Avenue, 2120 Market
Street, and 3605 Market Street, all in the City of Wilmington, New Castle
County, Delaware, and such other branch offices or places of business as
may be authorized from time to time by the agency or agencies of the
government of the State of Delaware empowered to confer such authority.
THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this Corporation are
to do any or all of the things herein mentioned as fully and to the same
extent as natural persons might or could do and in any part of the world,
viz.:
(1) To sue and be sued, complain and defend in any Court of law or
equity and to make and use a common seal, and alter the seal at
pleasure, to hold, purchase, convey, mortgage or otherwise deal in real
and personal estate and property, and to appoint such officers and
agents as the business of the Corporation shall require, to make
by-laws not inconsistent with the Constitution or laws of the
<PAGE> 5
United States or of this State, to discount bills, notes or other
evidences of debt, to receive deposits of money, or securities for
money, to buy gold and silver bullion and foreign coins, to buy and
sell bills of exchange, and generally to use, exercise and enjoy all
the powers, rights, privileges and franchises incident to a corporation
which are proper or necessary for the transaction of the business of
the Corporation hereby created.
(2) To insure titles to real and personal property, or any estate or
interests therein, and to guarantee the holder of such property, real
or personal, against any claim or claims, adverse to his interest
therein, and to prepare and give certificates of title for any lands or
premises in the State of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the receipt,
collection, custody, investment and management of funds, and the
purchase, sale, management and disposal of property of all
descriptions, and to prepare and execute all papers which may be
necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds, leases,
conveyances, mortgages, bonds and legal papers of every description,
and to carry on the business of conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money, jewelry, plate,
deeds, bonds and any and all other personal property of every sort and
kind, from executors, administrators, guardians, public officers,
courts, receivers, assignees, trustees, and from all fiduciaries, and
from all other persons and individuals, and from all corporations
whether state, municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such property.
(6) To act as agent or otherwise for the purpose of registering,
issuing, certificating, countersigning, transferring or underwriting
the stock, bonds or other obligations of any corporation, association,
state or municipality, and may receive and manage any sinking fund
therefor on such terms as may be agreed upon between the two parties,
and in like manner may act as Treasurer of any corporation or
municipality.
(7) To act as Trustee under any deed of trust, mortgage, bond or other
instrument issued by any state, municipality, body politic,
corporation, association or person, either alone or in conjunction with
any other person or persons, corporation or corporations.
(8) To guarantee the validity, performance or effect of any contract
or agreement, and the fidelity of persons holding places of
responsibility or trust; to become surety for any person, or persons,
for the faithful performance of any
2
<PAGE> 6
trust, office, duty, contract or agreement, either by itself or in
conjunction with any other person, or persons, corporation, or
corporations, or in like manner become surety upon any bond,
recognizance, obligation, judgment, suit, order, or decree to be
entered in any court of record within the State of Delaware or
elsewhere, or which may now or hereafter be required by any law, judge,
officer or court in the State of Delaware or elsewhere.
(9) To act by any and every method of appointment as trustee, trustee
in bankruptcy, receiver, assignee, assignee in bankruptcy, executor,
administrator, guardian, bailee, or in any other trust capacity in the
receiving, holding, managing, and disposing of any and all estates and
property, real, personal or mixed, and to be appointed as such trustee,
trustee in bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian or bailee by any persons,
corporations, court, officer, or authority, in the State of Delaware or
elsewhere; and whenever this Corporation is so appointed by any person,
corporation, court, officer or authority such trustee, trustee in
bankruptcy, receiver, assignee, assignee in bankruptcy, executor,
administrator, guardian, bailee, or in any other trust capacity, it
shall not be required to give bond with surety, but its capital stock
shall be taken and held as security for the performance of the duties
devolving upon it by such appointment.
(10) And for its care, management and trouble, and the exercise of any
of its powers hereby given, or for the performance of any of the duties
which it may undertake or be called upon to perform, or for the
assumption of any responsibility the said Corporation may be entitled
to receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages, debentures,
shares of capital stock, and other securities, obligations, contracts
and evidences of indebtedness, of any private, public or municipal
corporation within and without the State of Delaware, or of the
Government of the United States, or of any state, territory, colony, or
possession thereof, or of any foreign government or country; to
receive, collect, receipt for, and dispose of interest, dividends and
income upon and from any of the bonds, mortgages, debentures, notes,
shares of capital stock, securities, obligations, contracts, evidences
of indebtedness and other property held and owned by it, and to
exercise in respect of all such bonds, mortgages, debentures, notes,
shares of capital stock, securities, obligations, contracts, evidences
of indebtedness and other property, any and all the rights, powers and
privileges of individual owners thereof, including the right to vote
thereon; to invest and deal in and with any of the moneys of the
Corporation upon such securities and in such manner as it may think fit
and proper, and from time to time to vary or realize such investments;
to issue bonds and secure the same by pledges or deeds of trust or
mortgages of or upon the whole or any part of the property held or
owned by the Corporation, and to sell and pledge such bonds,
3
<PAGE> 7
as and when the Board of Directors shall determine, and in the
promotion of its said corporate business of investment and to the
extent authorized by law, to lease, purchase, hold, sell, assign,
transfer, pledge, mortgage and convey real and personal property of any
name and nature and any estate or interest therein.
(b) In furtherance of, and not in limitation, of the powers conferred by
the laws of the State of Delaware, it is hereby expressly provided that the
said Corporation shall also have the following powers:
(1) To do any or all of the things herein set forth, to the same
extent as natural persons might or could do, and in any part of the
world.
(2) To acquire the good will, rights, property and franchises and to
undertake the whole or any part of the assets and liabilities of any
person, firm, association or corporation, and to pay for the same in
cash, stock of this Corporation, bonds or otherwise; to hold or in any
manner to dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any part of any
business so acquired, and to exercise all the powers necessary or
convenient in and about the conduct and management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien, and to
lease, sell, exchange, transfer, or in any manner whatever dispose of
property, real, personal or mixed, wherever situated.
(4) To enter into, make, perform and carry out contracts of every kind
with any person, firm, association or corporation, and, without limit
as to amount, to draw, make, accept, endorse, discount, execute and
issue promissory notes, drafts, bills of exchange, warrants, bonds,
debentures, and other negotiable or transferable instruments.
(5) To have one or more offices, to carry on all or any of its
operations and businesses, without restriction to the same extent as
natural persons might or could do, to purchase or otherwise acquire, to
hold, own, to mortgage, sell, convey or otherwise dispose of, real and
personal property, of every class and description, in any State,
District, Territory or Colony of the United States, and in any foreign
country or place.
(6) It is the intention that the objects, purposes and powers
specified and clauses contained in this paragraph shall (except where
otherwise expressed in said paragraph) be nowise limited or restricted
by reference to or inference from the terms of any other clause of this
or any other paragraph in this charter, but that the objects, purposes
and powers specified in each of the clauses of this paragraph shall be
regarded as independent objects, purposes and powers.
4
<PAGE> 8
FOURTH: - (a) The total number of shares of all classes of stock which the
Corporation shall have authority to issue is forty-one million (41,000,000)
shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par value
$10.00 per share (hereinafter referred to as "Preferred Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par value $1.00
per share (hereinafter referred to as "Common Stock").
(b) Shares of Preferred Stock may be issued from time to time in one or
more series as may from time to time be determined by the Board of
Directors each of said series to be distinctly designated. All shares of
any one series of Preferred Stock shall be alike in every particular,
except that there may be different dates from which dividends, if any,
thereon shall be cumulative, if made cumulative. The voting powers and the
preferences and relative, participating, optional and other special rights
of each such series, and the qualifications, limitations or restrictions
thereof, if any, may differ from those of any and all other series at any
time outstanding; and, subject to the provisions of subparagraph 1 of
Paragraph (c) of this Article FOURTH, the Board of Directors of the
Corporation is hereby expressly granted authority to fix by resolution or
resolutions adopted prior to the issuance of any shares of a particular
series of Preferred Stock, the voting powers and the designations,
preferences and relative, optional and other special rights, and the
qualifications, limitations and restrictions of such series, including, but
without limiting the generality of the foregoing, the following:
(1) The distinctive designation of, and the number of shares of
Preferred Stock which shall constitute such series, which number may be
increased (except where otherwise provided by the Board of Directors)
or decreased (but not below the number of shares thereof then
outstanding) from time to time by like action of the Board of
Directors;
(2) The rate and times at which, and the terms and conditions on
which, dividends, if any, on Preferred Stock of such series shall be
paid, the extent of the preference or relation, if any, of such
dividends to the dividends payable on any other class or classes, or
series of the same or other class of stock and whether such dividends
shall be cumulative or non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of such
series to convert the same into or exchange the same for, shares of any
other class or classes or of any series of the same or any other class
or classes of stock of the Corporation and the terms and conditions of
such conversion or exchange;
(4) Whether or not Preferred Stock of such series shall be subject to
redemption, and the redemption price or prices and the time or times at
which, and the terms and conditions on which, Preferred Stock of such
series may be redeemed.
5
<PAGE> 9
(5) The rights, if any, of the holders of Preferred Stock of such
series upon the voluntary or involuntary liquidation, merger,
consolidation, distribution or sale of assets, dissolution or winding-
up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase account,
if any, to be provided for the Preferred Stock of such series; and
(7) The voting powers, if any, of the holders of such series of
Preferred Stock which may, without limiting the generality of the
foregoing include the right, voting as a series or by itself or
together with other series of Preferred Stock or all series of
Preferred Stock as a class, to elect one or more directors of the
Corporation if there shall have been a default in the payment of
dividends on any one or more series of Preferred Stock or under such
circumstances and on such conditions as the Board of Directors may
determine.
(c) (1) After the requirements with respect to preferential dividends on
the Preferred Stock (fixed in accordance with the provisions of section (b)
of this Article FOURTH), if any, shall have been met and after the
Corporation shall have complied with all the requirements, if any, with
respect to the setting aside of sums as sinking funds or redemption or
purchase accounts (fixed in accordance with the provisions of section (b)
of this Article FOURTH), and subject further to any conditions which may be
fixed in accordance with the provisions of section (b) of this Article
FOURTH, then and not otherwise the holders of Common Stock shall be
entitled to receive such dividends as may be declared from time to time by
the Board of Directors.
(2) After distribution in full of the preferential amount, if any,
(fixed in accordance with the provisions of section (b) of this Article
FOURTH), to be distributed to the holders of Preferred Stock in the
event of voluntary or involuntary liquidation, distribution or sale of
assets, dissolution or winding-up, of the Corporation, the holders of
the Common Stock shall be entitled to receive all of the remaining
assets of the Corporation, tangible and intangible, of whatever kind
available for distribution to stockholders ratably in proportion to the
number of shares of Common Stock held by them respectively.
(3) Except as may otherwise be required by law or by the provisions of
such resolution or resolutions as may be adopted by the Board of
Directors pursuant to section (b) of this Article FOURTH, each holder
of Common Stock shall have one vote in respect of each share of Common
Stock held on all matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock or of
options, warrants or other rights to purchase shares of any class or series
of stock or of other securities of the Corporation shall have any
preemptive right to purchase or subscribe for any unissued stock of any
class or series or any additional shares of any class or series to be
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<PAGE> 10
issued by reason of any increase of the authorized capital stock of the
Corporation of any class or series, or bonds, certificates of indebtedness,
debentures or other securities convertible into or exchangeable for stock
of the Corporation of any class or series, or carrying any right to
purchase stock of any class or series, but any such unissued stock,
additional authorized issue of shares of any class or series of stock or
securities convertible into or exchangeable for stock, or carrying any
right to purchase stock, may be issued and disposed of pursuant to
resolution of the Board of Directors to such persons, firms, corporations
or associations, whether such holders or others, and upon such terms as may
be deemed advisable by the Board of Directors in the exercise of its sole
discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and rights
of each other series of Preferred Stock shall, in each case, be as fixed
from time to time by the Board of Directors in the resolution or
resolutions adopted pursuant to authority granted in section (b) of this
Article FOURTH and the consent, by class or series vote or otherwise, of
the holders of such of the series of Preferred Stock as are from time to
time outstanding shall not be required for the issuance by the Board of
Directors of any other series of Preferred Stock whether or not the powers,
preferences and rights of such other series shall be fixed by the Board of
Directors as senior to, or on a parity with, the powers, preferences and
rights of such outstanding series, or any of them; provided, however, that
the Board of Directors may provide in the resolution or resolutions as to
any series of Preferred Stock adopted pursuant to section (b) of this
Article FOURTH that the consent of the holders of a majority (or such
greater proportion as shall be therein fixed) of the outstanding shares of
such series voting thereon shall be required for the issuance of any or all
other series of Preferred Stock.
(f) Subject to the provisions of section (e), shares of any series of
Preferred Stock may be issued from time to time as the Board of Directors
of the Corporation shall determine and on such terms and for such
consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and for such
consideration as shall be fixed by the Board of Directors.
(h) The authorized amount of shares of Common Stock and of Preferred Stock
may, without a class or series vote, be increased or decreased from time to
time by the affirmative vote of the holders of a majority of the stock of
the Corporation entitled to vote thereon.
FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of directors
constituting the entire Board shall be not less than five nor more than
twenty-five as fixed from time to time by vote of a majority of the whole
Board, provided, however, that the number of directors shall not
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<PAGE> 11
be reduced so as to shorten the term of any director at the time in office,
and provided further, that the number of directors constituting the whole
Board shall be twenty-four until otherwise fixed by a majority of the whole
Board.
(b) The Board of Directors shall be divided into three classes, as nearly
equal in number as the then total number of directors constituting the
whole Board permits, with the term of office of one class expiring each
year. At the annual meeting of stockholders in 1982, directors of the
first class shall be elected to hold office for a term expiring at the next
succeeding annual meeting, directors of the second class shall be elected
to hold office for a term expiring at the second succeeding annual meeting
and directors of the third class shall be elected to hold office for a term
expiring at the third succeeding annual meeting. Any vacancies in the
Board of Directors for any reason, and any newly created directorships
resulting from any increase in the directors, may be filled by the Board of
Directors, acting by a majority of the directors then in office, although
less than a quorum, and any directors so chosen shall hold office until the
next annual election of directors. At such election, the stockholders
shall elect a successor to such director to hold office until the next
election of the class for which such director shall have been chosen and
until his successor shall be elected and qualified. No decrease in the
number of directors shall shorten the term of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding the
fact that some lesser percentage may be specified by law, this Charter or
Act of Incorporation or the By-Laws of the Corporation), any director or
the entire Board of Directors of the Corporation may be removed at any time
without cause, but only by the affirmative vote of the holders of two-
thirds or more of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) cast at a meeting of the
stockholders called for that purpose.
(d) Nominations for the election of directors may be made by the Board of
Directors or by any stockholder entitled to vote for the election of
directors. Such nominations shall be made by notice in writing, delivered
or mailed by first class United States mail, postage prepaid, to the
Secretary of the Corporation not less than 14 days nor more than 50 days
prior to any meeting of the stockholders called for the election of
directors; provided, however, that if less than 21 days' notice of the
meeting is given to stockholders, such written notice shall be delivered or
mailed, as prescribed, to the Secretary of the Corporation not later than
the close of the seventh day following the day on which notice of the
meeting was mailed to stockholders. Notice of nominations which are
proposed by the Board of Directors shall be given by the Chairman on behalf
of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name, age,
business address and, if known, residence address of each nominee proposed
in such notice, (ii) the principal occupation or employment of such nominee
and (iii) the number of shares of
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<PAGE> 12
stock of the Corporation which are beneficially owned by each such nominee.
(f) The Chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with
the foregoing procedure, and if he should so determine, he shall so declare
to the meeting and the defective nomination shall be disregarded.
(g) No action required to be taken or which may be taken at any annual or
special meeting of stockholders of the Corporation may be taken without a
meeting, and the power of stockholders to consent in writing, without a
meeting, to the taking of any action is specifically denied.
SIXTH: - The Directors shall choose such officers, agent and servants as
may be provided in the By-Laws as they may from time to time find necessary
or proper.
SEVENTH: - The Corporation hereby created is hereby given the same powers,
rights and privileges as may be conferred upon corporations organized under
the Act entitled "An Act Providing a General Corporation Law", approved
March 10, 1899, as from time to time amended.
EIGHTH: - This Act shall be deemed and taken to be a private Act.
NINTH: - This Corporation is to have perpetual existence.
TENTH: - The Board of Directors, by resolution passed by a majority of the
whole Board, may designate any of their number to constitute an Executive
Committee, which Committee, to the extent provided in said resolution, or
in the By-Laws of the Company, shall have and may exercise all of the
powers of the Board of Directors in the management of the business and
affairs of the Corporation, and shall have power to authorize the seal of
the Corporation to be affixed to all papers which may require it.
ELEVENTH: - The private property of the stockholders shall not be liable
for the payment of corporate debts to any extent whatever.
TWELFTH: - The Corporation may transact business in any part of the world.
THIRTEENTH: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation by a
vote of the majority of the entire Board. The stockholders may make, alter
or repeal any By-Law whether or not adopted by them, provided however, that
any such additional By-Laws, alterations or repeal may be adopted only by
the affirmative vote of the holders of two-thirds or more of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors (considered for this purpose as one
class).
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FOURTEENTH: - Meetings of the Directors may be held outside of the State of
Delaware at such places as may be from time to time designated by the
Board, and the Directors may keep the books of the Company outside of the
State of Delaware at such places as may be from time to time designated by
them.
FIFTEENTH: - (a) In addition to any affirmative vote required by law, and
except as otherwise expressly provided in sections (b) and (c) of this
Article FIFTEENTH:
(A) any merger or consolidation of the Corporation or any Subsidiary
(as hereinafter defined) with or into (i) any Interested Stockholder
(as hereinafter defined) or (ii) any other corporation (whether or not
itself an Interested Stockholder), which, after such merger or
consolidation, would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of related transactions) to
or with any Interested Stockholder or any Affiliate of any Interested
Stockholder of any assets of the Corporation or any Subsidiary having
an aggregate fair market value of $1,000,000 or more, or
(C) the issuance or transfer by the Corporation or any Subsidiary (in
one transaction or a series of related transactions) of any securities
of the Corporation or any Subsidiary to any Interested Stockholder or
any Affiliate of any Interested Stockholder in exchange for cash,
securities or other property (or a combination thereof) having an
aggregate fair market value of $1,000,000 or more, or
(D) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation, or
(E) any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or any
similar transaction (whether or not with or into or otherwise involving
an Interested Stockholder) which has the effect, directly or
indirectly, of increasing the proportionate share of the outstanding
shares of any class of equity or convertible securities of the
Corporation or any Subsidiary which is directly or indirectly owned by
any Interested Stockholder, or any Affiliate of any Interested
Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article FIFTEENTH as one class ("Voting Shares"). Such affirmative vote shall
be required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
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(2) The term "business combination" as used in this Article
FIFTEENTH shall mean any transaction which is referred to any
one or more of clauses (A) through (E) of paragraph 1 of the
section (a).
(b) The provisions of section (a) of this Article FIFTEENTH shall not
be applicable to any particular business combination and such business
combination shall require only such affirmative vote as is required by
law and any other provisions of the Charter or Act of Incorporation of
By-Laws if such business combination has been approved by a majority of
the whole Board.
(c) For the purposes of this Article FIFTEENTH:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any Subsidiary) who
or which as of the record date for the determination of stockholders
entitled to notice of and to vote on such business combination, or
immediately prior to the consummation of any such transaction:
(A) is the beneficial owner, directly or indirectly, of more than 10%
of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time within two
years prior thereto was the beneficial owner, directly or indirectly,
of not less than 10% of the then outstanding voting Shares, or
(C) is an assignee of or has otherwise succeeded in any share of
capital stock of the Corporation which were at any time within two
years prior thereto beneficially owned by any Interested Stockholder,
and such assignment or succession shall have occurred in the course of
a transaction or series of transactions not involving a public offering
within the meaning of the Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and Associates (as
hereafter defined) beneficially own, directly or indirectly, or
(B) which such person or any of its Affiliates or Associates has (i)
the right to acquire (whether such right is exercisable immediately or
only after the passage of time), pursuant to any agreement, arrangement
or understanding or upon the exercise of conversion rights, exchange
rights, warrants or options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or understanding, or
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<PAGE> 15
(C) which are beneficially owned, directly or indirectly, by any other
person with which such first mentioned person or any of its Affiliates
or Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any shares of
capital stock of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any other
Voting Shares which may be issuable pursuant to any agreement, or upon
exercise of conversion rights, warrants or options or otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings given
those terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect on December 31, 1981.
(6) "Subsidiary" shall mean any corporation of which a majority of any
class of equity security (as defined in Rule 3a11-1 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as in effect in
December 31, 1981) is owned, directly or indirectly, by the Corporation;
provided, however, that for the purposes of the definition of Investment
Stockholder set forth in paragraph (2) of this section (c), the term
"Subsidiary" shall mean only a corporation of which a majority of each
class of equity security is owned, directly or indirectly, by the
Corporation.
(d) majority of the directors shall have the power and duty to
determine for the purposes of this Article FIFTEENTH on the basis of
information known to them, (1) the number of Voting Shares beneficially
owned by any person (2) whether a person is an Affiliate or Associate
of another, (3) whether a person has an agreement, arrangement or
understanding with another as to the matters referred to in paragraph
(3) of section (c), or (4) whether the assets subject to any business
combination or the consideration received for the issuance or transfer
of securities by the Corporation, or any Subsidiary has an aggregate
fair market value of $1,000,000 or more.
(e) Nothing contained in this Article FIFTEENTH shall be construed to
relieve any Interested Stockholder from any fiduciary obligation
imposed by law.
SIXTEENTH: Notwithstanding any other provision of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and in addition to any
other vote that may be required by law, this Charter or Act of
Incorporation by the By-Laws), the affirmative vote of the holders of at
least two-thirds of the outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) shall be required to amend,
alter or repeal any provision of Articles FIFTH, THIRTEENTH, FIFTEENTH or
SIXTEENTH of this Charter or Act of Incorporation.
SEVENTEENTH: (a) a Director of this Corporation shall not be liable to the
Corporation
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or its stockholders for monetary damages for breach of fiduciary duty as a
Director, except to the extent such exemption from liability or limitation
thereof is not permitted under the Delaware General Corporation Laws as the
same exists or may hereafter be amended.
(b) Any repeal or modification of the foregoing paragraph shall not
adversely affect any right or protection of a Director of the
Corporation existing hereunder with respect to any act or omission
occurring prior to the time of such repeal or modification."
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EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON JANUARY 16, 1997
<PAGE> 18
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. The Annual Meeting of Stockholders shall be held on the
third Thursday in April each year at the principal office at the Company or at
such other date, time, or place as may be designated by resolution by the Board
of Directors.
Section 2. Special meetings of all stockholders may be called at any
time by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be given
by mailing to each stockholder at least ten (10) days before said meeting, at
his last known address, a written or printed notice fixing the time and place
of such meeting.
Section 4. A majority in the amount of the capital stock of the
Company issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one
vote, either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
DIRECTORS
Section 1. The number and classification of the Board of Directors
shall be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72)
years shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed
and conducted by the Board of Directors.
Section 5. The Board of Directors shall meet at the principal office
of the Company or elsewhere in its discretion at such times to be determined by
a majority of its members, or at the call of the Chairman of the Board of
Directors or the President.
<PAGE> 19
Section 6. Special meetings of the Board of Directors may be called
at any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of
any special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal, inability
to act, or disqualification of any director, the Board of Directors, although
less than a quorum, shall have the right to elect the successor who shall hold
office for the remainder of the full term of the class of directors in which
the vacancy occurred, and until such director's successor shall have been duly
elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect
from its own members a Chairman of the Board of Directors and a President who
may be the same person. The Board of Directors shall also elect at such
meeting a Secretary and a Treasurer, who may be the same person, may appoint at
any time such other committees and elect or appoint such other officers as it
may deem advisable. The Board of Directors may also elect at such meeting one
or more Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be in
charge of such of the departments or division of the Company as it may deem
advisable.
ARTICLE III
COMMITTEES
Section 1. Executive Committee
(A) The Executive Committee shall be composed of
not more than nine members who shall be selected by the Board of Directors from
its own members and who shall hold office during the pleasure of the Board.
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(B) The Executive Committee shall have all the
powers of the Board of Directors when it is not in session to transact all
business for and in behalf of the Company that may be brought before it.
(C) The Executive Committee shall meet at the
principal office of the Company or elsewhere in its discretion at such times to
be determined by a majority of its members, or at the call of the Chairman of
the Executive Committee or at the call of the Chairman of the Board of
Directors. The majority of its members shall be necessary to constitute a
quorum for the transaction of business. Special meetings of the Executive
Committee may be held at any time when a quorum is present.
(D) Minutes of each meeting of the Executive
Committee shall be kept and submitted to the Board of Directors at its next
meeting.
(E) The Executive Committee shall advise and
superintend all investments that may be made of the funds of the Company, and
shall direct the disposal of the same, in accordance with such rules and
regulations as the Board of Directors from time to time make.
(F) In the event of a state of disaster of
sufficient severity to prevent the conduct and management of the affairs and
business of the Company by its directors and officers as contemplated by these
By-Laws any two available members of the Executive Committee as constituted
immediately prior to such disaster shall constitute a quorum of that Committee
for the full conduct and management of the affairs and business of the Company
in accordance with the provisions of Article III of these By-Laws; and if less
than three members of the Trust Committee is constituted immediately prior to
such disaster shall be available for the transaction of its business, such
Executive Committee shall also be empowered to exercise all of the powers
reserved to the Trust Committee under Article III Section 2 hereof. In the
event of the unavailability, at such time, of a minimum of two members of such
Executive Committee, any three available directors shall constitute the
Executive Committee for the full conduct and management of the affairs and
business of the Company in accordance with the foregoing provisions of this
Section. This By-Law shall be subject to implementation by Resolutions of the
Board of Directors presently existing or hereafter passed from time to time for
that purpose, and any provisions of these By-Laws (other than this Section) and
any resolutions which are contrary to the provisions of this Section or to the
provisions of any such implementary Resolutions shall be suspended during such
a disaster period until it shall be determined by any interim Executive
Committee acting under this section that it shall be to the advantage of the
Company to resume the conduct and management of its affairs and business under
all of the other provisions of these By-Laws.
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Section 2. Trust Committee
(A) The Trust Committee shall be composed of not
more than thirteen members who shall be selected by the Board of Directors, a
majority of whom shall be members of the Board of Directors and who shall hold
office during the pleasure of the Board.
(B) The Trust Committee shall have general
supervision over the Trust Department and the investment of trust funds, in all
matters, however, being subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the
principal office of the Company or elsewhere in its discretion at such times to
be determined by a majority of its members or at the call of its chairman. A
majority of its members shall be necessary to constitute a quorum for the
transaction of business.
(D) Minutes of each meeting of the Trust Committee
shall be kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to
appoint Committees and/or designate officers or employees of the Company to
whom supervision over the investment of trust funds may be delegated when the
Trust Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five
members who shall be selected by the Board of Directors from its own members,
none of whom shall be an officer of the Company, and shall hold office at the
pleasure of the Board.
(B) The Audit Committee shall have general
supervision over the Audit Division in all matters however subject to the
approval of the Board of Directors; it shall consider all matters brought to
its attention by the officer in charge of the Audit Division, review all
reports of examination of the Company made by any governmental agency or such
independent auditor employed for that purpose, and make such recommendations to
the Board of Directors with respect thereto or with respect to any other
matters pertaining to auditing the Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and
wherever the majority of its members shall deem it to be proper for the
transaction of its business, and a majority of its Committee shall constitute a
quorum.
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Section 4. Compensation Committee
(A) The Compensation Committee shall be composed
of not more than five (5) members who shall be selected by the Board of
Directors from its own members who are not officers of the Company and who
shall hold office during the pleasure of the Board.
(B) The Compensation Committee shall in general
advise upon all matters of policy concerning the Company brought to its
attention by the management and from time to time review the management of the
Company, major organizational matters, including salaries and employee benefits
and specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be
called at any time by the Chairman of the Compensation Committee, the Chairman
of the Board of Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be
elected by the Board of Directors as an associate director, to serve during the
pleasure of the Board.
(B) An associate director shall be entitled to
attend all directors meetings and participate in the discussion of all matters
brought to the Board, with the exception that he would have no right to vote.
An associate director will be eligible for appointment to Committees of the
Company, with the exception of the Executive Committee, Audit Committee and
Compensation Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any
member of any Committee created under Article III of the By-Laws of this
Company, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absence or disqualified member.
ARTICLE IV
OFFICERS
Section 1. The Chairman of the Board of Directors shall preside at
all meetings of the Board and shall have such further authority and powers and
shall perform such duties as the Board of Directors may from time to time
confer and direct. He shall also exercise such powers
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and perform such duties as may from time to time be agreed upon between himself
and the President of the Company.
Section 2. The Vice Chairman of the Board. The Vice Chairman of the
Board of Directors shall preside at all meetings of the Board of Directors at
which the Chairman of the Board shall not be present and shall have such
further authority and powers and shall perform such duties as the Board of
Directors or the Chairman of the Board may from time to time confer and direct.
Section 3. The President shall have the powers and duties pertaining
to the office of the President conferred or imposed upon him by statute or
assigned to him by the Board of Directors in the absence of the Chairman of the
Board the President shall have the powers and duties of the Chairman of the
Board.
Section 4. The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and such
other powers and duties as may from time to time be assigned to them by the
Board of Directors, the Executive Committee, the Chairman of the Board or the
President and by the officer in charge of the department or division to which
they are assigned.
Section 6. The Secretary shall attend to the giving of notice of
meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings and
to recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all
assets and liabilities of the Company. He shall be custodian of and
responsible for all monies, funds and valuables of the Company and for the
keeping of proper records of the evidence of property or indebtedness and of
all the transactions of the Company. He shall have general supervision of the
expenditures of the Company and shall report to the Board of Directors at each
regular meeting of the condition of the Company, and perform such other duties
as may be assigned to him from time to time by the Board of Directors of the
Executive Committee.
6
<PAGE> 24
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.
Section 10. There may be one or more officers, subordinate in rank to
all Vice Presidents with such functional titles as shall be determined from
time to time by the Board of Directors, who shall ex officio hold the office
Assistant Secretary of this Company and who may perform such duties as may be
prescribed by the officer in charge of the department or division to whom they
are assigned.
Section 11. The powers and duties of all other officers of the
Company shall be those usually pertaining to their respective offices, subject
to the direction of the Board of Directors, the Executive Committee, Chairman
of the Board of Directors or the President and the officer in charge of the
department or division to which they are assigned.
ARTICLE V
STOCK AND STOCK CERTIFICATES
Section 1. Shares of stock shall be transferrable on the books of the
Company and a transfer book shall be kept in which all transfers of stock shall
be recorded.
Section 2. Certificate of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new
certificate or certificates shall be issued in lieu thereof.
7
<PAGE> 25
Duplicate certificates of stock shall be issued only upon giving such security
as may be satisfactory to the Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to fix
in advance a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the
date for the payment of any dividend, or the date for the allotment of rights,
or the date when any change or conversion or exchange of capital stock shall go
into effect, or a date in connection with obtaining such consent.
ARTICLE VI
SEAL
Section 1. The corporate seal of the Company shall be in the
following form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."
ARTICLE VII
FISCAL YEAR
Section 1. The fiscal year of the Company shall be the calendar year.
ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver
and the Secretary or any Assistant Secretary shall have full power and
authority to attest and affix the corporate seal of the Company to any and all
deeds, conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or
8
<PAGE> 26
confirmation by the Board of Directors or the Executive Committee, and any and
all such instruments shall have the same force and validity as though expressly
authorized by the Board of Directors and/or the Executive Committee.
ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES
Section 1. Directors and associate directors of the Company, other
than salaried officers of the Company, shall be paid such reasonable honoraria
or fees for attending meetings of the Board of Directors as the Board of
Directors may from time to time determine. Directors and associate directors
who serve as members of committees, other than salaried employees of the
Company, shall be paid such reasonable honoraria or fees for services as
members of committees as the Board of Directors shall from time to time
determine and directors and associate directors may be employed by the Company
for such special services as the Board of Directors may from time to time
determine and shall be paid for such special services so performed reasonable
compensation as may be determined by the Board of Directors.
ARTICLE X
INDEMNIFICATION
Section 1. (A) The Corporation shall indemnify and hold harmless, to
the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or
was a director, officer, employee or agent of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee,
fiduciary or agent of another corporation or of a partnership, joint venture,
trust, enterprise or non-profit entity, including service with respect to
employee benefit plans, against all liability and loss suffered and expenses
reasonably incurred by such person. The Corporation shall indemnify a person
in connection with a proceeding initiated by such person only if the proceeding
was authorized by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses
incurred in defending any proceeding in advance of its final disposition,
provided, however, that the payment of expenses incurred by a Director officer
in his capacity as a Director or officer in advance of the final disposition of
the proceeding shall be made only upon receipt of an undertaking by the
Director or officer to repay all amounts advanced if it should be ultimately
determined that the Director or officer is not entitled to be indemnified under
this Article or otherwise.
9
<PAGE> 27
(C) If a claim for indemnification or payment of
expenses, under this Article X is not paid in full within ninety days after a
written claim therefor has been received by the Corporation the claimant may
file suit to recover the unpaid amount of such claim and, if successful in
whole or in part, shall be entitled to be paid the expense of prosecuting such
claim. In any such action the Corporation shall have the burden of proving
that the claimant was not entitled to the requested indemnification of payment
of expenses under applicable law.
(D) The rights conferred on any person by this
Article X shall not be exclusive of any other rights which such person may have
or hereafter acquire under any statute, provision of the Charter or Act of
Incorporation, these By-Laws, agreement, vote of stockholders or disinterested
Directors or otherwise.
(E) Any repeal or modification of the foregoing
provisions of this Article X shall not adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring prior to
the time of such repeal or modification.
ARTICLE XI
AMENDMENTS TO THE BY-LAWS
Section 1. These By-Laws may be altered, amended or repealed, in
whole or in part, and any new By-Law or By-Laws adopted at any regular or
special meeting of the Board of Directors by a vote of the majority of all the
members of the Board of Directors then in office.
10
<PAGE> 28
EXHIBIT C
SECTION 321(b) CONSENT
Pursuant to Section 321(b) of the Trust Indenture Act of 1939,
Wilmington Trust Company hereby consents that reports of examinations by
Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: August 14, 1998 By: /s/ Emmett R. Harmon
--------------------
Name: Emmett R. Harmon
Title: Vice President
<PAGE> 29
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings banks with
state publication requirements. It has not been approved by any state banking
authorities. Refer to your appropriate state banking authorities for your
state publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
------------------------ ----------
Name of Bank City
in the State of DELAWARE, at the close of business on March 31, 1998.
ASSETS
<TABLE>
<CAPTION>
Thousands of dollars
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins . . . . . . . . . . . . . . . . . . . . . . . . . 180,015
Interest-bearing balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Held-to-maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 287,798
Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,355,745
Federal funds sold and securities purchased under agreements to resell . . . . . . . . . . . . . . . . . . . . 124,500
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . . 3,896,238
LESS: Allowance for loan and lease losses. . . . . . 61,635
LESS: Allocated transfer risk reserve. . . . . . . . 0
Loans and leases, net of unearned income, allowance, and reserve . . . . . . . . . . . . . . . . . . . 3,834,603
Assets held in trading accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Premises and fixed assets (including capitalized leases) . . . . . . . . . . . . . . . . . . . . . . . . . . . 134,016
Other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,444
Investments in unconsolidated subsidiaries and associated companies . . . . . . . . . . . . . . . . . . . . . . 10
Customers' liability to this bank on acceptances outstanding . . . . . . . . . . . . . . . . . . . . . . . . . 0
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,264
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215,048
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,189,443
</TABLE>
CONTINUED ON NEXT PAGE
<PAGE> 30
LIABILITIES
<TABLE>
<S> <C> <C>
Deposits:
In domestic offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,183,321
Noninterest-bearing . . . . . . . . 904,511
Interest-bearing. . . . . . . . . . 3,278,810
Federal funds purchased and Securities sold under agreements to repurchase . . . . . . . . . . . . . . . . . 558,553
Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,761
Trading liabilities (from Schedule RC-D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other borrowed money: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ///////
With original maturity of one year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 788,000
With original maturity of more than one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,000
Bank's liability on acceptances executed and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Subordinated notes and debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other liabilities (from Schedule RC-G) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99,777
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,730,412
</TABLE>
EQUITY CAPITAL
<TABLE>
<S> <C>
Perpetual preferred stock and related surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500
Surplus (exclude all surplus related to preferred stock) . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,118
Undivided profits and capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 388,458
Net unrealized holding gains (losses) on available-for-sale securities . . . . . . . . . . . . . . . . . . . . 7,955
Total equity capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 459,031
Total liabilities, limited-life preferred stock, and equity capital . . . . . . . . . . . . . . . . . . . . . . 6,189,443
</TABLE>
2
<PAGE> 1
EXHIBIT 25.8
Registration No.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) X
---
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
AMERICAN COIN MERCHANDISING, INC.
d/b/a SUGARLOAF CREATIONS, INC.
(Exact name of obligor as specified in its charter)
Delaware 84-1093721
(State of incorporation (I.R.S. employer identification no.)
or formation)
5660 Central Avenue
Boulder, Colorado 77002
(Address of principal executive offices) (Zip Code)
Guarantee of Trust Preferred Securities of
American Coin Merchandising Trust III
(Title of the indenture securities)
================================================================================
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust
powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the
obligor is not an affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which
includes the certificate of authority of Wilmington Trust
Company to commence business and the authorization of
Wilmington Trust Company to exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section
321(b) of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington
Trust Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, Wilmington Trust Company, a corporation organized and existing under
the laws of Delaware, has duly caused this Statement of Eligibility to be signed
on its behalf by the undersigned, thereunto duly authorized, all in the City of
Wilmington and State of Delaware on the 14th day of August, 1998.
[SEAL] WILMINGTON TRUST COMPANY
Attest: /s/ Donald G. MacKelcan By: /s/ Emmett R. Harmon
----------------------- -----------------------------------
Assistant Secretary Name: Emmett R. Harmon
Title: Vice President
<PAGE> 3
EXHIBIT A
AMENDED CHARTER
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON MAY 9, 1987
<PAGE> 4
AMENDED CHARTER
OR
ACT OF INCORPORATION
OF
WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, originally incorporated by an Act of the General
Assembly of the State of Delaware, entitled "An Act to Incorporate the Delaware
Guarantee and Trust Company", approved March 2, A.D. 1901, and the name of
which company was changed to "WILMINGTON TRUST COMPANY" by an amendment filed
in the Office of the Secretary of State on March 18, A.D. 1903, and the Charter
or Act of Incorporation of which company has been from time to time amended and
changed by merger agreements pursuant to the corporation law for state banks
and trust companies of the State of Delaware, does hereby alter and amend its
Charter or Act of Incorporation so that the same as so altered and amended
shall in its entirety read as follows:
FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.
SECOND: - The location of its principal office in the State of Delaware is
at Rodney Square North, in the City of Wilmington, County of New Castle;
the name of its resident agent is WILMINGTON TRUST COMPANY whose address is
Rodney Square North, in said City. In addition to such principal office,
the said corporation maintains and operates branch offices in the City of
Newark, New Castle County, Delaware, the Town of Newport, New Castle
County, Delaware, at Claymont, New Castle County, Delaware, at Greenville,
New Castle County Delaware, and at Milford Cross Roads, New Castle County,
Delaware, and shall be empowered to open, maintain and operate branch
offices at Ninth and Shipley Streets, 418 Delaware Avenue, 2120 Market
Street, and 3605 Market Street, all in the City of Wilmington, New Castle
County, Delaware, and such other branch offices or places of business as
may be authorized from time to time by the agency or agencies of the
government of the State of Delaware empowered to confer such authority.
THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this Corporation are
to do any or all of the things herein mentioned as fully and to the same
extent as natural persons might or could do and in any part of the world,
viz.:
(1) To sue and be sued, complain and defend in any Court of law or
equity and to make and use a common seal, and alter the seal at
pleasure, to hold, purchase, convey, mortgage or otherwise deal in real
and personal estate and property, and to appoint such officers and
agents as the business of the Corporation shall require, to make
by-laws not inconsistent with the Constitution or laws of the
<PAGE> 5
United States or of this State, to discount bills, notes or other
evidences of debt, to receive deposits of money, or securities for
money, to buy gold and silver bullion and foreign coins, to buy and
sell bills of exchange, and generally to use, exercise and enjoy all
the powers, rights, privileges and franchises incident to a corporation
which are proper or necessary for the transaction of the business of
the Corporation hereby created.
(2) To insure titles to real and personal property, or any estate or
interests therein, and to guarantee the holder of such property, real
or personal, against any claim or claims, adverse to his interest
therein, and to prepare and give certificates of title for any lands or
premises in the State of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the receipt,
collection, custody, investment and management of funds, and the
purchase, sale, management and disposal of property of all
descriptions, and to prepare and execute all papers which may be
necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds, leases,
conveyances, mortgages, bonds and legal papers of every description,
and to carry on the business of conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money, jewelry, plate,
deeds, bonds and any and all other personal property of every sort and
kind, from executors, administrators, guardians, public officers,
courts, receivers, assignees, trustees, and from all fiduciaries, and
from all other persons and individuals, and from all corporations
whether state, municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such property.
(6) To act as agent or otherwise for the purpose of registering,
issuing, certificating, countersigning, transferring or underwriting
the stock, bonds or other obligations of any corporation, association,
state or municipality, and may receive and manage any sinking fund
therefor on such terms as may be agreed upon between the two parties,
and in like manner may act as Treasurer of any corporation or
municipality.
(7) To act as Trustee under any deed of trust, mortgage, bond or other
instrument issued by any state, municipality, body politic,
corporation, association or person, either alone or in conjunction with
any other person or persons, corporation or corporations.
(8) To guarantee the validity, performance or effect of any contract
or agreement, and the fidelity of persons holding places of
responsibility or trust; to become surety for any person, or persons,
for the faithful performance of any
2
<PAGE> 6
trust, office, duty, contract or agreement, either by itself or in
conjunction with any other person, or persons, corporation, or
corporations, or in like manner become surety upon any bond,
recognizance, obligation, judgment, suit, order, or decree to be
entered in any court of record within the State of Delaware or
elsewhere, or which may now or hereafter be required by any law, judge,
officer or court in the State of Delaware or elsewhere.
(9) To act by any and every method of appointment as trustee, trustee
in bankruptcy, receiver, assignee, assignee in bankruptcy, executor,
administrator, guardian, bailee, or in any other trust capacity in the
receiving, holding, managing, and disposing of any and all estates and
property, real, personal or mixed, and to be appointed as such trustee,
trustee in bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian or bailee by any persons,
corporations, court, officer, or authority, in the State of Delaware or
elsewhere; and whenever this Corporation is so appointed by any person,
corporation, court, officer or authority such trustee, trustee in
bankruptcy, receiver, assignee, assignee in bankruptcy, executor,
administrator, guardian, bailee, or in any other trust capacity, it
shall not be required to give bond with surety, but its capital stock
shall be taken and held as security for the performance of the duties
devolving upon it by such appointment.
(10) And for its care, management and trouble, and the exercise of any
of its powers hereby given, or for the performance of any of the duties
which it may undertake or be called upon to perform, or for the
assumption of any responsibility the said Corporation may be entitled
to receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages, debentures,
shares of capital stock, and other securities, obligations, contracts
and evidences of indebtedness, of any private, public or municipal
corporation within and without the State of Delaware, or of the
Government of the United States, or of any state, territory, colony, or
possession thereof, or of any foreign government or country; to
receive, collect, receipt for, and dispose of interest, dividends and
income upon and from any of the bonds, mortgages, debentures, notes,
shares of capital stock, securities, obligations, contracts, evidences
of indebtedness and other property held and owned by it, and to
exercise in respect of all such bonds, mortgages, debentures, notes,
shares of capital stock, securities, obligations, contracts, evidences
of indebtedness and other property, any and all the rights, powers and
privileges of individual owners thereof, including the right to vote
thereon; to invest and deal in and with any of the moneys of the
Corporation upon such securities and in such manner as it may think fit
and proper, and from time to time to vary or realize such investments;
to issue bonds and secure the same by pledges or deeds of trust or
mortgages of or upon the whole or any part of the property held or
owned by the Corporation, and to sell and pledge such bonds,
3
<PAGE> 7
as and when the Board of Directors shall determine, and in the
promotion of its said corporate business of investment and to the
extent authorized by law, to lease, purchase, hold, sell, assign,
transfer, pledge, mortgage and convey real and personal property of any
name and nature and any estate or interest therein.
(b) In furtherance of, and not in limitation, of the powers conferred by
the laws of the State of Delaware, it is hereby expressly provided that the
said Corporation shall also have the following powers:
(1) To do any or all of the things herein set forth, to the same
extent as natural persons might or could do, and in any part of the
world.
(2) To acquire the good will, rights, property and franchises and to
undertake the whole or any part of the assets and liabilities of any
person, firm, association or corporation, and to pay for the same in
cash, stock of this Corporation, bonds or otherwise; to hold or in any
manner to dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any part of any
business so acquired, and to exercise all the powers necessary or
convenient in and about the conduct and management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien, and to
lease, sell, exchange, transfer, or in any manner whatever dispose of
property, real, personal or mixed, wherever situated.
(4) To enter into, make, perform and carry out contracts of every kind
with any person, firm, association or corporation, and, without limit
as to amount, to draw, make, accept, endorse, discount, execute and
issue promissory notes, drafts, bills of exchange, warrants, bonds,
debentures, and other negotiable or transferable instruments.
(5) To have one or more offices, to carry on all or any of its
operations and businesses, without restriction to the same extent as
natural persons might or could do, to purchase or otherwise acquire, to
hold, own, to mortgage, sell, convey or otherwise dispose of, real and
personal property, of every class and description, in any State,
District, Territory or Colony of the United States, and in any foreign
country or place.
(6) It is the intention that the objects, purposes and powers
specified and clauses contained in this paragraph shall (except where
otherwise expressed in said paragraph) be nowise limited or restricted
by reference to or inference from the terms of any other clause of this
or any other paragraph in this charter, but that the objects, purposes
and powers specified in each of the clauses of this paragraph shall be
regarded as independent objects, purposes and powers.
4
<PAGE> 8
FOURTH: - (a) The total number of shares of all classes of stock which the
Corporation shall have authority to issue is forty-one million (41,000,000)
shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par value
$10.00 per share (hereinafter referred to as "Preferred Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par value $1.00
per share (hereinafter referred to as "Common Stock").
(b) Shares of Preferred Stock may be issued from time to time in one or
more series as may from time to time be determined by the Board of
Directors each of said series to be distinctly designated. All shares of
any one series of Preferred Stock shall be alike in every particular,
except that there may be different dates from which dividends, if any,
thereon shall be cumulative, if made cumulative. The voting powers and the
preferences and relative, participating, optional and other special rights
of each such series, and the qualifications, limitations or restrictions
thereof, if any, may differ from those of any and all other series at any
time outstanding; and, subject to the provisions of subparagraph 1 of
Paragraph (c) of this Article FOURTH, the Board of Directors of the
Corporation is hereby expressly granted authority to fix by resolution or
resolutions adopted prior to the issuance of any shares of a particular
series of Preferred Stock, the voting powers and the designations,
preferences and relative, optional and other special rights, and the
qualifications, limitations and restrictions of such series, including, but
without limiting the generality of the foregoing, the following:
(1) The distinctive designation of, and the number of shares of
Preferred Stock which shall constitute such series, which number may be
increased (except where otherwise provided by the Board of Directors)
or decreased (but not below the number of shares thereof then
outstanding) from time to time by like action of the Board of
Directors;
(2) The rate and times at which, and the terms and conditions on
which, dividends, if any, on Preferred Stock of such series shall be
paid, the extent of the preference or relation, if any, of such
dividends to the dividends payable on any other class or classes, or
series of the same or other class of stock and whether such dividends
shall be cumulative or non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of such
series to convert the same into or exchange the same for, shares of any
other class or classes or of any series of the same or any other class
or classes of stock of the Corporation and the terms and conditions of
such conversion or exchange;
(4) Whether or not Preferred Stock of such series shall be subject to
redemption, and the redemption price or prices and the time or times at
which, and the terms and conditions on which, Preferred Stock of such
series may be redeemed.
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<PAGE> 9
(5) The rights, if any, of the holders of Preferred Stock of such
series upon the voluntary or involuntary liquidation, merger,
consolidation, distribution or sale of assets, dissolution or winding-
up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase account,
if any, to be provided for the Preferred Stock of such series; and
(7) The voting powers, if any, of the holders of such series of
Preferred Stock which may, without limiting the generality of the
foregoing include the right, voting as a series or by itself or
together with other series of Preferred Stock or all series of
Preferred Stock as a class, to elect one or more directors of the
Corporation if there shall have been a default in the payment of
dividends on any one or more series of Preferred Stock or under such
circumstances and on such conditions as the Board of Directors may
determine.
(c) (1) After the requirements with respect to preferential dividends on
the Preferred Stock (fixed in accordance with the provisions of section (b)
of this Article FOURTH), if any, shall have been met and after the
Corporation shall have complied with all the requirements, if any, with
respect to the setting aside of sums as sinking funds or redemption or
purchase accounts (fixed in accordance with the provisions of section (b)
of this Article FOURTH), and subject further to any conditions which may be
fixed in accordance with the provisions of section (b) of this Article
FOURTH, then and not otherwise the holders of Common Stock shall be
entitled to receive such dividends as may be declared from time to time by
the Board of Directors.
(2) After distribution in full of the preferential amount, if any,
(fixed in accordance with the provisions of section (b) of this Article
FOURTH), to be distributed to the holders of Preferred Stock in the
event of voluntary or involuntary liquidation, distribution or sale of
assets, dissolution or winding-up, of the Corporation, the holders of
the Common Stock shall be entitled to receive all of the remaining
assets of the Corporation, tangible and intangible, of whatever kind
available for distribution to stockholders ratably in proportion to the
number of shares of Common Stock held by them respectively.
(3) Except as may otherwise be required by law or by the provisions of
such resolution or resolutions as may be adopted by the Board of
Directors pursuant to section (b) of this Article FOURTH, each holder
of Common Stock shall have one vote in respect of each share of Common
Stock held on all matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock or of
options, warrants or other rights to purchase shares of any class or series
of stock or of other securities of the Corporation shall have any
preemptive right to purchase or subscribe for any unissued stock of any
class or series or any additional shares of any class or series to be
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<PAGE> 10
issued by reason of any increase of the authorized capital stock of the
Corporation of any class or series, or bonds, certificates of indebtedness,
debentures or other securities convertible into or exchangeable for stock
of the Corporation of any class or series, or carrying any right to
purchase stock of any class or series, but any such unissued stock,
additional authorized issue of shares of any class or series of stock or
securities convertible into or exchangeable for stock, or carrying any
right to purchase stock, may be issued and disposed of pursuant to
resolution of the Board of Directors to such persons, firms, corporations
or associations, whether such holders or others, and upon such terms as may
be deemed advisable by the Board of Directors in the exercise of its sole
discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and rights
of each other series of Preferred Stock shall, in each case, be as fixed
from time to time by the Board of Directors in the resolution or
resolutions adopted pursuant to authority granted in section (b) of this
Article FOURTH and the consent, by class or series vote or otherwise, of
the holders of such of the series of Preferred Stock as are from time to
time outstanding shall not be required for the issuance by the Board of
Directors of any other series of Preferred Stock whether or not the powers,
preferences and rights of such other series shall be fixed by the Board of
Directors as senior to, or on a parity with, the powers, preferences and
rights of such outstanding series, or any of them; provided, however, that
the Board of Directors may provide in the resolution or resolutions as to
any series of Preferred Stock adopted pursuant to section (b) of this
Article FOURTH that the consent of the holders of a majority (or such
greater proportion as shall be therein fixed) of the outstanding shares of
such series voting thereon shall be required for the issuance of any or all
other series of Preferred Stock.
(f) Subject to the provisions of section (e), shares of any series of
Preferred Stock may be issued from time to time as the Board of Directors
of the Corporation shall determine and on such terms and for such
consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and for such
consideration as shall be fixed by the Board of Directors.
(h) The authorized amount of shares of Common Stock and of Preferred Stock
may, without a class or series vote, be increased or decreased from time to
time by the affirmative vote of the holders of a majority of the stock of
the Corporation entitled to vote thereon.
FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of directors
constituting the entire Board shall be not less than five nor more than
twenty-five as fixed from time to time by vote of a majority of the whole
Board, provided, however, that the number of directors shall not
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<PAGE> 11
be reduced so as to shorten the term of any director at the time in office,
and provided further, that the number of directors constituting the whole
Board shall be twenty-four until otherwise fixed by a majority of the whole
Board.
(b) The Board of Directors shall be divided into three classes, as nearly
equal in number as the then total number of directors constituting the
whole Board permits, with the term of office of one class expiring each
year. At the annual meeting of stockholders in 1982, directors of the
first class shall be elected to hold office for a term expiring at the next
succeeding annual meeting, directors of the second class shall be elected
to hold office for a term expiring at the second succeeding annual meeting
and directors of the third class shall be elected to hold office for a term
expiring at the third succeeding annual meeting. Any vacancies in the
Board of Directors for any reason, and any newly created directorships
resulting from any increase in the directors, may be filled by the Board of
Directors, acting by a majority of the directors then in office, although
less than a quorum, and any directors so chosen shall hold office until the
next annual election of directors. At such election, the stockholders
shall elect a successor to such director to hold office until the next
election of the class for which such director shall have been chosen and
until his successor shall be elected and qualified. No decrease in the
number of directors shall shorten the term of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding the
fact that some lesser percentage may be specified by law, this Charter or
Act of Incorporation or the By-Laws of the Corporation), any director or
the entire Board of Directors of the Corporation may be removed at any time
without cause, but only by the affirmative vote of the holders of two-
thirds or more of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) cast at a meeting of the
stockholders called for that purpose.
(d) Nominations for the election of directors may be made by the Board of
Directors or by any stockholder entitled to vote for the election of
directors. Such nominations shall be made by notice in writing, delivered
or mailed by first class United States mail, postage prepaid, to the
Secretary of the Corporation not less than 14 days nor more than 50 days
prior to any meeting of the stockholders called for the election of
directors; provided, however, that if less than 21 days' notice of the
meeting is given to stockholders, such written notice shall be delivered or
mailed, as prescribed, to the Secretary of the Corporation not later than
the close of the seventh day following the day on which notice of the
meeting was mailed to stockholders. Notice of nominations which are
proposed by the Board of Directors shall be given by the Chairman on behalf
of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name, age,
business address and, if known, residence address of each nominee proposed
in such notice, (ii) the principal occupation or employment of such nominee
and (iii) the number of shares of
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<PAGE> 12
stock of the Corporation which are beneficially owned by each such nominee.
(f) The Chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with
the foregoing procedure, and if he should so determine, he shall so declare
to the meeting and the defective nomination shall be disregarded.
(g) No action required to be taken or which may be taken at any annual or
special meeting of stockholders of the Corporation may be taken without a
meeting, and the power of stockholders to consent in writing, without a
meeting, to the taking of any action is specifically denied.
SIXTH: - The Directors shall choose such officers, agent and servants as
may be provided in the By-Laws as they may from time to time find necessary
or proper.
SEVENTH: - The Corporation hereby created is hereby given the same powers,
rights and privileges as may be conferred upon corporations organized under
the Act entitled "An Act Providing a General Corporation Law", approved
March 10, 1899, as from time to time amended.
EIGHTH: - This Act shall be deemed and taken to be a private Act.
NINTH: - This Corporation is to have perpetual existence.
TENTH: - The Board of Directors, by resolution passed by a majority of the
whole Board, may designate any of their number to constitute an Executive
Committee, which Committee, to the extent provided in said resolution, or
in the By-Laws of the Company, shall have and may exercise all of the
powers of the Board of Directors in the management of the business and
affairs of the Corporation, and shall have power to authorize the seal of
the Corporation to be affixed to all papers which may require it.
ELEVENTH: - The private property of the stockholders shall not be liable
for the payment of corporate debts to any extent whatever.
TWELFTH: - The Corporation may transact business in any part of the world.
THIRTEENTH: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation by a
vote of the majority of the entire Board. The stockholders may make, alter
or repeal any By-Law whether or not adopted by them, provided however, that
any such additional By-Laws, alterations or repeal may be adopted only by
the affirmative vote of the holders of two-thirds or more of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors (considered for this purpose as one
class).
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FOURTEENTH: - Meetings of the Directors may be held outside of the State of
Delaware at such places as may be from time to time designated by the
Board, and the Directors may keep the books of the Company outside of the
State of Delaware at such places as may be from time to time designated by
them.
FIFTEENTH: - (a) In addition to any affirmative vote required by law, and
except as otherwise expressly provided in sections (b) and (c) of this
Article FIFTEENTH:
(A) any merger or consolidation of the Corporation or any Subsidiary
(as hereinafter defined) with or into (i) any Interested Stockholder
(as hereinafter defined) or (ii) any other corporation (whether or not
itself an Interested Stockholder), which, after such merger or
consolidation, would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of related transactions) to
or with any Interested Stockholder or any Affiliate of any Interested
Stockholder of any assets of the Corporation or any Subsidiary having
an aggregate fair market value of $1,000,000 or more, or
(C) the issuance or transfer by the Corporation or any Subsidiary (in
one transaction or a series of related transactions) of any securities
of the Corporation or any Subsidiary to any Interested Stockholder or
any Affiliate of any Interested Stockholder in exchange for cash,
securities or other property (or a combination thereof) having an
aggregate fair market value of $1,000,000 or more, or
(D) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation, or
(E) any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or any
similar transaction (whether or not with or into or otherwise involving
an Interested Stockholder) which has the effect, directly or
indirectly, of increasing the proportionate share of the outstanding
shares of any class of equity or convertible securities of the
Corporation or any Subsidiary which is directly or indirectly owned by
any Interested Stockholder, or any Affiliate of any Interested
Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article FIFTEENTH as one class ("Voting Shares"). Such affirmative vote shall
be required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
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(2) The term "business combination" as used in this Article
FIFTEENTH shall mean any transaction which is referred to any
one or more of clauses (A) through (E) of paragraph 1 of the
section (a).
(b) The provisions of section (a) of this Article FIFTEENTH shall not
be applicable to any particular business combination and such business
combination shall require only such affirmative vote as is required by
law and any other provisions of the Charter or Act of Incorporation of
By-Laws if such business combination has been approved by a majority of
the whole Board.
(c) For the purposes of this Article FIFTEENTH:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any Subsidiary) who
or which as of the record date for the determination of stockholders
entitled to notice of and to vote on such business combination, or
immediately prior to the consummation of any such transaction:
(A) is the beneficial owner, directly or indirectly, of more than 10%
of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time within two
years prior thereto was the beneficial owner, directly or indirectly,
of not less than 10% of the then outstanding voting Shares, or
(C) is an assignee of or has otherwise succeeded in any share of
capital stock of the Corporation which were at any time within two
years prior thereto beneficially owned by any Interested Stockholder,
and such assignment or succession shall have occurred in the course of
a transaction or series of transactions not involving a public offering
within the meaning of the Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and Associates (as
hereafter defined) beneficially own, directly or indirectly, or
(B) which such person or any of its Affiliates or Associates has (i)
the right to acquire (whether such right is exercisable immediately or
only after the passage of time), pursuant to any agreement, arrangement
or understanding or upon the exercise of conversion rights, exchange
rights, warrants or options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or understanding, or
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<PAGE> 15
(C) which are beneficially owned, directly or indirectly, by any other
person with which such first mentioned person or any of its Affiliates
or Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any shares of
capital stock of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any other
Voting Shares which may be issuable pursuant to any agreement, or upon
exercise of conversion rights, warrants or options or otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings given
those terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect on December 31, 1981.
(6) "Subsidiary" shall mean any corporation of which a majority of any
class of equity security (as defined in Rule 3a11-1 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as in effect in
December 31, 1981) is owned, directly or indirectly, by the Corporation;
provided, however, that for the purposes of the definition of Investment
Stockholder set forth in paragraph (2) of this section (c), the term
"Subsidiary" shall mean only a corporation of which a majority of each
class of equity security is owned, directly or indirectly, by the
Corporation.
(d) majority of the directors shall have the power and duty to
determine for the purposes of this Article FIFTEENTH on the basis of
information known to them, (1) the number of Voting Shares beneficially
owned by any person (2) whether a person is an Affiliate or Associate
of another, (3) whether a person has an agreement, arrangement or
understanding with another as to the matters referred to in paragraph
(3) of section (c), or (4) whether the assets subject to any business
combination or the consideration received for the issuance or transfer
of securities by the Corporation, or any Subsidiary has an aggregate
fair market value of $1,000,000 or more.
(e) Nothing contained in this Article FIFTEENTH shall be construed to
relieve any Interested Stockholder from any fiduciary obligation
imposed by law.
SIXTEENTH: Notwithstanding any other provision of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and in addition to any
other vote that may be required by law, this Charter or Act of
Incorporation by the By-Laws), the affirmative vote of the holders of at
least two-thirds of the outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) shall be required to amend,
alter or repeal any provision of Articles FIFTH, THIRTEENTH, FIFTEENTH or
SIXTEENTH of this Charter or Act of Incorporation.
SEVENTEENTH: (a) a Director of this Corporation shall not be liable to the
Corporation
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or its stockholders for monetary damages for breach of fiduciary duty as a
Director, except to the extent such exemption from liability or limitation
thereof is not permitted under the Delaware General Corporation Laws as the
same exists or may hereafter be amended.
(b) Any repeal or modification of the foregoing paragraph shall not
adversely affect any right or protection of a Director of the
Corporation existing hereunder with respect to any act or omission
occurring prior to the time of such repeal or modification."
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EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON JANUARY 16, 1997
<PAGE> 18
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. The Annual Meeting of Stockholders shall be held on the
third Thursday in April each year at the principal office at the Company or at
such other date, time, or place as may be designated by resolution by the Board
of Directors.
Section 2. Special meetings of all stockholders may be called at any
time by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be given
by mailing to each stockholder at least ten (10) days before said meeting, at
his last known address, a written or printed notice fixing the time and place
of such meeting.
Section 4. A majority in the amount of the capital stock of the
Company issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one
vote, either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
DIRECTORS
Section 1. The number and classification of the Board of Directors
shall be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72)
years shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed
and conducted by the Board of Directors.
Section 5. The Board of Directors shall meet at the principal office
of the Company or elsewhere in its discretion at such times to be determined by
a majority of its members, or at the call of the Chairman of the Board of
Directors or the President.
<PAGE> 19
Section 6. Special meetings of the Board of Directors may be called
at any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of
any special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal, inability
to act, or disqualification of any director, the Board of Directors, although
less than a quorum, shall have the right to elect the successor who shall hold
office for the remainder of the full term of the class of directors in which
the vacancy occurred, and until such director's successor shall have been duly
elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect
from its own members a Chairman of the Board of Directors and a President who
may be the same person. The Board of Directors shall also elect at such
meeting a Secretary and a Treasurer, who may be the same person, may appoint at
any time such other committees and elect or appoint such other officers as it
may deem advisable. The Board of Directors may also elect at such meeting one
or more Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be in
charge of such of the departments or division of the Company as it may deem
advisable.
ARTICLE III
COMMITTEES
Section 1. Executive Committee
(A) The Executive Committee shall be composed of
not more than nine members who shall be selected by the Board of Directors from
its own members and who shall hold office during the pleasure of the Board.
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(B) The Executive Committee shall have all the
powers of the Board of Directors when it is not in session to transact all
business for and in behalf of the Company that may be brought before it.
(C) The Executive Committee shall meet at the
principal office of the Company or elsewhere in its discretion at such times to
be determined by a majority of its members, or at the call of the Chairman of
the Executive Committee or at the call of the Chairman of the Board of
Directors. The majority of its members shall be necessary to constitute a
quorum for the transaction of business. Special meetings of the Executive
Committee may be held at any time when a quorum is present.
(D) Minutes of each meeting of the Executive
Committee shall be kept and submitted to the Board of Directors at its next
meeting.
(E) The Executive Committee shall advise and
superintend all investments that may be made of the funds of the Company, and
shall direct the disposal of the same, in accordance with such rules and
regulations as the Board of Directors from time to time make.
(F) In the event of a state of disaster of
sufficient severity to prevent the conduct and management of the affairs and
business of the Company by its directors and officers as contemplated by these
By-Laws any two available members of the Executive Committee as constituted
immediately prior to such disaster shall constitute a quorum of that Committee
for the full conduct and management of the affairs and business of the Company
in accordance with the provisions of Article III of these By-Laws; and if less
than three members of the Trust Committee is constituted immediately prior to
such disaster shall be available for the transaction of its business, such
Executive Committee shall also be empowered to exercise all of the powers
reserved to the Trust Committee under Article III Section 2 hereof. In the
event of the unavailability, at such time, of a minimum of two members of such
Executive Committee, any three available directors shall constitute the
Executive Committee for the full conduct and management of the affairs and
business of the Company in accordance with the foregoing provisions of this
Section. This By-Law shall be subject to implementation by Resolutions of the
Board of Directors presently existing or hereafter passed from time to time for
that purpose, and any provisions of these By-Laws (other than this Section) and
any resolutions which are contrary to the provisions of this Section or to the
provisions of any such implementary Resolutions shall be suspended during such
a disaster period until it shall be determined by any interim Executive
Committee acting under this section that it shall be to the advantage of the
Company to resume the conduct and management of its affairs and business under
all of the other provisions of these By-Laws.
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Section 2. Trust Committee
(A) The Trust Committee shall be composed of not
more than thirteen members who shall be selected by the Board of Directors, a
majority of whom shall be members of the Board of Directors and who shall hold
office during the pleasure of the Board.
(B) The Trust Committee shall have general
supervision over the Trust Department and the investment of trust funds, in all
matters, however, being subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the
principal office of the Company or elsewhere in its discretion at such times to
be determined by a majority of its members or at the call of its chairman. A
majority of its members shall be necessary to constitute a quorum for the
transaction of business.
(D) Minutes of each meeting of the Trust Committee
shall be kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to
appoint Committees and/or designate officers or employees of the Company to
whom supervision over the investment of trust funds may be delegated when the
Trust Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five
members who shall be selected by the Board of Directors from its own members,
none of whom shall be an officer of the Company, and shall hold office at the
pleasure of the Board.
(B) The Audit Committee shall have general
supervision over the Audit Division in all matters however subject to the
approval of the Board of Directors; it shall consider all matters brought to
its attention by the officer in charge of the Audit Division, review all
reports of examination of the Company made by any governmental agency or such
independent auditor employed for that purpose, and make such recommendations to
the Board of Directors with respect thereto or with respect to any other
matters pertaining to auditing the Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and
wherever the majority of its members shall deem it to be proper for the
transaction of its business, and a majority of its Committee shall constitute a
quorum.
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Section 4. Compensation Committee
(A) The Compensation Committee shall be composed
of not more than five (5) members who shall be selected by the Board of
Directors from its own members who are not officers of the Company and who
shall hold office during the pleasure of the Board.
(B) The Compensation Committee shall in general
advise upon all matters of policy concerning the Company brought to its
attention by the management and from time to time review the management of the
Company, major organizational matters, including salaries and employee benefits
and specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be
called at any time by the Chairman of the Compensation Committee, the Chairman
of the Board of Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be
elected by the Board of Directors as an associate director, to serve during the
pleasure of the Board.
(B) An associate director shall be entitled to
attend all directors meetings and participate in the discussion of all matters
brought to the Board, with the exception that he would have no right to vote.
An associate director will be eligible for appointment to Committees of the
Company, with the exception of the Executive Committee, Audit Committee and
Compensation Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any
member of any Committee created under Article III of the By-Laws of this
Company, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absence or disqualified member.
ARTICLE IV
OFFICERS
Section 1. The Chairman of the Board of Directors shall preside at
all meetings of the Board and shall have such further authority and powers and
shall perform such duties as the Board of Directors may from time to time
confer and direct. He shall also exercise such powers
5
<PAGE> 23
and perform such duties as may from time to time be agreed upon between himself
and the President of the Company.
Section 2. The Vice Chairman of the Board. The Vice Chairman of the
Board of Directors shall preside at all meetings of the Board of Directors at
which the Chairman of the Board shall not be present and shall have such
further authority and powers and shall perform such duties as the Board of
Directors or the Chairman of the Board may from time to time confer and direct.
Section 3. The President shall have the powers and duties pertaining
to the office of the President conferred or imposed upon him by statute or
assigned to him by the Board of Directors in the absence of the Chairman of the
Board the President shall have the powers and duties of the Chairman of the
Board.
Section 4. The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and such
other powers and duties as may from time to time be assigned to them by the
Board of Directors, the Executive Committee, the Chairman of the Board or the
President and by the officer in charge of the department or division to which
they are assigned.
Section 6. The Secretary shall attend to the giving of notice of
meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings and
to recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all
assets and liabilities of the Company. He shall be custodian of and
responsible for all monies, funds and valuables of the Company and for the
keeping of proper records of the evidence of property or indebtedness and of
all the transactions of the Company. He shall have general supervision of the
expenditures of the Company and shall report to the Board of Directors at each
regular meeting of the condition of the Company, and perform such other duties
as may be assigned to him from time to time by the Board of Directors of the
Executive Committee.
6
<PAGE> 24
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.
Section 10. There may be one or more officers, subordinate in rank to
all Vice Presidents with such functional titles as shall be determined from
time to time by the Board of Directors, who shall ex officio hold the office
Assistant Secretary of this Company and who may perform such duties as may be
prescribed by the officer in charge of the department or division to whom they
are assigned.
Section 11. The powers and duties of all other officers of the
Company shall be those usually pertaining to their respective offices, subject
to the direction of the Board of Directors, the Executive Committee, Chairman
of the Board of Directors or the President and the officer in charge of the
department or division to which they are assigned.
ARTICLE V
STOCK AND STOCK CERTIFICATES
Section 1. Shares of stock shall be transferrable on the books of the
Company and a transfer book shall be kept in which all transfers of stock shall
be recorded.
Section 2. Certificate of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new
certificate or certificates shall be issued in lieu thereof.
7
<PAGE> 25
Duplicate certificates of stock shall be issued only upon giving such security
as may be satisfactory to the Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to fix
in advance a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the
date for the payment of any dividend, or the date for the allotment of rights,
or the date when any change or conversion or exchange of capital stock shall go
into effect, or a date in connection with obtaining such consent.
ARTICLE VI
SEAL
Section 1. The corporate seal of the Company shall be in the
following form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."
ARTICLE VII
FISCAL YEAR
Section 1. The fiscal year of the Company shall be the calendar year.
ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver
and the Secretary or any Assistant Secretary shall have full power and
authority to attest and affix the corporate seal of the Company to any and all
deeds, conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or
8
<PAGE> 26
confirmation by the Board of Directors or the Executive Committee, and any and
all such instruments shall have the same force and validity as though expressly
authorized by the Board of Directors and/or the Executive Committee.
ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES
Section 1. Directors and associate directors of the Company, other
than salaried officers of the Company, shall be paid such reasonable honoraria
or fees for attending meetings of the Board of Directors as the Board of
Directors may from time to time determine. Directors and associate directors
who serve as members of committees, other than salaried employees of the
Company, shall be paid such reasonable honoraria or fees for services as
members of committees as the Board of Directors shall from time to time
determine and directors and associate directors may be employed by the Company
for such special services as the Board of Directors may from time to time
determine and shall be paid for such special services so performed reasonable
compensation as may be determined by the Board of Directors.
ARTICLE X
INDEMNIFICATION
Section 1. (A) The Corporation shall indemnify and hold harmless, to
the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or
was a director, officer, employee or agent of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee,
fiduciary or agent of another corporation or of a partnership, joint venture,
trust, enterprise or non-profit entity, including service with respect to
employee benefit plans, against all liability and loss suffered and expenses
reasonably incurred by such person. The Corporation shall indemnify a person
in connection with a proceeding initiated by such person only if the proceeding
was authorized by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses
incurred in defending any proceeding in advance of its final disposition,
provided, however, that the payment of expenses incurred by a Director officer
in his capacity as a Director or officer in advance of the final disposition of
the proceeding shall be made only upon receipt of an undertaking by the
Director or officer to repay all amounts advanced if it should be ultimately
determined that the Director or officer is not entitled to be indemnified under
this Article or otherwise.
9
<PAGE> 27
(C) If a claim for indemnification or payment of
expenses, under this Article X is not paid in full within ninety days after a
written claim therefor has been received by the Corporation the claimant may
file suit to recover the unpaid amount of such claim and, if successful in
whole or in part, shall be entitled to be paid the expense of prosecuting such
claim. In any such action the Corporation shall have the burden of proving
that the claimant was not entitled to the requested indemnification of payment
of expenses under applicable law.
(D) The rights conferred on any person by this
Article X shall not be exclusive of any other rights which such person may have
or hereafter acquire under any statute, provision of the Charter or Act of
Incorporation, these By-Laws, agreement, vote of stockholders or disinterested
Directors or otherwise.
(E) Any repeal or modification of the foregoing
provisions of this Article X shall not adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring prior to
the time of such repeal or modification.
ARTICLE XI
AMENDMENTS TO THE BY-LAWS
Section 1. These By-Laws may be altered, amended or repealed, in
whole or in part, and any new By-Law or By-Laws adopted at any regular or
special meeting of the Board of Directors by a vote of the majority of all the
members of the Board of Directors then in office.
10
<PAGE> 28
EXHIBIT C
SECTION 321(b) CONSENT
Pursuant to Section 321(b) of the Trust Indenture Act of 1939,
Wilmington Trust Company hereby consents that reports of examinations by
Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: August 14, 1998 By: /s/ Emmett R. Harmon
----------------------------------------
Name: Emmett R. Harmon
Title: Vice President
<PAGE> 29
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings banks with
state publication requirements. It has not been approved by any state banking
authorities. Refer to your appropriate state banking authorities for your
state publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
------------------------ ----------
Name of Bank City
in the State of DELAWARE, at the close of business on March 31, 1998.
ASSETS
<TABLE>
<CAPTION>
Thousands of dollars
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins . . . . . . . . . . . . . . . . . . . . . . . . . 180,015
Interest-bearing balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Held-to-maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 287,798
Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,355,745
Federal funds sold and securities purchased under agreements to resell . . . . . . . . . . . . . . . . . . . . 124,500
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . . 3,896,238
LESS: Allowance for loan and lease losses. . . . . . 61,635
LESS: Allocated transfer risk reserve. . . . . . . . 0
Loans and leases, net of unearned income, allowance, and reserve . . . . . . . . . . . . . . . . . . . 3,834,603
Assets held in trading accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Premises and fixed assets (including capitalized leases) . . . . . . . . . . . . . . . . . . . . . . . . . . . 134,016
Other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,444
Investments in unconsolidated subsidiaries and associated companies . . . . . . . . . . . . . . . . . . . . . . 10
Customers' liability to this bank on acceptances outstanding . . . . . . . . . . . . . . . . . . . . . . . . . 0
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,264
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215,048
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,189,443
</TABLE>
CONTINUED ON NEXT PAGE
<PAGE> 30
LIABILITIES
<TABLE>
<S> <C> <C>
Deposits:
In domestic offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,183,321
Noninterest-bearing . . . . . . . . 904,511
Interest-bearing. . . . . . . . . . 3,278,810
Federal funds purchased and Securities sold under agreements to repurchase . . . . . . . . . . . . . . . . . 558,553
Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,761
Trading liabilities (from Schedule RC-D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other borrowed money: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ///////
With original maturity of one year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 788,000
With original maturity of more than one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,000
Bank's liability on acceptances executed and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Subordinated notes and debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other liabilities (from Schedule RC-G) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99,777
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,730,412
</TABLE>
EQUITY CAPITAL
<TABLE>
<S> <C>
Perpetual preferred stock and related surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500
Surplus (exclude all surplus related to preferred stock) . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,118
Undivided profits and capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 388,458
Net unrealized holding gains (losses) on available-for-sale securities . . . . . . . . . . . . . . . . . . . . 7,955
Total equity capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 459,031
Total liabilities, limited-life preferred stock, and equity capital . . . . . . . . . . . . . . . . . . . . . . 6,189,443
</TABLE>
2
<PAGE> 1
EXHIBIT 25.9
Registration No.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) X
---
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
AMERICAN COIN MERCHANDISING, INC.
d/b/a SUGARLOAF CREATIONS, INC.
(Exact name of obligor as specified in its charter)
Delaware 84-1093721
(State of incorporation (I.R.S. employer identification no.)
or formation)
5660 Central Avenue
Boulder, Colorado 77002
(Address of principal executive offices) (Zip Code)
Guarantee of Trust Preferred Securities of
American Coin Merchandising Trust IV
(Title of the indenture securities)
===============================================================================
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust
powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the
obligor is not an affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which
includes the certificate of authority of Wilmington Trust
Company to commence business and the authorization of
Wilmington Trust Company to exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section
321(b) of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington
Trust Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, Wilmington Trust Company, a corporation organized and existing under
the laws of Delaware, has duly caused this Statement of Eligibility to be signed
on its behalf by the undersigned, thereunto duly authorized, all in the City of
Wilmington and State of Delaware on the 14th day of August, 1998.
[SEAL] WILMINGTON TRUST COMPANY
Attest:/s/ Donald G. MacKelcan By:/s/Emmett R. Harmon
----------------------- -------------------
Assistant Secretary Name: Emmett R. Harmon
Title: Vice President
<PAGE> 3
EXHIBIT A
AMENDED CHARTER
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON MAY 9, 1987
<PAGE> 4
AMENDED CHARTER
OR
ACT OF INCORPORATION
OF
WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, originally incorporated by an Act of the General
Assembly of the State of Delaware, entitled "An Act to Incorporate the Delaware
Guarantee and Trust Company", approved March 2, A.D. 1901, and the name of
which company was changed to "WILMINGTON TRUST COMPANY" by an amendment filed
in the Office of the Secretary of State on March 18, A.D. 1903, and the Charter
or Act of Incorporation of which company has been from time to time amended and
changed by merger agreements pursuant to the corporation law for state banks
and trust companies of the State of Delaware, does hereby alter and amend its
Charter or Act of Incorporation so that the same as so altered and amended
shall in its entirety read as follows:
FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.
SECOND: - The location of its principal office in the State of Delaware is
at Rodney Square North, in the City of Wilmington, County of New Castle;
the name of its resident agent is WILMINGTON TRUST COMPANY whose address is
Rodney Square North, in said City. In addition to such principal office,
the said corporation maintains and operates branch offices in the City of
Newark, New Castle County, Delaware, the Town of Newport, New Castle
County, Delaware, at Claymont, New Castle County, Delaware, at Greenville,
New Castle County Delaware, and at Milford Cross Roads, New Castle County,
Delaware, and shall be empowered to open, maintain and operate branch
offices at Ninth and Shipley Streets, 418 Delaware Avenue, 2120 Market
Street, and 3605 Market Street, all in the City of Wilmington, New Castle
County, Delaware, and such other branch offices or places of business as
may be authorized from time to time by the agency or agencies of the
government of the State of Delaware empowered to confer such authority.
THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this Corporation are
to do any or all of the things herein mentioned as fully and to the same
extent as natural persons might or could do and in any part of the world,
viz.:
(1) To sue and be sued, complain and defend in any Court of law or
equity and to make and use a common seal, and alter the seal at
pleasure, to hold, purchase, convey, mortgage or otherwise deal in real
and personal estate and property, and to appoint such officers and
agents as the business of the Corporation shall require, to make
by-laws not inconsistent with the Constitution or laws of the
<PAGE> 5
United States or of this State, to discount bills, notes or other
evidences of debt, to receive deposits of money, or securities for
money, to buy gold and silver bullion and foreign coins, to buy and
sell bills of exchange, and generally to use, exercise and enjoy all
the powers, rights, privileges and franchises incident to a corporation
which are proper or necessary for the transaction of the business of
the Corporation hereby created.
(2) To insure titles to real and personal property, or any estate or
interests therein, and to guarantee the holder of such property, real
or personal, against any claim or claims, adverse to his interest
therein, and to prepare and give certificates of title for any lands or
premises in the State of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the receipt,
collection, custody, investment and management of funds, and the
purchase, sale, management and disposal of property of all
descriptions, and to prepare and execute all papers which may be
necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds, leases,
conveyances, mortgages, bonds and legal papers of every description,
and to carry on the business of conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money, jewelry, plate,
deeds, bonds and any and all other personal property of every sort and
kind, from executors, administrators, guardians, public officers,
courts, receivers, assignees, trustees, and from all fiduciaries, and
from all other persons and individuals, and from all corporations
whether state, municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such property.
(6) To act as agent or otherwise for the purpose of registering,
issuing, certificating, countersigning, transferring or underwriting
the stock, bonds or other obligations of any corporation, association,
state or municipality, and may receive and manage any sinking fund
therefor on such terms as may be agreed upon between the two parties,
and in like manner may act as Treasurer of any corporation or
municipality.
(7) To act as Trustee under any deed of trust, mortgage, bond or other
instrument issued by any state, municipality, body politic,
corporation, association or person, either alone or in conjunction with
any other person or persons, corporation or corporations.
(8) To guarantee the validity, performance or effect of any contract
or agreement, and the fidelity of persons holding places of
responsibility or trust; to become surety for any person, or persons,
for the faithful performance of any
2
<PAGE> 6
trust, office, duty, contract or agreement, either by itself or in
conjunction with any other person, or persons, corporation, or
corporations, or in like manner become surety upon any bond,
recognizance, obligation, judgment, suit, order, or decree to be
entered in any court of record within the State of Delaware or
elsewhere, or which may now or hereafter be required by any law, judge,
officer or court in the State of Delaware or elsewhere.
(9) To act by any and every method of appointment as trustee, trustee
in bankruptcy, receiver, assignee, assignee in bankruptcy, executor,
administrator, guardian, bailee, or in any other trust capacity in the
receiving, holding, managing, and disposing of any and all estates and
property, real, personal or mixed, and to be appointed as such trustee,
trustee in bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian or bailee by any persons,
corporations, court, officer, or authority, in the State of Delaware or
elsewhere; and whenever this Corporation is so appointed by any person,
corporation, court, officer or authority such trustee, trustee in
bankruptcy, receiver, assignee, assignee in bankruptcy, executor,
administrator, guardian, bailee, or in any other trust capacity, it
shall not be required to give bond with surety, but its capital stock
shall be taken and held as security for the performance of the duties
devolving upon it by such appointment.
(10) And for its care, management and trouble, and the exercise of any
of its powers hereby given, or for the performance of any of the duties
which it may undertake or be called upon to perform, or for the
assumption of any responsibility the said Corporation may be entitled
to receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages, debentures,
shares of capital stock, and other securities, obligations, contracts
and evidences of indebtedness, of any private, public or municipal
corporation within and without the State of Delaware, or of the
Government of the United States, or of any state, territory, colony, or
possession thereof, or of any foreign government or country; to
receive, collect, receipt for, and dispose of interest, dividends and
income upon and from any of the bonds, mortgages, debentures, notes,
shares of capital stock, securities, obligations, contracts, evidences
of indebtedness and other property held and owned by it, and to
exercise in respect of all such bonds, mortgages, debentures, notes,
shares of capital stock, securities, obligations, contracts, evidences
of indebtedness and other property, any and all the rights, powers and
privileges of individual owners thereof, including the right to vote
thereon; to invest and deal in and with any of the moneys of the
Corporation upon such securities and in such manner as it may think fit
and proper, and from time to time to vary or realize such investments;
to issue bonds and secure the same by pledges or deeds of trust or
mortgages of or upon the whole or any part of the property held or
owned by the Corporation, and to sell and pledge such bonds,
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as and when the Board of Directors shall determine, and in the
promotion of its said corporate business of investment and to the
extent authorized by law, to lease, purchase, hold, sell, assign,
transfer, pledge, mortgage and convey real and personal property of any
name and nature and any estate or interest therein.
(b) In furtherance of, and not in limitation, of the powers conferred by
the laws of the State of Delaware, it is hereby expressly provided that the
said Corporation shall also have the following powers:
(1) To do any or all of the things herein set forth, to the same
extent as natural persons might or could do, and in any part of the
world.
(2) To acquire the good will, rights, property and franchises and to
undertake the whole or any part of the assets and liabilities of any
person, firm, association or corporation, and to pay for the same in
cash, stock of this Corporation, bonds or otherwise; to hold or in any
manner to dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any part of any
business so acquired, and to exercise all the powers necessary or
convenient in and about the conduct and management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien, and to
lease, sell, exchange, transfer, or in any manner whatever dispose of
property, real, personal or mixed, wherever situated.
(4) To enter into, make, perform and carry out contracts of every kind
with any person, firm, association or corporation, and, without limit
as to amount, to draw, make, accept, endorse, discount, execute and
issue promissory notes, drafts, bills of exchange, warrants, bonds,
debentures, and other negotiable or transferable instruments.
(5) To have one or more offices, to carry on all or any of its
operations and businesses, without restriction to the same extent as
natural persons might or could do, to purchase or otherwise acquire, to
hold, own, to mortgage, sell, convey or otherwise dispose of, real and
personal property, of every class and description, in any State,
District, Territory or Colony of the United States, and in any foreign
country or place.
(6) It is the intention that the objects, purposes and powers
specified and clauses contained in this paragraph shall (except where
otherwise expressed in said paragraph) be nowise limited or restricted
by reference to or inference from the terms of any other clause of this
or any other paragraph in this charter, but that the objects, purposes
and powers specified in each of the clauses of this paragraph shall be
regarded as independent objects, purposes and powers.
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<PAGE> 8
FOURTH: - (a) The total number of shares of all classes of stock which the
Corporation shall have authority to issue is forty-one million (41,000,000)
shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par value
$10.00 per share (hereinafter referred to as "Preferred Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par value $1.00
per share (hereinafter referred to as "Common Stock").
(b) Shares of Preferred Stock may be issued from time to time in one or
more series as may from time to time be determined by the Board of
Directors each of said series to be distinctly designated. All shares of
any one series of Preferred Stock shall be alike in every particular,
except that there may be different dates from which dividends, if any,
thereon shall be cumulative, if made cumulative. The voting powers and the
preferences and relative, participating, optional and other special rights
of each such series, and the qualifications, limitations or restrictions
thereof, if any, may differ from those of any and all other series at any
time outstanding; and, subject to the provisions of subparagraph 1 of
Paragraph (c) of this Article FOURTH, the Board of Directors of the
Corporation is hereby expressly granted authority to fix by resolution or
resolutions adopted prior to the issuance of any shares of a particular
series of Preferred Stock, the voting powers and the designations,
preferences and relative, optional and other special rights, and the
qualifications, limitations and restrictions of such series, including, but
without limiting the generality of the foregoing, the following:
(1) The distinctive designation of, and the number of shares of
Preferred Stock which shall constitute such series, which number may be
increased (except where otherwise provided by the Board of Directors)
or decreased (but not below the number of shares thereof then
outstanding) from time to time by like action of the Board of
Directors;
(2) The rate and times at which, and the terms and conditions on
which, dividends, if any, on Preferred Stock of such series shall be
paid, the extent of the preference or relation, if any, of such
dividends to the dividends payable on any other class or classes, or
series of the same or other class of stock and whether such dividends
shall be cumulative or non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of such
series to convert the same into or exchange the same for, shares of any
other class or classes or of any series of the same or any other class
or classes of stock of the Corporation and the terms and conditions of
such conversion or exchange;
(4) Whether or not Preferred Stock of such series shall be subject to
redemption, and the redemption price or prices and the time or times at
which, and the terms and conditions on which, Preferred Stock of such
series may be redeemed.
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<PAGE> 9
(5) The rights, if any, of the holders of Preferred Stock of such
series upon the voluntary or involuntary liquidation, merger,
consolidation, distribution or sale of assets, dissolution or winding-
up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase account,
if any, to be provided for the Preferred Stock of such series; and
(7) The voting powers, if any, of the holders of such series of
Preferred Stock which may, without limiting the generality of the
foregoing include the right, voting as a series or by itself or
together with other series of Preferred Stock or all series of
Preferred Stock as a class, to elect one or more directors of the
Corporation if there shall have been a default in the payment of
dividends on any one or more series of Preferred Stock or under such
circumstances and on such conditions as the Board of Directors may
determine.
(c) (1) After the requirements with respect to preferential dividends on
the Preferred Stock (fixed in accordance with the provisions of section (b)
of this Article FOURTH), if any, shall have been met and after the
Corporation shall have complied with all the requirements, if any, with
respect to the setting aside of sums as sinking funds or redemption or
purchase accounts (fixed in accordance with the provisions of section (b)
of this Article FOURTH), and subject further to any conditions which may be
fixed in accordance with the provisions of section (b) of this Article
FOURTH, then and not otherwise the holders of Common Stock shall be
entitled to receive such dividends as may be declared from time to time by
the Board of Directors.
(2) After distribution in full of the preferential amount, if any,
(fixed in accordance with the provisions of section (b) of this Article
FOURTH), to be distributed to the holders of Preferred Stock in the
event of voluntary or involuntary liquidation, distribution or sale of
assets, dissolution or winding-up, of the Corporation, the holders of
the Common Stock shall be entitled to receive all of the remaining
assets of the Corporation, tangible and intangible, of whatever kind
available for distribution to stockholders ratably in proportion to the
number of shares of Common Stock held by them respectively.
(3) Except as may otherwise be required by law or by the provisions of
such resolution or resolutions as may be adopted by the Board of
Directors pursuant to section (b) of this Article FOURTH, each holder
of Common Stock shall have one vote in respect of each share of Common
Stock held on all matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock or of
options, warrants or other rights to purchase shares of any class or series
of stock or of other securities of the Corporation shall have any
preemptive right to purchase or subscribe for any unissued stock of any
class or series or any additional shares of any class or series to be
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<PAGE> 10
issued by reason of any increase of the authorized capital stock of the
Corporation of any class or series, or bonds, certificates of indebtedness,
debentures or other securities convertible into or exchangeable for stock
of the Corporation of any class or series, or carrying any right to
purchase stock of any class or series, but any such unissued stock,
additional authorized issue of shares of any class or series of stock or
securities convertible into or exchangeable for stock, or carrying any
right to purchase stock, may be issued and disposed of pursuant to
resolution of the Board of Directors to such persons, firms, corporations
or associations, whether such holders or others, and upon such terms as may
be deemed advisable by the Board of Directors in the exercise of its sole
discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and rights
of each other series of Preferred Stock shall, in each case, be as fixed
from time to time by the Board of Directors in the resolution or
resolutions adopted pursuant to authority granted in section (b) of this
Article FOURTH and the consent, by class or series vote or otherwise, of
the holders of such of the series of Preferred Stock as are from time to
time outstanding shall not be required for the issuance by the Board of
Directors of any other series of Preferred Stock whether or not the powers,
preferences and rights of such other series shall be fixed by the Board of
Directors as senior to, or on a parity with, the powers, preferences and
rights of such outstanding series, or any of them; provided, however, that
the Board of Directors may provide in the resolution or resolutions as to
any series of Preferred Stock adopted pursuant to section (b) of this
Article FOURTH that the consent of the holders of a majority (or such
greater proportion as shall be therein fixed) of the outstanding shares of
such series voting thereon shall be required for the issuance of any or all
other series of Preferred Stock.
(f) Subject to the provisions of section (e), shares of any series of
Preferred Stock may be issued from time to time as the Board of Directors
of the Corporation shall determine and on such terms and for such
consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and for such
consideration as shall be fixed by the Board of Directors.
(h) The authorized amount of shares of Common Stock and of Preferred Stock
may, without a class or series vote, be increased or decreased from time to
time by the affirmative vote of the holders of a majority of the stock of
the Corporation entitled to vote thereon.
FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of directors
constituting the entire Board shall be not less than five nor more than
twenty-five as fixed from time to time by vote of a majority of the whole
Board, provided, however, that the number of directors shall not
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<PAGE> 11
be reduced so as to shorten the term of any director at the time in office,
and provided further, that the number of directors constituting the whole
Board shall be twenty-four until otherwise fixed by a majority of the whole
Board.
(b) The Board of Directors shall be divided into three classes, as nearly
equal in number as the then total number of directors constituting the
whole Board permits, with the term of office of one class expiring each
year. At the annual meeting of stockholders in 1982, directors of the
first class shall be elected to hold office for a term expiring at the next
succeeding annual meeting, directors of the second class shall be elected
to hold office for a term expiring at the second succeeding annual meeting
and directors of the third class shall be elected to hold office for a term
expiring at the third succeeding annual meeting. Any vacancies in the
Board of Directors for any reason, and any newly created directorships
resulting from any increase in the directors, may be filled by the Board of
Directors, acting by a majority of the directors then in office, although
less than a quorum, and any directors so chosen shall hold office until the
next annual election of directors. At such election, the stockholders
shall elect a successor to such director to hold office until the next
election of the class for which such director shall have been chosen and
until his successor shall be elected and qualified. No decrease in the
number of directors shall shorten the term of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding the
fact that some lesser percentage may be specified by law, this Charter or
Act of Incorporation or the By-Laws of the Corporation), any director or
the entire Board of Directors of the Corporation may be removed at any time
without cause, but only by the affirmative vote of the holders of two-
thirds or more of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) cast at a meeting of the
stockholders called for that purpose.
(d) Nominations for the election of directors may be made by the Board of
Directors or by any stockholder entitled to vote for the election of
directors. Such nominations shall be made by notice in writing, delivered
or mailed by first class United States mail, postage prepaid, to the
Secretary of the Corporation not less than 14 days nor more than 50 days
prior to any meeting of the stockholders called for the election of
directors; provided, however, that if less than 21 days' notice of the
meeting is given to stockholders, such written notice shall be delivered or
mailed, as prescribed, to the Secretary of the Corporation not later than
the close of the seventh day following the day on which notice of the
meeting was mailed to stockholders. Notice of nominations which are
proposed by the Board of Directors shall be given by the Chairman on behalf
of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name, age,
business address and, if known, residence address of each nominee proposed
in such notice, (ii) the principal occupation or employment of such nominee
and (iii) the number of shares of
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<PAGE> 12
stock of the Corporation which are beneficially owned by each such nominee.
(f) The Chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with
the foregoing procedure, and if he should so determine, he shall so declare
to the meeting and the defective nomination shall be disregarded.
(g) No action required to be taken or which may be taken at any annual or
special meeting of stockholders of the Corporation may be taken without a
meeting, and the power of stockholders to consent in writing, without a
meeting, to the taking of any action is specifically denied.
SIXTH: - The Directors shall choose such officers, agent and servants as
may be provided in the By-Laws as they may from time to time find necessary
or proper.
SEVENTH: - The Corporation hereby created is hereby given the same powers,
rights and privileges as may be conferred upon corporations organized under
the Act entitled "An Act Providing a General Corporation Law", approved
March 10, 1899, as from time to time amended.
EIGHTH: - This Act shall be deemed and taken to be a private Act.
NINTH: - This Corporation is to have perpetual existence.
TENTH: - The Board of Directors, by resolution passed by a majority of the
whole Board, may designate any of their number to constitute an Executive
Committee, which Committee, to the extent provided in said resolution, or
in the By-Laws of the Company, shall have and may exercise all of the
powers of the Board of Directors in the management of the business and
affairs of the Corporation, and shall have power to authorize the seal of
the Corporation to be affixed to all papers which may require it.
ELEVENTH: - The private property of the stockholders shall not be liable
for the payment of corporate debts to any extent whatever.
TWELFTH: - The Corporation may transact business in any part of the world.
THIRTEENTH: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation by a
vote of the majority of the entire Board. The stockholders may make, alter
or repeal any By-Law whether or not adopted by them, provided however, that
any such additional By-Laws, alterations or repeal may be adopted only by
the affirmative vote of the holders of two-thirds or more of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors (considered for this purpose as one
class).
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FOURTEENTH: - Meetings of the Directors may be held outside of the State of
Delaware at such places as may be from time to time designated by the
Board, and the Directors may keep the books of the Company outside of the
State of Delaware at such places as may be from time to time designated by
them.
FIFTEENTH: - (a) In addition to any affirmative vote required by law, and
except as otherwise expressly provided in sections (b) and (c) of this
Article FIFTEENTH:
(A) any merger or consolidation of the Corporation or any Subsidiary
(as hereinafter defined) with or into (i) any Interested Stockholder
(as hereinafter defined) or (ii) any other corporation (whether or not
itself an Interested Stockholder), which, after such merger or
consolidation, would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of related transactions) to
or with any Interested Stockholder or any Affiliate of any Interested
Stockholder of any assets of the Corporation or any Subsidiary having
an aggregate fair market value of $1,000,000 or more, or
(C) the issuance or transfer by the Corporation or any Subsidiary (in
one transaction or a series of related transactions) of any securities
of the Corporation or any Subsidiary to any Interested Stockholder or
any Affiliate of any Interested Stockholder in exchange for cash,
securities or other property (or a combination thereof) having an
aggregate fair market value of $1,000,000 or more, or
(D) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation, or
(E) any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or any
similar transaction (whether or not with or into or otherwise involving
an Interested Stockholder) which has the effect, directly or
indirectly, of increasing the proportionate share of the outstanding
shares of any class of equity or convertible securities of the
Corporation or any Subsidiary which is directly or indirectly owned by
any Interested Stockholder, or any Affiliate of any Interested
Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article FIFTEENTH as one class ("Voting Shares"). Such affirmative vote shall
be required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
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(2) The term "business combination" as used in this Article
FIFTEENTH shall mean any transaction which is referred to any
one or more of clauses (A) through (E) of paragraph 1 of the
section (a).
(b) The provisions of section (a) of this Article FIFTEENTH shall not
be applicable to any particular business combination and such business
combination shall require only such affirmative vote as is required by
law and any other provisions of the Charter or Act of Incorporation of
By-Laws if such business combination has been approved by a majority of
the whole Board.
(c) For the purposes of this Article FIFTEENTH:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any Subsidiary) who
or which as of the record date for the determination of stockholders
entitled to notice of and to vote on such business combination, or
immediately prior to the consummation of any such transaction:
(A) is the beneficial owner, directly or indirectly, of more than 10%
of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time within two
years prior thereto was the beneficial owner, directly or indirectly,
of not less than 10% of the then outstanding voting Shares, or
(C) is an assignee of or has otherwise succeeded in any share of
capital stock of the Corporation which were at any time within two
years prior thereto beneficially owned by any Interested Stockholder,
and such assignment or succession shall have occurred in the course of
a transaction or series of transactions not involving a public offering
within the meaning of the Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and Associates (as
hereafter defined) beneficially own, directly or indirectly, or
(B) which such person or any of its Affiliates or Associates has (i)
the right to acquire (whether such right is exercisable immediately or
only after the passage of time), pursuant to any agreement, arrangement
or understanding or upon the exercise of conversion rights, exchange
rights, warrants or options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or understanding, or
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(C) which are beneficially owned, directly or indirectly, by any other
person with which such first mentioned person or any of its Affiliates
or Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any shares of
capital stock of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any other
Voting Shares which may be issuable pursuant to any agreement, or upon
exercise of conversion rights, warrants or options or otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings given
those terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect on December 31, 1981.
(6) "Subsidiary" shall mean any corporation of which a majority of any
class of equity security (as defined in Rule 3a11-1 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as in effect in
December 31, 1981) is owned, directly or indirectly, by the Corporation;
provided, however, that for the purposes of the definition of Investment
Stockholder set forth in paragraph (2) of this section (c), the term
"Subsidiary" shall mean only a corporation of which a majority of each
class of equity security is owned, directly or indirectly, by the
Corporation.
(d) majority of the directors shall have the power and duty to
determine for the purposes of this Article FIFTEENTH on the basis of
information known to them, (1) the number of Voting Shares beneficially
owned by any person (2) whether a person is an Affiliate or Associate
of another, (3) whether a person has an agreement, arrangement or
understanding with another as to the matters referred to in paragraph
(3) of section (c), or (4) whether the assets subject to any business
combination or the consideration received for the issuance or transfer
of securities by the Corporation, or any Subsidiary has an aggregate
fair market value of $1,000,000 or more.
(e) Nothing contained in this Article FIFTEENTH shall be construed to
relieve any Interested Stockholder from any fiduciary obligation
imposed by law.
SIXTEENTH: Notwithstanding any other provision of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and in addition to any
other vote that may be required by law, this Charter or Act of
Incorporation by the By-Laws), the affirmative vote of the holders of at
least two-thirds of the outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) shall be required to amend,
alter or repeal any provision of Articles FIFTH, THIRTEENTH, FIFTEENTH or
SIXTEENTH of this Charter or Act of Incorporation.
SEVENTEENTH: (a) a Director of this Corporation shall not be liable to the
Corporation
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or its stockholders for monetary damages for breach of fiduciary duty as a
Director, except to the extent such exemption from liability or limitation
thereof is not permitted under the Delaware General Corporation Laws as the
same exists or may hereafter be amended.
(b) Any repeal or modification of the foregoing paragraph shall not
adversely affect any right or protection of a Director of the
Corporation existing hereunder with respect to any act or omission
occurring prior to the time of such repeal or modification."
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EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON JANUARY 16, 1997
<PAGE> 18
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. The Annual Meeting of Stockholders shall be held on the
third Thursday in April each year at the principal office at the Company or at
such other date, time, or place as may be designated by resolution by the Board
of Directors.
Section 2. Special meetings of all stockholders may be called at any
time by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be given
by mailing to each stockholder at least ten (10) days before said meeting, at
his last known address, a written or printed notice fixing the time and place
of such meeting.
Section 4. A majority in the amount of the capital stock of the
Company issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one
vote, either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
DIRECTORS
Section 1. The number and classification of the Board of Directors
shall be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72)
years shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed
and conducted by the Board of Directors.
Section 5. The Board of Directors shall meet at the principal office
of the Company or elsewhere in its discretion at such times to be determined by
a majority of its members, or at the call of the Chairman of the Board of
Directors or the President.
<PAGE> 19
Section 6. Special meetings of the Board of Directors may be called
at any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of
any special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal, inability
to act, or disqualification of any director, the Board of Directors, although
less than a quorum, shall have the right to elect the successor who shall hold
office for the remainder of the full term of the class of directors in which
the vacancy occurred, and until such director's successor shall have been duly
elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect
from its own members a Chairman of the Board of Directors and a President who
may be the same person. The Board of Directors shall also elect at such
meeting a Secretary and a Treasurer, who may be the same person, may appoint at
any time such other committees and elect or appoint such other officers as it
may deem advisable. The Board of Directors may also elect at such meeting one
or more Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be in
charge of such of the departments or division of the Company as it may deem
advisable.
ARTICLE III
COMMITTEES
Section 1. Executive Committee
(A) The Executive Committee shall be composed of
not more than nine members who shall be selected by the Board of Directors from
its own members and who shall hold office during the pleasure of the Board.
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(B) The Executive Committee shall have all the
powers of the Board of Directors when it is not in session to transact all
business for and in behalf of the Company that may be brought before it.
(C) The Executive Committee shall meet at the
principal office of the Company or elsewhere in its discretion at such times to
be determined by a majority of its members, or at the call of the Chairman of
the Executive Committee or at the call of the Chairman of the Board of
Directors. The majority of its members shall be necessary to constitute a
quorum for the transaction of business. Special meetings of the Executive
Committee may be held at any time when a quorum is present.
(D) Minutes of each meeting of the Executive
Committee shall be kept and submitted to the Board of Directors at its next
meeting.
(E) The Executive Committee shall advise and
superintend all investments that may be made of the funds of the Company, and
shall direct the disposal of the same, in accordance with such rules and
regulations as the Board of Directors from time to time make.
(F) In the event of a state of disaster of
sufficient severity to prevent the conduct and management of the affairs and
business of the Company by its directors and officers as contemplated by these
By-Laws any two available members of the Executive Committee as constituted
immediately prior to such disaster shall constitute a quorum of that Committee
for the full conduct and management of the affairs and business of the Company
in accordance with the provisions of Article III of these By-Laws; and if less
than three members of the Trust Committee is constituted immediately prior to
such disaster shall be available for the transaction of its business, such
Executive Committee shall also be empowered to exercise all of the powers
reserved to the Trust Committee under Article III Section 2 hereof. In the
event of the unavailability, at such time, of a minimum of two members of such
Executive Committee, any three available directors shall constitute the
Executive Committee for the full conduct and management of the affairs and
business of the Company in accordance with the foregoing provisions of this
Section. This By-Law shall be subject to implementation by Resolutions of the
Board of Directors presently existing or hereafter passed from time to time for
that purpose, and any provisions of these By-Laws (other than this Section) and
any resolutions which are contrary to the provisions of this Section or to the
provisions of any such implementary Resolutions shall be suspended during such
a disaster period until it shall be determined by any interim Executive
Committee acting under this section that it shall be to the advantage of the
Company to resume the conduct and management of its affairs and business under
all of the other provisions of these By-Laws.
3
<PAGE> 21
Section 2. Trust Committee
(A) The Trust Committee shall be composed of not
more than thirteen members who shall be selected by the Board of Directors, a
majority of whom shall be members of the Board of Directors and who shall hold
office during the pleasure of the Board.
(B) The Trust Committee shall have general
supervision over the Trust Department and the investment of trust funds, in all
matters, however, being subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the
principal office of the Company or elsewhere in its discretion at such times to
be determined by a majority of its members or at the call of its chairman. A
majority of its members shall be necessary to constitute a quorum for the
transaction of business.
(D) Minutes of each meeting of the Trust Committee
shall be kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to
appoint Committees and/or designate officers or employees of the Company to
whom supervision over the investment of trust funds may be delegated when the
Trust Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five
members who shall be selected by the Board of Directors from its own members,
none of whom shall be an officer of the Company, and shall hold office at the
pleasure of the Board.
(B) The Audit Committee shall have general
supervision over the Audit Division in all matters however subject to the
approval of the Board of Directors; it shall consider all matters brought to
its attention by the officer in charge of the Audit Division, review all
reports of examination of the Company made by any governmental agency or such
independent auditor employed for that purpose, and make such recommendations to
the Board of Directors with respect thereto or with respect to any other
matters pertaining to auditing the Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and
wherever the majority of its members shall deem it to be proper for the
transaction of its business, and a majority of its Committee shall constitute a
quorum.
4
<PAGE> 22
Section 4. Compensation Committee
(A) The Compensation Committee shall be composed
of not more than five (5) members who shall be selected by the Board of
Directors from its own members who are not officers of the Company and who
shall hold office during the pleasure of the Board.
(B) The Compensation Committee shall in general
advise upon all matters of policy concerning the Company brought to its
attention by the management and from time to time review the management of the
Company, major organizational matters, including salaries and employee benefits
and specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be
called at any time by the Chairman of the Compensation Committee, the Chairman
of the Board of Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be
elected by the Board of Directors as an associate director, to serve during the
pleasure of the Board.
(B) An associate director shall be entitled to
attend all directors meetings and participate in the discussion of all matters
brought to the Board, with the exception that he would have no right to vote.
An associate director will be eligible for appointment to Committees of the
Company, with the exception of the Executive Committee, Audit Committee and
Compensation Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any
member of any Committee created under Article III of the By-Laws of this
Company, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absence or disqualified member.
ARTICLE IV
OFFICERS
Section 1. The Chairman of the Board of Directors shall preside at
all meetings of the Board and shall have such further authority and powers and
shall perform such duties as the Board of Directors may from time to time
confer and direct. He shall also exercise such powers
5
<PAGE> 23
and perform such duties as may from time to time be agreed upon between himself
and the President of the Company.
Section 2. The Vice Chairman of the Board. The Vice Chairman of the
Board of Directors shall preside at all meetings of the Board of Directors at
which the Chairman of the Board shall not be present and shall have such
further authority and powers and shall perform such duties as the Board of
Directors or the Chairman of the Board may from time to time confer and direct.
Section 3. The President shall have the powers and duties pertaining
to the office of the President conferred or imposed upon him by statute or
assigned to him by the Board of Directors in the absence of the Chairman of the
Board the President shall have the powers and duties of the Chairman of the
Board.
Section 4. The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and such
other powers and duties as may from time to time be assigned to them by the
Board of Directors, the Executive Committee, the Chairman of the Board or the
President and by the officer in charge of the department or division to which
they are assigned.
Section 6. The Secretary shall attend to the giving of notice of
meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings and
to recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all
assets and liabilities of the Company. He shall be custodian of and
responsible for all monies, funds and valuables of the Company and for the
keeping of proper records of the evidence of property or indebtedness and of
all the transactions of the Company. He shall have general supervision of the
expenditures of the Company and shall report to the Board of Directors at each
regular meeting of the condition of the Company, and perform such other duties
as may be assigned to him from time to time by the Board of Directors of the
Executive Committee.
6
<PAGE> 24
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.
Section 10. There may be one or more officers, subordinate in rank to
all Vice Presidents with such functional titles as shall be determined from
time to time by the Board of Directors, who shall ex officio hold the office
Assistant Secretary of this Company and who may perform such duties as may be
prescribed by the officer in charge of the department or division to whom they
are assigned.
Section 11. The powers and duties of all other officers of the
Company shall be those usually pertaining to their respective offices, subject
to the direction of the Board of Directors, the Executive Committee, Chairman
of the Board of Directors or the President and the officer in charge of the
department or division to which they are assigned.
ARTICLE V
STOCK AND STOCK CERTIFICATES
Section 1. Shares of stock shall be transferrable on the books of the
Company and a transfer book shall be kept in which all transfers of stock shall
be recorded.
Section 2. Certificate of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new
certificate or certificates shall be issued in lieu thereof.
7
<PAGE> 25
Duplicate certificates of stock shall be issued only upon giving such security
as may be satisfactory to the Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to fix
in advance a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the
date for the payment of any dividend, or the date for the allotment of rights,
or the date when any change or conversion or exchange of capital stock shall go
into effect, or a date in connection with obtaining such consent.
ARTICLE VI
SEAL
Section 1. The corporate seal of the Company shall be in the
following form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."
ARTICLE VII
FISCAL YEAR
Section 1. The fiscal year of the Company shall be the calendar year.
ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver
and the Secretary or any Assistant Secretary shall have full power and
authority to attest and affix the corporate seal of the Company to any and all
deeds, conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or
8
<PAGE> 26
confirmation by the Board of Directors or the Executive Committee, and any and
all such instruments shall have the same force and validity as though expressly
authorized by the Board of Directors and/or the Executive Committee.
ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES
Section 1. Directors and associate directors of the Company, other
than salaried officers of the Company, shall be paid such reasonable honoraria
or fees for attending meetings of the Board of Directors as the Board of
Directors may from time to time determine. Directors and associate directors
who serve as members of committees, other than salaried employees of the
Company, shall be paid such reasonable honoraria or fees for services as
members of committees as the Board of Directors shall from time to time
determine and directors and associate directors may be employed by the Company
for such special services as the Board of Directors may from time to time
determine and shall be paid for such special services so performed reasonable
compensation as may be determined by the Board of Directors.
ARTICLE X
INDEMNIFICATION
Section 1. (A) The Corporation shall indemnify and hold harmless, to
the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or
was a director, officer, employee or agent of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee,
fiduciary or agent of another corporation or of a partnership, joint venture,
trust, enterprise or non-profit entity, including service with respect to
employee benefit plans, against all liability and loss suffered and expenses
reasonably incurred by such person. The Corporation shall indemnify a person
in connection with a proceeding initiated by such person only if the proceeding
was authorized by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses
incurred in defending any proceeding in advance of its final disposition,
provided, however, that the payment of expenses incurred by a Director officer
in his capacity as a Director or officer in advance of the final disposition of
the proceeding shall be made only upon receipt of an undertaking by the
Director or officer to repay all amounts advanced if it should be ultimately
determined that the Director or officer is not entitled to be indemnified under
this Article or otherwise.
9
<PAGE> 27
(C) If a claim for indemnification or payment of
expenses, under this Article X is not paid in full within ninety days after a
written claim therefor has been received by the Corporation the claimant may
file suit to recover the unpaid amount of such claim and, if successful in
whole or in part, shall be entitled to be paid the expense of prosecuting such
claim. In any such action the Corporation shall have the burden of proving
that the claimant was not entitled to the requested indemnification of payment
of expenses under applicable law.
(D) The rights conferred on any person by this
Article X shall not be exclusive of any other rights which such person may have
or hereafter acquire under any statute, provision of the Charter or Act of
Incorporation, these By-Laws, agreement, vote of stockholders or disinterested
Directors or otherwise.
(E) Any repeal or modification of the foregoing
provisions of this Article X shall not adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring prior to
the time of such repeal or modification.
ARTICLE XI
AMENDMENTS TO THE BY-LAWS
Section 1. These By-Laws may be altered, amended or repealed, in
whole or in part, and any new By-Law or By-Laws adopted at any regular or
special meeting of the Board of Directors by a vote of the majority of all the
members of the Board of Directors then in office.
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<PAGE> 28
EXHIBIT C
SECTION 321(b) CONSENT
Pursuant to Section 321(b) of the Trust Indenture Act of 1939,
Wilmington Trust Company hereby consents that reports of examinations by
Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: August 14, 1998 By: /s/Emmett R. Harmon
-------------------
Name: Emmett R. Harmon
Title: Vice President
<PAGE> 29
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings banks with
state publication requirements. It has not been approved by any state banking
authorities. Refer to your appropriate state banking authorities for your
state publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
------------------------ ----------
Name of Bank City
in the State of DELAWARE, at the close of business on March 31, 1998.
ASSETS
<TABLE>
<CAPTION>
Thousands of dollars
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins . . . . . . . . . . . . . . . . . . . . . . . . . 180,015
Interest-bearing balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Held-to-maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 287,798
Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,355,745
Federal funds sold and securities purchased under agreements to resell . . . . . . . . . . . . . . . . . . . . 124,500
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . . 3,896,238
LESS: Allowance for loan and lease losses. . . . . . 61,635
LESS: Allocated transfer risk reserve. . . . . . . . 0
Loans and leases, net of unearned income, allowance, and reserve . . . . . . . . . . . . . . . . . . . 3,834,603
Assets held in trading accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Premises and fixed assets (including capitalized leases) . . . . . . . . . . . . . . . . . . . . . . . . . . . 134,016
Other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,444
Investments in unconsolidated subsidiaries and associated companies . . . . . . . . . . . . . . . . . . . . . . 10
Customers' liability to this bank on acceptances outstanding . . . . . . . . . . . . . . . . . . . . . . . . . 0
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,264
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215,048
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,189,443
</TABLE>
CONTINUED ON NEXT PAGE
<PAGE> 30
LIABILITIES
<TABLE>
<S> <C> <C>
Deposits:
In domestic offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,183,321
Noninterest-bearing . . . . . . . . 904,511
Interest-bearing. . . . . . . . . . 3,278,810
Federal funds purchased and Securities sold under agreements to repurchase . . . . . . . . . . . . . . . . . 558,553
Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,761
Trading liabilities (from Schedule RC-D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other borrowed money: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ///////
With original maturity of one year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 788,000
With original maturity of more than one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,000
Bank's liability on acceptances executed and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Subordinated notes and debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other liabilities (from Schedule RC-G) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99,777
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,730,412
</TABLE>
EQUITY CAPITAL
<TABLE>
<S> <C>
Perpetual preferred stock and related surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500
Surplus (exclude all surplus related to preferred stock) . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,118
Undivided profits and capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 388,458
Net unrealized holding gains (losses) on available-for-sale securities . . . . . . . . . . . . . . . . . . . . 7,955
Total equity capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 459,031
Total liabilities, limited-life preferred stock, and equity capital . . . . . . . . . . . . . . . . . . . . . . 6,189,443
</TABLE>
2
