As filed with the Securities and Exchange Commission on April 5, 2002
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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M/I SCHOTTENSTEIN HOMES, INC.
(Exact name of Registrant as specified in its charter)
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OHIO 31-1210837
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
3 EASTON OVAL, SUITE 500
COLUMBUS, OHIO 43219
(614) 418-8000
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
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PAUL S. COPPEL
M/I SCHOTTENSTEIN HOMES, INC.
3 EASTON OVAL, SUITE 500
COLUMBUS, OHIO 43219
(614) 418-8000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
RONALD A. ROBINS, JR.
VORYS, SATER, SEYMOUR AND PEASE LLP
52 EAST GAY STREET
COLUMBUS, OHIO 43215
(614) 464-6400
Approximate date of commencement of proposed sale to the public: From time
to time after this Registration Statement becomes effective as determined by
market conditions.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration number of the earlier effective registration
statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS AMOUNT TO BE PROPOSED MAXIMUM AGGREGATE AMOUNT OF
OF SECURITIES TO BE REGISTERED REGISTERED (1), (2), (3) OFFERING PRICE REGISTRATION FEE
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Debt securities, preferred shares, depositary
shares, common shares and warrants (4)......... $150,000,000 $150,000,000 $13,800
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(1) In United States dollars or the equivalent thereof in any other currency,
currency unit or units or composite currency or currencies.
(2) This amount represents the principal amount of any debt securities issued at
their principal amount, the issue price of any debt securities issued at an
original issue discount, the issue price of preferred shares and the amount
computed pursuant to Rule 457(c) for any common shares. Such common shares may
include up to 1,000,000 shares to be sold by certain selling shareholders.
(3) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(o) under the Securities Act.
(4) Also includes such indeterminate amount of securities as may be issued in
exchange for, or upon conversion of, the securities registered hereunder.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the prospectus is delivered in final form. This
prospectus is not an offer to sell these securities and is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
Subject to completion, dated April 5, 2002
PROSPECTUS
$150,000,000
M/I SCHOTTENSTEIN HOMES, INC.
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Debt Securities, Preferred Shares, Depositary Shares
Common Shares and Warrants
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We may from time to time issue debt securities, preferred shares,
depositary shares, common shares or warrants to purchase debt securities,
preferred shares or common shares having an aggregate offering price of up to
$150,000,000 (or the equivalent in foreign denominated currency or units based
on or related to currencies). The debt securities may be either senior debt
securities or subordinated debt securities. Of the common shares, up to
1,000,000 common shares may be sold by certain of our shareholders who are set
forth under "Selling Shareholders."
The securities may be sold from time to time in one or more separate
offerings, in amounts, at prices and on terms to be determined at the time of
sale. The prospectus will describe the general terms of the securities and the
general manner in which the securities may be offered. Each time securities are
offered, we will provide a prospectus supplement that will contain the specific
terms of the securities offered and will describe the specific manner in which
the securities will be offered.
Our common shares are quoted on The New York Stock Exchange under the
symbol "MHO." On April 3, 2002, the last sale price of our common shares as
reported on The New York Stock Exchange was $56.15.
The securities may be sold to or through underwriters and also to other
purchasers or through agents. The names of the underwriters will be set forth in
a prospectus supplement.
The prospectus supplement may also add, update or change information
contained in this prospectus. You should read this prospectus, the prospectus
supplement and the additional information described under "Where You Can Find
More Information" carefully before you invest.
This investment involves risk. See "Risk Factors" beginning on page 3.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this prospectus is _______, 2002.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-3 with the Securities
and Exchange Commission relating to the debt securities, preferred shares,
depositary shares, common shares and warrants. This prospectus does not contain
all of the information included in the registration statement. For further
information, you should refer to the registration statement.
We file annual, quarterly and current reports, proxy statements and
other information with the SEC. You may read and copy any reports, statements or
other information we file at the SEC's public reference room at 450 Fifth
Street, N.W., in Washington, D.C. 20549. You can request copies of these
documents, upon payment of a duplicating fee, by writing to the SEC. Please call
the SEC at 1-800-SEC-0330 for further information on the operation of the public
reference room. Our SEC filings are also available to the public at the SEC's
web site at http://www.sec.gov (this uniform resource locator (URL) is an
inactive textual reference only and is not intended to incorporate the SEC web
site into this prospectus).
The following documents that we have filed with the SEC are
incorporated into this prospectus by reference and considered a part of this
prospectus:
- Our Annual Report on Form 10-K for the fiscal year ended
December 31, 2001.
Later information that we file with the SEC will update and/or
supersede this information. We are also incorporating by reference all documents
that we file with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended, after the date of this prospectus
and prior to the termination of the offering of the debt securities.
We will provide any of the above documents (including any exhibits that
are specifically incorporated by reference in them) to each person, including
any beneficial owner, to whom a prospectus is delivered. You may request these
documents at no cost. Written or telephone requests should be directed to:
M/I Schottenstein Homes, Inc.
3 Easton Oval, Suite 500
Columbus, Ohio 43219
Attn: General Counsel
(614) 418-8000
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Unless the context requires otherwise, the terms "we," "us," and "our"
refer to M/I Schottenstein Homes, Inc., an Ohio corporation.
FORWARD-LOOKING STATEMENTS
This prospectus includes, and incorporates by reference,
"forward-looking statements" within the meaning of Section 27A of the Securities
Act and Section 21E of the Securities Exchange Act, including, in particular,
the statements about our plans, strategies and prospects. Although we believe
that our plans, intentions and expectations reflected in or suggested by such
forward-looking statements are reasonable, we can give no assurance that such
plans, intentions or expectations will be achieved. Important factors that could
cause actual results to differ materially from the forward-looking statements we
make in, or incorporate by reference into, this prospectus are set forth under
the caption "Risk Factors" and elsewhere in this prospectus or the documents
incorporated by reference herein. All forward-looking statements are expressly
qualified in their entirety by those cautionary statements.
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M/I SCHOTTENSTEIN HOMES, INC.
We are one of the nation's leading homebuilders. We sell and construct
single-family homes to the first-time, move-up, empty nester and luxury buyer
under the M/I Homes and Showcase Homes trade names. Our homes are sold in eleven
geographic markets including Columbus and Cincinnati, Ohio; Tampa, Orlando and
Palm Beach County, Florida; Charlotte and Raleigh, North Carolina; Indianapolis,
Indiana; the Virginia and Maryland suburbs of Washington, D.C., and Phoenix,
Arizona (which we are in the process of exiting).
We believe that we distinguish ourselves from competitors by offering
homes in select areas with a high level of design and construction quality
within a given price range, and by providing superior customer service. Offering
homes at a variety of price points allows us to attract a wide range of buyers,
including many existing M/I homeowners. We support our homebuilding operations
by providing mortgage financing services through our M/I Financial subsidiary
and title-related services through affiliated entities.
We are an Ohio corporation, first incorporated, through predecessor
entities, in 1973. We commenced homebuilding activities in 1976. Our principal
executive offices are located at 3 Easton Oval, Suite 500, Columbus, Ohio 43219;
and our telephone number is (614) 418-8000.
RISK FACTORS
OUR INDUSTRY IS PARTICULARLY AFFECTED BY ECONOMIC CONDITIONS AND
INTEREST RATES. The homebuilding industry is significantly affected by changes
in national and local economic and other conditions. Many of these conditions
are beyond our control. These conditions include employment levels, changing
demographics, availability of financing, consumer confidence and housing demand.
In addition, homebuilders are subject to risks related to competitive
overbuilding, availability and cost of building lots, availability of materials
and labor, adverse weather conditions which can cause delays in construction
schedules, cost overruns, changes in governmental regulations and increases in
real estate taxes and other local government fees. Interest rate increases also
adversely affect the industry as it is impossible to predict whether rates will
be at levels that are attractive to prospective home buyers. If mortgage
interest rates increase, our business could be adversely affected.
DEVELOPING OUR OWN LAND INVOLVES SIGNIFICANT RISKS. We develop the lots
for a majority of our subdivisions. Therefore, our short- and long-term
financial success will be dependent upon our ability to develop these
subdivisions successfully. Acquiring land and committing the financial and
managerial resources to develop a subdivision involves significant risks. Before
a subdivision generates any revenue, we must make material expenditures for
items such as acquiring land and constructing subdivision infrastructure
(streets and utilities).
WE OPERATE IN A LIMITED NUMBER OF MARKETS, AND WE ARE PARTICULARLY
CONCENTRATED IN COLUMBUS, OHIO. We have operations in Columbus and Cincinnati,
Ohio; Indianapolis, Indiana; Tampa, Orlando and Palm Beach County, Florida;
Charlotte and Raleigh, North Carolina; the Virginia and Maryland suburbs of
Washington, D.C.; and Phoenix, Arizona. Adverse general economic conditions in
these markets could have a material adverse impact on our operations. In 2001,
approximately 40% of our operating income was derived from operations in the
Columbus market.
WE COMPETE AGAINST MANY SIGNIFICANTLY LARGER HOMEBUILDERS. The
homebuilding industry is highly competitive. We compete in each of our local
market areas with numerous national, regional and local homebuilders, some of
which have greater financial, marketing, land acquisition and sales resources
than we do. Builders of new homes compete not only for home buyers, but also for
desirable properties, financing, raw materials and skilled subcontractors. We
also compete with the resale market for existing homes which provides certain
attractions to home buyers over the new home market.
GOVERNMENTAL REGULATIONS AND ENVIRONMENTAL CONSIDERATIONS AFFECT US IN
MANY WAYS. The homebuilding industry is subject to increasing local, state and
Federal statutes, ordinances, rules and regulations concerning zoning, resource
protection, building design and construction and similar matters. This includes
local regulations which impose restrictive zoning and density requirements in
order to limit the number of homes that can eventually be built within the
boundaries of a particular location. Such regulation also affects construction
activities, including construction materials which must be used in certain
aspects of building design, as well as sales activities and other dealings with
home buyers. We must also obtain licenses, permits and approvals from various
governmental agencies for our development activities,
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the granting of which are beyond our control. Furthermore, increasingly
stringent requirements may be imposed on homebuilders and developers in the
future. Although we cannot predict the impact on us to comply with any such
requirements, such requirements could result in time-consuming and expensive
compliance programs.
We are also subject to a variety of local, state and Federal statutes,
ordinances, rules and regulations concerning the protection of health and the
environment. The particular environmental laws, which apply to any given
project, vary greatly according to the project site and the present and former
uses of the property. These environmental laws may result in delays, cause us to
incur substantial compliance costs (including substantial expenditures for
pollution and water quality control) and prohibit or severely restrict
development in certain environmentally sensitive regions. Although there can be
no assurance that we will be successful in all cases, we have a general practice
of requiring an environmental audit and resolution of environmental issues prior
to purchasing land in an effort to avoid major environmental issues in our
developments.
In addition, we have been, and in the future may be, subject to
periodic delays or may be precluded from developing certain projects due to
building moratoriums. These moratoriums generally relate to insufficient water
supplies or sewer facilities, delays in utilities hookups or inadequate road
capacity within the specific market area or subdivision. These moratoriums can
occur prior to, or subsequent to, commencement of our operations without notice
or recourse.
MATERIAL OR LABOR SHORTAGES CAN ADVERSELY AFFECT OUR BUSINESS. The
residential construction industry has, from time to time, experienced material
and labor shortages in insulation, drywall, brick, cement and certain areas of
carpentry and framing, as well as fluctuations in lumber prices and supplies.
Continued shortages in these areas could delay construction on homes which could
adversely affect our business.
OUR PRINCIPAL SHAREHOLDERS HAVE SIGNIFICANT VOTING CONTROL. As of
December 31, 2001, members of the Irving E. Schottenstein family owned
approximately 31% of our outstanding common shares. Therefore, members of the
Irving E. Schottenstein family have significant voting power.
LITIGATION RELATED TO CONSTRUCTION DEFECTS COULD ADVERSELY AFFECT OUR
BUSINESS. Litigation related to construction defects has increased significantly
in recent years. The homebuilding industry has experienced both an increase in
the number of individual claims for construction defects as well as increased
costs of insuring against such claims.
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RATIO OF EARNINGS TO FIXED CHARGES
Fiscal Year Ended December 31,
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2001 2000 1999 1998 1997
---- ---- ---- ---- ----
Ratio of earnings to
fixed charges....... 4.96 4.12 4.79 3.91 2.98
The ratios of earnings to fixed charges were computed by dividing earnings by
fixed charges. Earnings include income before provision for income taxes and
cumulative effect of change in accounting principle, adjusted for income or loss
of equity investees and fixed charges, excluding capitalized interest. Fixed
charges consist of interest on all indebtedness, amortization of debt issuance
costs and discount or premium relating to any indebtedness, capitalized interest
and a portion of rental charges considered to be representative of the interest
component in the particular case. We did not have any preferred stock dividends
in any of the periods indicated, and, therefore, the ratio of earnings to fixed
charges and preferred stock dividends for each of the periods indicated was
equal to the ratio of earnings to fixed charges for that period.
USE OF PROCEEDS
Unless otherwise stated in the applicable prospectus supplement, we
intend to use the net proceeds from the sale of the securities for general
corporate purposes. This may include the acquisition and development of land,
refinancing of debt, purchase of our common shares, capital expenditures,
mergers, acquisitions and other strategic investments. Specific allocations of
the proceeds for such purposes have not been made at this time. We will not
receive any of the proceeds from the sale of common shares by the selling
shareholders.
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DESCRIPTION OF SECURITIES
The following is a general description of the terms and provisions of
the securities we may offer and sell by this prospectus. These summaries are not
meant to be a complete description of each security. This prospectus and any
accompanying prospectus supplement will contain the material terms and
conditions for each security. The prospectus supplement may add, update or
change the terms and conditions of the securities as described in this
prospectus.
DESCRIPTION OF DEBT SECURITIES
The following description discusses the general terms and provisions of
the debt securities that we may offer by this prospectus. The debt securities
may be issued as senior debt securities or subordinated debt securities. The
indebtedness represented by the senior debt securities will rank equally with
all of our other unsecured and unsubordinated debt. The indebtedness represented
by the subordinated debt securities will rank junior and be subordinate in right
of payment to the prior payment in full of our senior debt, to the extent and in
the manner set forth in the prospectus supplement for the securities. See
"--Subordination" below.
For more information about the securities offered by us, please refer
to:
- the form of indenture between us and an as yet to be
identified trustee, relating to the issuance of each series of
senior debt securities by us;
- the form of indenture between us and an as yet to be
identified trustee, relating to the issuance of each series of
subordinated debt securities by us.
The forms of the indentures are filed as exhibits to the registration
statement. The indentures listed above are sometimes collectively referred to as
the "indentures" and individually referred to as an "indenture." The trustee
under each indenture is referred to as the "indenture trustee." The indentures
are subject to and governed by the Trust Indenture Act of 1939, and may be
supplemented or amended from time to time following their execution. We have not
yet selected an indenture trustee for either of the indentures, and we have not
yet executed either indenture. Prior to issuing any debt securities, we will be
required to select an indenture trustee for the applicable indenture or
indentures, to qualify such indenture trustee or trustees under the Trust
Indenture Act of 1939 and to execute the applicable indenture or indentures.
The form of each indenture gives us broad authority to set the
particular terms of each series of debt securities, including the right to
modify certain of the terms contained in the indenture. The particular terms of
a series of debt securities and the extent, if any, to which the particular
terms of the issue modify the terms of the applicable form of indenture will be
described in the prospectus supplement relating to the debt securities.
Each form of indenture contains the full legal text of the matters
described in this section. Because this section is a summary, it does not
describe every aspect of the debt securities or the applicable indenture. This
summary is subject to and qualified in its entirety by reference to all the
provisions of the applicable indenture, including definitions of terms used in
the indenture. We also include references in parentheses to certain sections of
the indentures. Whenever we refer to particular sections or defined terms of the
indentures in this prospectus or in a prospectus supplement, these sections or
defined terms are incorporated by reference herein or in the prospectus
supplement. This summary also is subject to and qualified by reference to the
description of the particular terms of the debt securities in the applicable
prospectus supplement.
GENERAL
We will be able to issue an unlimited amount of debt securities under
each indenture in one or more series. We need not issue all debt securities of
one series at the same time and, unless otherwise provided, we may reopen a
series, without the consent of the holders of the debt securities of that
series, for issuances of additional debt securities of that series.
The debt securities will be unsecured obligations of the Company.
Prior to the issuance of each series of debt securities, the terms of
the particular securities will be specified in a supplemental indenture or a
resolution of our board of directors or in one or more officer's certificates
pursuant to a board resolution. We refer you to the applicable prospectus
supplement for a description of the following terms of the series of debt
securities:
(a) the title of the debt securities;
(b) any limit on the aggregate principal amount of the debt securities;
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(c) the date or dates on which principal will be payable or how to
determine the dates;
(d) the rate or rates or method of determination of interest; the date
from which interest will accrue; the dates on which interest will be payable,
which we refer to as the "interest payment dates;" and any record dates for the
interest payable on the interest payment dates;
(e) the place of payment on the debt securities;
(f) any obligation or option we have to redeem, purchase or repay debt
securities, or any option of the registered holder to require us to redeem or
repurchase debt securities, and the terms and conditions upon which the debt
securities will be redeemed, purchased or repaid;
(g) the denominations in which the debt securities will be issuable (if
other than denominations of $1,000 and any integral multiple thereof);
(h) the currency or currencies, including composite currencies or
currency units, in which payment of the principal of (or premium, if any) or
interest, if any, on any of the debt securities will be payable if other than
the currency of the United States of America;
(i) any index, formula or other method used to determine the amount of
principal, premium, if any, or interest;
(j) if other than the entire principal amount, the portion of the
principal amount of the debt securities that will be payable if the maturity of
the debt is accelerated;
(k) the terms and conditions upon which the currency in which the debt
securities are payable may change;
(l) any event of default applicable to the debt security in addition to
those included in the applicable indenture;
(m) any covenant included for the benefit of the debt security in
addition to (and not inconsistent with) those included in the applicable
indenture;
(n) whether the debt securities are to be issued in whole or in part in
the form of one or more global debt securities and, if so, the identity of the
depositary for the global debt securities;
(o) the terms of any right to convert the debt securities into other
securities of the company or other property; and
(p) any other terms of the debt securities. (See Section 301.)
If the debt securities are denominated in whole or in part in any
currency other than United States dollars, if the principal of (and premium, if
any) or interest, if any, on the debt securities are to be payable in a currency
or currencies other than that in which such debt securities are to be payable,
or if any index is used to determine the amount of payments of principal of,
premium, if any, or interest on any series of the debt securities, special
Federal income tax, accounting and other considerations applicable thereto will
be described in the prospectus supplement.
PAYMENT OF DEBT SECURITIES--INTEREST
Unless indicated differently in a prospectus supplement, we will pay
interest on the debt security on each interest payment date to the person in
whose name the debt security is registered as of the close of business on the
regular record date relating to the interest payment date.
However, if we default in paying interest on a debt security, we will
pay defaulted interest in either of the two following ways:
(a) We will first propose to the indenture trustee a payment date for
the defaulted interest. Next, the indenture trustee will choose a special record
date for determining which registered holders are entitled to the payment. The
special record date will be between 10 and 15 days before the payment date we
propose. Finally, we will pay the defaulted interest on the payment date to the
registered holder of the debt security as of the close of business on the
special record date.
(b) Alternatively, we can propose to the indenture trustee any other
lawful manner of payment that is consistent with the requirements of any
securities exchange on which the debt securities are listed for trading. If the
indenture trustee thinks the proposal is practicable, payment will be made as
proposed. (See Section 307.)
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PAYMENT OF DEBT SECURITIES--PRINCIPAL
Unless we indicate differently in a prospectus supplement, we will pay
principal of and any premium on the debt securities at stated maturity, upon
redemption or otherwise, upon presentation of the debt securities at the office
of the indenture trustee, as our paying agent. Any other paying agent initially
designated for the debt securities of a particular series will be named in the
applicable prospectus supplement.
FORM; TRANSFERS; EXCHANGES
The debt securities will be issued:
(a) only in fully registered form;
(b) without interest coupons; and
(c) unless otherwise specified in a prospectus supplement, in
denominations that are integral multiples of $1,000.
You may have your debt securities divided into debt securities of
smaller denominations (of at least $1,000) or combined into debt securities of
larger denominations, as long as the total principal amount is not changed. This
is called an "exchange."
You may exchange or transfer debt securities at the office of the
indenture trustee. The indenture trustee acts as our agent for registering debt
securities in the names of holders and transferring debt securities. We may
appoint another agent or act as our own agent for this purpose. The entity
performing the role of maintaining the list of registered holders is called the
"security registrar." It will also perform transfers.
In our discretion, we may change the place for registration of transfer
of the debt securities and may remove and/or appoint one or more additional
security registrars. (See Sections 305 and 1002.)
Except as otherwise provided in a prospectus supplement, there will be
no service charge for any transfer or exchange of the debt securities, but you
may be required to pay a sum sufficient to cover any tax or other governmental
charge payable in connection with the transfer or exchange. We may block the
transfer or exchange of (a) debt securities during a period of 15 days prior to
giving any notice of redemption or (b) any debt security selected for redemption
in whole or in part, except the unredeemed portion of any debt security being
redeemed in part. (See Section 305.)
REDEMPTION
We will set forth any terms for the redemption of debt securities in a
prospectus supplement. Unless we indicate differently in a prospectus
supplement, and except with respect to debt securities redeemable at the option
of the registered holder, debt securities will be redeemable upon notice by mail
between 30 and 60 days prior to the redemption date. If less than all of the
debt securities of any series are to be redeemed, the indenture trustee will
select the debt securities to be redeemed. In the absence of any provision for
selection, the indenture trustee will choose a method of random selection it
deems fair and appropriate. (See Sections 1102, 1103 and 1104.)
Debt securities will cease to bear interest on the redemption date. We
will pay the redemption price and any accrued interest once you surrender the
debt security for redemption. (See Section 1106.) If only part of a debt
security is redeemed, the indenture trustee will deliver to you a new debt
security of the same series for the remaining portion without charge. (See
Section 1107.)
We may make any redemption conditional upon the receipt by the paying
agent, on or prior to the date fixed for redemption, of money sufficient to pay
the redemption price. If the paying agent has not received the money by the date
fixed for redemption, we will not be required to redeem the debt securities.
(See Section 1105.)
EVENTS OF DEFAULT
Unless otherwise specified in a prospectus supplement, an "event of
default" occurs with respect to debt securities of any series if:
(a) we do not pay any interest on any debt securities of the applicable
series within 30 days of the due date (following any deferral allowed under the
terms of the debt securities and elected by us);
(b) we do not pay principal or premium on any debt securities of the
applicable series on its due date;
(c) we do not deposit any sinking fund payment when due by the terms of
the applicable security;
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(d) we remain in breach of a covenant or warranty (excluding covenants
and warranties not applicable to the affected series) of the applicable
indenture for 90 days after we receive a written notice of default stating we
are in breach and requiring remedy of the breach; the notice must be sent by
either the indenture trustee or registered holders of at least 10% of the
principal amount of debt securities of the affected series;
(e) we do not pay other indebtedness in an aggregate principal amount
of $25 million or more when due and remain in default for 10 days after we
receive written notice as provided in the applicable indenture;
(f) we file for bankruptcy or other specified events in bankruptcy,
insolvency, receivership or reorganization occur;
(g) we fail to convert any securities which are convertible into other
securities of the Company or other property when required by the terms of such
convertible securities; or
(h) any other event of default specified in the prospectus supplement
occurs. (See Section 501.)
No event of default with respect to a series of debt securities
necessarily constitutes an event of default with respect to the debt securities
of any other series issued under the indentures.
REMEDIES
Acceleration
If an event of default occurs and is continuing with respect to any
series of debt securities, then either the indenture trustee or the registered
holders of not less than 25% in principal amount of the outstanding debt
securities of that series may declare the principal amount of all of the debt
securities of that series to be due and payable immediately. (See Section 502.)
Rescission of Acceleration
After the declaration of acceleration has been made and before the
indenture trustee has obtained a judgment or decree for payment of the money due
on any series of debt securities, the registered holders of not less than a
majority in aggregate principal amount of the outstanding debt securities of
that series may rescind and annul the declaration and its consequences, if
(a) we pay or deposit with the indenture trustee a sum sufficient to
pay:
- all overdue interest;
- the principal and any premium which have become due
other than by the declaration of acceleration and
overdue interest on these amounts;
- interest on overdue interest to the extent lawful;
- all amounts due to the indenture trustee under the
indenture; and
(b) all events of default with respect to the affected series, other
than the nonpayment of the principal which has become due solely by the
declaration of acceleration, have been cured or waived as provided in the
applicable indenture. (See Section 502.)
For more information as to waiver of defaults, see "Waiver of Default
and of Compliance" below.
Control by Registered Holders; Limitations
Subject to the applicable indenture, if an event of default with
respect to the debt securities of any series occurs and is continuing, the
registered holders of a majority in principal amount of the outstanding debt
securities of that series will have the right to:
(a) direct the time, method and place of conducting any proceeding for
any remedy available to the indenture trustee, or
(b) exercise any trust or power conferred on the indenture trustee with
respect to the debt securities of the series.
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If an event of default is continuing with respect to all the series of
debt securities, the registered holders of a majority in aggregate principal
amount of the outstanding debt securities of all the series, considered as one
class, will have the right to make such direction, and not the registered
holders of the debt securities of any one of the series.
These rights of registered holders to make direction are subject to the
following limitations:
(a) the registered holders' directions will not conflict with any law
or the applicable indenture; and
(b) the registered holders' directions may not involve the indenture
trustee in personal liability where the indenture trustee believes indemnity is
not adequate.
The indenture trustee may also take any other action it deems proper
which is consistent with the registered holders' direction. (See Sections 512
and 603.)
In addition, each indenture provides that no registered holder of any
debt security of any series will have any right to institute any proceeding,
judicial or otherwise, with respect to the indenture for the appointment of a
receiver or for any other remedy under the indenture unless:
(a) that registered holder has previously given the indenture trustee
written notice of a continuing event of default;
(b) the registered holders of not less than 25% in aggregate principal
amount of the outstanding debt securities of that series have made written
request to the indenture trustee to institute proceedings in respect of that
event of default and have offered the indenture trustee indemnity satisfactory
to it against costs and liabilities incurred in complying with the request; and
(c) for 60 days after receipt of the notice, the indenture trustee has
failed to institute a proceeding and no direction inconsistent with the request
has been given to the indenture trustee during the 60-day period by the
registered holders of a majority in aggregate principal amount of outstanding
debt securities of that series.
Furthermore, no registered holder will be entitled to institute any
action if and to the extent that the action would disturb or prejudice the
rights of other registered holders. (See Sections 507 and 603.)
However, each registered holder has an absolute and unconditional right
to receive payment when due and to bring a suit to enforce that right. (See
Section 508.)
NOTICE OF DEFAULT
The indenture trustee is required, under each indenture, to give the
registered holders of the debt securities notice of any default under the
indenture to the extent required by the Trust Indenture Act, unless the default
has been cured or waived; except that in the case of an event of default due to
our failure to deposit any sinking fund payment when due, no notice shall be
given to the registered holders until at least 60 days after the occurrence
thereof. (See Section 602.) The Trust Indenture Act currently permits the
indenture trustee to withhold notices of default (except for certain payment
defaults) if the indenture trustee in good faith determines the withholding of
the notice to be in the interests of the registered holders.
We will furnish the indenture trustee with an annual statement as to
our compliance with the conditions and covenants in the indentures. (See Section
1004.)
WAIVER OF DEFAULT AND OF COMPLIANCE
The registered holders of a majority in aggregate principal amount of
the outstanding debt securities of all affected series (voting as one class) may
waive, on behalf of the registered holders of all debt securities of all such
series, any past default under the applicable indenture, except a default in the
payment of principal, premium or interest, or with respect to compliance with
certain provisions of the indenture that cannot be amended without the consent
of the registered holder of each outstanding debt security. (See Section 513.)
Compliance with some of the covenants in the indentures or otherwise
provided with respect to debt securities may be waived by the registered holders
of a majority in aggregate principal amount of the affected debt securities,
considered as one class. (See Section 1010.)
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COVENANTS
The covenants described below apply to any and all series of senior
debt securities unless we specify otherwise in the applicable prospectus. We
will describe any additional covenants for a particular series of senior debt
securities in the applicable prospectus supplement.
For your reference, we have provided a list of definitions of the
capitalized terms used in the covenants at the end of the description.
CONSOLIDATION, MERGER AND CONVEYANCE OF ASSETS AS AN ENTIRETY
Subject to the provisions described in the next paragraph, we will
preserve our corporate existence. (See Section 1005.)
We have agreed not to consolidate with or merge into any other entity
and not to convey, transfer or lease our properties and assets substantially as
an entirety to any entity, unless:
(a) the entity formed by the consolidation or into which we are merged,
or the entity which acquires us or which leases our property and assets
substantially as an entirety, is an entity organized and existing under the laws
of the United States of America or any State of the United States or the
District of Columbia, and expressly assumes, by supplemental indenture, the due
and punctual payment of the principal, premium and interest on all the
outstanding debt securities and the performance of all of our covenants under
the indentures,
(b) immediately after giving effect to the transactions, no event of
default, and no event which after notice or lapse of time or both would become
an event of default, will have occurred and be continuing;
(c) if, as a result of the transaction, our property or assets would
become subject to a lien that would not be permitted under the applicable
indenture, the entity formed by the consolidation or into which we are merged
causes all of the debt securities issued under the indenture to be secured
equally and ratably;
(d) all other conditions specified in the indenture are met. (See
Section 801.)
MODIFICATION OF INDENTURES
Without Registered Holder Consent.
Without the consent of any registered holders of debt securities, we
and the applicable indenture trustee may enter into one or more supplemental
indentures for any of the following purposes:
(a) to evidence the succession of another entity to us; or
(b) to add one or more covenants or other provisions for the benefit of
the registered holders of all or any series of debt securities, or to surrender
any right or power conferred upon us; or
(c) to add any additional events of default for all or any series of
debt securities; or
(d) to provide for the issuance of bearer securities; or
(e) to change or eliminate any provision of the indenture or to add any
new provision to the indenture that does not adversely affect the interests of
the registered holders; or
(f) to provide security for the debt securities of any series; or
(g) to establish the form or terms of debt securities of any series as
permitted by the indenture; or
(h) to evidence and provide for the acceptance of appointment of a
separate or successor indenture trustee; or
(i) to provide holders with rights to convert their debt securities
into any security or property other than common stock of the Company; or
(j) to cure any ambiguity, defect or inconsistency or to make any other
changes that do not adversely affect the interests of the registered holders in
any material respect. (See Section 901.)
With Registered Holder Consent.
We and the applicable indenture trustee may, with some exceptions,
amend or modify any indenture with the consent of the registered holders of at
least a majority in aggregate principal amount of the debt securities of all
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series affected by the amendment or modification (voting as one class).
However, no amendment or modification may, without the consent of the
registered holder of each outstanding debt security affected thereby:
(a) change the stated maturity of the principal of or interest on any
debt security (other than pursuant to the terms of the debt security), or reduce
the principal amount, interest or premium payable or change the currency in
which any debt security is payable, or impair the right to bring suit to enforce
any payment;
(b) reduce the percentages of registered holders whose consent is
required for any supplemental indenture or waiver or reduce the requirements for
quorum and voting under the indenture; or
(c) modify certain of the provisions in the indenture relating to
supplemental indentures and waivers of certain covenants and past defaults or
(d) make any change that adversely affects the right to convert any
convertible debt security or decrease the conversion rate or increase the
conversion price of any convertible debt security.
A supplemental indenture which changes or eliminates any provision of
an indenture expressly included solely for the benefit of registered holders of
debt securities of one or more particular series will be deemed not to affect
the rights under the indenture of the registered holders of debt securities of
any other series. (See Section 902.)
MISCELLANEOUS
The indentures will provide that some debt securities, including those
for which payment or redemption money has been deposited or set aside in trust,
will not be deemed to be "outstanding" in determining whether the registered
holders of the requisite principal amount of the outstanding debt securities
have given or taken any demand, direction, consent or other action under the
indenture as of any date, or are present at a meeting of registered holders for
quorum purposes. (See Section 101.)
We will be entitled to set any day as a record date for the purpose of
determining the registered holders of outstanding debt securities of any series
entitled to give or take any demand, direction, consent or other action under
the indentures, in the manner and subject to the limitations provided in the
indentures. In some circumstances, the indenture trustee also will be entitled
to set a record date for action by registered holders. If a record date is set
for any action to be taken by registered holders of particular debt securities,
the action may be taken only by persons who are registered holders of the
respective debt securities on the record date. (See Section 104.)
DEFEASANCE AND COVENANT DEFEASANCE
The indentures will provide, unless the terms of the particular series
of debt securities provide otherwise, that we may, upon satisfying several
conditions, cause ourselves to be:
(a) discharged from our obligations, with some exceptions, with respect
to any series of debt securities, which we refer to as "defeasance"; and
(b) released from our obligations under specified covenants with
respect to any series of debt securities, which we refer to as "covenant
defeasance."
One condition we must satisfy is the irrevocable deposit with the
indenture trustee, in trust, of money and/or government obligations which,
through the scheduled payment of principal and interest on those obligations,
would provide sufficient moneys to pay the principal of and any premium and
interest on those debt securities on the maturity dates of the payments or upon
redemption. In addition, we must deliver to the indenture trustee an opinion of
counsel confirming that there will be no Federal income tax consequences to the
holders of the debt securities as a result of the defeasance and an officer's
certificate confirming that the securities will not be delisted.
The indentures will permit defeasance with respect to any series of
debt securities even if a prior covenant defeasance has occurred with respect to
the debt securities of that series. Following a defeasance, payment of the debt
securities defeased may not be accelerated because of an event of default.
Following a covenant defeasance, payment of the debt securities may not be
accelerated by reference to the specified covenants affected by the covenant
defeasance. However, if an acceleration were to occur, the realizable value at
the acceleration date of the money and government obligations in the defeasance
trust could be less than the principal and interest then due on the respective
debt securities, since the required deposit in the defeasance trust would be
based upon scheduled cash flows rather than market value, which would vary
depending upon interest rates and other factors.
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RESIGNATION AND REMOVAL OF AN INDENTURE TRUSTEE; DEEMED RESIGNATION
An indenture trustee, once selected and duly qualified, may resign at
any time by giving written notice to us.
An indenture trustee may also be removed by act of the registered
holders of a majority in principal amount of the then outstanding debt
securities of any series.
No resignation or removal of an indenture trustee and no appointment of
a successor indenture trustee will become effective until the acceptance of
appointment by a successor indenture trustee in accordance with the requirements
of the applicable indenture.
Under some circumstances, we may appoint a successor indenture trustee
and, if the successor accepts, the indenture trustee will be deemed to have
resigned. (See Section 610.)
SUBORDINATION
Unless we indicate differently in a prospectus supplement, any
subordinated debt securities will be subordinated in the following manner. If
our assets are distributed upon our dissolution, winding up, liquidation or
reorganization, the payment of the principal of, premium, if any, and interest
on any subordinated debt securities will be subordinated, to the extent provided
in the subordinated debt indenture and the applicable supplemental indenture, to
the prior payment in full of all senior indebtedness, including senior debt
securities. However, our obligation to pay principal of, and premium, if any, or
interest on the subordinated debt securities will not otherwise be affected. No
payment on account of principal, premium, if any, sinking fund or interest may
be made on the subordinated debt securities at any time when there is a default
in the payment of principal, premium, if any, sinking fund or interest on senior
indebtedness. If, while we are in default on senior indebtedness, any payment is
received by the indenture trustee under the subordinated debt security indenture
or the holders of any of the subordinated debt securities before we have paid
all senior indebtedness in full, the payment or distribution must be paid over
to the holders of the unpaid senior indebtedness or applied to the repayment of
the unpaid senior indebtedness. Subject to paying the senior indebtedness in
full, the holders of the subordinated debt securities will be subrogated to the
rights of the holders of the senior indebtedness to the extent that payments are
made to the holders of senior indebtedness out of the distributive share of the
subordinated debt securities.
Due to the subordination, if our assets are distributed upon
insolvency, some or all of our general creditors may recover more, ratably, than
holders of subordinated debt securities. The subordinated debt indenture or
applicable supplemental indenture may state that its subordination provisions
will not apply to money and securities held in trust under the satisfaction and
discharge, and the legal defeasance provisions of the subordinated debt
indenture.
If this prospectus is being delivered in connection with the offering
of a series of subordinated debt securities, the accompanying prospectus
supplement or the information incorporated by reference in it will set forth the
approximate amount of senior indebtedness outstanding as of a recent date.
CONVERSION RIGHTS
The terms and conditions of any debt securities being offered that are
convertible into our common shares will be set forth in a prospectus supplement.
These terms will include the conversion price, the conversion period, provisions
as to whether conversion will be mandatory, or at the option of the holder or
us, the events requiring an adjustment of the conversion price and provisions
affecting conversion in the event that the debt securities are redeemed.
DESCRIPTION OF CAPITAL STOCK
OUR AUTHORIZED CAPITAL STOCK
Our authorized capital stock consists of 38,000,000 common shares, par
value $.01 per share, and 2,000,000 preferred shares, par value $.01 per share.
As of February 22, 2002, there were 1,283,014 common shares held by the Company
in treasury, 7,530,047 common shares issued and outstanding and no preferred
shares issued and outstanding.
The following summary description does not purport to be complete and
is qualified in its entirety by reference to the Amended and Restated Articles
of Incorporation (the "Articles") and Regulations of the Company, which are
incorporated herein by reference.
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COMMON SHARES
Holders of our common shares are entitled to:
- one vote for each share held;
- receive dividends when and if declared by the directors from
funds legally available therefor, subject to the rights of
holders of preferred shares, if any, and to restrictions
contained in our long-term indebtedness; and
- share ratably in our net assets, legally available to our
shareholders in the event of our liquidation, dissolution or
winding up, after provision for distribution to the holders of
any preferred shares.
Holders of our common shares have no preemptive, subscription,
redemption, conversion or cumulative voting rights. Our outstanding common
shares are, and the shares which may be issued on conversion will be, when
issued, fully paid and nonassessable.
PREFERRED SHARES
Our articles of incorporation authorize our board of directors to
issue, without any further vote or action by our shareholders, subject to
certain limitations prescribed by law and the rules and regulations of the New
York Stock Exchange, up to an aggregate of 2,000,000 preferred shares in one or
more classes or series. With respect to any classes or series, the board of
directors may determine the designation and the number of shares, preferences,
limitations and special rights, including dividend rights, voting rights,
conversion rights, redemption rights and liquidation preferences. Absent a
determination by the board of directors to establish different voting rights,
holders of preferred shares are entitled to one vote per share on matters to be
voted upon by the holders of common shares and preferred shares voting together
as a single class, except that Ohio law entitles the holders of preferred shares
to exercise a class vote on certain matters.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common shares is Boston
Equiserve.
ANTI-TAKEOVER EFFECTS OF ARTICLES OF INCORPORATION, CODE OF REGULATIONS AND THE
OHIO GENERAL CORPORATION LAW
There are provisions in our articles of incorporation and code of
regulations, and the Ohio Revised Code that could discourage potential takeover
attempts and make attempts by shareholders to change management more difficult.
These provisions could adversely affect the market price of our shares:
Classified Board of Directors
Our board of directors is divided into three classes, with regular
three-year staggered terms. This classification system increases the difficulty
of replacing a majority of the directors and may tend to discourage a
third-party from making a tender offer or otherwise attempting to gain control
of us. It also may maintain the incumbency of our board of directors. In
addition, our regulations provide that the number of directors in each class and
the total number of directors may only be changed by the affirmative vote of a
majority of the directors or the holders of record of at least 75% of our voting
power. Under a recent revision to the Ohio General Corporation Law, shareholders
may not remove any directors on a classified board of directors, except for
cause.
Limited Shareholder Action by Written Consent
Section 1701.54 of the Ohio General Corporation Law requires that an
action by written consent of the shareholders in lieu of a meeting be unanimous,
except that, pursuant to Section 1701.11, the code of regulations may be amended
by an action by written consent of holders of shares entitling them to exercise
two-thirds of the voting power of the corporation or, if the articles of
incorporation or code of regulations otherwise provide, such greater or lesser
amount, but not less than a majority. This provision may have the effect of
delaying, deferring or preventing a tender offer or takeover attempt that a
shareholder might consider in its best interest.
14
Supermajority Voting Provisions
The affirmative vote of two-thirds of the voting power of the company
is required in order to amend or repeal our existing regulations, or adopt new
regulations, with respect to any of the following:
- the requirements for calling a special meeting of shareholders;
- the provisions regarding our staggered board;
- the provisions for filling vacancies on our board or adding
directors;
- the procedures for nominating directors;
- the provisions regarding conflicts of interest;
- the requirement that directors can only be removed for cause;
- the indemnification provisions;
- our non-statutory Control Share Acquisition Act provisions; and
- amendments to these supermajority provisions.
In addition, the affirmative vote of 75% of the voting power of the
company is required to amend or repeal the provision regarding changes in the
number of directors in our regulations.
On all other matters, the required vote is a majority of the voting
power of the company.
Control Share Acquisition Act
Section 1701.831 of the Ohio Revised Code provides that certain notice
and informational filings, and special shareholder meeting and voting
procedures, must occur prior to any person's acquisition of an issuer's shares
that would entitle the acquirer to exercise or direct the voting power of the
issuer in the election of directors within any of the following ranges:
- one-fifth or more but less than one-third of such voting power;
- one-third or more but less than a majority of such voting power;
- a majority or more of such voting power.
The Control Share Acquisition Act does not apply to a corporation if
its articles of incorporation or code of regulations so provide. We have opted
out of the application of the Control Share Acquisition Act. However, we have
adopted a substantially similar provision in our regulations with one
significant exception: under our regulations no shareholder vote is required if
the board of directors has approved the acquisition of voting power. In
addition, the our regulations provide our Board with more flexibility in setting
a date for the special meeting of shareholders to consider the proposed control
share acquisition than the Control Share Acquisition Act.
DESCRIPTION OF DEPOSITARY SHARES
GENERAL
We may issue depositary shares, each of which will represent a
fractional interest of a share of a particular series of preferred shares, as
specified in the applicable prospectus supplement. We will deposit with a
depositary (the "preferred stock depositary") preferred shares of each series
represented by depositary shares. We will enter into a deposit agreement (each a
"deposit agreement") with the preferred stock depositary and holders from time
to time of the depositary receipts issued by the preferred stock depositary
which evidence the depositary shares ("depositary receipts"). Subject to the
terms of the deposit agreement, each owner of a depositary receipt will be
entitled, in proportion to the holder's fractional interest in the preferred
shares, to all the rights and preferences of the series of the preferred shares
represented by the depositary shares (including dividend, voting, conversion,
redemption and liquidation rights).
Immediately after we issue and deliver the preferred shares to a
preferred stock depositary, we will cause the preferred stock depositary to
issue the depositary receipts on our behalf. You may obtain copies of the
applicable form of deposit agreement and depositary receipt from us upon
request. The statements made in this section relating to the deposit agreement
and depositary receipts are summaries of certain anticipated provisions. These
summaries are not complete and we may modify them in a prospectus supplement.
For more detail, we refer you to the deposit agreement itself, which we will
file as an exhibit to the registration statement.
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DIVIDENDS AND OTHER DISTRIBUTIONS
The preferred stock depositary will distribute all cash dividends or
other cash distributions received in respect of the preferred shares to the
record holders of depositary receipts in proportion to the number of the
depositary receipts owned by the holders, subject to the obligations of holders
to file proofs, certificates and other information and to pay certain charges
and expenses to the preferred stock depositary.
In the event of a distribution other than in cash, the preferred stock
depositary will distribute property received by it to the record holders of
depositary receipts in proportion to the number of the depositary receipts owned
by the holders, unless the preferred stock depositary determines that it is not
feasible to make the distribution, in which case the preferred stock depositary
may, with our approval, sell the property and distribute the net proceeds from
the sale to the holders.
No distribution will be made in respect of any depositary share that
represents any preferred share converted into other securities.
WITHDRAWAL OF STOCK
Upon surrender of the depositary receipts at the corporate trust office
of the preferred stock depositary (unless we have previously called for
redemption or converted into other securities the related depositary shares),
the holders will be entitled to delivery at that office of the number of whole
or fractional preferred shares and any money or other property represented by
the depositary shares. Holders of depositary receipts will be entitled to
receive the related preferred shares as specified in the applicable prospectus
supplement, but holders of preferred shares will not thereafter be entitled to
receive depositary shares.
REDEMPTION OF DEPOSITARY SHARES
Whenever we redeem preferred shares held by the preferred stock
depositary, the preferred stock depositary will concurrently redeem the number
of depositary shares representing preferred shares so redeemed, provided we have
paid the applicable redemption price for the preferred shares to be redeemed
plus an amount equal to any accrued and unpaid dividends to the date fixed for
redemption. The redemption price per depositary share will be equal to the
corresponding proportion of the redemption price and any other amounts per share
payable with respect to the preferred shares. If fewer than all the depositary
shares are to be redeemed, the depositary shares to be redeemed will be selected
pro rata (as nearly as may be practicable without creating fractional depositary
shares) or by any other equitable method determined by us.
From and after the date fixed for redemption:
- all dividends in respect of preferred shares called for
redemption will cease to accrue;
- the depositary shares called for redemption will no longer be
deemed to be outstanding; and
- all rights of the holders of the depositary receipts evidencing
the depositary shares called for redemption will cease, except
the right to receive any moneys payable upon the redemption and
any money or other property to which the holders of the
depositary receipts were entitled upon redemption and surrender
to the preferred stock depositary.
VOTING OF THE PREFERRED SHARES
Upon receipt of notice of any meeting at which the holders of the
preferred shares are entitled to vote, the preferred stock depositary will mail
the information contained in the notice of meeting to the record holders of the
depositary receipts. Each record holder of these depositary receipts on the
record date (which will be the same date as the record date for the preferred
shares) will be entitled to instruct the preferred stock depositary as to the
exercise of the voting rights pertaining to the amount of preferred shares
represented by the holder's depositary shares. The preferred stock depositary
will vote the amount of preferred shares represented by the depositary shares in
accordance with the instructions, and we will agree to take all reasonable
action necessary to enable the preferred stock depositary to do so. The
preferred stock depositary will abstain from voting the amount of preferred
shares represented by the depositary shares for which it does not receive
specific instructions from the holders of depositary receipts evidencing the
depositary shares. The preferred stock depositary will not be responsible for
any failure to carry out any instruction to vote, or for the manner or effect of
any vote made, as long as the action or non-action is in good faith and does not
result from the preferred stock depositary's negligence or willful misconduct.
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LIQUIDATION PREFERENCE
If we voluntarily or involuntarily liquidate, dissolve or wind up, the
holders of each depositary receipt will be entitled to the fraction of the
liquidation preference accorded each preferred share represented by the
depositary shares, as set forth in the applicable prospectus supplement.
CONVERSION OF PREFERRED SHARES
The depositary shares, as such, are not convertible into common shares
or any of our other securities or property. Nevertheless, if we so specify in
the applicable prospectus supplement relating to an offering of depositary
shares, holders may surrender depositary receipts to the preferred stock
depositary with written instructions to the preferred stock depositary to
instruct us to convert the preferred shares represented by the depositary shares
into whole common shares, other preferred shares or other securities. We have
agreed that upon receipt of the instructions and any amounts payable, we will
convert the depositary shares using the same procedures as those provided for
converting preferred shares. If the depositary shares evidenced by a depositary
receipt are to be converted in part only, the preferred stock depositary will
issue a new depositary receipt(s) for any depositary shares not converted. No
fractional common shares will be issued upon conversion, and if the conversion
would result in a fractional share being issued, we will pay an amount in cash
equal to the value of the fractional interest based upon the closing price of
the common shares on the last business day prior to the conversion.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
We may amend the form of depositary receipt and any provision of the
deposit agreement at any time by agreement between us and the preferred stock
depositary. However, any amendment that materially and adversely alters the
rights of the holders of depositary receipts or that would be materially and
adversely inconsistent with the rights granted to the holders of the related
preferred shares will not be effective unless the holders of at least 66 2/3% of
the depositary shares evidenced by the depositary receipts then outstanding
approve the amendment. No amendment will impair the right, subject to the
exceptions set forth in the depositary agreement, of any holder of depositary
receipts to surrender any depositary receipt with instructions to deliver to the
holder the related preferred shares and all money and other property, if any,
represented by the depositary receipt, except in order to comply with law. Every
holder of an outstanding depositary receipt at the time any such amendment
becomes effective will be deemed, by continuing to hold the receipt, to consent
and agree to the amendment and to be bound by the deposit agreement as amended.
We may terminate the deposit agreement upon not less than 30 days'
prior written notice to the preferred stock depositary if a majority of each
series of preferred shares affected by the termination consents to the
termination. Upon termination, the preferred stock depositary will deliver or
make available to each holder of depositary receipts, upon surrender of the
depositary receipts held by the holder, the number of whole or fractional
preferred shares represented by the depositary shares evidenced by the
depositary receipts together with any other property held by the preferred stock
depositary with respect to the depositary receipt.
In addition, the deposit agreement will automatically terminate if:
- all outstanding depositary shares have been redeemed;
- there has been a final distribution of the related preferred
shares in connection with our liquidation, dissolution or winding
up and the distribution has been distributed to the holders of
depositary receipts evidencing the depositary shares representing
the preferred shares; or
- each related preferred share has been converted into our
securities which are not represented by depositary shares.
CHARGES OF PREFERRED STOCK DEPOSITARY
We will pay all transfer and other taxes and governmental charges
arising solely from the existence of the deposit agreement. In addition, we will
pay the fees and expenses of the preferred stock depositary in connection with
the performance of its duties under the deposit agreement. However, holders of
depositary receipts will pay the fees and expenses of the preferred stock
depositary for any duties requested by the holders to be performed which are
outside of those expressly provided for in the deposit agreement.
RESIGNATION AND REMOVAL OF DEPOSITARY
The preferred stock depositary may resign at any time by delivering to
us notice of its election to do so, and we may at any time remove the preferred
stock depositary. Any such resignation or removal will take effect upon our
appointment of a successor preferred stock depositary. We must appoint a
17
successor preferred stock depositary within 60 days after delivery of the
notice of resignation or removal, and any preferred stock depositary must be a
bank or trust company having its principal office in the United States and
having a combined capital and surplus of at least $50,000,000.
MISCELLANEOUS
The preferred stock depositary will forward to holders of depositary
receipts any reports and communications the preferred stock depositary receives
from us relating to the preferred shares.
We will not be liable, nor will the preferred stock depositary be
liable, if we are prevented from or delayed in, by law or any circumstances
beyond our control, performing our obligations under the deposit agreement. Our
obligations and the obligations of the preferred stock depositary under the
deposit agreement will be limited to performing our duties in good faith and
without negligence (only in the case of any action or inaction in the voting of
preferred shares represented by the depositary shares), gross negligence or
willful misconduct. We will not be obligated, nor will the preferred stock
depositary be obligated, to prosecute or defend any legal proceeding in respect
of any depositary receipts, depositary shares or preferred shares represented
thereby unless satisfactory indemnity is furnished to us. We may rely, and the
preferred stock depositary may rely, on written advice of counsel or
accountants, or information provided by persons presenting preferred shares
represented thereby for deposit, holders of depositary receipts or other persons
we believe in good faith to be competent to give such information, and on
documents we believe in good faith to be genuine and signed by a proper party.
DESCRIPTION OF WARRANTS
We may issue warrants to purchase debt securities ("debt warrants"),
preferred shares ("preferred share warrants"), depositary shares ("depositary
share warrants") or common shares ("common share warrants," collectively with
the debt warrants, the preferred share warrants and the depositary share
warrants ("warrants")). We may issue warrants independently or together with any
other securities we offer pursuant to a prospectus supplement and the warrants
may be attached to or separate from the securities. We will issue each series of
warrants under a separate warrant agreement that we will enter into with a bank
or trust company, as warrant agent. We will set forth additional terms of the
warrants and the applicable warrant agreements in the applicable prospectus
supplement.
DEBT WARRANTS
We will describe in the applicable prospectus supplement the terms of
the debt warrants being offered, the warrant agreement relating to the debt
warrants and the debt warrant certificates representing the debt warrants,
including the following:
(a) the title of the debt warrants;
(b) the aggregate number of the debt warrants;
(c) the price or prices at which the debt warrants will be issued;
(d) the designation, aggregate principal amount and terms of the debt
securities issuable upon exercise of the warrants and the procedures and
conditions relating to the exercise of the debt warrants;
(e) the designation and terms of any related debt securities with which
the debt warrants are issued, and the number of debt warrants issued with each
security;
(f) the date, if any, on and after which the debt warrants and the
related debt securities will be separately transferable;
(g) the principal amount of debt securities purchasable upon exercise
of each debt warrant, and the price at which the principal amount of the debt
securities may be purchased upon exercise;
(h) the date on which the right to exercise the debt warrants will
commence, and the date on which the right will expire;
(i) the maximum or minimum number of debt warrants which may be
exercised at any time;
(j) a discussion of the material United States Federal income tax
considerations applicable to the exercise of the debt warrants; and
(k) any other terms of the debt warrants and terms, procedures and
limitations relating to the exercise of the debt warrants.
18
Holders may exchange debt warrant certificates for new debt warrant
certificates of different denominations, and may exercise debt warrants at the
corporate trust office of the warrant agent or any other office indicated in the
applicable prospectus supplement. Prior to the exercise of their debt warrants,
holders of debt warrants will not have any of the rights of holders of the
securities purchasable upon the exercise and will not be entitled to payments of
principal, premium or interest on the securities purchasable upon the exercise.
OTHER WARRANTS
We will describe in the applicable prospectus supplement the terms of
the preferred share warrants, depositary share warrants and common share
warrants being offered, including the following:
(a) the title of the warrants;
(b) the securities for which the warrants are exercisable;
(c) the price or prices at which the warrants will be issued;
(d) if applicable, the number of warrants issued with each preferred
share, common share or depositary share;
(e) any provisions for adjustment of the number or amount of preferred
shares, common shares or depositary shares receivable upon exercise of the
warrants or the exercise price of the warrants;
(f) if applicable, the date on and after which the warrants and the
related preferred shares, common shares or depositary shares will be separately
transferable;
(g) if applicable, a discussion of the material United States Federal
income tax considerations applicable to the exercise of the warrants;
(h) any other terms of the warrants, including terms, procedures and
limitations relating to the exchange and exercise of the warrants;
(i) the date on which the right to exercise the warrants will commence,
and the date on which the right will expire; and
(j) the maximum or minimum number of warrants which may be exercised at
any time.
EXERCISE OF WARRANTS
Each warrant will entitle the holder of the warrant to purchase for
cash at the exercise price set forth in the applicable prospectus supplement the
principal amount of debt securities or preferred shares, common shares or
depositary shares being offered. Holders may exercise warrants at any time up to
the close of business on the expiration date set forth in the applicable
prospectus supplement. After the close of business on the expiration date,
unexercised warrants are void.
Holders may exercise warrants as set forth in the prospectus supplement
relating to the warrants being offered. Upon receipt of payment and the warrant
certificate properly completed and duly executed at the corporate trust office
of the warrant agent or any other office indicated in the prospectus supplement,
we will, as soon as practicable, forward the debt securities, depositary shares
or preferred shares or common shares purchasable upon the exercise. If less than
all of the warrants represented by the warrant certificate are exercised, we
will issue a new warrant certificate for the remaining warrants.
19
PLAN OF DISTRIBUTION
ISSUANCES BY THE COMPANY
We may sell the securities from time to time in their initial offering
as follows:
- through agents;
- to dealers or underwriters for resale;
- directly to purchasers; or
- through a combination of any of these methods of sale.
In addition, we may issue the securities as a dividend or distribution or in a
subscription rights offering to our existing security holders. This prospectus
may be used in connection with any offering of our securities through any of
these methods or other methods described in the applicable prospectus
supplement.
The securities we distribute by any of these methods may be sold to the
public, in one or more transactions, either:
- at a fixed price or prices, which may be changed;
- at market prices prevailing at the time of sale;
- at prices related to prevailing market prices; or
- at negotiated prices.
We may solicit offers to purchase securities directly from the public
from time to time. We may also designate agents from time to time to solicit
offers to purchase securities from the public on our behalf. The prospectus
supplement relating to any particular offering of securities will name any
agents designated to solicit offers, and will include information about any
commissions we may pay the agents, in that offering. Agents may be deemed to be
"underwriters" as that term is defined in the Securities Act.
From time to time, we may sell securities to one or more dealers acting
as principals. The dealers, who may be deemed to be "underwriters" as that term
is defined in the Securities Act, may then resell those securities to the
public.
We may sell securities from time to time to one or more underwriters,
who would purchase the securities as principal for resale to the public, either
on a firm-commitment or best-efforts basis. If we sell securities to
underwriters, we and/or the selling shareholders may execute an underwriting
agreement with them at the time of sale and will name them in the applicable
prospectus supplement. In connection with those sales, underwriters may be
deemed to have received compensation from us in the form of underwriting
discounts or commissions and may also receive commissions from purchasers of the
securities for whom they may act as agents. Underwriters may resell the
securities to or through dealers, and those dealers may receive compensation in
the form of discounts, concessions or commissions from the underwriters and/or
commissions from purchasers for whom they may act as agents. The applicable
prospectus supplement will include any required information about underwriting
compensation we pay to underwriters, and any discounts, concessions or
commissions underwriters allow to participating dealers, in connection with an
offering of securities.
If we offer securities in a subscription rights offering to our
existing security holders, we may enter into a standby underwriting agreement
with dealers, acting as standby underwriters. We may pay the standby
underwriters a commitment fee for the securities they commit to purchase on a
standby basis. If we do not enter into a standby underwriting arrangement, we
may retain a dealer-manager to manage a subscription rights offering for us.
We may authorize underwriters, dealers and agents to solicit from third
parties offers to purchase securities under contracts providing for payment and
delivery on future dates. The applicable prospectus supplement will describe the
material terms of these contracts, including any conditions to the purchasers'
obligations, and will include any required information about commissions we may
pay for soliciting these contracts.
Underwriters, dealers, agents and other persons may be entitled, under
agreements that they may enter into with us, to indemnification by us against
certain liabilities, including liabilities under the Securities Act.
Unless otherwise indicated in the applicable prospectus supplement or
confirmation of sale, the purchase price of the securities will be required to
be paid in immediately available funds in Columbus, Ohio or New York City.
20
SALES BY SELLING SHAREHOLDERS
As a portion of the $150,000,000 aggregate offering price registered
hereby, as such amount may be amended pursuant to Rule 462(b), we are
registering 1,000,000 common shares on behalf of the selling shareholders. As
used herein, "selling shareholders" includes the selling shareholders named in
the table below, all of whom may be deemed to be affiliates of the company, and
pledgees, donees, transferees or other successors-in-interest selling shares
received from a named selling shareholder as a gift, partnership distribution or
other non-sale-related transfer after the date of this prospectus.
The selling shareholders may sell the shares from time to time and may
also decide not to sell all the shares they are allowed to sell under this
prospectus. The selling shareholders will act independently of us in making
decisions with respect to the timing, manner and size of each sale. The sales
may be made on one or more exchanges or in the over-the-counter market or
otherwise, at prices and at terms then prevailing or at prices related to the
then current market prices, or in negotiated transactions. The selling
shareholders may effect such transactions by selling the shares to or through
broker-dealers. The selling shareholders may sell common shares from time to
time hereunder as follows:
- a block trade in which the broker-dealer so engaged will attempt
to sell shares as agent but may position and resell a portion of
the block as principal to facilitate the transaction;
- purchases by a broker-dealer as principal and resale by such
broker-dealer for its account pursuant to this prospectus;
- an exchange distribution in accordance with the rules of such
exchange;
- ordinary brokerage transactions and transactions in which the
broker solicits purchasers; and
- privately negotiated transactions.
The selling shareholders may enter into hedging transactions with
broker-dealers in connection with distributions of shares or otherwise. In such
transactions, broker-dealers may engage in short sales of shares in the course
of hedging the positions they assume with selling shareholders. The selling
shareholders also may sell shares short and redeliver shares to close out such
short positions. The selling shareholders may enter into option or other
transactions with broker-dealers which require the delivery of shares to the
broker-dealer. The broker-dealer may then resell or otherwise transfer such
shares pursuant to this prospectus. The selling shareholders also may loan or
pledge shares to a broker-dealer. The broker-dealer may sell the shares so
loaned, or upon a default the broker-dealer may sell the shares so pledged,
pursuant to this prospectus.
The shares may be sold by selling shareholders only through registered
or licensed brokers or dealers if required under applicable state securities
laws. In addition, in certain states the shares may not be sold unless they have
been registered or qualified for sale in the applicable state or an exemption
from the registration or qualification requirement is available and is complied
with. Under applicable rules and regulations under the Exchange Act of 1934, any
person engaged in the distribution of shares may not simultaneously engage in
market making activities with respect to our common shares for a period of two
business days prior to the commencement of such distribution. In addition, each
selling shareholder will be subject to applicable provisions of the Exchange Act
of 1934 and the associated rules and regulations under the Exchange Act of 1934,
including Regulation M, which provisions may limit the timing of purchases and
sales of our common shares by the selling shareholders. We will make copies of
this prospectus available to the selling shareholders and have informed them of
the need for delivery of copies of this prospectus to purchasers at or prior to
the time of any sale of the shares.
We will file a supplement to this prospectus, if required, pursuant to
Rule 424(b) under the Securities Act of 1933 upon being notified by a selling
shareholder that any material arrangement has been entered into with a
broker-dealer for the sale of shares through a block trade, special offering,
exchange distribution or secondary distribution or a purchase by a broker or
dealer. Such supplement will disclose:
- the name of each such selling shareholder and of the
participating broker-dealer(s);
- the number of shares involved;
- the price at which such shares were sold;
- the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable;
- that such broker-dealer(s) did not conduct any investigation to
verify the information set out or incorporated by reference in
this prospectus; and
21
- other facts material to the transaction.
In addition, we will file a supplement to this prospectus upon being notified by
a selling shareholder that a donee or pledgee intends to sell more than 500
shares hereunder.
We will bear all costs, expenses and fees in connection with the
registration of the shares. The selling shareholders will bear all commissions
and discounts, if any, attributable to the sales of the shares. The selling
shareholders may agree to indemnify any broker-dealer or agent that participates
in transactions involving sales of the shares against certain liabilities,
including liabilities arising under the Securities Act.
SELLING SHAREHOLDERS
The following table sets forth the number of shares beneficially owned
by each of the selling shareholders. Each of the selling shareholders may be
deemed to be an affiliate of the Company. No estimate can be given as to the
amount of our common shares that will be beneficially owned by the selling
shareholders after completion of this offering because the selling shareholders
may offer all, some or none of the common shares beneficially owned by them or
that may hereafter be acquired by them upon the exercise of stock options. The
shares offered by this prospectus may be offered from time to time by the
selling shareholders named below.
NUMBER OF
NUMBER OF COMMON SHARES COMMON SHARES
BENEFICIALLY OWNED REGISTERED FOR
NAME OF SELLING SHAREHOLDER(1) PRIOR TO OFFERING (2) PERCENT OF CLASS SALE HEREBY
------------------------------- --------------------- ---------------- -----------
Irving E. Schottenstein.................. 538,024(3) 7.1% 100,000
Robert H. Schottenstein.................. 440,108(4) 5.8% 150,000
Steven Schottenstein..................... 457,079(5) 6.0% 150,000
Linda S. Fisher.......................... 509,300(6) 6.8% 300,000
Gary L. Schottenstein.................... 405,600(7) 5.4% 300,000
----------
(1) Irving E. Schottenstein is the Chairman of the Board and Chief
Executive Officer of the Company; Robert H. Schottenstein is a director
and President of the Company; Steven Schottenstein is a director and
Chief Operating Officer of the Company; and Gary L. Schottenstein is a
vice president of the Company. Irving E. Schottenstein is the father of
Robert H. Schottenstein, Steven Schottenstein, Linda S. Fisher and Gary
L. Schottenstein.
(2) The amounts shown include 29,924, 15,808 and 7,579 Common Shares held
by Irving E. Schottenstein, Robert H. Schottenstein and Steven
Schottenstein, respectively, under the terms of the Executives'
Deferred Compensation Plan. Under the terms of the Executives' Deferred
Compensation Plan, a participant does not beneficially own, or have
voting or investment power with respect to, common shares acquired
under the plan, until such common shares are distributed pursuant to
terms of the plan.
(3) Irving E. Schottenstein is the trustee of (i) the Irving and Frankie
Schottenstein Trust which holds 453,300 common shares, and (ii) the
Steven Schottenstein Descendants Trust which holds 54,800 common
shares, and exercises all rights with regard to such common shares.
Does not include an aggregate of 1,730,800 common shares which are held
in trust by Irving E. Schottenstein, as trustee, pursuant to trust
agreements dated August 1986, as amended, for the benefit of his four
children: Robert H. Schottenstein (405,000 shares), Steven
Schottenstein (430,200 shares), Gary L. Schottenstein (405,600 shares)
and Linda S. Fisher (490,000 shares). As trustee, Irving E.
Schottenstein is empowered to exercise all rights with regard to such
common shares and, with the agreement of each beneficiary, amend each
trust.
(4) 405,000 of these common shares are held in trust by Irving E.
Schottenstein in accordance with note 3 above. 2,800 of these common
shares are held by Robert H. Schottenstein individually. 16,500 of
these common shares are held in trust by Robert H. Schottenstein, as
trustee, for the benefit of his children pursuant to trust agreements
dated December 22, 1994. As trustee, Robert H. Schottenstein is
empowered to exercise all rights with regard to such common shares and
may be deemed the beneficial owner of such common shares.
22
(5) 430,200 of these common shares are held in trust by Irving E.
Schottenstein in accordance with note 3 above. 2,800 of these common
shares are held by Steven Schottenstein individually. 16,500 of these
common shares are held in trust by Steven Schottenstein, as trustee,
for the benefit of his children pursuant to trust agreements dated
December 22, 1994. As trustee, Steven Schottenstein is empowered to
exercise all rights with regard to such common shares and may be deemed
the beneficial owner of such common shares.
(6) 490,000 of these common shares are held in trust by Irving E.
Schottenstein in accordance with note 3 above. 2,800 of these common
shares are held by Linda S. Fisher individually. 16,500 of these common
shares are held in trust by Ms. Fisher, as trustee, for the benefit of
her children pursuant to trust agreements dated December 22, 1994. As
trustee, Ms. Fisher is empowered to exercise all rights with regard to
such common shares and may be deemed the beneficial owner of such
common shares.
(7) 405,600 of these common shares are held in trust by Irving E.
Schottenstein in accordance with note 3 above.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for
us by Vorys, Sater, Seymour and Pease LLP, Columbus, Ohio.
EXPERTS
The financial statements and the related financial statement schedules
incorporated in this prospectus by reference from the Company's Annual Report on
Form 10-K have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their reports, which are incorporated herein by reference, and have
been so incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
23
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated (except for the Securities
and Exchange Commission registration fees) fees and expenses payable by the
Company in connection with the sale and distribution of the securities
registered hereby other than underwriting discounts and commissions:
Securities and Exchange Commission registration fee $ 13,800
Printing and engraving costs 25,000
Legal fees and expenses 25,000
Accountants' fees and expenses 20,000
Blue sky qualification fees and expenses 10,000
Transfer agent fees 1,000
Miscellaneous 5,200
---------
Total $ 100,000
=========
The selling shareholders will not bear any costs, expenses or fees in connection
with the sale and distribution of the securities registered hereby other than
any applicable discounts or commissions.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article EIGHTH of the Company's Amended and Restated Articles of
Incorporation provides that:
The provisions of Section 1701.13(E)(5)(a) of the Ohio Revised
Code or any statute of like tenor or effect which is hereafter
enacted shall not apply to the corporation. The corporation
shall, to the fullest extent not prohibited by any provision
of applicable law other than Section 1701.13(E)(5)(a) of the
Ohio Revised Code or any statute of like tenor or effect which
is hereafter enacted, indemnify each director and officer
against any and all costs and expenses (including attorney
fees, judgments, fines, penalties, amounts paid in settlement,
and other disbursements) actually and reasonably incurred or
imposed upon such person in connection with any action, suit,
investigation or proceeding (or any claim or matter therein),
whether civil, criminal, administrative or otherwise in
nature, including any settlements thereof or any appeals
therein, with respect to which such person is named or
otherwise becomes or is threatened to be made a party by
reason of being or at any time having been a director or
officer of the corporation, or by any reason of being or at
any time having been, while such a director or officer, an
employee or other agent of the corporation or, at the
direction or request of the corporation, a director, trustee,
officer, administrator, manager, employee, adviser or other
agent of or fiduciary for any other corporation, partnership,
trust, venture or other entity or enterprise including any
employee benefit plan.
The corporation shall indemnify any other person to the extent
such person shall be entitled to indemnification under Ohio
law by reason of being successful on the merits or otherwise
in defense of an action to which such person is named a party
by reason of being an employee or other agent of the
corporation, and the corporation may further indemnify any
such person if it is determined on a case by case basis by the
Board of Directors that indemnification is proper in the
specific case.
II-1
Notwithstanding anything to the contrary in these Articles of
Incorporation, no person shall be indemnified to the extent,
if any, it is determined by the Board of Directors or by
written opinion of legal counsel designated by the Board of
Directors for such purpose that indemnification is contrary to
applicable law.
Article VIII of the Company's Amended Regulations provides:
(a) Mandatory Indemnification. The corporation shall
indemnify any officer or director of the corporation who was
or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative
(including, without limitation, any action threatened or
instituted by or in the right of the corporation), by reason
of the fact that he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request
of the corporation as a director, trustee, officer, employee,
member, manager or agent of another corporation (domestic or
foreign, nonprofit or for profit), limited liability company,
partnership, joint venture, trust or other enterprise, against
expenses (including, without limitation, attorneys' fees,
filing fees, court reporters' fees and transcript costs),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action,
suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best
interests of the corporation. A person claiming
indemnification under this section shall be presumed, in
respect of any act or omission giving rise to such claim for
indemnification, to have acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best
interests of the corporation, and the termination of any
action suit or proceeding by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, rebut such presumption. Any
indemnification under this section, unless ordered by a court,
shall be made by the corporation only upon a determination
that the director or officer has met the applicable standard
of conduct and such determination shall be made by (i) a
majority vote of a quorum consisting of directors of the
corporation who were and are not parties to, or threatened
with, any such action, suit or proceeding, (ii) if such a
quorum is not obtainable or if a majority of a quorum of
disinterested directors so directs, in a written opinion by
independent legal counsel other than an attorney, or a firm
having associated with it an attorney, who has been retained
by or who has performed services for or any person to be
indemnified, within the past five years, or (iii) by the
shareholders.
(b) Indemnification and Advances for Expenses.
Anything contained in the Regulations or elsewhere to the
contrary notwithstanding, to the extent that an officer or
director of the corporation has been successful on the merits
or otherwise in defense of any action, suit or proceeding, he
shall be promptly indemnified by the corporation against
expenses (including, without limitation, attorneys' fees,
filing fees, court reporters' fees and transcript costs)
actually and reasonably incurred by him in connection
therewith. Expenses (including, without limitation, attorneys'
fees, filing fees, court reporters' fees and transcript costs)
incurred in defending any action, suit or proceeding shall be
paid by the corporation in advance of the final disposition of
such action, suit or proceeding to or on behalf of the officer
or director promptly as such expenses are incurred by him if:
(i) in respect of any claim, except one in which the only
liability asserted against a director is pursuant to Section
1701.95 of the Ohio Revised Code, the corporation receives an
undertaking by or on behalf of the director, in which he
agrees to repay all such amounts if it is proved by clear and
convincing evidence in a court of competent jurisdiction that
his action or failure to act involved an act or omission
undertaken with deliberate intent to cause injury to the
corporation or undertaken with reckless disregard for the best
interests of the corporation and agrees to cooperate
II-2
reasonably with the corporation concerning the action, suit,
or proceeding; or (ii) the corporation receives an undertaking
by or on behalf of the director or officer in which he agrees
to repay all such amounts if it ultimately is determined that
he is not entitled to be indemnified by the corporation under
section (a) of this Article VIII.
(c) Article VIII Not Exclusive. The indemnification
provided by this Article VIII shall not be exclusive of, and
shall be in addition to, any other rights to which any person
seeking indemnification may be entitled under any agreement,
vote of shareholders or disinterested directors, or otherwise,
both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue
as to a person who has ceased to be an officer or director of
the corporation and shall inure to the benefit of the heirs,
executors, and administrators of such a person.
(d) Insurance. The corporation may purchase and
maintain insurance or furnish similar protection, including
but not limited to trust funds, letters of credit, or
self-insurance, on behalf of any person who is or was a
director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as a
director, trustee, officer, employee, member, manager or agent
of another corporation (domestic or foreign, nonprofit or for
profit), limited liability company, partnership, joint
venture, trust or other enterprise, against any liability
asserted against him and incurred by him in any such capacity,
or arising out of his status as such, whether or not the
corporation would have the obligation or the power to
indemnify him against such liability under the provisions of
this Article VIII.
In addition, the Company has purchased insurance coverage which insures
directors and officers against certain liabilities which might be incurred by
them in such capacity.
ITEM 16. EXHIBITS
1.1* Form of Underwriting Agreement related to Debt
Securities
1.2* Form of Underwriting Agreement relating to securities
other than Debt Securities
4.1 Form of Indenture for Senior Debt Securities (including
form of Senior Debt Security)
4.2 Form of Indenture for Subordinated Debt Securities
(including form of Subordinated Debt Security)
4.3 Amended and Restated Articles of Incorporation of the
Company, hereby incorporated by reference to Exhibit
3.1 of the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993. (File No.
0-12434).
4.4 Amended and Restated Regulations of the Company, hereby
incorporated by reference to Exhibit 3.4 of the
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998. (File No. 0-12434).
5.1 Opinion of Vorys, Sater, Seymour and Pease LLP as to
the validity of the securities being offered
12.1 Calculation of Ratio of Earnings to Fixed Charges
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Vorys, Sater, Seymour and Pease (included in
Exhibit 5.1)
24.1 Powers of Attorney (included on signature pages)
25.1** Statement of Eligibility of Trustee under the Trust
Indenture Act of 1939 on Form T-1 of the trustee to be
named under the Senior Debt Securities Indenture.
II-3
25.2** Statement of Eligibility of Trustee under the Trust
Indenture Act of 1939 on Form T-1 of the trustee to be
named under the Subordinated Debt Securities Indenture.
----------
* To be filed as an exhibit to a Current Report of the
Registrant on Form 8-K and incorporated herein by
reference.
** To be filed separately on Form T-1 and incorporated
herein by reference.
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made of the securities registered hereby, a post-effective
amendment to this Registration Statement;
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1993;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the
total dollar value of securities offered would not
exceed that which was registered) and any deviation
from the low or high end of the estimated maximum
offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the
effective registration statement; 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 the undertakings set forth in
paragraphs (a)(1)(i) and (a)(1)(ii) of this section do not
apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by
the 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.
(b) The undersigned registrant hereby undertakes 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.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or
controlling persons of the registrant pursuant to the foregoing
provisions or otherwise, the registrant has been informed that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is therefore
unenforceable.
II-4
In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
(d) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act of 1933 the information omitted from the form of
prospectus filed as part of this registration statement in reliance
upon Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability
under the Securities Act of 1933, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(e) The undersigned registrant hereby undertakes to file an
application for the purpose of determining the eligibility of the trustee to act
under subsection (a) of Section 310 of the Trust Indenture Act (the "Act") in
accordance with the rules and regulations prescribed by the SEC under Section
305(b)(2) of the Act.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Columbus, State of Ohio, on April 5, 2002.
M/I SCHOTTENSTEIN HOMES, INC.
By: /s/ Robert H. Schottenstein
-----------------------------------------
ROBERT H. SCHOTTENSTEIN
President and Director
POWER OF ATTORNEY
We, the undersigned directors and officers of M/I Schottenstein Homes,
Inc. (the "Company") and each of us, do hereby constitute and appoint Robert H.
Schottenstein, Phillip G. Creek and Paul S. Coppel or any of them, the Company's
true and lawful attorneys and agents, each with power of substitution, to do any
and all acts and things in our and on our behalf in our capacities as directors
and officers and to execute any and all instruments for us and in our names in
the capacities indicated below, which said attorneys or agents, or any of them,
may deem necessary or advisable to enable the Company to comply with the
Securities Act of 1933, as amended, and any rules, regulations and requirements
of the Securities and Exchange Commission, in connection with the filing of this
Registration Statement on Form S-3 in connection with the public offering from
time to time of the Common Stock of the Company, including specifically but
without limitation, power and authority to sign for us or any of us in our names
in the capacities indicated below, any and all amendments (including
post-effective amendments) to such Registration Statement and registration
statements relating to the same offering filed pursuant to Rule 462(b) under the
Securities Act of 1933 and requests to accelerate the effectiveness of each
registration statement; and we do hereby ratify and confirm all that the said
attorneys and agents, or their substitute or substitutes, or either of them,
shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
NAME AND TITLE DATE NAME AND TITLE DATE
-------------- ---- -------------- ----
/s/ Irving E. Schottenstein 4/5/02 /s/ Phillip G. Creek 4/5/02
------------------------------------ ------------------------------------
IRVING E. SCHOTTENSTEIN PHILLIP G. CREEK
Chairman of the Board and Chief Executive Senior Vice President, Treasurer and
Officer(Principal Executive Officer) Chief Financial Officer(Principal
Financial Officer)
/s/ John A. Wilt 4/5/02 /s/ Jeffery H. Miro 4/5/02
------------------------------------ -------------------------------------
JOHN A. WILT JEFFERY H. MIRO
Corporate Controller (Principal Accounting Director
Officer)
/s/ Friedrich K. M. Bohm 4/5/02 /s/ Steven Schottenstein 4/5/02
--------------------------- --------------------------
FRIEDRICH K. M. BOHM STEVEN SCHOTTENSTEIN
Director Chief Operating Officer and Director
/s/ Robert H. Schottenstein 4/5/02 /s/ Norman L. Traeger 4/5/02
---------------------------- ------------------------------------
ROBERT H. SCHOTTENSTEIN NORMAN L. TRAEGER
President and Director Director
II-6
/s/ Lewis R. Smoot, Sr. /s/ Thomas D. Igoe 4/5/02
------------------------------------ ------------------------------------
LEWIS R. SMOOT, SR. 4/5/02 THOMAS D. IGOE
Director Director
/s/ Kerrii B. Anderson 4/5/02
------------------------------------
KERRII B. ANDERSON
Director
II-7
INDEX OF EXHIBITS
EXH. NO. NAME OF EXHIBIT
1.1* Form of Underwriting Agreement related to Debt Securities
1.2* Form of Underwriting Agreement relating to securities other than Debt
Securities
4.1 Form of Indenture for Senior Debt Securities (including form of Senior
Debt Security)
4.2 Form of Indenture for Subordinated Debt Securities (including form of
Subordinated Debt Security)
4.3 Amended and Restated Articles of Incorporation of the Company, hereby
incorporated by reference to Exhibit 3.1 of the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1993. (File No.
0-12434)
4.4 Amended and Restated Regulations of the Company, hereby incorporated by
reference to Exhibit 3.4 of the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1998. (File No. 0-12434).
5.1 Opinion of Vorys, Sater, Seymour and Pease LLP as to the validity of
the securities being offered
12.1 Calculation of Ratio of Earnings to Fixed Charges
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Vorys, Sater, Seymour and Pease (included in Exhibit 5.1)
24.1 Powers of Attorney (included on signature pages)
25.1** Statement of Eligibility of Trustee under the Trust Indenture Act of
1939 on Form T-1 of the trustee to be named under the Senior Debt
Securities Indenture.
25.2** Statement of Eligibility of Trustee under the Trust Indenture Act of
1939 on Form T-1 of the trustee to be named under the Subordinated Debt
Securities Indenture.
----------
* To be filed as an exhibit to a Current Report of the Registrant on Form 8-K
and incorporated herein by reference.
** To be filed separately on Form T-1 and incorporated herein by reference.