<PAGE>
Filed pursuant to Rule 424(b)(2)
Registration No. 333-1063
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MARCH 20, 1996)
TYCO INTERNATIONAL LTD.
$300,000,000
6 1/2% Notes due 2001
Interest payable May 1 and November 1
ISSUE PRICE: 99.479%
The 6 1/2% Notes due 2001 (the "Notes") will bear interest from November 1, 1996
at the rate of 6 1/2% per annum, payable semiannually on May 1 and November 1,
commencing May 1, 1997. The Notes are not redeemable prior to maturity. The
Notes will be represented by one or more global securities registered in the
name of a nominee of The Depository Trust Company, as Depositary. Beneficial
interests in the Notes will be shown on, and transfers thereof will be effected
only through, records maintained by the Depositary and its participants. Except
as described herein, Notes will not be issued in definitive form. See
"Description of the Notes."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
PROCEEDS TO
PRICE TO UNDERWRITING COMPANY
PUBLIC (1) DISCOUNT (2) (1)(3)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note 99.479% .600% 98.879%
- ----------------------------------------------------------------------------------------------------
Total $298,437,000 $1,800,000 $296,637,000
- ----------------------------------------------------------------------------------------------------
</TABLE>
(1) Plus accrued interest, if any, from November 1, 1996.
(2) The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933. See
"Underwriting."
(3) Before deducting expenses payable by the Company estimated to be
approximately $100,000.
The Notes are offered subject to prior sale, when, as and if accepted by the
Underwriter, and subject to the approval of certain legal matters by Davis Polk
& Wardwell, counsel for the Underwriter. It is expected that delivery of the
Notes will be made through the facilities of The Depository Trust Company, on or
about November 1, 1996, against payment therefor in same day funds.
J.P. MORGAN & CO.
October 29, 1996
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
No person has been authorized to give any information or to make any
representation not contained or incorporated by reference in this Prospectus
Supplement or the accompanying Prospectus and, if given or made, such
information or representation must not be relied upon as having been authorized
by the Company or any underwriter, dealer or agent. Neither the delivery of this
Prospectus Supplement or the accompanying Prospectus nor any sale made hereunder
or thereunder shall, under any circumstances, create any implication that the
information contained herein or in the accompanying Prospectus is correct as of
any date subsequent to the date hereof or thereof or that there has been no
change in the affairs of the Company since the date hereof or thereof. Neither
this Prospectus Supplement nor the accompanying Prospectus constitutes an offer
to sell or a solicitation of an offer to buy Notes in any jurisdiction in which
such offer or solicitation is not authorized or in which the person making such
offer or solicitation is not qualified to do so or to any person to whom it is
unlawful to make such offer or solicitation.
INCORPORATION BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended June 30, 1996,
at the time of filing with the Securities and Exchange Commission, modifies and
supersedes all prior documents filed pursuant to Sections 13, 14 and 15(d) of
the Securities Exchange Act of 1934 and incorporated by reference into the
accompanying Prospectus.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Incorporation by Reference............................................................ S-2
Results for the First Quarter Ended September 30, 1996................................ S-3
Use of Proceeds....................................................................... S-3
Ratio of Earnings to Fixed Charges.................................................... S-4
Description of the Notes.............................................................. S-4
Underwriting.......................................................................... S-5
Experts............................................................................... S-5
Legal Opinions........................................................................ S-5
PROSPECTUS
Available Information................................................................. 2
Incorporation of Certain Information by Reference..................................... 2
The Company........................................................................... 3
Current Developments.................................................................. 4
Use of Proceeds....................................................................... 4
Ratio of Earnings to Fixed Charges.................................................... 4
Description of Debt Securities........................................................ 5
Plan of Distribution.................................................................. 14
Experts............................................................................... 14
Legal Opinions........................................................................ 15
</TABLE>
S-2
<PAGE>
RESULTS FOR THE FIRST QUARTER ENDED SEPTEMBER 30, 1996
On October 16, 1996, the Company announced results of operations for the
first quarter ended September 30, 1996 ("fiscal 1997 first quarter"). Net income
increased 26% to $83.1 million, or $.54 per share, in fiscal 1997 first quarter,
compared to $65.7 million, or $.43 per share, for the first quarter ended
September 30, 1995 ("fiscal 1996 first quarter"). Sales increased 22% to $1.5
billion in fiscal 1997 first quarter from $1.2 billion in fiscal 1996 first
quarter. Earnings of the Company's Disposable and Specialty Products Group
increased 28% to $81.4 million in fiscal 1997 first quarter compared to $63.6
million in fiscal 1996 first quarter. The increase is attributable to market
expansion and recent acquisitions for Kendall's adhesive products unit,
Kendall-Polyken. Earnings of the Company's Fire and Safety Services Group
(formerly the Fire Protection Group) increased 69% to $42.4 million in fiscal
1997 first quarter compared to $25.0 million in fiscal 1996 first quarter.
Results in this group were enhanced by the inclusion of the Thorn Security Group
acquired in July 1996. Earnings of the Company's Flow Control segment increased
16% to $30.7 million in fiscal 1997 first quarter compared to $26.6 million in
fiscal 1996 first quarter. In this segment, the Company's worldwide valve and
distribution businesses continue to benefit from new product introductions and
expansion into new geographic areas. Earnings of the Company's Electrical and
Electronic Components Group were $20.8 million for the quarter, compared to
$20.4 million in fiscal 1996 first quarter. Although the Company's Printed
Circuit Group results reflected higher demand for its circuit boards, Simplex
results were slightly lower than year ago levels, a result of delays in
deliveries of its undersea communications systems. Earnings of the Company's
four business groups are stated before deduction for general corporate expenses,
interest expense and taxes.
The following table sets forth the announced summary of results of
operations of the Company for fiscal 1997 first quarter compared to fiscal 1996
first quarter.
<TABLE>
<CAPTION>
THREE MONTHS ENDED (1)
------------------------
9/30/96 9/30/95
---------- ----------
(IN THOUSANDS, EXCEPT
PER SHARE DATA)
<S> <C> <C>
Sales.............................................................. $1,479,152 $1,216,202
---------- ----------
---------- ----------
Income before income taxes......................................... $ 138,880 $ 112,247
Income taxes....................................................... (55,830) (46,583)
---------- ----------
Net income......................................................... $ 83,050 $ 65,664
---------- ----------
---------- ----------
Earnings per share................................................. $ 0.54 $ 0.43
---------- ----------
---------- ----------
Common equivalent shares........................................... 154,614 152,740
---------- ----------
---------- ----------
</TABLE>
- ------------
(1) All share and per share data has been restated to reflect the two-for-one
stock split which was distributed on November 14, 1995.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Notes offered hereby
are estimated to be approximately $297 million. All of the proceeds will be used
to reduce the amounts outstanding under the Company's $300 million credit
facility. The due dates of the outstanding borrowings range from approximately
fifteen to thirty days at interest rates ranging from 5.70% to 5.76% per annum.
Approximately $130 million of the short-term borrowings resulted from the
redemption of $105 million principal amount of 10.25% Carlisle Plastics Senior
Notes and $19 million principal amount of Carlisle Senior Variable Rate Notes
bearing interest at the time of redemption of 9.53% per annum. Carlisle Plastics
was acquired by the Company on September 9, 1996. The balance of the short-term
borrowings were generally for financing corporate working capital needs.
S-3
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
the Company for the five years in the period ended June 30, 1996:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges(1)(2)..................... 6.99 5.42 4.98 2.68 2.78
</TABLE>
- ------------
(1) The merger of the Company with Kendall International, Inc. ("Kendall Inc.")
on October 19, 1994 (the "Merger") has been accounted for using the pooling
of interests basis of accounting. As such, the ratio of earnings to fixed
charges for the years ended June 30, 1996, 1995, 1994 and 1993 include the
effect of the Merger. Kendall Inc. undertook a financial restructuring as of
June 30, 1992. Accordingly, the ratio of earnings to fixed charges for the
year ended June 30, 1992 represents the Company's historical ratio.
(2) Earnings consist of pre-tax earnings from continuing operations before fixed
charges. Fixed charges consist of interest on indebtedness, amortization of
debt expenses and one-third of rent expense which is deemed representative
of an interest factor.
DESCRIPTION OF THE NOTES
The following description of the particular terms of the Notes offered
hereby (referred to in the accompanying Prospectus as the "Debt Securities")
supplements, and to the extent inconsistent therewith replaces, the description
of the general terms and provisions of the Debt Securities set forth in the
Prospectus, to which description reference is hereby made.
The Notes will be limited to $300,000,000 aggregate principal amount and
will mature on November 1, 2001. The Notes will bear interest at the rate of 6
1/2% per annum, from November 1, 1996 or from the most recent interest payment
date to which interest has been paid or provided for, payable semiannually on
May 1 and November 1, of each year, commencing May 1, 1997, to the persons in
whose names the Notes are registered at the close of business on April 15 or
October 15, as the case may be, next preceding such interest payment date.
The Notes are not redeemable prior to maturity.
The Notes will be issued in the form of one or more registered global
securities and will be deposited with, or on behalf of, The Depository Trust
Company, as depositary (the "Depositary"), and registered in the name of the
Depositary's nominee. A description of the Depositary's procedures with respect
to the global securities is set forth in the accompanying Prospectus under
"Description of Debt Securities--Book-Entry System".
S-4
<PAGE>
UNDERWRITING
Under the terms and subject to the conditions contained in an Underwriting
Agreement (the "Underwriting Agreement") relating to the Notes offered hereby,
the Company has agreed to sell all of the Notes to J.P. Morgan Securities Inc.
(the "Underwriter").
Under the terms and conditions of the Underwriting Agreement, the
Underwriter is committed to purchase all of the Notes offered hereby if any are
purchased.
The Underwriter proposes to offer the Notes to the public at the initial
offering price set forth on the cover page of this Prospectus Supplement, and to
certain dealers at such price less a concession not in excess of .35% of the
principal amount. The Underwriter may allow, and such dealers may reallow, a
concession to certain other dealers not in excess of .25% of the principal
amount. After the initial public offering, the public offering price and such
concessions may from time to time be changed.
The Notes are a new issue of securities with no established trading market.
The Company has been advised by the Underwriter that the Underwriter intends to
make a market in the Notes but is not obligated to do so and may discontinue
market making at any time without notice. No assurance can be given as to the
liquidity of the trading market for the Notes.
The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, or to
contribute to payments the Underwriter may be required to make in respect
thereof. See also "Plan of Distribution" in the Prospectus.
In the ordinary course of their respective business, J.P. Morgan Securities
Inc. and its affiliates have provided, and may in the future provide, commercial
banking and investment banking services to the Company. Morgan Guaranty Trust
Company of New York, an affiliate of J.P. Morgan Securities Inc., is the agent
for the banks and a lender under the Company's Credit Agreement dated as of
October 17, 1994 (the "Credit Agreement") with a group of banks. Appproximately
$45 million of the net proceeds from the offering of the Notes will be used to
repay Morgan Guaranty Trust Company of New York for a portion of the outstanding
borrowings of the Company under the Credit Agreement. See "Use of Proceeds."
Since the amount to be repaid to Morgan Guaranty Trust Company of New York
exceeds 10% of the net proceeds from the sale of the Notes, the offering of the
Notes is being made pursuant to the provisions of Rules 2710(c)(8) and
2720(c)(3)(C) of the National Association of Securities Dealers, Inc.
EXPERTS
The consolidated financial statements of the Company incorporated in this
Prospectus by reference to the Annual Report on Form 10-K of the Company as of
June 30, 1996 and 1995 and for the three years in the period ended June 30, 1996
have been incorporated herein in reliance on the report of Coopers & Lybrand
L.L.P., independent accountants, given on the authority of that firm as experts
in accounting and auditing.
LEGAL OPINIONS
The validity of the Notes offered hereby will be passed upon for the Company
by M. Brian Moroze, Esq., General Counsel of the Company, and Kramer, Levin,
Naftalis & Frankel, New York, New York, and for the Underwriter by Davis Polk &
Wardwell, New York, New York. As of the date of this Prospectus, Mr. Moroze
holds 20,945 shares of the Common Stock of the Company. Joshua M. Berman, a
director and the Secretary of the Company, is counsel to the law firm of Kramer,
Levin, Naftalis & Frankel and owns 36,000 shares of Common Stock of the Company.
S-5
<PAGE>
PROSPECTUS
$400,000,000
-------------------
TYCO INTERNATIONAL LTD.
-------------------
DEBT SECURITIES
-------------------
Tyco International Ltd. (the "Company" or "Tyco") may offer from time to
time, in one or more
series, debt securities consisting of debentures, notes and/or other unsecured
evidences of indebtedness (the "Debt Securities") with an aggregate initial
public offering price of up to $400,000,000 on terms to be determined at the
time of sale. The specific terms of the Debt Securities, including, where
applicable, the designation, aggregate principal amount, denominations (which
may be in United States dollars, in any other currency or in composite
currencies), purchase price, maturity, interest rate (which may be fixed or
variable) and time of payment of interest, if any, any terms for mandatory or
optional redemption, any terms for sinking fund payments, any listing on a
securities exchange and any other specific terms in connection with the sale of
the Debt Securities in respect of which this Prospectus is being delivered are
set forth in the accompanying Prospectus Supplement (the "Prospectus
Supplement").
The Company may sell Debt Securities offered hereby to or through
underwriters or dealers, and also may sell Debt Securities directly to other
purchasers or through agents. The Prospectus Supplement sets forth the names of
the underwriters, dealers and agents involved in the sale of the Debt Securities
offered hereby, the principal amounts, if any, to be purchased by the
underwriters or agents and the compensation, if any, of such underwriters or
agents and any applicable commissions or discounts. The net proceeds to the
Company from the sale of the Debt Securities offered hereby are also set out in
the Prospectus Supplement.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-------------------
The date of this Prospectus is March 20, 1996.
<PAGE>
No person has been authorized to give any information or to make any
representation not contained or incorporated by reference in this Prospectus or
the accompanying Prospectus Supplement and, if given or made, such information
or representation must not be relied upon as having been authorized by the
Company or any underwriter, dealer or agent. Neither the delivery of this
Prospectus or the accompanying Prospectus Supplement nor any sale made hereunder
or thereunder shall, under any circumstances, create an implication that the
information contained herein or in the accompanying Prospectus Supplement is
correct as of any date subsequent to the date hereof or thereof or that there
has been no change in the affairs of the Company since the date hereof or
thereof. Neither this Prospectus nor the accompanying Prospectus Supplement
constitutes an offer to sell or a solicitation of an offer to buy Debt
Securities in any jurisdiction in which such offer or solicitation is not
authorized or in which the person making such offer or solicitation is not
qualified to do so or to any person to whom it is unlawful to make such offer or
solicitation.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"), all of which may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington,
D.C. 20549, and at the following Regional Offices of the Commission: Chicago
Regional Office, Suite 1400, Northwest Atrium Center, 500 West Madison Street,
Chicago, Illinois 60661; and New York Regional Office, Seven World Trade Center,
13th Floor, New York, New York 10048. Copies of such material can be obtained at
prescribed rates from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549. Such material can
also be inspected at the offices of the New York Stock Exchange, 20 Broad
Street, New York, New York 10005, where the Company's Common Stock is listed.
This Prospectus constitutes part of a Registration Statement filed by the
Company with the Commission under the Securities Act of 1933, as amended (the
"Securities Act"). This Prospectus and the accompanying Prospectus Supplement
omit certain of the information contained in the Registration Statement in
accordance with the rules and regulations of the Commission. Reference is hereby
made to the Registration Statement and related exhibits for further information
with respect to the Company and the Debt Securities. Statements contained herein
concerning the provisions of any document are not necessarily complete and, in
each instance, where a copy of such document has been filed as an exhibit to the
Registration Statement or otherwise has been filed with the Commission,
reference is made to the copy so filed. Each such statement is qualified in its
entirety by such reference.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents, which have been filed by the Company with the
Commission pursuant to the Exchange Act, are hereby incorporated by reference in
this Prospectus:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended June
30, 1995; and
(b) The Company's Quarterly Reports on Form 10-Q for the quarters ended
September 30, 1995 and December 31, 1995.
All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus
and prior to the termination of the offering of the Debt Securities shall be
deemed to be incorporated by reference into this Prospectus from the date of
filing of such documents. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this
2
<PAGE>
Prospectus to the extent that a statement contained herein or in any Prospectus
Supplement or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, including any beneficial owner of Debt Securities,
upon written or oral request of such person, a copy of any and all of the
documents that have been or may be incorporated by reference herein (other than
exhibits to such documents which are not specifically incorporated by reference
into such documents). Such requests should be directed to David P. Brownell,
Vice President, Tyco International Ltd., One Tyco Park, Exeter, New Hampshire
03833 (telephone: (603) 778-9700).
THE COMPANY
The Company is a major manufacturer and supplier of disposable medical
products, packaging materials, fire protection products and services, flow
control products and electrical and electronic components. The Company is
organized into four business segments: Disposable and Specialty Products
("DSP"), Fire Protection, Flow Control, and Electrical and Electronic Components
("E&EC"). The Company operates in over 50 countries around the world through
manufacturing, distribution and sales offices.
The principal division of the DSP segment is The Kendall Company
("Kendall"), which manufactures disposable medical products for hospitals and
other medical care facilities. Additionally, the DSP segment manufactures
polyethylene film products, casual furniture fabric, precision metal parts,
laminated and coated packaging material, transfer tapes, medical chart paper and
disposable medical electrodes. These products are manufactured by the Company's
Armin Plastics, Twitchell, Accurate Forming, Ludlow Laminating and Coating and
Ludlow Technical Products divisions, respectively.
Tyco's Fire Protection segment is the world's largest manufacturer,
installer, servicer and distributor of fire protection products and services.
The major products of this segment consist of fire sprinkler products and
systems, fire extinguishers and specially engineered suppression systems. The
Company operates its fire protection business around the world under a number of
well-recognized names, such as Grinnell, Wormald, Mather & Platt and Ansul.
The Flow Control segment is a major worldwide manufacturer and distributor
of flow control products for the process/industrial, power generation,
pharmaceutical, chemical, transportation, water/gas utility, plumbing, and
heating, ventilating and air-conditioning markets. The Company manufactures and
distributes its products under various tradenames such as Grinnell, Allied,
Mueller, Hindle, Winn and Neotecha.
The E&EC segment is a major manufacturer of undersea fiberoptic
telecommunication cable and is the only U.S.-owned supplier of this type of
cable. This product is manufactured under the Simplex Technologies tradename.
The E&EC segment also manufactures complex, high-density printed circuit boards
for the electronic industry and is the largest U.S. producer of steel electrical
conduits. These products are manufactured under the Tyco Printed Circuit Group
and Allied Tube and Conduit tradenames, respectively.
The Company's principal executive office is located at One Tyco Park,
Exeter, New Hampshire 03833. Its telephone number is (603) 778-9700.
3
<PAGE>
CURRENT DEVELOPMENTS
The Company reviews acquisition opportunities in the ordinary course of its
business, some of which may be material and some of which are currently under
investigation, discussion or negotiation.
USE OF PROCEEDS
Except as otherwise described in the applicable Prospectus Supplement, the
Company intends to use the net proceeds from the sale of the Debt Securities to
refinance, in part, existing indebtedness and for general corporate purposes.
Funds not required immediately for such purposes may be invested temporarily in
short-term marketable securities.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
the Company for the five years in the period ended June 30, 1995 and for the
six-month period ended December 31, 1995:
<TABLE>
<CAPTION>
SIX MONTHS FISCAL YEAR
ENDED ENDED JUNE 30,
DECEMBER 31, --------------------------------
1995 1995 1994 1993 1992 1991
------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges(1)(2)............... 6.46 5.42 4.98 2.68 2.78 3.26
</TABLE>
- ------------
(1) The merger of the Company with Kendall International, Inc. ("Kendall Inc.")
on October 19, 1994 (the "Merger") has been accounted for using the pooling
of interests basis of accounting. As such, the ratio of earnings to fixed
charges for the years ended June 30, 1995, 1994 and 1993 include the effect
of the Merger. Kendall Inc. undertook a financial restructuring as of June
30, 1992. Accordingly, the ratio of earnings to fixed charges for all
periods prior to and including June 30, 1992 represents Tyco's historical
ratio.
(2) Earnings consist of pre-tax earnings from continuing operations before fixed
charges. Fixed charges consist of interest on indebtedness, amortization of
debt expenses and one-third of rent expense which is deemed representative
of an interest factor.
4
<PAGE>
DESCRIPTION OF DEBT SECURITIES
The Debt Securities offered hereby will be issued under an Indenture dated
as of April 30, 1992, as amended (hereinafter referred to as the "Indenture"),
between the Company and First Trust of New York, National Association, as
successor to BankAmerica National Trust Company pursuant to the Certificate of
Transfer and Assignment of New York Appointments pursuant to Section 604-a of
the New York Banking Law, as Trustee (hereinafter referred to as the "Trustee").
The following statements are subject to the detailed provisions of the
Indenture, a copy of which is filed as an exhibit to the Registration Statement
and which is also available for inspection at the office of the Trustee. Section
references are to the Indenture. Wherever particular provisions of the Indenture
are referred to, such provisions are incorporated by reference as part of the
statements made and the statements are qualified in their entirety by such
reference.
GENERAL
The Indenture does not limit the aggregate principal amount of debt
securities which may be issued thereunder and provides that the debt securities
may be issued from time to time in one or more series. Except as otherwise
specified, references to Debt Securities in this section include, in addition to
the Debt Securities offered hereby, any other debt securities that have been or
in the future may be issued under the Indenture. As of the date of this
Prospectus, $200,000,000 principal amount of the Company's 9 1/2% Debentures due
2022, $50,000,000 principal amount of the Company's 8% Debentures due 2023,
$105,000,000 principal amount of the Company's 6 3/8% Notes due 2004 and
$145,000,000 principal amount of the Company's 8 1/8% Notes due 1999 have been
issued and are outstanding under the Indenture.
The Debt Securities offered hereby will be direct, unsecured and
unsubordinated obligations of the Company and will rank equally with any other
unsecured and unsubordinated obligations of the Company for borrowed money.
Except as described under "Certain Covenants," the Indenture does not limit
other indebtedness or securities which may be incurred or issued by the Company
or any of its subsidiaries or contain financial or similar restrictions on the
Company or any of its subsidiaries. The Company's rights and the rights of its
creditors, including holders of Debt Securities, to participate in any
distribution of assets of any subsidiary upon the latter's liquidation or
reorganization or otherwise are effectively subordinated to the claims of the
subsidiary's creditors, except to the extent that the Company or any of its
creditors may itself be a creditor of that subsidiary.
The Prospectus Supplement which accompanies this Prospectus sets forth where
applicable the following terms of and information relating to the Debt
Securities offered thereby: (i) the designation of the Debt Securities; (ii) the
aggregate principal amount of the Debt Securities; (iii) the date or dates on
which principal of, and premium, if any, on the Debt Securities is payable; (iv)
the rate or rates at which the Debt Securities shall bear interest, if any, or
the method by which such rate shall be determined, the date or dates from which
interest will accrue and on which such interest will be payable and the related
record dates; (v) if other than the offices of the Trustee, the place where the
principal of and any premium or interest on the Debt Securities will be payable;
(vi) any redemption, repayment or sinking fund provisions; (vii) if other than
denominations of $1,000 or multiples thereof, the denominations in which the
Debt Securities will be issuable; (viii) if other than the principal amount
thereof, the portion of the principal amount due upon acceleration; (ix) whether
the Debt Securities shall be issued in the form of a global security or
securities; (x) any other specific terms of the Debt Securities (which may, for
example, include the currency, and any index used to determine the amount, of
payment of principal of and any premium and interest on the Debt Securities);
and (xi) if other than the Trustee, the identity of any trustees, paying agents,
transfer agents or registrars with respect to the Debt Securities. (Section
2.3).
5
<PAGE>
The Debt Securities offered hereby will be issued either in certificated,
fully registered form, without coupons, or as global notes under a book-entry
system, as specified in the accompanying Prospectus Supplement.
Unless otherwise specified in the accompanying Prospectus Supplement,
principal and premium, if any, will be payable, and the Debt Securities offered
hereby will be transferable and exchangeable without any service charge, at the
office of the Trustee. However, the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
with any such transfer or exchange. (Section 2.8).
Interest on any series of Debt Securities offered hereby will be payable on
the interest payment dates set forth in the accompanying Prospectus Supplement
to the persons in whose names the Debt Securities are registered at the close of
business on the related record date and may be paid by checks mailed to such
persons. (Sections 2.7 and 3.1).
If the Debt Securities offered hereby are issued as original issue discount
securities (bearing no interest or interest at a rate which at the time of
issuance is below market rates) to be sold at more than a de minimis discount
below their stated principal amount, the federal income tax consequences and
other special considerations applicable to such original issue discount
securities will be as described in the Prospectus Supplement.
Unless otherwise described in the accompanying Prospectus Supplement, there
are no covenants or provisions contained in the Indenture which afford the
holders of the Debt Securities offered hereby protection in the event of a
highly leveraged transaction, reorganization, restructuring, merger or similar
transaction involving the Company. The consummation of any highly leveraged
transaction, reorganization, restructuring, merger or similar transaction could
cause a material decline in the credit quality of the outstanding Debt
Securities.
BOOK-ENTRY SYSTEM
If so specified in the accompanying Prospectus Supplement, Debt Securities
of any series offered hereby may be issued under a book-entry system in the form
of one or more global securities ("Global Securities"). Each Global Security
will be deposited with, or on behalf of, a depositary, which, unless otherwise
specified in the accompanying Prospectus Supplement, will be The Depository
Trust Company, New York, New York (the "Depositary"). The Global Securities will
be registered in the name of the Depositary or its nominee.
The Depositary has advised the Company as follows: The Depositary is a
limited purpose trust company organized under the laws of the State of New York,
a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of section 17A of the Exchange Act. The
Depositary was created to hold securities of persons who have accounts with the
Depositary ("participants") and to facilitate the clearance and settlement of
securities transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of certificates. The Depositary's
participants include securities brokers and dealers, banks, trust companies and
clearing corporations, and may include certain other organizations. Indirect
access to the Depositary's book-entry system is also available to others, such
as banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.
Upon the issuance of a Global Security, the Depositary or its nominee will
credit, on its book-entry registration and transfer system, the respective
principal amounts of the Debt Securities represented by such Global Security to
the accounts of participants. The accounts to be credited will be designated by
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the underwriters or agents, if any, or by the Company, if such Debt Securities
are offered and sold directly by the Company. Ownership of beneficial interests
in the Global Security will be limited to participants or persons that may hold
interests through participants. Ownership of beneficial interests by
participants in the Global Security will be shown on, and the transfer of that
ownership interest will be effected only through, records maintained by the
Depositary or its nominee for such Global Security. Ownership of beneficial
interests in the Global Security by persons that hold through participants will
be shown on, and the transfer of that ownership interest within such participant
will be effected only through, records maintained by such participant. The laws
of some jurisdictions require that certain purchasers of securities take
physical delivery of such securities in definitive form. Such limits and such
laws may impair the ability to transfer beneficial interests in a Global
Security.
So long as the Depositary or its nominee is the registered owner of a Global
Security, it will be considered the sole owner or holder of the Debt Securities
represented by such Global Security for all purposes under the Indenture. Except
as set forth below, owners of beneficial interests in such Global Security will
not be entitled to have the Debt Securities represented thereby registered in
their names, will not receive or be entitled to receive physical delivery of
certificates representing the Debt Securities and will not be considered the
owners or holders thereof under the Indenture.
Payment of principal of, premium, if any, and any interest on Debt
Securities represented by a Global Security will be made to the Depositary or
its nominee, as the case may be, as the registered owner or the holder of the
Global Security. None of the Company, the Trustee, any paying agent or registrar
for such Debt Securities will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in the Global Security or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
The Company has been advised by the Depositary that the Depositary will
credit participants' accounts with payments of principal, premium, if any, or
interest on the payment date thereof in amounts proportionate to their
respective beneficial interests in the principal amount of the Global Security
as shown on the records of the Depositary. The Company expects that payments by
participants to owners of beneficial interests in the Global Security held
through such participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers registered in "street name," and will be the responsibility of such
participants.
A Global Security may not be transferred except as a whole to a nominee or
successor of the Depositary. If the Depositary is at any time unwilling or
unable to continue as depositary and a successor depositary is not appointed by
the Company within ninety days, the Company will issue certificates in
registered form in exchange for the Global Security or securities representing
the Debt Securities. In addition, the Company may at any time and in its sole
discretion determine not to have Debt Securities of a series represented by a
Global Security and, in such event, will issue certificates in definitive form
in exchange for the Global Security representing such Debt Securities. (Section
2.12).
CERTAIN COVENANTS
Limitations on Liens. The Company covenants that, so long as any Debt
Securities remain outstanding (but subject to defeasance, as provided in the
Indenture), it will not, and will not permit any Restricted Subsidiary (as
defined below) to, issue, assume or guarantee any Indebtedness (as defined
below) which is secured by a mortgage, pledge, security interest, lien or
encumbrance (each a "lien") upon any Principal Property (as defined below), or
any shares of stock or Indebtedness issued by any Restricted Subsidiary, without
effectively providing that, for so long as such lien shall continue in existence
with respect to such secured Indebtedness, the Debt Securities (together with,
if the Company shall so determine, any other Indebtedness of the Company ranking
equally with the Debt Securities) shall be equally and ratably secured with (or
at the Company's option prior to) such secured
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Indebtedness, except that the foregoing covenant shall not apply to (a) liens
existing on the date of the Indenture; (b) liens on the stock, assets or
Indebtedness of a corporation existing at the same time such corporation becomes
a Restricted Subsidiary; (c) liens on the assets or Indebtedness of a
corporation existing at the time such corporation is merged into the Company or
a Subsidiary; (d) liens on any Principal Property existing at the time of
acquisition thereof, or to secure the payment of the purchase price of such
Principal Property, or to secure Indebtedness incurred, assumed or guaranteed by
the Company or a Restricted Subsidiary for the purpose of financing all or any
part of the purchase price of such Principal Property or improvements or
construction thereon, which Indebtedness is incurred, assumed or guaranteed
prior to, at the time of, or within one year after such acquisition (or in the
case of real property, completion of such improvement or construction or
commencement of full operation of such property, whichever is later); (e) liens
securing Indebtedness owing by any Restricted Subsidiary to the Company or a
Subsidiary; (f) liens in favor of the United States or any State thereof or any
other country, or political subdivision thereof, to secure partial, progress,
advance or other payments pursuant to any contract, statute, rule or regulation
or to secure any Indebtedness incurred or guaranteed for the purpose of
financing all or any part of the purchase price (or, in the case of real
property, the cost of construction or improvement) of the Principal Property
subject to such liens (including but not limited to, liens incurred in
connection with pollution control, industrial revenue or similar financings);
(g) pledges, liens or deposits under worker's compensation or similar
legislation, or in connection with bids, tenders, contracts (other than for the
payment of money) or leases to which the Company or any Restricted Subsidiary is
a party, or to secure the public or statutory obligations of the Company or any
Restricted Subsidiary, or in connection with self-insurance, or to obtain the
benefits of any law pertaining to unemployment insurance, old age pensions,
social security or similar matters, or to secure surety, performance, appeal or
customs bonds to which the Company or any Restricted Subsidiary is a party, or
in litigation or other proceedings in connection with the matters heretofore
referred to in this clause(s), such as, but not limited to, interpleader
proceedings, and other similar pledges, liens or deposits made or incurred in
the ordinary course of business; (h) certain liens in connection with legal
proceedings, including certain liens arising out of judgments or awards, to the
extent such proceedings are being contested or appealed in good faith, or liens
incurred for the purpose of obtaining a stay or discharge in the course of any
litigation or other proceeding; (i) liens for certain taxes or assessments,
landlord's liens and liens and charges incidental to the conduct of the business
of the Company or any Restricted Subsidiary, or the ownership of their assets,
which were not incurred in connection with the borrowing of money and which do
not, in the opinion of the Board of Directors of the Company, materially impair
the use of such Principal Property in the operation of the business of the
Company or such Restricted Subsidiary or the value of such Principal Property
for the purposes thereof; (j) liens to secure the Company's or any Restricted
Subsidiary's obligations under agreements with respect to spot, forward, future
and option transactions, entered into in the ordinary course of business; (k)
liens not permitted by the foregoing clauses (a) to (j), inclusive, if at the
time of, and after giving effect to, the creation or assumption of such lien,
the aggregate amount of all outstanding Indebtedness of the Company and its
Restricted Subsidiaries (without duplication) secured by all liens not so
permitted by the foregoing clauses (a) through (j), inclusive, together with the
Attributable Debt (as defined below) in respect of Sale and Lease-Back
Transactions (as defined below) permitted by paragraph (a) under "Limitation on
Sale and Lease-Back Transactions" below does not exceed the greater of
$100,000,000 and 10% of Consolidated Net Worth (as defined below); and (l) any
extension, renewal or replacement (or successive extensions, renewals or
replacements) in whole or in part, of any lien referred to in the foregoing
clauses (a) to (k), inclusive. (Section 3.9).
Limitation on Sale and Lease-Back Transactions. The Company will not, and
will not permit any Restricted Subsidiary to, enter into any Sale and Lease-Back
Transaction with respect to a Principal Property unless (a) the Company or such
Restricted Subsidiary would, at the time of entering into a Sale and Lease-Back
Transaction, be entitled to incur Indebtedness secured by a lien on the
Principal Property to be leased in an amount at least equal to the Attributable
Debt in respect of such transaction, without equally and ratably securing the
Debt Securities pursuant to the provisions described under
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"Limitations on Liens" above, or (b) the direct or indirect proceeds of the sale
of the Principal Property to be leased are at least equal to their fair value
(as determined by the Company's Board of Directors) and an amount equal to the
net proceeds is applied, within 180 days of the effective date of such
transaction, to the purchase or acquisition (or, in the case of real property,
commencement of the construction) of property or assets or to the retirement
(other than at maturity or pursuant to a mandatory sinking fund or mandatory
redemption provision) of Debt Securities, or of Funded Indebtedness (as defined
below) of the Company that ranks on a parity with the Debt Securities or of
Funded Indebtedness of a consolidated Subsidiary of the Company (subject to
credits for certain voluntary retirement of Funded Indebtedness and certain
delivery of Debt Securities to the Trustee for retirement and cancellation).
(Section 3.10).
Definitions. "Attributable Debt" means in connection with a Sale and
Lease-Back Transaction, as of any particular time, the aggregate of present
values (discounted at a rate per annum equal to the average interest borne by
all outstanding Debt Securities determined on a weighted average basis and
compounded semi-annually) of the obligations of the Company or any Restricted
Subsidiary for net rental payments during the remaining term of the applicable
lease (including any period for which such lease has been extended or may, at
the option of the lessor, be extended). The term "net rental payments" under any
lease of any period shall mean the sum of the rental and other payments required
to be paid in such period by the lessee thereunder, not including, however, any
amounts required to be paid by such lessee (whether or not designated as rental
or additional rental) on account of maintenance and repairs, reconstruction,
insurance, taxes, assessments, water rates or similar charges required to be
paid by such lessee thereunder or any amounts required to be paid by such lessee
thereunder contingent upon the amount of sales, maintenance and repairs,
reconstruction, insurance, taxes, assessments, water rates or similar charges.
"Consolidated Net Worth" means, at any date, the total assets less the total
liabilities, each as appearing on the most recently prepared consolidated
balance sheet of the Company and its subsidiaries as of the end of a fiscal
quarter of the Company, prepared in accordance with generally accepted
accounting principles.
"Consolidated Tangible Assets" means, at any date, the total assets less all
intangible assets appearing on the most recently prepared consolidated balance
sheet of the Company and its subsidiaries as of the end of a fiscal quarter of
the Company, prepared in accordance with generally accepted accounting
principles. "Intangible Assets" means the value (net of any applicable
reserves), as shown on or reflected in such balance sheet of: (i) all trade
names, trademarks, licenses, patents, copyrights and goodwill; (ii)
organizational costs; and (iii) deferred charges (other than prepaid items such
as insurance, taxes, interest, commissions, rents and similar items and tangible
assets being amortized); but in no event shall the term "intangible assets"
include product development costs.
"Funded Indebtedness" means any Indebtedness maturing by its terms more than
one year from the date of the determination thereof, including any Indebtedness
renewable or extendible at the option of the obligor to a date later than one
year from the date of the determination thereof.
"Indebtedness" means, without duplication, the principal or face amount of
(i) all obligations for borrowed money, (ii) all obligations evidenced by
debentures, notes or other similar instruments, (iii) all obligations in respect
of letters of credit or bankers acceptances or similar instruments (or
reimbursement obligations with respect thereto), (iv) all obligations to pay the
deferred purchase price of property or services, except trade accounts payable
arising in the ordinary course of business, (v) all obligations as lessee which
are capitalized in accordance with generally accepted accounting principles, and
(vi) all Indebtedness of others guaranteed by the Company or any of its
Subsidiaries or for which the Company or any of its Subsidiaries is legally
responsible or liable (whether by agreement to purchase indebtedness of, or to
supply funds or to invest in, others).
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"Principal Property" means (i) certain manufacturing, processing or assembly
plants and facilities, warehouse facilities and distribution facilities
specified in the Indenture and (ii) any manufacturing, processing or assembly
plant or facility or any warehouse or distribution facility which is located
within the United States and is used by the Company or any Subsidiary after the
date hereof, other than any such plants, facilities, warehouses or portions
thereof, which in the opinion of the Board of Directors, are not collectively of
material importance to the total business conducted by the Company and its
Restricted Subsidiaries as an entirety, or which, in each case, has a book
value, on the date of the acquisition or completion of the initial construction
thereof by the Company, of less than 1.5% of Consolidated Tangible Assets.
"Restricted Subsidiary" means any Subsidiary organized under the laws of the
United States or any State thereof or the District of Columbia (i) substantially
all of the property of which is located, or substantially all of the business of
which is carried on, within the United States and (ii) which owns or leases a
Principal Property.
"Sale and Lease-Back Transaction" means an arrangement with any person
providing for the leasing by the Company or a Restricted Subsidiary of any
Principal Property whereby such Principal Property has been or is to be sold or
transferred by the Company or a Restricted Subsidiary to such person; provided,
however, that the foregoing shall not apply to any such arrangement involving a
lease for a term, including renewal rights, for not more than three years.
"Subsidiary" means any corporation of which at least a majority of the
outstanding securities having voting power under ordinary circumstances for the
election of the board of directors of said corporation shall at the time
directly or indirectly be owned or controlled by the Company or by one or more
Subsidiaries or by the Company and one or more Subsidiaries or by one or more
Subsidiaries. (Section 1.1).
MERGER, CONSOLIDATION, SALE OR CONVEYANCE
The Indenture provides that the Company will not merge or consolidate with
any other corporation and will not sell or convey all or substantially all of
its assets to any person, unless the Company shall be the continuing
corporation, or the successor corporation or person that acquires all or
substantially all of the assets of the Company shall be a corporation organized
under the laws of the United States or a State thereof or the District of
Columbia and shall expressly assume the payment of principal of, premium, if
any, and interest on the Debt Securities and the observance of all the covenants
and agreements under the Indenture to be performed or observed by the Company,
and immediately after such merger, consolidation, sale or conveyance, the
Company, such person or such successor corporation shall not be in default in
the performance of the covenants and agreements of the Indenture to be performed
or observed by the Company. Notwithstanding the foregoing, the Company may
engage in a transaction or series of related transactions for the purpose of
causing (w) the Company to become a direct or indirect wholly-owned subsidiary
of a corporation (the "Foreign Parent") organized under a jurisdiction other
than the United States or any State thereof or the District of Columbia, (x) the
public shareholders of the Company to become shareholders of the Foreign Parent,
(y) one or more Subsidiaries of the Company organized under a jurisdiction other
than the United States or any State thereof or the District of Columbia (the
"Foreign Subsidiaries") to cease to be Subsidiaries of the Company and to become
subsidiaries of the Foreign Parent, and (z) intercompany debt of the Foreign
Subsidiaries held by one or more Subsidiaries of the Company to be held by the
Foreign Parent or one or more of its subsidiaries; provided, however, that (i)
the Company shall remain incorporated under the laws of the United States or a
State thereof or the District of Columbia, (ii) the Company shall remain the
obligor on the Debt Securities, (iii) the Consolidated Net Worth of the Company
immediately after giving effect to and solely as a result of the transaction or
transactions referred to in this sentence shall not be materially less than the
Consolidated Net Worth of the Company immediately prior to giving effect to such
transaction or transactions, and (iv) immediately following consummation of the
transaction or
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transactions referred to in this sentence the Company shall not be in default in
the performance of the covenants and agreements of the Indenture to be performed
or observed by the Company. (Section 8.1).
EVENTS OF DEFAULT
An Event of Default with respect to Debt Securities of any series issued
under the Indenture is defined in the Indenture as being: default for 30 days in
payment of any interest upon any Debt Securities of such series; default in any
payment of principal of or premium, if any, on any Debt Securities of such
series (including any sinking fund payment); default by the Company in
performance of any other of the covenants or agreements in respect of the Debt
Securities of such series or the Indenture which shall not have been remedied
for a period of 90 days after written notice to the Company by the Trustee or
the holders of at least 25% of the principal amount of all Debt Securities of
all affected series, specifying that such notice is a "Notice of Default" under
the Indenture; default by the Company in the payment at the final maturity
thereof, after the expiration of any applicable grace period, of principal of,
premium, if any, or interest on indebtedness for money borrowed (other than
Non-Recourse Indebtedness, as defined) in the principal amount then outstanding
of $25,000,000 or more, or acceleration of any indebtedness in such principal
amount so that it becomes due and payable prior to the date on which it would
otherwise have become due and payable and such acceleration is not rescinded
within ten business days after notice to the Company by the Trustee or the
holders of at least 25% of the principal amount of all of the Debt Securities at
the time outstanding (treated as one class); certain events involving
bankruptcy, insolvency or reorganization of the Company; or any other Event of
Default established for the Debt Securities of such series set forth in the
accompanying Prospectus Supplement. (Section 4.1). The Indenture provides that
the Trustee shall transmit notice of any uncured default under the Indenture
with respect to any series, within 90 days after the occurrence of such default,
to the holders of Debt Securities of each affected series, except that the
Trustee may withhold notice to the holders of any series of the Debt Securities
of any default (except in payment of principal of, premium, if any, or interest
on, such series of Debt Securities) if the Trustee considers it in the interest
of the holders of such series of Debt Securities to do so. (Section 4.11).
The Indenture provides that (a) if an Event of Default due to the default in
payment of principal of, premium, if any, or interest on, any series of Debt
Securities issued under the Indenture or due to the default in the performance
or breach of any other covenant or agreement of the Company applicable to the
Debt Securities of such series but not applicable to all outstanding Debt
Securities issued under the Indenture shall have occurred and be continuing,
either the Trustee or the holders of not less than 25% in principal amount of
the Debt Securities of each affected series issued under the Indenture and then
outstanding (each such series voting as a separate class) may declare the
principal of all Debt Securities of such affected series and interest accrued
thereon to be due and payable immediately; and (b) if an Event of Default due to
a default in the performance of any other of the covenants or agreements in the
Indenture applicable to all outstanding Debt Securities issued thereunder and
then outstanding, or due to a default in payment at final maturity upon or
acceleration of indebtedness for money borrowed in the principal amount then
outstanding of $25,000,000 or more, or to certain events of bankruptcy,
insolvency and reorganization of the Company shall have occurred and be
continuing, either the Trustee or the holders of not less than 25% in principal
amount of all Debt Securities issued under the Indenture and then outstanding
(treated as one class) may declare the principal of all such Debt Securities and
interest accrued thereon to be due and payable immediately, but upon certain
conditions such declarations may be annulled and past defaults may be waived
(except a continuing default in payment of principal of, premium, if any, or
interest on such Debt Securities) by the holders of a majority in principal
amount of the Debt Securities of all such affected series then outstanding (each
such series voting as a separate class or all such Debt Securities voting as a
single class, as the case may be). (Sections 4.1 and 4.10).
The holders of a majority in principal amount of the Debt Securities of each
series then outstanding and affected (with each series voting as a separate
class) shall have the right to direct the time, method
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and place of conducting any proceeding for any remedy available to the Trustee
with respect to the Debt Securities of such series under the Indenture, subject
to certain limitations specified in the Indenture, provided that the holders of
such Debt Securities shall have offered to the Trustee reasonable indemnity
against expenses and liabilities. (Sections 4.9 and 5.2(d)).
The Indenture provides that no holder of Debt Securities of any series may
institute any action against the Company under the Indenture (except actions for
payment of overdue principal, premium, if any, or interest) unless such holder
previously shall have given to the Trustee written notice of default and
continuance thereof and unless the holders of not less than 25% in principal
amount of the Debt Securities of each affected series (with each series voting
as a separate class) issued under the Indenture and then outstanding shall have
requested the Trustee to institute such action and shall have offered the
Trustee reasonable indemnity, and the Trustee shall not have instituted such
action within 60 days of such request, and the Trustee shall not have received
direction inconsistent with such written request by the holders of a majority in
principal amount of the Debt Securities of each affected series (with each
series voting as a separate class) issued under such Indenture and then
outstanding. (Sections 4.6 and 4.7).
The Indenture requires the annual filing by the Company with the Trustee of
a written statement as to compliance with the covenants and agreements contained
in the Indenture. (Section 3.5).
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Company may discharge or defease its obligations under the Indenture as
set forth below.
Under terms satisfactory to the Trustee, the Company may discharge this
Indenture with respect to any series of Debt Securities issued under the
Indenture which have not already been delivered to the Trustee for cancellation
and which have either become due and payable or are by their terms due and
payable within one year (or which may be called for redemption within one year)
by irrevocably depositing with the Trustee cash or direct obligations of the
United States as trust funds in an amount certified to be sufficient to pay at
maturity (or upon redemption) the principal of, premium, if any, and interest on
such Debt Securities. However, the Company may not thereby avoid its duty to
register the transfer or exchange of such series of Debt Securities, to replace
any mutilated, destroyed, lost or stolen Debt Securities of such series or to
maintain an office or agency in respect of such series of Debt Securities.
(Section 9.1).
In the case of any series of Debt Securities in respect of which the exact
amounts of principal of and interest due on such series can be determined at the
time of making the deposit referred to below, the Company at its option at any
time may also (i) discharge any and all of its obligations to holders of such
series of Debt Securities issued under the Indenture ("defeasance"), but may not
thereby avoid its duty to register the transfer or exchange of such series of
Debt Securities, to replace any mutilated, destroyed, lost, or stolen Debt
Securities of such series or to maintain an office or agency in respect of such
series of Debt Securities or (ii) be released with respect to any outstanding
series of Debt Securities issued under the Indenture from the obligations
imposed by the covenants described under the captions "Covenants" and "Merger,
Consolidation, Sale, Lease, or Conveyance" above and omit to comply with such
covenants without creating an Event of Default ("covenant defeasance").
Defeasance or covenant defeasance may be effected only if, among other things:
(i) the Company irrevocably deposits with the Trustee cash and/or direct
obligations of the United States, as trust funds in an amount certified by a
nationally recognized firm of independent public accountants to be sufficient to
pay each installment of principal of, premium, if any, and interest on all
outstanding Debt Securities of such series issued under the Indenture on the
dates such installments of principal, premium, if any, and interest are due;
(ii) no default or Event of Default shall have occurred and be continuing on the
date of the deposit referred to in clause (i) or, in respect of certain events
of bankruptcy, insolvency or reorganization, during the period ending on the
121st day after the date of such deposit (or any longer applicable preference
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period); and (iii) the Company delivers to the Trustee an opinion of counsel to
the effect that the holders of such series of Debt Securities will not recognize
income, gain or loss for United States federal income tax purpose as a result of
such defeasance or covenant defeasance and will be subject to United States
federal income tax on the same amounts and in the same manner and at the same
times as would have been the case if such defeasance or covenant defeasance had
not occurred (in the case of defeasance, such opinion must be based on a ruling
of the Internal Revenue Service or a change in United States federal income tax
law occurring after the date of the Indenture). (Sections 9.2, 9.3, 9.4 and
9.5).
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than a majority of principal amount
of the Debt Securities at the time outstanding of all series affected (voting as
one class), to modify the Indenture or any supplemental indenture or the rights
of the holders of the Debt Securities, except that no such modification shall
(i) extend the final maturity of any of the Debt Securities or reduce the
principal amount thereof, or reduce the rate or extend the time of payment of
interest thereon, or reduce any amount payable on redemption thereof, or reduce
the amount of any original issue discount security payable upon acceleration or
provable in bankruptcy or impair or affect the right of any holder of the Debt
Securities to institute suit for the payment thereof without the consent of the
holder of each of the Debt Securities so affected or (ii) reduce the aforesaid
percentage in principal amount of Debt Securities, the consent of the holders of
which is required for any such modification, without the consent of the holders
of all Debt Securities then outstanding. (Section 7.2).
The Indenture contains provisions permitting the Company and the Trustee,
without the consent of any holders of Debt Securities, to enter into a
supplemental indenture, among other things, for purposes of curing any ambiguity
or correcting or supplementing any provision contained in the Indenture or in
any supplemental indenture or making other provisions in regard to the matters
or questions arising under the Indenture or any supplemental indenture as the
Board of Directors of the Company deems necessary or desirable and which does
not adversely affect the interests of the holders of Debt Securities in any
material respect. The Company and the Trustee, without the consent of any
holders of Debt Securities, may also enter into a supplemental indenture to
establish the form or terms of any series of Debt Securities as are not
otherwise inconsistent with any of the provisions of the Indenture. (Section
7.1).
CONCERNING THE TRUSTEE
The Trustee may hold Debt Securities, act as a depository for funds of, make
loans to, or perform other services for, the Company and its Subsidiaries as if
it were not the Trustee. (Section 5.4).
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PLAN OF DISTRIBUTION
The Company may sell Debt Securities to or through underwriters or dealers,
and also may sell Debt Securities directly to other purchasers or through
agents. Each Prospectus Supplement will describe the method of distribution of
the offered Debt Securities.
The distribution of the Debt Securities may be effected from time to time in
one or more transactions at a fixed price or prices, which may be changed, or at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
In connection with the sale of Debt Securities, underwriters may receive
compensation from the Company or from purchasers of Debt Securities for whom
they may act as agents in the form of discounts, concessions, or commissions.
Underwriters may sell Debt Securities to or through dealers, and such dealers
may receive compensation in the form of discounts, concessions, or commissions
from the underwriters and/or commissions from the purchasers for whom they may
act as agents. Underwriters, dealers, and agents that participate in the
distribution of Debt Securities may be deemed to be underwriters, and any
discounts or commissions received by them from the Company and any profit on the
resale of Debt Securities by them may be deemed to be underwriting discounts and
commissions, under the Securities Act. Any such underwriter or agent will be
identified, and any such compensation received from the Company will be
described, in the Prospectus Supplement.
Underwriters and agents who participate in the distribution of Debt
Securities may be entitled under agreements which may be entered into by the
Company to indemnification by the Company against certain liabilities, including
liabilities under the Securities Act.
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters or other persons acting as the Company's agents to solicit offers
by certain institutions to purchase offered Debt Securities from the Company
pursuant to contracts providing for payment and delivery on a future date.
Institutions with which such contracts may be made include commercial and
savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and others, but in all cases such
institutions must be approved by the Company. The obligations of any purchaser
under any such contract will be subject to the condition that the purchase of
the offered Debt Securities shall not at the time of delivery be prohibited
under the laws of the jurisdiction to which such purchaser is subject. The
underwriters and such other agents will not have any responsibility in respect
of the validity or performance of such contracts.
EXPERTS
The Consolidated Financial Statements of the Company for the years ended
June 30, 1995 and 1994 and the combination of the financial statements of the
Company and Kendall Inc. for the year ended June 30, 1993 incorporated by
reference in this Prospectus have been so incorporated by reference in reliance
on the report of Coopers & Lybrand L.L.P., independent accountants, given on the
authority of that firm as experts in accounting and auditing.
The Consolidated Financial Statements of the Company for the year ended June
30, 1993 (prior to retroactive restatement to account for the pooling of
interests with Kendall on October 19, 1994) incorporated by reference in this
Prospectus have been so incorporated by reference in reliance on the report
(which includes an explanatory paragraph relating to the fact that the Company
changed its method of accounting for incomes taxes and for post-retirement
benefits other than pensions in fiscal 1993) of Price Waterhouse LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
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LEGAL OPINIONS
The validity of the Debt Securities offered hereby will be passed upon for
the Company by M. Brian Moroze, Esq., General Counsel of the Company, and
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel, New York, New York. Joshua M.
Berman, a director and the Secretary of the Company, is counsel to the law firm
of Kramer, Levin, Naftalis, Nessen, Kamin & Frankel and owns 36,000 shares of
Common Stock of the Company. As of the date of this Prospectus, Mr. Moroze holds
20,945 shares of the Common Stock of the Company.
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