<PAGE> 1
Filed pursuant to Rule 424(b)(5)
Registration No. 333-00583
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED FEBRUARY 13, 1996)
$75,000,000
U.S. HOME CORPORATION
7.95% SENIOR NOTES DUE 2001
------------------------
The 7.95% Senior Notes due 2001 (the "Senior Notes") of U.S. Home
Corporation (the "Company") are unsecured and unsubordinated obligations of the
Company ranking on a parity with all other unsecured and unsubordinated
obligations of the Company and constitute Senior Debt Securities (as defined in
the Prospectus). Interest on the Senior Notes is payable on March 1 and
September 1 of each year, commencing September 1, 1996. The Senior Notes are not
redeemable at the option of the Company prior to their maturity.
Upon a Change of Control (as defined), holders of Senior Notes have the
right to require the Company to purchase the Senior Notes at a purchase price of
101% of the principal amount thereof, plus accrued and unpaid interest, if any,
to the date of purchase.
The Senior Notes will be issued only in book-entry form through the
facilities of The Depository Trust Company (the "Depository"). Interests in the
Senior Notes will be shown in, and transfer thereof will be effected only
through, records maintained by the Depository and its participants. Except as
provided herein, Senior Notes in definitive form will not be issued. See
"Description of Debt Securities -- Global Securities" in the Prospectus.
See "Risk Factors" beginning on page S-3 for a discussion of certain
factors that should be considered by prospective purchasers of the Senior 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.
------------------------
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT
PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING.
ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
------------------------
<TABLE>
<CAPTION>
Underwriting
Discounts
Price to and Proceeds to
Public Commissions* Company+
<S> <C> <C> <C>
Per Senior Note................ 100.000% 2.125% 97.875%
Total.......................... $75,000,000 $1,593,750 $73,406,250
</TABLE>
- ---------------
* The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933. See
"Underwriting."
+ Before deducting expenses estimated at $500,000, which will be paid by the
Company.
------------------------
The Senior Notes are being offered by the Underwriter as set forth under
"Underwriting" herein. It is expected that delivery thereof will be made through
the book-entry facilities of the Depository on or about February 16, 1996,
against payment therefor in immediately available funds. the Underwriter is:
DILLON, READ & CO. INC.
The date of this Prospectus Supplement is February 13, 1996.
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SENIOR NOTES AT
LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
S-2
<PAGE> 3
THE COMPANY
U.S. Home Corporation (the "Company"), organized in 1954 and incorporated
in the State of Delaware in 1959, is one of the largest single-family
homebuilders in the United States based on homes delivered. The Company
currently builds and sells homes in more than 200 new home communities in 32
metropolitan areas in 12 states. Since its formation, the Company has delivered
more than 260,000 homes. The Company conducts substantially all of its
homebuilding business through U.S. Home Corporation, the parent company. In
addition to building single family homes, the Company provides mortgage banking
services to its customers.
The principal executive offices of the Company are located at 1800 West
Loop South, Houston, Texas 77027 (telephone: (713) 877-2311).
RISK FACTORS
Prospective investors should carefully consider the specific factors set
forth below as well as the other information included or incorporated by
reference in this Prospectus Supplement or the Prospectus before deciding to
invest in the Senior Notes offered hereby.
REAL ESTATE, ECONOMIC AND CERTAIN OTHER CONDITIONS
The Company is significantly affected by the cyclical nature of the
homebuilding industry, which is sensitive to fluctuations in economic activity
and interest rates. Sales of new homes are also affected by market conditions
for rental properties and by the condition of the resale market for used homes,
including foreclosed homes. For example, an oversupply of resale units depresses
prices and reduces the margins available on sales of new homes. The sale of new
homes and profitability from sales are heavily influenced by the level and
expected direction of interest rates. Increases in interest rates tend to have a
depressing effect on the market for new homes in view of increased monthly
mortgage costs to potential home buyers.
Inventory risk is substantial for homebuilders. The market value of housing
inventories, building lots and raw land can change significantly over the life
of a community, reflecting dynamic market conditions. In addition, inventory
carrying costs are significant. This can result in losses when trying to exit a
poorly performing community or market. The Company intends to continue to reduce
risks associated with housing inventories, building lots and raw land through
(i) maintaining its diverse community locations and markets and (ii) acquiring
lots and land under option where possible, thereby enabling the Company to
control land with a smaller capital investment. However, there can be no
assurance that such efforts will be successful.
Cash flow management is crucial due to the high leverage and seasonal cycle
of home sales. The need to stage critical raw materials such as land and
finished lots ahead of the start of home construction requires homebuilders to
commit working capital for long periods of time. The Company intends to continue
to limit investments in land and finished lots through the use of option
contracts and to keep fixed overhead costs low. In addition, the Company intends
to continue to control housing inventory by generally not commencing
construction until the Company receives an executed sales contract from the
housing purchaser and preliminary mortgage approval based on the purchaser's
mortgage application. However, there can be no assurance that such efforts will
be successful.
COMPETITION
The residential housing industry is highly competitive, and the Company
competes in each of its markets with a large number of national, regional and
local homebuilding companies. Some of these companies are larger than the
Company and have greater financial resources.
REGULATORY AND ENVIRONMENTAL MATTERS
The Company and its competitors are subject to various local, state and
federal statutes, ordinances, rules and regulations concerning zoning, building
design, construction and similar matters, including local
S-3
<PAGE> 4
regulation which imposes restrictive zoning and density requirements in order to
limit the number of homes that can eventually be built within the boundaries of
a particular area. The Company may also be subject to periodic delays in its
homebuilding projects due to building moratoria in any of the areas in which it
operates.
The Company and its competitors are subject to a variety of local, state
and federal statutes, ordinances, rules and regulations concerning the
protection of health and the environment. The Company is also subject to a
variety of environmental conditions that can affect its business and its
homebuilding projects. The particular environmental laws which apply to any
given homebuilding site vary greatly according to the site's location, the
site's environmental condition and the present and former uses of the site, as
well as adjoining properties. Environmental laws and conditions may result in
delays, may cause the Company to incur substantial compliance and other costs,
and can prohibit or severely restrict homebuilding activity in certain
environmentally sensitive regions or areas.
LEVERAGE
The Company has significant indebtedness. At December 31, 1995, as adjusted
for the issuance of the Senior Notes offered hereby and application of the
proceeds thereof, the Company would have had total housing debt of approximately
$375.6 million and a ratio of total housing debt to stockholders' equity of
approximately 1.14 to 1. In addition, the Company expects to borrow additional
amounts under its unsecured revolving working capital facility (the "Credit
Agreement") or otherwise. See "Use of Proceeds."
The ability of the Company to meet its debt service obligations will be
dependent upon the future performance of the Company, which, in turn, will be
subject to general economic conditions and to financial, competitive, business
and other factors, including factors beyond the Company's control. The level of
the Company's indebtedness could restrict its flexibility in responding to
changing business and economic conditions. The Company believes that cash flow
from operations will be sufficient to cover the Company's debt service
requirements. However, if the Company is at any time unable to generate
sufficient cash flow from operations to service its debt, it may be required to
seek refinancing for all or a portion of that debt or to obtain additional
financing. There can be no assurance that any such refinancing would be possible
or that any additional financing could be obtained on terms that are favorable
or acceptable to the Company.
The Credit Agreement imposes restrictions on the Company's operations and
requires the Company to achieve and maintain certain financial ratios. Such
restrictions include, among other things, limitations on the ability of the
Company to incur additional indebtedness, to own land, to pay dividends or make
other distributions, and to enter into mergers and certain other transactions.
MARKET FOR THE SENIOR NOTES
The Senior Notes are a new issue of securities, have no established trading
market and may not be widely distributed. Dillon, Read & Co. Inc. intends to
make a market in the Senior Notes; however, it is not obligated to do so and any
market making may be discontinued at any time without notice. No application
will be made to list the Senior Notes on any stock exchange. Accordingly, no
assurance can be given as to the liquidity of, trading market for, or secondary
market prices for the Senior Notes.
CHANGE OF CONTROL
Upon a Change of Control (as defined in the Prospectus), the Company will
be required to offer to repurchase all of the outstanding Senior Notes at 101%
of the principal amount thereof, plus accrued and unpaid interest to the date of
repurchase. There can be no assurance that the Company will have sufficient
funds available or will be permitted by its other indebtedness agreements to
repurchase the Senior Notes upon the occurrence of a Change of Control. In
addition, a Change of Control may require the Company to offer to repurchase its
9 3/4% Senior Notes due 2003 and 4 7/8% Convertible Subordinated Debentures due
2005 and may cause a default under the Credit Agreement. See "Description of
Debt Securities -- Senior Indenture Covenants -- Change of Control" in the
Prospectus. The inability to repurchase all of the tendered Senior Notes would
constitute an Event of Default (as defined in the Prospectus) under the Senior
Indenture.
S-4
<PAGE> 5
USE OF PROCEEDS
The net proceeds (after deducting underwriting discounts and commissions
and estimated offering expenses) from the sale of the Senior Notes offered
hereby will be approximately $72.9 million. The Company intends to apply such
net proceeds to repay outstanding short-term indebtedness of approximately $54.0
million at January 31, 1996 outstanding under the Credit Agreement. The balance
of the net proceeds will be used for working capital and general corporate
purposes. Indebtedness under the Credit Agreement may be reborrowed by the
Company after repayment, bears interest at fluctuating rates (an average
weighted rate of approximately 7.7% at January 31, 1996) and matures on
September 29, 1998, subject to extension with the consent of the lenders
thereunder.
SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL
------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------
1993 1994 1995
-------- -------- ----------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Housing operating revenues................................ $798,950 $982,378 $1,092,283
Housing gross margin...................................... 130,244 158,781 173,635
Housing operating income.................................. 41,830 51,045 55,739
Financial services operating income....................... 2,810 1,481 3,333
Income before reorganization items and income taxes....... 44,640 52,526 59,072
Net income................................................ 71,691(1) 32,829 36,920
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1995
-----------------------------
HISTORICAL AS ADJUSTED(2)
---------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Housing Assets
Cash............................................................. $ 5,110 $ 54,016
Other assets..................................................... 772,301 774,395
-------- --------
Total Housing Assets............................................... 777,411 828,411
Financial services assets.......................................... 64,673 64,673
-------- --------
Total assets............................................. $ 842,084 $893,084
======== ========
Housing Debt:
Credit Agreement................................................. $ 24,000 $--
Notes and mortgages payable...................................... 20,599 20,599
Senior Notes due 2003............................................ 200,000 200,000
Convertible Subordinated Debentures due 2005..................... 80,000 80,000
Senior Notes offered hereby...................................... -- 75,000
-------- --------
Total housing debt....................................... 324,599 375,599
Financial services debt............................................ 35,371 35,371
-------- --------
Total debt............................................... $ 359,970 $410,970
======== ========
Stockholders' equity............................................... $ 328,992 $328,992
======== ========
Total housing debt as a percent of total housing debt and
stockholders' equity............................................. 49.7% 53.3%
Net housing debt as a percent of net housing debt and stockholders'
equity (3)....................................................... 49.3% 49.4%
</TABLE>
S-5
<PAGE> 6
<TABLE>
<CAPTION>
HISTORICAL
----------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------
1993 1994 1995
-------- -------- --------
<S> <C> <C> <C>
OPERATING DATA:
New orders taken -- units (4).............................. 6,418 6,234 6,959
Homes delivered -- units................................... 5,586 6,387 6,779
Homes under contract at period end (backlog) -- units
(5)...................................................... 2,704 2,551 2,731
Homes under contract at period end (backlog) -- dollars
(5)...................................................... $412,269 $414,351 $460,337
Average sales price........................................ $141,300 $151,000 $158,600
Single-family homes gross margin percent................... 16.2% 16.3% 16.1%
Selling, general and administrative expenses as a percent
of housing revenues...................................... 11.0% 11.0% 10.8%
</TABLE>
- ---------------
(1) Net income for the year ended December 31, 1993 includes the recognition of
a $45 million tax benefit resulting from the resolution of prior
uncertainties concerning the valuation allowance related to the Company's
deferred tax assets attributable to its net operating loss carry forwards.
(2) As adjusted for the sale of the Senior Notes offered hereby assuming the
proceeds therefrom are first utilized to repay amounts outstanding under the
Credit Agreement with the remainder being added to housing assets for
working capital and general corporate purposes. See "Use of Proceeds."
(3) Net housing debt is total housing debt less cash.
(4) New orders taken are net of cancellations. The Company recognizes revenue at
closing when title is transferred.
(5) Substantially all of the Company's backlog units at December 31, 1995, net
of cancellations, are expected to result in revenues in the year ending
December 31, 1996.
S-6
<PAGE> 7
DESCRIPTION OF SENIOR NOTES
The Senior Notes constitute Senior Debt Securities (as defined in the
Prospectus). The following description of the particular terms of the Senior
Notes supplements the description of the general terms and provisions of Debt
Securities set forth in the Prospectus, to which description reference is hereby
made. Capitalized terms used but not defined herein have the meanings set forth
in the Prospectus.
The Senior Notes will constitute direct, unsecured general obligations of
the Company, will be issued under the Senior Indenture between the Company and
IBJ Schroder Bank & Trust Company, as Trustee (the "Trustee"), will be limited
to $75,000,000 principal amount, will be issued in book-entry form only and will
mature on March 1, 2001.
The Senior Notes will bear interest from February 16, 1996 or from the most
recent date to which interest has been paid or provided for, at the rate of
7.95% per annum, payable semi-annually on March 1 and September 1, commencing on
September 1, 1996, to the persons in whose names the Senior Notes are registered
at the close of business on the preceding February 15 and August 15,
respectively.
The Senior Notes will not be redeemable prior to maturity or entitled to
any sinking fund.
The Company can discharge or defease its obligations under the Senior
Indenture for the Senior Notes as set forth below.
The Company may discharge certain obligations to holders of the Senior
Notes that have not already been delivered to the Trustee for cancellation and
that have either become due and payable or are by their terms due and payable
within one year by irrevocably depositing with the Trustee cash or U.S.
Government Obligations, or a combination thereof, as trust funds in an amount
sufficient to pay at maturity the principal of and interest on the Senior Notes.
The Company may also discharge any and all of its obligations to holders of
the Senior Notes at any time ("defeasance"), but may not thereby avoid its duty
to register the transfer or exchange of the Senior Notes, to replace any
temporary, mutilated, destroyed, lost or stolen Senior Notes or to maintain an
office or agency in respect of the Senior Notes and certain other obligations.
Alternatively, the Company may be released with respect to the Senior Notes from
the obligations imposed by certain covenants of the Senior Indenture described
under the caption "Debt Securities -- Certain Covenants of the Company" and
"-- Senior Indenture Covenants" in the Prospectus 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:
(a) the Company irrevocably deposits with the Trustee cash or U.S. Government
Obligations, or a combination thereof, as trust funds in an amount certified to
be sufficient to pay at maturity the principal of and interest on all
outstanding Senior Notes; (b) no Event of Default under the Senior Notes has
occurred and is then continuing; (c) the defeasance or covenant defeasance will
not result in an event of default under any agreement to which the Company is a
party or by which it is bound; and (d) the Company delivers to the Trustee an
opinion of counsel to the effect that the holders of the Senior Notes will not
recognize income, gain or loss for federal income tax purposes as a result of
such defeasance or covenant defeasance will not otherwise alter such holders'
federal income tax treatment of principal and interest payments on the Senior
Notes.
For purposes hereof, "U.S. Government Obligations" means (i) any security
that is (a) a direct obligation of the United States for the payment of which
the full faith and credit of the United States is pledged or (b) an obligation
of a person controlled or supervised by and acting as an agency or
instrumentality of the United States the payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States, which, in
either case (a) or (b), is not callable or redeemable at the option of the
issuer thereof, and (ii) any depositary receipt issued by a bank (as defined in
Section 3(a)(2) of the Securities Act of 1933, as amended) as custodian with
respect to any U.S. Government Obligation specified in clause (i) and held by
such custodian for the account of the holder of such depositary receipt, or with
respect to any specific payment of principal of or interest on any such U.S.
Government Obligation; provided that (except as required by law) such custodian
is not authorized to make any deduction from the amount payable to the holder of
such depositary receipt from any amount received by the custodian in respect of
the U.S. Government Obligation or the specific payment of principal or interest
evidenced by such depositary receipt.
S-7
<PAGE> 8
Upon issuance, the Senior Notes will be represented by one or more global
securities which will be deposited with, or on behalf of, the Depository and
will be registered in the name of the Depository or a nominee of the Depository.
See "Description of Securities -- Global Securities" in the Prospectus.
UNDERWRITING
Dillon, Read & Co. Inc. (the "Underwriter") has agreed to purchase from the
Company, subject to the terms and conditions specified in the Underwriting
Agreement filed as an exhibit to the Company's Current Report on Form 8-K, dated
February 13, 1996, incorporated by reference in the Registration Statement, all
of the Senior Notes offered hereby. If any Senior Notes are purchased by the
Underwriter, all Senior Notes will be so purchased.
The Underwriter proposes to offer the Senior Notes directly to the public
at the price to public set forth on the cover page of this Prospectus Supplement
or at such price less a concession not in excess of 1.275% of the principal
amount of Senior Notes on sales to certain dealers. The Underwriter may allow,
and such dealers may reallow, a concession not in excess of 0.25% of the
principal amount of Senior Notes on sales to certain other dealers.
The offering of the Senior Notes is made for delivery when, as and if
accepted by the Underwriter and subject to prior sale and to withdrawal,
cancellation or modification of the offer without notice. The Underwriter
reserves the right to reject any order for the purchase of Senior Notes. After
the initial public offering, the offering price and concession may be changed by
the Underwriter.
The Company has agreed to indemnify the Underwriter against certain
liabilities, including certain liabilities under the Securities Act of 1933, as
amended, or to contribute to payments that the Underwriter may be required to
make in respect thereof.
The Underwriter has from time to time performed investment banking services
for the Company.
LEGAL MATTERS
The legality of the Senior Notes will be passed upon for the Company by
Kaye, Scholer, Fierman, Hays & Handler, LLP, New York, New York and for the
Underwriter by Davis Polk & Wardwell, New York, New York.
S-8
<PAGE> 9
$100,000,000
U.S. HOME CORPORATION
DEBT SECURITIES
---------------------
U.S. Home Corporation ("U. S. Home" or the "Company") may offer from time
to time, in one or more series, its debt securities, consisting of bonds,
debentures, notes and/or other unsecured evidences of indebtedness. The debt
securities may consist of the Company's unsecured senior debt securities (the
"Senior Debt Securities"), unsecured senior subordinated debt securities (the
"Senior Subordinated Debt Securities") or unsecured subordinated debt securities
(the "Subordinated Debt Securities," and together with the Senior Debt
Securities and the Senior Subordinated Debt Securities, the "Debt Securities").
The Debt Securities will have a maximum aggregate principal amount of
$100,000,000 and will be offered on terms to be determined at the time of sale.
The specific terms of the Debt Securities in respect of which this
Prospectus is being delivered will be set forth in the supplement accompanying
this Prospectus (the "Prospectus Supplement") and will include, where
applicable, the specific title, the aggregate principal amount, the currency,
authorized denominations, the maturity, the rate (or method of calculation) and
time of payment of interest, if any, any redemption or sinking fund provisions,
any additional covenants or events of default, the initial public offering price
and the other material terms of the Debt Securities. The Prospectus Supplement
will also disclose whether the Debt Securities will be listed on a national
securities exchange and if they are not to be listed, the possible effects
thereof on their marketability.
Debt Securities may be offered by the Company directly to one or more
purchasers, through agents designated from time to time by the Company or to or
through underwriters and/or dealers. If any agent of the Company or any
underwriter or dealer is involved in the sale of the Debt Securities, the name
of such agent, underwriter or dealer and any applicable purchase price, fee,
commission or discount arrangement between or among them will be set forth, or
will be calculable from the information set forth, in the applicable Prospectus
Supplement. See "Plan of Distribution." No Debt Securities may be sold without
delivery of the applicable Prospectus Supplement describing the method and terms
of the offering of such series of Debt Securities.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT
PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING.
ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
---------------------
The date of this Prospectus is February 13, 1996
<PAGE> 10
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement (together with all amendments and
exhibits thereto, the "Registration Statement") under the Securities Act of
1933, as amended (the "Securities Act"), with respect to the Debt Securities
offered hereby. This Prospectus, which constitutes part of the Registration
Statement, does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information with respect to the
Company and the Debt Securities, reference is made to the Registration
Statement.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy and information statements and other information
with the Commission. The Registration Statement, as well as such reports, proxy
and information statements and other information filed by the Company, may be
inspected and copied (at prescribed rates) at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549 and at the Commission's regional offices located at Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and
7 World Trade Center, 13th Floor, New York, New York 10048. In addition, such
reports, proxy and information statements and other information concerning the
Company may also be inspected at the offices of the New York Stock Exchange, at
20 Broad Street, New York, New York 10005.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following information filed by the Company with the Commission (File
No. 1-5899) pursuant to the Exchange Act is incorporated herein by reference:
(i) The text under the caption (a) "Nominees for Directors" on pages
3 through 5, (b) "Committees of the Board of Directors" on pages 5 through
6, (c) "Executive Compensation" on pages 7 through 8, (d) "Stock Options"
on pages 9 through 10, (e) "Employment Contracts and Termination of
Employment and Change-in-Control Arrangements" on pages 10 through 11, (f)
"Director Compensation" on pages 11 through 13 and (g) "Security Ownership
of Management and Certain Beneficial Owners" on pages 17 through 19 of the
Company's Proxy Statement, dated March 20, 1995, for the Annual Meeting of
Stockholders held on April 26, 1995;
(ii) the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995; and
(iii) the Company's Current Report on Form 8-K, dated February 13,
1996.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Debt Securities offered hereby shall be
deemed incorporated by reference into this Prospectus and to be a part hereof
from the date such documents are filed.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein will be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in the applicable Prospectus Supplement or in any subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded will 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, upon the written or oral request of such person, a
copy of each document incorporated herein by reference. Requests for such copies
should be directed to Kelly F. Somoza, Vice President, U.S. Home Corporation,
1800 West Loop South, Houston, Texas 77027, (713) 877-2311.
2
<PAGE> 11
THE COMPANY
U.S. Home, organized in 1954 and incorporated in the State of Delaware in
1959, is one of the largest single-family homebuilders in the United States
based on homes delivered. The Company currently builds and sells homes in more
than 200 new home communities in 32 metropolitan areas in 12 states. Since its
formation, the Company has delivered more than 260,000 homes. The Company
conducts substantially all of its homebuilding business through U.S. Home, the
parent company.
The Company offers a wide variety of moderately-priced homes that are
designed to appeal to the affordable, move-up and retirement and
active-adult/second home buyers. In each of its markets, the Company's primary
strategy is to build quality homes, utilizing its Zero Defect Program, which the
Company believes offers prospective home buyers a high level of new home value.
The Company believes that many home purchasers compare homes on the basis of
location, perceived quality and dollars of purchase price per square foot of
living area. As a result, the Company attempts to purchase land and lots in
popular growth corridors, maintain high quality standards and design homes to
maximize living space.
In addition to building and selling single-family homes, the Company
provides mortgage banking services to its customers. The Company originates,
processes and sells mortgages to third-party investors. The Company does not
retain or service the mortgages that it originates but, rather, sells the
mortgages and related servicing rights to investors.
The principal executive offices of the Company are located at 1800 West
Loop South, Houston, Texas 77027 (telephone: (713) 877-2311).
USE OF PROCEEDS
Unless otherwise set forth in the applicable Prospectus Supplement, the
Company intends to use the net proceeds from the sale of the Debt Securities for
general corporate purposes.
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the consolidated ratio of earnings to fixed
charges for the Company for the periods indicated:
<TABLE>
<CAPTION>
FISCAL YEAR
ENDED
DECEMBER 31,
------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges
(unaudited)(1)...................................... 2.57 2.51 2.78 3.26 --
</TABLE>
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(1) The ratio of earnings to fixed charges is calculated by dividing earnings by
fixed charges. For this purpose, "earnings" means income (loss) before
reorganization items plus (a) provision (benefit) for income taxes, and (b)
fixed charges (including the proportionate share thereof of unconsolidated
affiliates). "Fixed charges" means total interest, whether capitalized or
expensed, and the portion of rent expense representative of interest costs
(including the proportionate share thereof of unconsolidated affiliates),
plus (i) debt-related fees and (ii) amortization of deferred financing
costs. Earnings were insufficient to cover fixed charges for the year ended
December 31, 1991 by approximately $2 million.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will constitute direct, unsecured obligations of the
Company, unless otherwise provided in the applicable Prospectus Supplement.
Senior Debt Securities may be issued from time to time in series under an
indenture (the "Senior Indenture") between the Company and IBJ Schroder Bank &
Trust Company, as trustee (the "Trustee"). See "-- Concerning the Trustee." The
Senior Indenture has been filed as an exhibit to the Registration Statement of
which this Prospectus is a part. Senior Subordinated Debt
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Securities may be issued from time to time in series under an indenture (the
"Senior Subordinated Indenture") between the Company and the Trustee. The Senior
Subordinated Indenture has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part. Subordinated Debt Securities may
be issued from time to time in series under an indenture (the "Subordinated
Indenture") between the Company and the Trustee. The Subordinated Indenture has
been filed as an exhibit to the Registration Statement of which this Prospectus
is a part. The Senior Indenture, the Senior Subordinated Indenture and the
Subordinated Indenture are sometimes referred to individually as the "Indenture"
and collectively as the "Indentures." The Indentures will be subject to and
governed by the Trust Indenture Act of 1939, as amended (the "TIA"). As used
under this caption, unless the context otherwise requires "Offered Debt
Securities" shall mean the Debt Securities offered by this Prospectus and the
accompanying Prospectus Supplement.
The following summaries of certain provisions of the Indentures do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all of the provisions of the Indentures, including the
definitions therein of certain capitalized terms used in this Prospectus. The
following sets forth certain general terms and provisions of the Debt Securities
to which any Prospectus Supplement may relate. Further terms of the Offered Debt
Securities will be described in the Prospectus Supplement. Except (i) with
respect to the covenants described herein for Senior Debt Securities, (ii) with
respect to the provisions relating to subordination and (iii) to the extent set
forth in a Prospectus Supplement with respect to a particular series of Debt
Securities, the Indentures are substantially identical. See "-- Senior Indenture
Covenants" and "-- Status of Debt Securities."
GENERAL
Each Indenture will provide for the issuance of Debt Securities in one or
more series. The Debt Securities will be unsecured senior, senior subordinated
or subordinated obligations of the Company, as set forth in the accompanying
Prospectus Supplement. Except as may be set forth in the accompanying Prospectus
Supplement and as described herein relating to the Senior Indenture, the
Indentures will not restrict the business or operations of the Company or its
subsidiaries, limit their indebtedness or prohibit any liens, charges or other
encumbrances on any properties or other assets they may have from time to time.
See "-- Senior Indenture Covenants."
The applicable Prospectus Supplement or Prospectus Supplements will
describe the following terms of the series of Offered Debt Securities in respect
of which this Prospectus is being delivered, if applicable: (i) the title of the
Offered Debt Securities; (ii) whether the Offered Debt Securities are Senior
Debt Securities, Senior Subordinated Debt Securities or Subordinated Debt
Securities; (iii) the aggregate principal amount of the Offered Debt Securities
and any limit on such aggregate principal amount; (iv) the person to whom
interest on an Offered Debt Security will be payable, if other than the person
in whose name the Offered Debt Security is registered on the record date for the
payment of such interest; (v) the date or dates, or method by which such date or
dates will be determined, on which the principal of the Offered Debt Securities
will be payable; (vi) the rate or rates at which the Offered Debt Securities
will bear interest, if any, or the method by which such rate or rates will be
determined; (vii) the date or dates from which interest, if any, will accrue, or
the method by which such date or dates will be determined, the interest payment
dates on which any such interest will be payable and the record date, if any,
for the interest payable on any Offered Debt Security on any interest payment
date, or the method by which such date or dates will be determined, and the
basis upon which interest will be calculated if other than on the basis of
actual days elapsed over a 365 or 366-day year; (viii) the place or places, if
any, other than or in addition to New York, New York, where the principal of and
interest on Offered Debt Securities will be payable, any Offered Debt Securities
may be surrendered for registration of transfer, any Offered Debt Securities may
be surrendered for exchange and the place or places where notices or demands to
or upon the Company in respect of the Offered Debt Securities and the applicable
Indenture may be served; (ix) the period or periods within, the price or prices
at and the terms and conditions upon, which the Offered Debt Securities may be
redeemed or purchased, in whole or in part, at the option of the Company; (x)
the obligation, if any, of the Company to redeem or repurchase the Offered Debt
Securities pursuant to any sinking fund or analogous provisions or at the option
of a holder thereof and the period or periods within which, the prices at which
and the terms and conditions upon which Offered Debt
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Securities will be redeemed or purchased, in whole or in part, pursuant to such
obligation; (xi) if other than denominations of $1,000 and any integral multiple
thereof, the denomination in which the Offered Debt Securities will be issuable;
(xii) the currency, currencies or currency units in which payment of the
principal of and interest on any Offered Debt Securities will be payable if
other than the currency of the United States and the manner of determining the
equivalent thereof in the currency of the United States for purposes of the
definition of "Outstanding" in the applicable Indenture; (xiii) if the principal
of or interest on any Offered Debt Securities is to be payable, at the election
of the Company or a holder thereof, in one or more currencies or currency units
other than that or those in which the Offered Debt Securities are stated to be
payable, the currency, currencies or currency units in which payment of the
principal of and interest on Offered Debt Securities as to which such election
is made will be payable, and the periods within which and the terms and
conditions upon which such election is to be made; (xiv) if the amount of
principal of or interest on any Offered Debt Securities may be determined with
reference to an index, the manner in which such amounts will be determined; (xv)
if other than the principal amount of the Offered Debt Securities, the portion
of the principal amount thereof which will be payable upon declaration of
acceleration of the maturity thereof; (xvi) if the Offered Debt Securities will
be issuable in whole or in part in the form of one or more Global Securities
and, in such case, the Depository or Depositories for such Global Security or
Global Securities (as defined) and any circumstances other than those set forth
herein in which any such Global Security may be transferred to, and registered
and exchanged for Offered Debt Securities registered in the name of, a person
other than the Depository for such Global Security or a nominee thereof and in
which any such transfer may be registered; (xvii) if other than the Trustee, the
identity of each paying agent and registrar for the Offered Debt Securities;
(xviii) any Events of Default (as defined) with respect to the Offered Debt
Securities, if not otherwise set forth under the caption "-- Events of Default"
or if different from those set forth herein; (xix) any material covenants with
respect to the Offered Debt Securities, if not otherwise set forth herein or if
different from those set forth herein; (xx) the applicability of the provisions
described under the caption "-- Discharge of the Indenture"; and (xxi) any other
material terms of the Offered Debt Securities.
Debt Securities may be issued at a discount from their principal amount.
Federal income tax considerations and other special considerations applicable to
any such Offered Debt Securities will be described in the applicable Prospectus
Supplement.
If the purchase price of any of the Offered Debt Securities is denominated
in a foreign currency or currencies or a foreign currency unit or units or if
the principal of, or interest, if any, on, any series of Debt Securities is
payable in a foreign currency or currencies or a foreign currency unit or units,
the restrictions, elections, general tax considerations, specific terms and
other information with respect to such Offered Debt Securities and such foreign
currency or currencies or foreign currency unit or units will be set forth in
the applicable Prospectus Supplement.
GLOBAL SECURITIES
Unless otherwise provided in the applicable Prospectus Supplement, the Debt
Securities will be issued in the form of one or more global securities (each a
"Global Security") registered in the name of a nominee of The Depository Trust
Company (the "Depository"). The identity of the nominee appointed by the
Depository will be set forth in the applicable Prospectus Supplement. The Global
Security will be issued in a denomination or aggregate denominations equal to
the portion of the aggregate principal amount of the outstanding Debt Securities
of the series represented by such Global Security. Except as described herein or
in the applicable Prospectus Supplement, Debt Securities will not be issued in
definitive form.
The specific terms of the depositary arrangement with respect to any
portion of a series of Debt Securities to be represented by a Global Security
will be described in the applicable Prospectus Supplement. The Company expects
that the following provisions will apply to depositary arrangements.
Upon the issuance of a Global Security, the Depository or its nominee will
credit the accounts of persons holding through it with the respective principal
amounts of the Debt Securities represented by such Global Security. Such
accounts will be designated by the underwriter, if any, with respect to Debt
Securities placed by the underwriter for the Company. Ownership of beneficial
interests in a Global Security will be limited to
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persons that have accounts with the Depository ("participants") or persons that
may hold interests through participants. Ownership of beneficial interests by
participants in a Global Security will be shown on, and the transfer of that
ownership interest will be effected only through, records maintained by the
Depository for such Global Security. Ownership of beneficial interests in such
Global Security by persons that hold through participants will be shown on, and
the transfer of that ownership interest through such participant will be
effected only through, records maintained by such participant. The foregoing may
impair the ability to transfer beneficial interests in a Global Security.
Except as provided in the applicable Prospectus Supplement, payment of
principal and interest, if any, on Debt Securities represented by any such
Global Security will be made to the Depository or its nominee, as the case may
be, as the sole registered holder of the Debt Securities represented thereby for
all purposes under the applicable Indenture. None of the Company, the Trustee,
any agent of the Company or the Trustee or the underwriter, if any, will have
any responsibility or liability for any aspect of the Depository's records
relating to or payments made on account of beneficial ownership interests in a
Global Security representing any Debt Securities or for maintaining, supervising
or reviewing any of the Depository's records relating to such beneficial
ownership interests.
The Company has been advised by the Depository that, upon receipt of any
payment of principal or interest on any Global Security, the Depository will
immediately credit, on its book-entry registration and transfer system, the
accounts of participants with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such Global Security
as shown on the records of the Depository. Payments by participants to owners of
beneficial interests in a Global Security held through such participants will be
governed by standing instructions and customary practices as is now the case
with securities held for customer accounts registered in "street name," and will
be the sole responsibility of such participants.
Except as described in the applicable Prospectus Supplement, a Global
Security may not be transferred except as a whole by the Depository for such
Global Security to a nominee of such Depository or by a nominee of such
Depository to such Depository or another nominee of such Depository or by such
Depository or any such nominee to a successor of such Depository or a nominee of
such successor. If the Depository is at any time unwilling or unable to continue
as depository and a successor depository is not appointed by the Company or the
Depository within 90 days, the Company will issue Debt Securities in definitive
form in exchange for the Global Security. In addition, the Company or the
Depository may at any time and in its sole discretion determine not to have the
Debt Securities represented by the Global Security and, in such event, the
Company will issue Debt Securities in definitive form in exchange for the Global
Security. In either instance, an owner of a beneficial interest in the Global
Security will be entitled to have Debt Securities equal in principal amount to
such beneficial interest registered in its name and will be entitled to physical
delivery of such Debt Securities in definitive form. Except as described in the
applicable Prospectus Supplement, Debt Securities so issued in definitive form
will be issued in denominations of $1,000 and integral multiples thereof and
will be issued in registered form only, without coupons. Except as described in
the applicable Prospectus Supplement, principal and interest, if any, on the
Debt Securities will be payable, and the Debt Securities may be presented for
registration of transfer or exchange, at the offices of the Trustee.
So long as the Depository for a Global Security, or its nominees, is the
registered owner of such Global Security, such Depository or such nominee, as
the case may be, will be considered the sole registered holder of the Debt
Securities represented by such Global Security for all purposes of receiving
payment on the Debt Securities, receiving notices and for all other purposes
under the Indenture and the Debt Securities. Beneficial interests in Debt
Securities will be evidenced only by, and transfers thereof will be effected
only through, records maintained by the Depository and its participants. Except
as provided above, owners of beneficial interests in a Global Security will not
be entitled to and will not be considered the registered holders thereof for any
purposes under the Indenture. Accordingly, any such person owning a beneficial
interest in such a Global Security must rely on the procedures of the
Depository, and, if any such person is not a participant, on the procedures of
the participant through which such person owns its interest, to exercise any
rights of a registered holder under the Indenture. The Indenture provides that
the Depository may grant proxies and otherwise authorize participants to give or
take any request, demand, authorization, direction, notice, consent, waiver or
other action which a registered holder is entitled to give or take under the
Indenture. The Company
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understands that under existing industry practices, in the event that the
Company requests any action of registered holders or that an owner of a
beneficial interest in such a Global Security desires to give or take any action
which a registered holder is entitled to give or take under the Indenture, the
Depository would authorize the participants holding the relevant beneficial
interest to give or take such action and such participants would authorize
beneficial owners owning through such participants to give or take such action
or would otherwise act upon the instructions of beneficial owners owning through
them.
The Depository has advised the Company that the Depository is a
limited-purpose trust company organized under the laws of the State of New York,
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 under the Exchange Act. The Depository was created to hold the
securities of its 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 securities certificates. The
Depository's participants include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations, some of whom
(and/or their representatives) own the Depository. Access to the Depository'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.
STATUS OF DEBT SECURITIES
The Senior Debt Securities will be unsecured and unsubordinated obligations
of the Company and will rank on a parity with all other unsecured and
unsubordinated indebtedness of the Company. All series of Senior Debt Securities
of the Company issued under the Senior Indenture will rank on parity in right of
payment with each other, with indebtedness under the Company's principal credit
facility and with the Company's $200,000,000 principal amount of 9 3/4% senior
notes due 2003, previously issued under an Indenture, dated as of June 21, 1993,
between the Company and IBJ Schroder Bank & Trust Company, as trustee (the
"Senior Notes"). The Senior Debt Securities offered hereby will be senior in
right of payment to the Company's $80,000,000 principal amount of 4 7/8%
convertible subordinated debentures due 2005, previously issued under an
Indenture, dated as of November 3, 1993, between the Company and Marine Midland
Bank, N.A., as trustee (the "Debentures").
The Senior Subordinated Debt Securities will be unsecured obligations of
the Company and will be subordinate and junior in right of payment, to the
extent and in the manner to be set forth in the Senior Subordinated Indenture to
the prior payment in full in cash (or cash equivalents) of amounts then due on
"Senior Indebtedness" of the Company. Except to the extent set forth in the
applicable Prospectus Supplement, the Senior Subordinated Indenture will define
"Senior Indebtedness" of the Company as the principal of (and premium, if any),
and interest on (including, without limitation, interest accruing subsequent to
the filing of a petition under applicable Bankruptcy Law (as defined in the
applicable Indenture) or the appointment of a Custodian (as defined in the
applicable Indenture)), (i) any and all indebtedness and obligations of the
Company (including indebtedness of others guaranteed by the Company), whether or
not contingent and whether or not outstanding on the Issue Date or thereafter
created, incurred or assumed (including, without limitation, all charges, fees,
expenses and other amounts incurred by or owing to holders of such
indebtedness), which (a) is for money borrowed, (b) is evidenced by any bond,
note, debenture or similar instrument, (c) represents the unpaid balance on the
purchase price of any property, business or asset of any kind, (d) is an
obligation of the Company as lessee under any and all leases of property,
equipment or other assets required to be capitalized on the balance sheet of the
lessee under generally accepted accounting principles, (e) is a reimbursement
obligation of the Company with respect to letters of credit, (f) is an
obligation of the Company with respect to an interest swap obligation or foreign
exchange agreement or (g) is an obligation of another secured by a lien to which
any of the properties or assets (including, without limitation, leasehold
interests and any other tangible or intangible property rights) of the Company
is subject, whether or not the obligations secured thereby shall have been
assumed by the Company or will otherwise be the Company's legal liability and
(ii) any deferrals, amendments, renewals, extensions, modifications and
refundings of any indebtedness or obligations of the types referred to in clause
(i) of this paragraph; provided that Senior Indebtedness will not include (A)
the Senior Subordinated Debt Securities or
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the Subordinated Debt Securities, (B) the Debentures, (C) any indebtedness or
obligation of the Company (or the instrument creating or evidencing it) which
expressly provides that such indebtedness is not superior in right of payment to
the Senior Subordinated Debt Securities, or which expressly provides that such
indebtedness is subordinate in right of payment to all other indebtedness of the
Company (including the Senior Subordinated Debt Securities), (D) any
indebtedness or obligation of the Company to any of its subsidiaries and (E) any
indebtedness or obligation incurred by the Company in connection with the
purchase of assets, materials or services in the ordinary course of business and
which constitutes a trade payable.
The Subordinated Debt Securities will be unsecured obligations of the
Company and will be subordinate and junior in right of payment, to the extent
and in the manner to be set forth in the Subordinated Indenture to the prior
payment in full in cash (or cash equivalents) of amounts then due on "Senior
Indebtedness" of the Company. Except to the extent set forth in the applicable
Prospectus Supplement, the Subordinated Indenture will define "Senior
Indebtedness" of the Company as the principal of (and premium, if any), and
interest on (including, without limitation, interest accruing subsequent to the
filing of a petition under applicable Bankruptcy Law or the appointment of a
Custodian), (i) any and all indebtedness and obligations of the Company
(including indebtedness of others guaranteed by the Company), whether or not
contingent and whether or not outstanding on the Issue Date or thereafter
created, incurred or assumed (including, without limitation, all charges, fees,
expenses and other amounts incurred by or owing to holders of such
indebtedness), which (a) is for money borrowed, (b) is evidenced by any bond,
note, debenture or similar instrument, (c) represents the unpaid balance on the
purchase price of any property, business or asset of any kind, (d) is an
obligation of the Company as lessee under any and all leases of property,
equipment or other assets required to be capitalized on the balance sheet of the
lessee under generally accepted accounting principles, (e) is a reimbursement
obligation of the Company with respect to letters of credit, (f) is an
obligation of the Company with respect to an interest swap obligation or foreign
exchange agreement or (g) is an obligation of another secured by a lien to which
any of the properties or assets (including, without limitation, leasehold
interests and any other tangible or intangible property rights) of the Company
is subject, whether or not the obligations secured thereby shall have been
assumed by the Company or will otherwise be the Company's legal liability and
(ii) any deferrals, amendments, renewals, extensions, modifications and
refundings of any indebtedness or obligations of the types referred to in clause
(i) of this paragraph; provided that Senior Indebtedness will not include (A)
the Subordinated Debt Securities, (B) the Debentures, (C) any indebtedness or
obligation of the Company (or the instrument creating or evidencing it) which
expressly provides that such indebtedness is not superior in right of payment to
the Subordinated Debt Securities, or which expressly provides that such
indebtedness is subordinate in right of payment to all other indebtedness of the
Company (including the Subordinated Debt Securities), (D) any indebtedness or
obligation of the Company to any of its subsidiaries and (E) any indebtedness or
obligation incurred by the Company in connection with the purchase of assets,
materials or services in the ordinary course of business and which constitutes a
trade payable.
The Senior Subordinated Debt Securities will constitute "Senior
Indebtedness" with respect to the Subordinated Debt Securities and the
Debentures.
The Senior Subordinated Indenture will provide that the Company will not
issue any indebtedness that is subordinated in right of payment to any Senior
Indebtedness of the Company and is senior in right of payment to the Senior
Subordinated Debt Securities. The Subordinated Indenture will not contain a
similar provision.
By reason of such subordination, in the event of dissolution, winding-up,
liquidation, insolvency, bankruptcy or other similar proceedings, upon any
distribution of assets of the Company: (i) holders of Senior Indebtedness will
be entitled to be paid in full before payments may be made on Senior
Subordinated Debt Securities and the Subordinated Debt Securities and the
holders of Senior Subordinated Debt Securities and Subordinated Debt Securities
will be required to pay over their share of such distributions to the holders of
Senior Indebtedness until such Senior Indebtedness is paid in full (except to
the extent, if at all, that holders of Senior Subordinated Debt Securities and
Subordinated Debt Securities may receive securities that are subordinated to the
same extent the Senior Subordinated Debt Securities and Subordinated Debt
Securities are subordinated to Senior Indebtedness); (ii) in addition, holders
of Senior Subordinated Debt Securities will be entitled to be paid in full
before payments may be made on Subordinated Debt Securities and holders of
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Subordinated Debt Securities will be required to pay over their share of such
distributions to the holders of Senior Subordinated Debt Securities until such
Senior Subordinated Debt Securities are paid in full (except to the extent, if
at all, that holders of Subordinated Debt Securities may receive securities that
are subordinated to the same extent the Subordinated Debt Securities are
subordinated to Senior Subordinated Debt Securities); and (iii) creditors of the
Company who are not holders of Senior Subordinated Debt Securities or
Subordinated Debt Securities may recover less, ratably, than holders of Senior
Indebtedness and may recover more, ratably, than the holders of the Senior
Subordinated Debt Securities or Subordinated Debt Securities. Accordingly, such
subordination may result in a reduction or elimination of payments to the
holders of all Senior Subordinated Debt Securities and Subordinated Debt
Securities.
Except as may otherwise be described in the applicable Prospectus
Supplement, no payment of principal or interest on any of the Offered Debt
Securities that are Senior Subordinated Debt Securities or Subordinated Debt
Securities may be made by the Company, nor may the Company acquire any Offered
Debt Securities that are Senior Subordinated Debt Securities or Subordinated
Debt Securities, in each case except as set forth in the Indenture for such
Offered Debt Securities, if (i) a default in the payment of principal, premium,
if any, or interest on any Senior Indebtedness occurs and continues beyond the
applicable period of grace, if any, specified in the applicable instrument,
lease, contract, agreement or other document evidencing such Senior Indebtedness
with respect to Senior Indebtedness in an aggregate principal amount of not less
than $5,000,000, or (ii) any event of default with respect to any Senior
Indebtedness occurs permitting the acceleration thereof and such event of
default is the subject of a judicial proceeding or the Company receives written
notice of such event of default from certain specified authorized persons
(including the holder thereof); provided that the foregoing will not prohibit
payments made in accordance with the defeasance provisions of the applicable
Indenture from monies deposited with the Trustee in accordance with such
provisions prior to any such default, judicial proceeding or notice. However,
except as may otherwise be described in the applicable Prospectus Supplement,
the Company may resume payments in respect of the Offered Debt Securities that
are Senior Subordinated Debt Securities or Subordinated Debt Securities and may
acquire such Senior Subordinated Debt Securities or Subordinated Debt Securities
if the default or event of default with respect to such Senior Indebtedness is
cured or waived or ceases to exist and the terms of the Indenture otherwise
permit the payment or acquisition of such Offered Debt Securities at the time in
question. By reason of these provisions, in the event of a default on any Senior
Indebtedness of the Company that is presently existing or may be incurred in the
future, payments of principal of and interest, if any, on the Offered Debt
Securities that are Senior Subordinated Debt Securities or Subordinated Debt
Securities may not be permitted until such Senior Indebtedness is paid in full.
Except as may otherwise be described in the applicable Prospectus
Supplement, the subordination provision described herein will not prevent the
occurrence of any Event of Default under the Senior Subordinated Indenture or
the Subordinated Indenture.
The Indenture for the Senior Notes and the Company's principal credit
facility restrict the acquisition by the Company of its subordinated
indebtedness, including any Senior Subordinated Debt Securities or Subordinated
Debt Securities.
In addition, the claims of third parties to the assets of the Company's
subsidiaries incurring obligations to such third parties will be superior to
those of the Company as a stockholder, and therefore the Offered Debt Securities
may be deemed to be effectively subordinated to the claims of such third
parties.
CERTAIN COVENANTS OF THE COMPANY
Affirmative Covenants. In addition to such other covenants, if any, as may
be described in the applicable Prospectus Supplement and as described herein
relating to the Senior Indenture, the Indenture for the Offered Debt Securities
will require the Company, subject to certain limitations described therein, to,
among other things, do the following: (i) pay the principal of, and interest on,
the Offered Debt Securities when the same shall be due and payable; (ii)
maintain an office or agency where Offered Debt Securities may be surrendered
for payment or registration of transfer or exchange and where notices and
demands to or upon the Company in respect of the Offered Debt Securities and the
Indenture may be served; (iii) deliver to the
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Trustee copies of all reports filed with the Commission; (iv) deliver to the
Trustee annual officers' certificates with respect to the Company's compliance
with its obligations under that Indenture; (v) maintain its corporate existence
subject to the provisions described below under the caption "-- Certain
Covenants of the Company -- Limitations on Mergers and Consolidations"; (vi) pay
its taxes when due except where such taxes are being contested in good faith;
and (vii) maintain insurance in at least such amounts and against such risks as
are usually and prudently insured against in the same general area by companies
engaged in the same or a similar business. Except as may be set forth in the
accompanying Prospectus Supplement and as described herein relating to the
Senior Indenture, the Indentures will not restrict the business or operations of
the Company or its subsidiaries, limit their indebtedness or prohibit any liens,
charges or other encumbrances on any properties or other assets they may have
from time to time. See "-- Senior Indenture Covenants."
Limitations on Mergers and Consolidations. Except as may otherwise be
provided in the applicable Prospectus Supplement and as described under the
caption "-- Senior Indenture Covenants", the Indenture for the Offered Debt
Securities will provide that the Company will not consolidate or merge with or
into or sell, lease, convey or otherwise dispose of all or substantially all of
its assets (including, without limitation, by way of liquidation or dissolution)
or assign any of its obligations under the Indenture or the Offered Debt
Securities (as an entirety or substantially an entirety in one transaction or
series of related transactions), to any person unless (i) the person formed by
or surviving such consolidation or merger (if other than the Company), or to
which sale, lease, conveyance or other disposition or assignment will be made
(collectively, the "Successor"), is a solvent corporation or other legal entity
organized and existing under the laws of the United States, one of the states
thereof or the District of Columbia, and the Successor expressly assumes by
supplemental indenture all of the obligations of the Company under the Offered
Debt Securities and the Indenture related thereto, (ii) immediately after giving
effect to such transaction, no default or Event of Default has occurred and is
continuing, and (iii) certain other conditions are met. Upon compliance with
these provisions by the Successor, the Company would be relieved of its
obligations under the Indenture and the Offered Debt Securities. No quantitative
or other established meaning has been given to the phrase "all or substantially
all" by courts which have interpreted this phrase in various contexts. In
interpreting this phrase, courts make a subjective determination as to the
portion of assets conveyed, considering such factors as the value of the assets
conveyed and the proportion of an entity's income derived from the assets
conveyed. Accordingly, there may be uncertainty as to whether a holder of
Offered Debt Securities can determine whether the Company has sold, leased,
conveyed or otherwise disposed of all or substantially all of its assets and
exercise any remedies such holder may have upon the occurrence of any such
transaction.
SENIOR INDENTURE COVENANTS
In addition to the other covenants set forth in the Prospectus and except
as otherwise provided in a Prospectus Supplement relating to the Offered Debt
Securities which are Senior Debt Securities, the Senior Indenture will include
the following covenants:
Reports to Holders of Senior Debt Securities. The Senior Indenture will
provide that as long as more than 10 percent of the original amount of the
Offered Debt Securities is outstanding, the Company will (i) remain subject to
the requirements of Section 13 or 15(d) of the Exchange Act whether or not it is
required to do so by the provisions thereof and will file with the Commission
all periodic reports as may be required thereunder and (ii) file with the
Commission, and with the Trustee within 15 days after the Company is required to
file the same with the Commission, copies of the periodic reports which the
Company may be required to file with the Commission pursuant to Section 13(a),
13(c) or 15(d) of the Exchange Act. The Company will also make such reports
available to the Holders, prospective purchasers of the Offered Debt Securities,
securities analysts and broker-dealers upon their written request.
The Senior Indenture will also provide that in the event that (i) 10
percent or less of the original principal amount of the Offered Debt Securities
are outstanding and (ii) the Company is not required to file with the Commission
such reports and other information referred to in the preceding paragraph, the
Company will furnish to the Trustee (A) within 120 days after the end of each
fiscal year, annual reports containing the information required to be contained
in Items 1, 2, 3, 5, 6, 7, 8 and 9 of the Annual Report on Form 10-K promulgated
under the Exchange Act, or substantially the same information required to be
contained in
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<PAGE> 19
comparable items of any successor form, (B) within 60 days after the end of each
of the first three fiscal quarters of each fiscal year, quarterly reports
containing the information required to be contained in the Quarterly Report on
Form 10-Q promulgated under the Exchange Act, or substantially the same
information required to be contained in any successor form and (C) promptly from
the time after the occurrence of an event which would be required to be reported
in the Current Report on Form 8-K if the Company was required to file such
Report, such other reports containing information required to be contained in
the Current Report on Form 8-K promulgated under the Exchange Act, or
substantially the same information required to be contained in any successor
form.
The Senior Indenture will also provide that the Company will also comply
with the other provisions of Section 314(a) of the TIA.
Disposition of Proceeds of Asset Sales. The Senior Indenture will provide,
subject to the provisions of the Senior Indenture described under the caption
"-- Limitations on Mergers and Consolidations", that the Company will not, and
will not permit any Restricted Subsidiary to, directly or indirectly, make any
Asset Sale unless (i) the Company or the Restricted Subsidiary, as the case may
be, receives consideration at the time of such Asset Sale at least equal to the
Fair Market Value for the shares or assets sold or otherwise disposed of (which
will be determined in good faith by the Board of Directors of the Company);
provided that the aggregate Fair Market Value of the consideration received from
any Asset Sale that is not in the form of cash or cash equivalents will not,
when aggregated with the Fair Market Value of all other noncash consideration
received by the Company and its Restricted Subsidiaries from all previous Asset
Sales since the Issue Date that has not been converted into cash or cash
equivalents, exceed five percent of the Consolidated Tangible Net Assets of the
Company at the time of the Asset Sale under consideration, and (ii) the Company
will apply the aggregate Net Proceeds received by the Company or any Restricted
Subsidiary from all Asset Sales occurring subsequent to the Issue Date as
follows: (A) to repay any outstanding Indebtedness of the Company that is not
subordinated to the Offered Debt Securities, or other Indebtedness of the
Company, or to the payment of any Indebtedness of any Restricted Subsidiary, in
each case, within one year after such Asset Sale or (B) to replace the
properties and assets that were the subject of the Asset Sale or properties and
assets that (as determined by the Board of Directors of the Company, whose
determination will be conclusive) will be used in the businesses existing on the
Issue Date of the Company and its Restricted Subsidiaries or in businesses
reasonably related thereto within one year after such Asset Sale. The amount of
such Net Proceeds neither used to repay the Indebtedness described above nor
used or invested as set forth in the preceding sentence constitutes "Excess
Proceeds."
The Senior Indenture also will provide that, notwithstanding the foregoing,
to the extent the Company or any of its Restricted Subsidiaries receives
securities or other noncash property or assets as proceeds of an Asset Sale, the
Company will not be required to make any application of such noncash proceeds
required by the provisions of the Senior Indenture described in the preceding
paragraph until it receives cash or cash equivalent proceeds from a sale,
repayment, exchange, redemption or retirement of or extraordinary dividend or
return of capital on such noncash property. Any amounts deferred pursuant to the
preceding sentence will be applied in accordance with the provisions of the
Senior Indenture described in the preceding paragraph when cash proceeds are
thereafter received from a sale, repayment, exchange, redemption or retirement
of an extraordinary dividend or return of capital on such noncash property.
The Senior Indenture will also provide that, when the aggregate amount of
Excess Proceeds equals $5,000,000 or more, the Company will so notify the
Trustee in writing by delivery of an Officers' Certificate and will offer to
purchase from all Holders (an "Excess Proceeds Offer"), and will purchase from
Holders accepting such Excess Proceeds Offer on the date fixed for the closing
of such Excess Proceeds Offer (the "Asset Sale Offer Date"), the maximum
principal amount (expressed as a multiple of $1,000) of Offered Debt Securities
that may be purchased out of the Excess Proceeds, at an offer price (the "Asset
Sale Offer Price") in cash in an amount equal to 100 percent of the principal
amount thereof plus accrued and unpaid interest, if any, to the Asset Sale Offer
Date, in accordance with the procedures set forth in the "Disposition of
Proceeds of Asset Sales" covenant in the Senior Indenture. To the extent that
the aggregate amount of Offered Debt Securities tendered pursuant to an Excess
Proceeds Offer is less than the Excess Proceeds relating thereto, then the
Company may use the Excess Proceeds which exceed the aggregate amount of the
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<PAGE> 20
Offered Debt Securities tendered pursuant to such Excess Proceeds Offer for
general corporate purposes. Upon completion of an Excess Proceeds Offer, the
amount of Excess Proceeds will be reset at zero.
In addition, the Senior Indenture will provide that, within 30 days after
the date on which the amount of Excess Proceeds equals $5,000,000 or more, the
Company (with written notice to the Trustee) or the Trustee at the Company's
request (and at the expense of the Company) will send or cause to be sent by
first-class mail, postage prepaid, to all Holders on the date such Excess
Proceeds equals $5,000,000, at their respective addresses appearing in the
Security Register, a notice prepared by the Company advising such Holders of
such occurrence and of such Holders' rights arising as a result thereof.
The Senior Indenture will also provide that:
(a) In the event the aggregate principal amount of Offered Debt
Securities surrendered by Holders exceeds the amount of Excess Proceeds,
the Company will select the Offered Debt Securities to be purchased on a
pro rata basis from all Offered Debt Securities so surrendered, with such
adjustments as may be deemed appropriate by the Company so that only
Offered Debt Securities in denominations of $1,000, or integral multiples
thereof, will be purchased. To the extent that the Excess Proceeds
remaining are less than $1,000, the Company may use such Excess Proceeds
for general corporate purposes. Holders whose Offered Debt Securities are
purchased only in part will be issued new Offered Debt Securities equal in
principal amount to the unpurchased portion of the Offered Debt Securities
surrendered.
(b) The Company will not, and will not permit any Restricted
Subsidiary to, create or permit to exist or become effective any
restriction (other than any restriction set forth in any agreement,
indenture, document or instrument relating to any Existing Indebtedness or
Refinancing Indebtedness with respect thereto) that would materially impair
the ability of the Company to make an Excess Proceeds Offer.
Notwithstanding the foregoing, if an Excess Proceeds Offer is made, the
Company will pay for Offered Debt Securities tendered for purchase in
accordance with the provisions of the Senior Indenture described under the
caption "-- Disposition of Proceeds of Asset Sales."
(c) Not later than one Business Day prior to the Asset Sale Offer Date
in connection with which the Excess Proceeds Offer is being made, the
Company will (i) accept for payment Offered Debt Securities or portions
thereof tendered pursuant to the Excess Proceeds Offer (on a pro rata basis
if required pursuant to the provisions of the Senior Indenture described in
paragraph (a) above), (ii) deposit with the Paying Agent money sufficient,
in immediately available funds, to pay the purchase price of all Offered
Debt Securities or portions thereof so accepted and (iii) deliver to the
Paying Agent an Officers' Certificate identifying the Offered Debt
Securities or portions thereof accepted for payment by the Company. The
Paying Agent will promptly after acceptance mail or deliver to Holders of
Offered Debt Securities so accepted payment in an amount equal to the Asset
Sale Offer Price of the Offered Debt Securities purchased from each such
Holder, and the Company will execute and upon receipt of an Officers'
Certificate of the Company the Trustee will promptly authenticate and mail
or deliver to such Holder a new Offered Debt Security equal in principal
amount to any unpurchased portion of the Offered Debt Security surrendered.
Any Offered Debt Securities not so accepted will be promptly mailed or
delivered by the Paying Agent at the Company's expense to the Holder
thereof. The Company will publicly announce the results of the Excess
Proceeds Offer on the Asset Sale Offer Date. For purposes of the provisions
of the Senior Indenture described above, the Company will choose a Paying
Agent which will not be the Company or a Subsidiary thereof.
(d) Any Excess Proceeds Offer will be conducted by the Company in
compliance with applicable law, including, without limitation, Section
14(e) of the Exchange Act and Rule 14e-1 thereunder, if applicable.
(e) Whenever Excess Proceeds are received by the Company, and prior to
the allocation of such Excess Proceeds pursuant to the provisions of the
Senior Indenture described under the caption "-- Disposition of Proceeds of
Asset Sales", such Excess Proceeds will be set aside by the Company in a
separate account to be held in trust for the benefit of the Holders;
provided, however, that in the event the Company will be unable to set
aside such Excess Proceeds in a separate account because of provisions of
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<PAGE> 21
applicable law or any agreement, indenture, document or instrument relating
to Existing Indebtedness or Refinancing Indebtedness with respect thereto,
the Company will not be required to set aside such Excess Proceeds.
There can be no assurance that sufficient funds will be available at the
time of an Excess Proceeds Offer to make any required repurchases. The Company's
failure to make any required repurchases in the event of an Excess Proceeds
Offer will create an Event of Default under the Senior Indenture.
Limitations on Restricted Payments. The Senior Indenture will provide that
the Company will not, and will not permit any of its Restricted Subsidiaries to,
make any Restricted Payment, directly or indirectly, after the Issue Date if at
the time of such Restricted Payment:
(i) the amount of such Restricted Payment (the amount of such
Restricted Payment, if other than in cash, will be determined by the Board
of Directors of the Company), when added to the aggregate amount of all
Restricted Payments made after the Issue Date, exceeds the sum of: (1)
$50,000,000, plus (2) 50 percent of the Company's Consolidated Net Income
accrued during the period (taken as a single period) since January 1, 1995
(or, if such aggregate Consolidated Net Income is a deficit, minus 100
percent of such aggregate deficit), plus (3) the net cash proceeds derived
from the issuance and sale of Capital Stock of the Company and its
Restricted Subsidiaries that is not Disqualified Stock (other than a sale
to a Subsidiary of the Company) after the Issue Date but only to the extent
not applied under clause (d) of the definition of "Restricted Payment" set
forth herein, plus (4) 100 percent of the principal amount of any
Indebtedness of the Company or a Restricted Subsidiary that is converted
into or exchanged for Capital Stock of the Company that is not Disqualified
Stock, plus (5) 100 percent of the aggregate amounts received by the
Company or any Restricted Subsidiary upon the sale, disposition or
liquidation (including by way of dividends) of any Investment but only to
the extent (x) not included in Consolidated Net Income in clause (i)(2)
above and (y) that the making of such Investment constituted a Restricted
Investment made pursuant to the provisions of the Senior Indenture
described in this paragraph, plus (6) 100 percent of the principal amount
of, or if issued at a discount the accreted value of, any Indebtedness or
other obligation that is the subject of a guaranty by the Company which is
released after the Issue Date, but only to the extent that the granting of
such guaranty constituted a "Restricted Payment" under the definition
thereof set forth in the Senior Indenture and described herein; or
(ii) the Company would be unable to incur an additional $1.00 of
Indebtedness under the Consolidated Fixed Charge Coverage Ratio set forth
under the caption "-- Limitations on Additional Indebtedness"; or
(iii) a Default or Event of Default has occurred and is continuing or
occurs as a consequence thereof.
Notwithstanding the foregoing, the provisions of the Senior Indenture
described above will not prevent: (i) the payment of any dividend within 60 days
after the date of declaration thereof if the payment thereof would have complied
with the limitations of the Senior Indenture on the date of declaration or (ii)
the retirement of shares of the Company's Capital Stock or the Company's or a
Subsidiary of the Company's Indebtedness for, in exchange for or out of the
proceeds of a substantially concurrent sale (other than a sale to a Subsidiary
of the Company) of, other shares of its Capital Stock (other than Disqualified
Stock).
Limitations on Additional Indebtedness. The Senior Indenture will provide
that the Company will not, and will not permit any of its Restricted
Subsidiaries to Incur any Indebtedness (other than Indebtedness between the
Company and its Restricted Subsidiaries which are Wholly Owned Subsidiaries or
among such Restricted Subsidiaries which are Wholly Owned Subsidiaries)
including Acquisition Debt, unless, after giving effect thereto or the
application of the proceeds therefrom, the (i) Company's Consolidated Fixed
Charge Coverage Ratio on the date thereof would be at least 2.0 to 1.0; and (ii)
ratio of the Company's Indebtedness (excluding Non-Recourse Indebtedness) to
Consolidated Tangible Net Worth on the date thereof is not greater than 2.25 to
1.0.
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<PAGE> 22
Notwithstanding the foregoing, the provisions of the Senior Indenture will
not prevent: (i) in addition to the Indebtedness permitted to be Incurred under
clauses (ii) and (iii) of this sentence and Indebtedness permitted to be
Incurred under the provisions of the Senior Indenture described in the preceding
paragraph, the Company from Incurring (A) Refinancing Indebtedness, (B)
Non-Recourse Indebtedness and (C) Indebtedness Incurred for working capital
purposes or to finance the acquisition, holding or development of property by
the Company and its Restricted Subsidiaries (including, without limitation, the
financing of any related interest reserve) in the ordinary course of business in
an aggregate amount at any one time outstanding not to exceed $130,000,000
(excluding any Indebtedness referred to in clauses (i)(A) and (i)(B) of this
paragraph), less the amount of any Indebtedness repaid pursuant to the
provisions of the Senior Indenture described in clause (ii)(A) of the first
paragraph under the caption "Disposition of Proceeds of Asset Sales", (ii)
Unrestricted Subsidiaries from Incurring Indebtedness, (iii) the Company and its
Restricted Subsidiaries from Incurring Indebtedness under any deposits made to
secure performance of tenders, bids, leases, statutory obligations, surety and
appeal bonds, progress statements, government contracts and other obligations of
like nature (exclusive of the obligation for the payment of borrowed money) in
each case Incurred in the ordinary course of business of the Company or the
Restricted Subsidiary consistent with past practice and (iv) Restricted
Subsidiaries from guaranteeing Indebtedness of the Company or another Restricted
Subsidiary; provided that the tangible net assets of all Restricted Subsidiaries
guaranteeing Indebtedness of the Company or other Restricted Subsidiaries at the
end of the fiscal quarter immediately preceding the date of Incurring any such
guaranty, as determined in accordance with GAAP, shall not exceed 10% of the
Company's Consolidated Tangible Net Assets.
Restrictions on Restricted Subsidiary Indebtedness. The Senior Indenture
will provide that the Company will not permit any Restricted Subsidiaries to,
directly or indirectly, Incur any additional Indebtedness after the Issue Date
other than: (i) Refinancing Indebtedness, (ii) Non-Recourse Indebtedness, (iii)
Indebtedness to the Company, (iv) any deposits made to secure performance of
tenders, bids, leases, statutory obligations, surety and appeal bonds, progress
statements, government contracts, and other obligations of like nature
(exclusive of the obligation for the payment of borrowed money), in each case
Incurred in the ordinary course of business of the Restricted Subsidiary and (v)
any guaranty of Indebtedness of the Company or another Restricted Subsidiary;
provided that the tangible net assets of all Restricted Subsidiaries
guaranteeing Indebtedness of the Company or other Restricted Subsidiaries at the
end of the fiscal quarter immediately preceding the date of Incurring any such
guaranty, as determined in accordance with GAAP, shall not exceed 10% of the
Company's Consolidated Tangible Net Assets.
Limitations and Restrictions on Issuance of Capital Stock of Restricted
Subsidiaries. The Senior Indenture will provide that the Company will not
permit any Restricted Subsidiaries to issue, or permit to be outstanding at any
time, Preferred Stock or any other Capital Stock constituting Disqualified
Stock.
Change of Control. The Senior Indenture will provide that, following the
occurrence of any Change of Control, the Company will so notify the Trustee in
writing by delivery of an Officers' Certificate and will offer to purchase (a
"Change of Control Offer") from all Holders, and will purchase from Holders
accepting such Change of Control Offer on the date fixed for the closing of such
Change of Control Offer (the "Change of Control Payment Date"), the Outstanding
Offered Debt Securities at an offer price (the "Change of Control Price") in
cash in an amount equal to 101 percent of the aggregate principal amount thereof
plus accrued and unpaid interest, if any, to the Change of Control Payment Date
in accordance with the procedures set forth in the "Change of Control" covenant
of the Senior Indenture.
In addition, the Senior Indenture will provide that, within 30 days after
the date of any Change of Control, the Company (with written notice to the
Trustee) or the Trustee at the Company's request (and at the expense of the
Company), will send or cause to be sent by first-class mail, postage prepaid, to
all Holders on the date of the Change of Control at their respective addresses
appearing in the Security Register, a notice prepared by the Company advising
the Holders of such occurrence and of such Holder's rights arising as a result
thereof. Such notice will contain all instructions and materials necessary to
enable such Holders to tender their Offered Debt Securities to the Company.
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<PAGE> 23
The Senior Indenture will also provide that:
(a) In the event of a Change of Control Offer, the Company will only
be required to accept Offered Debt Securities in denominations of $1,000 or
integral multiples thereof.
(b) The Company will not, and will not permit any Restricted
Subsidiary to, create or permit to exist or become effective any
restriction (other than any restriction set forth in any agreement,
indenture, document or instrument relating to any Existing Indebtedness or
Refinancing Indebtedness with respect thereto) that would materially impair
the ability of the Company to make a Change of Control Offer.
Notwithstanding the foregoing, if a Change of Control Offer is made, the
Company will pay for Offered Debt Securities tendered for purchase in
accordance with the provisions of the Senior Indenture described under the
caption "-- Change of Control."
(c) Not later than one Business Day prior to the Change of Control
Payment Date in connection with which the Change of Control Offer is being
made, the Company will (i) accept for payment Offered Debt Securities or
portions thereof tendered pursuant to the Change of Control Offer, (ii)
deposit with the Paying Agent money sufficient, in immediately available
funds, to pay the purchase price of all Offered Debt Securities or portions
thereof so accepted and (iii) deliver to the Paying Agent an Officers'
Certificate identifying the Offered Debt Securities or portions thereof
accepted for payment by the Company. The Paying Agent will promptly after
acceptance mail or deliver to Holders of Offered Debt Securities so
accepted payment in an amount equal to the Change of Control Price of the
Offered Debt Securities purchased from each such Holder, and the Company
will execute and, upon receipt of an Officer's Certificate of the Company,
the Trustee will promptly authenticate and mail or deliver to such Holder a
new Offered Debt Security equal in principal amount to any unpurchased
portion of the Offered Debt Security surrendered. Any Offered Debt
Securities not so accepted will be promptly mailed or delivered by the
Paying Agent at the Company's expense to the Holder thereof. The Company
will publicly announce the results of the Change of Control Offer on the
Change of Control Payment Date. For purposes of the provisions of the
Senior Indenture described above, the Company will choose a Paying Agent
which will not be the Company or a Subsidiary thereof.
(d) Any Change of Control Offer will be conducted by the Company in
compliance with applicable law, including, without limitation, Section
14(e) of the Exchange Act and Rule 14e-1 thereunder.
There can be no assurance that sufficient funds will be available at the
time of a Change of Control to make any required repurchases. The Company's
failure to make any required repurchases in the event of a Change of Control
Offer will create an Event of Default under the Senior Indenture.
No quantitative or other established meaning has been given to the phrase
"all or substantially all" (which appears in the definition of Change of
Control) by courts which have interpreted this phrase in various contexts. In
interpreting this phrase, courts make a subjective determination as to the
portion of assets conveyed, considering such factors as the value of the assets
conveyed and the proportion of an entity's income derived from the assets
conveyed. Accordingly, there may be uncertainty as to whether a Holder of
Offered Debt Securities can determine whether a Change of Control has occurred
and exercise any remedies such Holder may have upon a Change of Control.
Limitations on Transactions with Affiliates. The Senior Indenture will
provide that the Company will not, and will not permit any of its Subsidiaries
to, make any loan, advance, guaranty or capital contribution to or for the
benefit of, or sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or for the benefit of, or purchase or lease any
property or assets from, or enter into or amend any contract, agreement or
understanding with, or for the benefit of, (i) any Affiliate of the Company or
any Affiliate of the Company's Subsidiaries or (ii) any Person (or any Affiliate
of such Person) holding 10 percent or more of the Common Equity of the Company
or any of its Subsidiaries (each an "Affiliate Transaction"), except on terms
that are no less favorable to the Company or the relevant Subsidiary, as the
case may be, than those that could have been obtained in a comparable
transaction on an arms' length basis from a Person that is not an Affiliate.
The Senior Indenture will also provide that the Company will not, and will
not permit any of its Subsidiaries to, enter into an Affiliate Transaction
involving or having a value of more than $10,000,000,
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<PAGE> 24
unless in each case such Affiliate Transaction has been approved by a majority
of the disinterested members of the Company's Board of Directors.
The Senior Indenture will also provide that the Company will not, and will
not permit any of its Subsidiaries to, enter into any Affiliate Transaction
involving or having a value of more than $20,000,000 unless the Company has
delivered to the Trustee an opinion of an Independent Financial Advisor to the
effect that the transaction is fair to the Company or the relevant Subsidiary,
as the case may be, from a financial point of view.
The Senior Indenture will also provide that, notwithstanding the foregoing,
an Affiliate Transaction will not include (i) any contract, agreement or
understanding with, or for the benefit of, or plan for the benefit of, employees
or directors of the Company or its Subsidiaries (in their capacity as such) that
has been approved by the Company's Board of Directors, (ii) Capital Stock
issuances to members of the Board of Directors, officers and employees of the
Company or its Subsidiaries pursuant to plans approved by the stockholders of
the Company, (iii) any Restricted Payment otherwise permitted under the
provisions of the Senior Indenture described under the caption "-- Limitations
on Restricted Payments", (iv) any transaction between the Company or a
Restricted Subsidiary and another Restricted Subsidiary, (v) any contract,
agreement or understanding as in effect on the Issue Date or any amendment
thereto or any transaction contemplated thereby (including any amendment
thereto) or (vi) loans or advances by the Company or any Restricted Subsidiary
to Unrestricted Subsidiaries which in an aggregate amount at any one time
outstanding do not exceed $25,000,000.
Limitations on Liens. The Senior Indenture will provide that the Company
will not, and will not permit any of its Restricted Subsidiaries to, create,
Incur, assume or suffer to exist any Liens, other than Permitted Liens, on any
of its or their assets, property, income or profits therefrom unless
contemporaneously therewith or prior thereto all payments due under the Senior
Indenture and the Offered Debt Securities are secured on an equal and ratable
basis with the obligation or liability so secured until such time as such
obligation or liability is no longer secured by a Lien.
Limitations on Restrictions on Distributions from Restricted
Subsidiaries. The Senior Indenture will provide that the Company will not, and
will not permit any of its Restricted Subsidiaries to, create, assume or
otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction (other than encumbrances or restrictions imposed by
law or by judicial or regulatory action or by provisions in leases or other
agreements that restrict the assignability thereof) on the ability of any
Restricted Subsidiary to (i) pay dividends or make any other distributions on
its Capital Stock or any other interest or participation in, or measured by, its
profits, owned by the Company or any of its other Restricted Subsidiaries, or
pay interest on or principal of any Indebtedness owed to the Company or any of
its other Restricted Subsidiaries, (ii) make loans or advances to the Company or
any of its other Restricted Subsidiaries, or (iii) transfer any of its
properties or assets to the Company or any of its other Restricted Subsidiaries,
except for encumbrances or restrictions existing under or by reason of (a)
applicable law, (b) covenants or restrictions contained in Existing Indebtedness
as in effect on the Issue Date, (c) any restrictions or encumbrances arising in
connection with the Existing Credit Facility; provided that any such
restrictions and encumbrances relating to any extension or renewal of the
Existing Credit Facility are not more restrictive than those in the Existing
Credit Facility being extended or renewed, (d) any restrictions or encumbrances
arising in connection with Refinancing Indebtedness; provided that any
restrictions and encumbrances of the type described in this clause (d) that
arise under such Refinancing Indebtedness are not more restrictive than those
under the agreement creating or evidencing the Indebtedness being refunded or
refinanced, (e) any agreement restricting the sale or other disposition of
property securing Indebtedness permitted by the Senior Indenture if such
agreement does not expressly restrict the ability of a Subsidiary of the Company
to pay dividends or make loans or advances, and (f) reasonable and customary
borrowing base covenants set forth in credit agreements evidencing Indebtedness
otherwise permitted by the Senior Indenture which covenants restrict or limit
the distribution of revenues or sale proceeds from real estate or a real estate
project based upon the amount of Indebtedness outstanding on such real estate or
real estate project and the value of some or all of the remaining real estate or
the project's remaining assets.
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Maintenance of Consolidated Tangible Net Worth. The Senior Indenture will
provide that in the event that the Consolidated Tangible Net Worth of the
Company for any two consecutive fiscal quarters is less than $115,000,000,
within 30 days after the end of each such period the Company will so notify the
Trustee in writing by delivery of an Officers' Certificate and will offer to
purchase from all Holders (a "Net Worth Offer"), and will purchase from Holders
accepting such Net Worth Offer on the date fixed for the closing of such Net
Worth Offer (the "Net Worth Offer Date"), ten percent of the original
Outstanding principal amount of the Offered Debt Securities (the "Net Worth
Amount") at an offer price (the "Net Worth Offer Price") in cash in an amount
equal to 100 percent of the principal amount thereof plus accrued and unpaid
interest, if any, to the Net Worth Offer Date, in accordance with the procedures
set forth in the "Maintenance of Consolidated Tangible Net Worth" covenant of
the Senior Indenture. To the extent that the aggregate amount of Offered Debt
Securities tendered pursuant to a Net Worth Offer is less than the Net Worth
Amount relating thereto, then the Company may use the excess of the Net Worth
Amount over the amount of Offered Debt Securities tendered, or a portion
thereof, for general corporate purposes.
The Senior Indenture will also provide that in the event that the
Consolidated Tangible Net Worth of the Company for any two consecutive fiscal
quarters is less than $115,000,000, within 30 days after the end of such period,
the Company (with written notice to the Trustee) or the Trustee at the Company's
request (and at the expense of the Company) will send or cause to be sent by
first-class mail, postage prepaid, to all Holders on the date of the end of the
second such consecutive fiscal quarter, at their respective addresses appearing
in the Security Register, a notice prepared by the Company advising the Holders
of such occurrence and of each Holder's rights arising as a result thereof. Such
notice will contain all instructions and materials necessary to enable Holders
to tender their Offered Debt Securities to the Company.
The Senior Indenture will also provide that:
(a) In the event that the aggregate principal amount of Offered Debt
Securities surrendered by Holders exceeds the Net Worth Amount, the Company
will select the Offered Debt Securities to be purchased on a pro rata basis
from all Offered Debt Securities so surrendered, with such adjustments as
may be deemed appropriate by the Company so that only Offered Debt
Securities in denominations of $1,000, or integral multiples thereof, will
be purchased. To the extent that the Net Worth Amount remaining is less
than $1,000, the Company may use such Net Worth Amount for general
corporate purposes. Holders whose Offered Debt Securities are purchased
only in part will be issued new Offered Debt Securities equal in principal
amount to the unpurchased portion of the Offered Debt Securities
surrendered.
(b) The Company will not, and will not permit any Restricted
Subsidiary to, create or permit to exist or become effective any
restriction (other than any restriction set forth in any agreement,
indenture, document or instrument relating to any Existing Indebtedness or
Refinancing Indebtedness with respect thereto) that would materially impair
the ability of the Company to make a Net Worth Offer. Notwithstanding the
foregoing, if a Net Worth Offer is made, the Company will pay for Offered
Debt Securities tendered for purchase in accordance with the provisions of
the Senior Indenture described under the caption "-- Maintenance of
Consolidated Tangible Net Worth."
(c) Not later than one Business Day prior to the Net Worth Offer Date
in connection with which the Net Worth Offer is being made, the Company
will (i) accept for payment Offered Debt Securities or portions thereof
tendered pursuant to the Net Worth Offer (on a pro rata basis if required
pursuant to the provisions of the Senior Indenture described in paragraph
(a) above), (ii) deposit with the Paying Agent money sufficient, in
immediately available funds, to pay the purchase price of all Offered Debt
Securities or portions thereof so accepted and (iii) deliver to the Paying
Agent an Officers' Certificate identifying the Offered Debt Securities or
portions thereof accepted for payment by the Company. The Paying Agent will
promptly after acceptance mail or deliver to Holders of Offered Debt
Securities so accepted payment in an amount equal to the Net Worth Offer
Price of the Offered Debt Securities purchased from each such Holder, and
the Company will execute and the Trustee will promptly authenticate and
mail or deliver to such Holder a new Offered Debt Security equal in
principal amount to any unpurchased portion of the Offered Debt Security
surrendered. Any Offered Debt Securities not so accepted will be promptly
mailed or delivered by the Paying Agent at the Company's expense to the
Holder thereof. The Company
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will publicly announce the results of the Net Worth Offer on the Net Worth
Offer Date. For purposes of the provisions of the Senior Indenture
described above, the Company will choose a Paying Agent which will not be
the Company or a Subsidiary thereof.
(d) Any Net Worth Offer will be conducted by the Company in compliance
with applicable law, including, without limitation, Section 14(e) of the
Exchange Act and Rule 14e-1 thereunder, if applicable.
There can be no assurance that sufficient funds will be available at the
time of a Net Worth Offer to make any required repurchases. The Company's
failure to make any required repurchases in the event of a Net Worth Offer will
create an Event of Default under the Senior Indenture.
Limitations on Mergers and Consolidations. The Senior Indenture will
provide that the Company will not consolidate or merge with or into, or sell,
lease, convey or otherwise dispose of all or substantially all of its assets
(including, without limitation, by way of liquidation or dissolution), or assign
any of its obligations thereunder or under the Offered Debt Securities (as an
entirety or substantially an entirety in one transaction or series of related
transactions), to any Person unless: (i) the Person formed by or surviving such
consolidation or merger (if other than the Company), or to which sale, lease,
conveyance or other disposition or assignment will be made (collectively, the
"Successor"), is a solvent corporation or other legal entity organized and
existing under the laws of the United States or any state thereof or the
District of Columbia, and the Successor assumes by supplemental indenture in a
form reasonably satisfactory to the Trustee all of the obligations of the
Company under the Offered Debt Securities and the Senior Indenture, (ii)
immediately after giving effect to such transaction, no Default or Event of
Default has occurred and is continuing, (iii) immediately after giving effect to
such transaction and the use of any net proceeds therefrom on a pro forma basis,
the Consolidated Tangible Net Worth of the Company or the Successor, as the case
may be, would be at least equal to the Consolidated Tangible Net Worth of the
Company immediately prior to such transaction and (iv) the Consolidated Fixed
Charge Coverage Ratio set forth in the Senior Indenture and described under the
caption "-- Limitations on Additional Indebtedness" of the Company or the
Successor, as the case may be, immediately after giving effect to such
transaction, would be such that the Company or the Successor, as the case may
be, would be entitled to Incur at least $1 of additional Indebtedness under such
Consolidated Fixed Charge Coverage Ratio test. However, any such consolidation,
merger, sale, lease, conveyance or disposition may result in a Change of
Control, thereby requiring the Company to make a Change of Control Offer. See
"-- Senior Indenture Covenants -- Change of Control."
No quantitative or other established meaning has been given to the phrase
"all or substantially all" by courts which have interpreted this phrase in
various contexts. In interpreting this phrase, courts make a subjective
determination as to the portion of assets conveyed, considering such factors as
the value of the assets conveyed and the proportion of an entity's income
derived from the assets conveyed. Accordingly, there may be uncertainty as to
whether a Holder of Offered Debt Securities can determine whether the Company
has sold, leased, conveyed or otherwise disposed of all or substantially all of
its assets and exercise any remedies such Holder may have upon the occurrence of
any such transaction.
For purposes solely of this "Senior Indenture Covenants" section of this
Prospectus, the terms set forth below shall have the following meanings:
"Acquisition Debt" means Indebtedness of any Person existing at the time
such Person became a Subsidiary of the Company (or such Person is merged into
the Company or one of the Company's Subsidiaries) or assumed in connection with
the acquisition of assets from any such Person (other than assets acquired in
the ordinary course of business of the Company and its Subsidiaries), including,
without limitation, Indebtedness Incurred in connection with, or in
contemplation of, such Person becoming a Subsidiary of the Company (but
excluding Indebtedness of such Person which is extinguished, retired or repaid
in connection with such Person becoming a Subsidiary of the Company).
"Affiliate" of any Person means any Person directly or indirectly
controlling or controlled by, or under direct or indirect common control with,
such Person. For purposes of the Senior Indenture, each executive officer and
director of the Company and each Restricted Subsidiary will be an Affiliate of
the Company. In addition, for purposes of the Senior Indenture, control of a
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
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<PAGE> 27
contract or otherwise. Notwithstanding the foregoing, the term "Affiliate" will
not include, with respect to the Company or any Restricted Subsidiary which is a
Wholly Owned Subsidiary of the Company, any Restricted Subsidiary which is a
Wholly Owned Subsidiary of the Company.
"Asset Sale" for any Person means the sale, lease, conveyance or other
disposition (including, without limitation, by merger, consolidation or sale and
leaseback transaction, and whether by operation of law or otherwise) of any of
that Person's assets (including, without limitation, the sale or other
disposition of Capital Stock of any Subsidiary of such Person, whether by such
Person or such Subsidiary), whether owned on the Issue Date of the Offered Debt
Securities or subsequently acquired in one transaction or a series of related
transactions, in which such Person and/or Subsidiaries receive cash and/or other
consideration (including, without limitation, the unconditional assumption of
Indebtedness of such Person and/or its Subsidiaries) having an aggregate Fair
Market Value of $5,000,000 or more as to such transaction or series of related
transactions; provided, however, (i) sales of homes and sales of mortgages on
homes in the ordinary course of business consistent with past practices will not
constitute Asset Sales, (ii) sales, leases, conveyances or other dispositions,
including, without limitation, exchanges or swaps, of real estate or other
assets in the ordinary course of business consistent with past practices will
not constitute Asset Sales, (iii) sales, leases, sale-leasebacks or other
dispositions of amenities and other improvements at the Company's or its
Subsidiaries' communities in the ordinary course of business consistent with
past practices will not constitute Asset Sales, and (iv) transactions between
the Company and any of its Restricted Subsidiaries which are Wholly Owned
Subsidiaries, or among such Restricted Subsidiaries which are Wholly Owned
Subsidiaries of the Company will not constitute Asset Sales.
"Board of Directors" means the board of directors of a Person or any
authorized committee of the board of directors of such Person.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means any day other than a Legal Holiday.
"Capital Stock" of any Person means any and all shares, rights to purchase,
warrants or options (whether or not currently exercisable), participations, or
other equivalents of or interests in (however designated) the equity (which
includes, but is not limited to, common stock, preferred stock and partnership
and joint venture interests) of such Person (excluding any debt securities that
are convertible into, or exchangeable for, such equity).
"Capitalized Lease Obligations" of any Person means any obligation of such
Person to pay rent or other amounts under a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP, and the
amount of such obligation will be the capitalized amount thereof determined in
accordance with GAAP.
"Change of Control" means any of the following: (i) the sale, lease,
conveyance or other disposition of all or substantially all of the Company's
assets as an entirety or substantially as an entirety to any Person or group of
Persons (within the meaning of Section 13(d)(3) of the Exchange Act) in one or a
series of transactions; provided that a transaction where the holders of all
classes of Common Equity of the Company immediately prior to such transaction
own, directly or indirectly, 50 percent or more of the aggregate voting power of
all classes of Common Equity of such Person or group immediately after such
transaction will not be a Change of Control, (ii) the acquisition by the Company
and/or any of its Subsidiaries of 50 percent or more of the aggregate voting
power of all classes of Common Equity of the Company in one transaction or a
series of related transactions, (iii) the liquidation or dissolution of the
Company; provided that a liquidation or dissolution of the Company which is part
of a transaction or series of related transactions that does not constitute a
Change of Control under the "provided" clause of clause (i) above will not
constitute a Change of Control under this clause (iii) or (iv) any transaction
or a series of related transactions (as a result of a tender offer, merger,
consolidation or otherwise) that results in, or that is in connection with, (a)
any Person, including, a "group" (within the meaning of Section 13(d)(3) of the
Exchange Act) acquiring beneficial ownership (as determined in accordance with
Rule 13d-3 under the Exchange Act), directly or indirectly, of 50 percent or
more of the aggregate voting power of all classes of Common Equity of the
Company or of any
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<PAGE> 28
Person that possesses beneficial ownership (as determined in accordance with
Rule 13d-3 under the Exchange Act), directly or indirectly, of 50 percent or
more of the aggregate voting power of all classes of Common Equity of the
Company or (b) less than 50 percent (measured by the aggregate voting power of
all classes) of the Common Equity of the Company being registered under Section
12(b) or 12(g) of the Exchange Act.
"Common Equity" of any Person means all Capital Stock of such Person that
is generally entitled (i) to vote in the election of directors of such Person,
or (ii) if such Person is not a corporation, to vote or otherwise participate in
the selection of the governing body, partners, managers or others that will
control the management and policies of such Person.
"Consolidated Cash Flow Available for Fixed Charges" of the Company means,
for any period, the sum of the amounts for such period of (i) Consolidated Net
Income, plus (ii) Consolidated Income Tax Expense (other than income tax expense
(either positive or negative) attributable to extraordinary and nonrecurring
gains or losses on Asset Sales), plus (iii) Consolidated Interest Expense, plus
(iv) all depreciation, and without duplication, amortization (including, without
limitation, previously capitalized interest amortized to cost of sales), plus
(v) all other noncash items reducing Consolidated Net Income for such period,
minus (vi) all other noncash items increasing Consolidated Net Income for such
period, all as determined on a consolidated basis for the Company and its
Restricted Subsidiaries in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" of the Company means, with
respect to any determination date, the ratio of (i) Consolidated Cash Flow
Available for Fixed Charges of the Company for the prior four full fiscal
quarters for which financial results have been reported immediately preceding
the determination date, to (ii) the aggregate Consolidated Interest Incurred of
the Company for the prior four fiscal quarters for which financial results have
been reported immediately preceding the determination date.
"Consolidated Income Tax Expense" of the Company for any period means the
income tax expense of the Company and its Restricted Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" of the Company for any period means the
Interest Expense of the Company and its Restricted Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP.
"Consolidated Interest Incurred" of the Company for any period means the
Interest Incurred of the Company and its Restricted Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" of the Company for any period means the aggregate
net income (or loss) of the Company and its Restricted Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP; provided
that there will be excluded from such net income (to the extent otherwise
included therein), without duplication: (i) the net income (or loss) of any
Person (other than a Restricted Subsidiary) in which any Person (including,
without limitation, an Unrestricted Subsidiary) other than the Company has an
ownership interest, except to the extent that any such income has actually been
received by the Company or any Restricted Subsidiary in the form of dividends or
similar distributions during such period, (ii) except to the extent includable
in the Consolidated Net Income pursuant to the foregoing clause (i), the net
income (or loss) of any Person that accrued prior to the date that (a) such
Person becomes a Restricted Subsidiary or is merged into or consolidated with
the Company or any of its Restricted Subsidiaries or (b) the assets of such
Person are acquired by the Company or any of its Restricted Subsidiaries, (iii)
the net income of any Restricted Subsidiary to the extent that (but only so long
as) the declaration or payment of dividends or similar distributions by such
Restricted Subsidiary of that income is not permitted by operation of the terms
of its charter or any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to that Restricted Subsidiary during
such period, (iv) in the case of a successor to the Company by consolidation,
merger or transfer of its assets, any earnings of the successor prior to such
merger, consolidation or transfer of assets and (v) the gains (but not losses)
resulting from (a) the acquisition of securities issued by the Company or
extinguishment of Indebtedness of the Company, (b) Asset Sales and (c) other
extraordinary items. Notwithstanding the foregoing, in calculating Consolidated
Net Income, the Company will be entitled to take into consideration the tax
benefits associated with any extraordinary loss, but only to the extent such tax
benefits are recognized by the Company. Consolidated Net Income will exclude any
noncash losses,
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whether or not extraordinary, incurred in connection with the issuance of
Capital Stock (other than Disqualified Stock) in exchange for Indebtedness of
the Company or its Wholly Owned Restricted Subsidiaries.
"Consolidated Tangible Net Assets" of the Company as of any date means the
total amount of assets of the Company and its Restricted Subsidiaries (less
applicable reserves) on a consolidated basis at the end of the fiscal quarter
immediately preceding such date, as determined in accordance with GAAP, less:
(i) Intangible Assets and (ii) appropriate adjustments on account of minority
interests of other Persons holding equity investments in Restricted
Subsidiaries, in the case of each of clauses (i) and (ii) above as reflected on
the consolidated balance sheet of the Company and its Restricted Subsidiaries as
of the end of the fiscal quarter immediately preceding such date.
"Consolidated Tangible Net Worth" of the Company as of any date means the
stockholders' equity (including any Preferred Stock that is classified as equity
under GAAP, other than Disqualified Stock) of the Company and its Restricted
Subsidiaries on a consolidated basis at the end of the fiscal quarter
immediately preceding such date, as determined in accordance with GAAP, less the
amount of Intangible Assets reflected on the consolidated balance sheet of the
Company and its Restricted Subsidiaries as of the end of the fiscal quarter
immediately preceding such date.
"Default" means any event, act or condition that is, or after notice or the
passage of time or both would be, an Event of Default.
"Defeasance" has the meaning set forth in Section 11.02 of the Senior
Indenture.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the option of the holder thereof, in whole or in part, on or prior to the
final Maturity date of the Offered Debt Securities; provided that any Capital
Stock which would not constitute Disqualified Stock but for provisions thereof
giving holders thereof the right to require the Company to repurchase or redeem
such Capital Stock upon the occurrence of a change of control occurring prior to
the final Maturity of the Offered Debt Securities will not constitute
Disqualified Stock if the change of control provisions applicable to such
Capital Stock are no more favorable to the holders of such Capital Stock than
the provisions of the Senior Indenture described under the caption "Change of
Control" and such Capital Stock specifically provides that the Company will not
repurchase or redeem (or be required to repurchase or redeem) any such Capital
Stock pursuant to such provisions prior to the Company's repurchase of Offered
Debt Securities pursuant to the "Change of Control" covenant set forth in the
Senior Indenture.
"Disqualified Stock Dividend" of any Person means, for any dividend payable
with regard to Disqualified Stock issued by such Person, the amount of such
dividend multiplied by a fraction, the numerator of which is one and the
denominator of which is one minus the maximum statutory combined federal, state
and local income tax rate (expressed as a decimal number between 1 and 0) then
applicable to such Person.
"Event of Default" has the meaning set forth under the caption "-- Events
of Default".
"Existing Credit Facility" means the Credit Agreement, dated as of
September 29, 1995, between the Company and the lenders named therein and The
First National Bank of Chicago, as Agent (together with the documents related
thereto (including, without limitation, any guaranty agreements)), as such
Facility may be amended, restated, supplemented or otherwise modified from time
to time, and includes any facility extending the maturity of, increasing the
total commitment of, or restructuring (including, without limitation, the
inclusion of additional borrowers thereunder that are Subsidiaries of the
Company and whose obligations thereunder are guaranteed by the Company) all or
any portion of, the Indebtedness under such Facility or any successor or
replacement facilities and includes any facility with one or more agents or
lenders refinancing or replacing all or any portion of the Indebtedness under
such Facility or any successor facilities.
"Existing Indebtedness" means all of the Indebtedness of the Company and
its Subsidiaries that is outstanding on the Issue Date.
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"Fair Market Value" with respect to any asset or property means the sale
value that would be obtained in an arm's-length transaction between an informed
and willing seller under no compulsion to sell and an informed and willing buyer
under no compulsion to buy.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, as in effect on the Issue Date.
"Hedging Obligations" of any Person means the obligations of such Person
pursuant to any interest rate swap agreement, foreign currency exchange
agreement, interest rate collar agreement, option or futures contract or other
similar agreement or arrangement relating to interest rates or foreign exchange
rates.
"Holder" means a Person in whose name an Offered Debt Security is
registered.
"Incur" means to, directly or indirectly, create, incur, assume, guaranty,
extend the maturity of, or otherwise become liable with respect to any
Indebtedness.
"Indebtedness" of any Person at any date means, without duplication, (i)
all indebtedness of such Person for borrowed money (whether or not the recourse
of the lender is to the whole of the assets of such Person or only to a portion
thereof), (ii) all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments, (iii) all obligations of such Person in
respect of letters of credit or other similar instruments (or reimbursement
obligations with respect thereto), other than standby letters of credit issued
for the benefit of, or surety and performance bonds issued by, such Person in
the ordinary course of business, (iv) all obligations of such Person with
respect to Hedging Obligations (other than those that fix or cap the interest
rate on variable rate indebtedness otherwise permitted by the Senior Indenture
or that fix the exchange rate in connection with indebtedness denominated in a
foreign currency and otherwise permitted by the Senior Indenture and other than
the purchase of mortgage commitments in the ordinary course of business), (v)
all obligations of such Person to pay the deferred and unpaid purchase price of
property or services, including, without limitation, all conditional sale
obligations of such Person and all obligations under any title retention
agreement (except trade payables and accrued expenses incurred in the ordinary
course of business), (vi) all Capitalized Lease Obligations of such Person,
(vii) all indebtedness of others secured by a Lien on any asset of such Person,
whether or not such indebtedness is assumed by such Person, (viii) all
indebtedness of others guaranteed by, or otherwise the liability of, such Person
to the extent of such guaranty or liability, and (ix) all Disqualified Stock
issued by such Person (the amount of indebtedness represented by any
Disqualified Stock will equal the greater of the voluntary or involuntary
liquidation preference plus accrued and unpaid dividends). The amount of
indebtedness of any Person at any date will be (a) the outstanding balance at
such date of all unconditional obligations as described above, (b) the maximum
liability of such Person for any contingent obligations under clause (v) above
and (c) in the case of clause (vii) (if the indebtedness referred to therein is
not assumed by such Person), the lesser of the (A) Fair Market Value of all
assets subject to a Lien securing the indebtedness of others on the date that
the Lien attaches and (B) amount of the indebtedness secured.
"Independent Financial Advisor" means an accounting, appraisal or
investment banking firm of nationally recognized standing that is, in the
reasonable judgment of the Company's Board of Directors, (i) qualified to
perform the task for which it has been engaged, and (ii) disinterested and
independent with respect to the Company, all of its Subsidiaries, and each
Affiliate of the Company and/or its Subsidiaries that is involved in the
Affiliate Transaction with respect to which such firm has been engaged.
"Intangible Assets" of the Company means all unamortized debt discount and
expense, unamortized deferred charges, goodwill, patents, trademarks, service
marks, trade names, copyrights, write-ups of assets over their carrying value at
the end of the last fiscal quarter ended prior to the Issue Date or the date of
acquisition, if acquired subsequent thereto, and all other items which would be
treated as intangibles on the consolidated balance sheet of the Company and its
Restricted Subsidiaries prepared in accordance with GAAP.
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<PAGE> 31
"Interest Expense" of any Person for any period means, without duplication,
the aggregate amount of (i) interest which, in conformity with GAAP, would be
set opposite the caption "interest expense" or any like caption on an income
statement for such Person (including, without limitation, imputed interest
included on Capitalized Lease Obligations, all commissions, discounts and other
fees and charges owed with respect to letters of credit securing financial
obligations and bankers' acceptance financing, the net costs associated with
Hedging Obligations, amortization of other financing fees and expenses, the
interest portion of any deferred payment obligation, amortization of discount or
premium, if any, and all other noncash interest expense other than interest and
other charges amortized to cost of sales) and includes, with respect to the
Company and its Restricted Subsidiaries, without duplication (including
duplication of the foregoing items), all interest included as a component of
cost of sales for such period, and (ii) the amount of Disqualified Stock
Dividends recognized by the Company on any Disqualified Stock whether or not
paid during such period.
"Interest Incurred" of any Person for any period means, without
duplication, the aggregate amount of (i) interest which, in conformity with
GAAP, would be set opposite the caption "interest expense" or any like caption
on an income statement for such Person (including, without limitation, imputed
interest included on Capitalized Lease Obligations, all commissions, discounts
and other fees and charges owed with respect to letters of credit securing
financial obligations and bankers' acceptance financing, the net costs
associated with Hedging Obligations, amortization of other financing fees and
expenses, the interest portion of any deferred payment obligation, amortization
of discount or premium, if any, and all other noncash interest expense other
than interest and other charges amortized to cost of sales) and includes, with
respect to the Company and its Restricted Subsidiaries, without duplication
(including duplication of the foregoing items), all capitalized interest for
such period, all interest attributable to discontinued operations for such
period to the extent not set forth on the income statement under the caption
"interest expense" or any like caption, and all interest actually paid by the
Company or a Restricted Subsidiary under any guaranty of Indebtedness
(including, without limitation, a guaranty of principal, interest or any
combination thereof) of any other Person during such period and (ii) the amount
of Disqualified Stock Dividends recognized by the Company on any Disqualified
Stock whether or not declared during such period.
"Investments" of any Person means all (i) investments by such Person in any
other Person in the form of loans, advances or capital contributions, (ii)
guarantees of Indebtedness or other obligations of any other Person by such
Person, (iii) purchases (or other acquisitions for consideration) by such Person
of Indebtedness, Capital Stock or other securities of any other Person and (iv)
other items that would be classified as investments (including, without
limitation, purchases of assets outside the ordinary course of business) on a
balance sheet of such Person determined in accordance with GAAP.
"Issue Date" means the date of original issuance of the Offered Debt
Securities.
"Legal Holiday" means Saturday, Sunday or a day on which banking
institutions in New York, New York or at a Place of Payment are authorized or
obligated by law, regulation or executive order to remain closed. If a payment
date is a Legal Holiday at a Place of Payment, payment shall be made at that
place on the next succeeding day that is not a Legal Holiday and no interest
shall accrue for the intervening period.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or other similar encumbrance of any kind upon or in
respect of such asset, whether or not filed, recorded or otherwise perfected
under applicable law (including, without limitation, any conditional sale or
other title retention agreement, and any lease in the nature thereof, any option
or other agreement to sell, and any filing of, or agreement to give, any
financing statement under the Uniform Commercial Code (or equivalent statutes)
of any jurisdiction).
"Maturity", when used with respect to an Offered Debt Security, means the
date on which the principal of such Offered Debt Security or an installment of
principal becomes due and payable as therein provided or provided in the Senior
Indenture, whether at the Stated Maturity or by declaration of acceleration,
call for redemption or otherwise.
"Net Proceeds" means cash (in U.S. dollars or freely convertible into U.S.
dollars) received by the Company or any Restricted Subsidiary from an Asset Sale
net of (i)(a) all brokerage commissions, investment banking fees and all other
fees and expenses (including, without limitation, fees and expenses of
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<PAGE> 32
counsel and investment bankers) related to such Asset Sale, (b) provisions for
all income and other taxes measured by or resulting from such Asset Sale, (c)
payments made to retire Indebtedness where payment of such Indebtedness is
required in connection with such Asset Sale, (d) amounts required to be paid to
any Person (other than the Company or a Restricted Subsidiary) owning a
beneficial interest in the assets subject to the Asset Sale and (e) appropriate
amounts to be provided by the Company or any Restricted Subsidiary thereof, as
the case may be, as a reserve, in accordance with GAAP, against any liabilities
associated with such Asset Sale and retained by the Company or any Restricted
Subsidiary thereof, as the case may be, after such Asset Sale, including,
without limitation, pension and other post-employment benefit liabilities,
liabilities related to environmental matters and liabilities under any
indemnification obligations associated with such Asset Sale, all as reflected in
an Officers' Certificate delivered to the Trustee, and (ii) all noncash
consideration received by the Company or any of its Restricted Subsidiaries from
such Asset Sale upon the liquidation or conversion of such consideration into
cash, without duplication, net of all items enumerated in subclauses (a) through
(e) of clause (i) hereof.
"Non-Recourse Indebtedness" with respect to any Person means Indebtedness
of such Person for which (i) the sole legal recourse for collection of principal
and interest on such Indebtedness is against the specific property identified in
the instruments evidencing or securing such Indebtedness and such property was
acquired with the proceeds of such Indebtedness or such Indebtedness was
Incurred within 90 days after the acquisition of such property and (ii) no other
assets of such Person may be realized upon in collection of principal or
interest on such Indebtedness.
"Officer" means the Chairman of the Board, the President, the Senior Vice
President, Treasurer, any Assistant Treasurer, the Controller, the Secretary,
any Assistant Secretary or any Vice President of a Person.
"Officers' Certificate" means a certificate signed by two Officers, one of
whom must be the Person's Chief Executive Officer (or Co-Chief Executive
Officer), Chief Operating Officer, Chief Financial Officer or Chief Accounting
Officer.
"Outstanding", when used with respect to Offered Debt Securities, means, as
of the date of determination, all Offered Debt Securities theretofore
authenticated and delivered under the Senior Indenture, except:
(i) Offered Debt Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Offered Debt Securities for whose payment or redemption money in
the necessary amount has been theretofore deposited with the Trustee or any
Paying Agent (other than the Company) in trust or set aside and segregated
in trust by the Company (if the Company shall act as its own Paying Agent)
for the Holders of such Offered Debt Securities; provided that, if such
Offered Debt Securities are to be redeemed, notice of such redemption has
been duly given pursuant to the Senior Indenture or provision therefor
satisfactory to the Trustee has been made;
(iii) Offered Debt Securities as to which the Defeasance has been
effected pursuant to the defeasance provisions, if any, of the Senior
Indenture; and
(iv) Offered Debt Securities which have been paid pursuant to the
"Mutilated, Destroyed, Lost and Stolen Securities" section of the Senior
Indenture or in exchange for or in lieu of which other Offered Debt
Securities have been authenticated and delivered pursuant to the Senior
Indenture, other than any such Offered Debt Securities in respect of which
there shall have been presented to the Trustee proof satisfactory to it
that such Offered Debt Securities are held by a bona fide purchaser in
whose hands such Offered Debt Securities are valid obligations of the
Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Offered Debt Securities have given any
request, demand, authorization, direction, notice, consent or waiver under the
Senior Indenture, (a) the principal amount of an Offered Debt Security
denominated in one or more foreign currencies or currency units shall be the
U.S. dollar equivalent, determined in the manner provided as contemplated by
Section 3.01 of the Senior Indenture on the Issue Date, of the principal amount
of such Offered Debt Security, and (b) Offered Debt Securities owned by the
Company or any other obligor of the Offered Debt Securities or any Subsidiary of
the Company or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in
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relying upon any such request, demand, authorization, direction, notice, consent
or waiver, only Offered Debt Securities which the Trustee knows to be so owned
shall be so disregarded. Offered Debt Securities so owned which have been
pledged in good faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Trustee the pledgee's right so to act with respect to
such Offered Debt Securities and that the pledgee is not the Company or any
other obligor upon the Offered Debt Securities or any Subsidiary of the Company
or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of or any interest on any Offered Debt Security.
"Permitted Investment" of any Person means any Investment of such Person in
(i) direct obligations of the United States or any agency thereof or obligations
guaranteed by the United States or any agency thereof, in each case maturing
within 180 days of the date of acquisition thereof, (ii) certificates of deposit
maturing within 180 days of the date of acquisition thereof issued by a bank,
trust company or savings and loan association which is organized under the laws
of the United States or any state thereof having capital, surplus and undivided
profits aggregating in excess of $250 million and a Keefe Bank Watch Rating of C
or better (or a similar rating by any successor thereof), (iii) certificates of
deposit maturing within 180 days of the date of acquisition thereof issued by a
bank, trust company or savings and loan association organized under the laws of
the United States or any state thereof other than banks, trust companies or
savings and loan associations satisfying the criteria in (ii) above, provided
that the aggregate amount of all certificates of deposit issued to the Company
at any one time by such bank, trust company or savings and loan association will
not exceed $100,000, (iv) commercial paper given the highest rating by two
established national credit rating agencies and maturing not more than 180 days
from the date of the acquisition thereof, (v) repurchase agreements or
money-market accounts which are fully secured by direct obligations of the
United States or any agency thereof and (vi) in the case of the Company and its
Subsidiaries, any receivables or loans taken by the Company or a Subsidiary in
connection with the sale of any asset otherwise permitted by the Senior
Indenture.
"Permitted Liens" means (i) Liens for taxes, assessments or governmental
charges or claims that either (a) are not yet delinquent or (b) are being
contested in good faith by appropriate proceedings and as to which appropriate
reserves have been established or other provisions have been made in accordance
with GAAP, (ii) statutory Liens of landlords and carriers', warehousemen's,
mechanics', suppliers', materialmen's, repairmen's or other Liens imposed by law
and arising in the ordinary course of business and with respect to amounts that,
to the extent applicable, either (a) are not yet delinquent or (b) are being
contested in good faith by appropriate proceedings and as to which appropriate
reserves have been established or other provisions have been made in accordance
with GAAP, (iii) Liens (other than any Lien imposed by the Employee Retirement
Income Security Act of 1974, as amended) incurred or deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security, (iv) Liens incurred
or deposits made to secure the performance of tenders, bids, leases, statutory
obligations, surety and appeal bonds, progress payments, government contracts
and other obligations of like nature (exclusive of obligations for the payment
of borrowed money), in each case incurred in the ordinary course of business of
the Company and its Subsidiaries, (v) attachment or judgment Liens not giving
rise to a Default or an Event of Default and which are being contested in good
faith by appropriate proceedings, (vi) easements, rights-of-way, restrictions
and other similar charges or encumbrances not materially interfering with the
ordinary course of business of the Company and its Subsidiaries, (vii) zoning
restrictions, licenses, restrictions on the use of real property or minor
irregularities in title thereto, which do not materially impair the use of such
real property in the ordinary course of business of the Company and its
Subsidiaries or the value of such real property for the purpose of such
business, (viii) leases or subleases granted to others not materially
interfering with the ordinary course of business of the Company and its
Subsidiaries, (ix) purchase money mortgages (including, without limitation,
Capitalized Lease Obligations and purchase money security interests), (x) Liens
securing Refinancing Indebtedness; provided that such Liens only extend to
assets which are similar to the type of assets securing the Indebtedness being
refinanced and such refinanced Indebtedness was previously secured by such
similar assets, (xi) Liens securing Indebtedness of the Company and its
Restricted Subsidiaries; provided that the aggregate amount of Indebtedness
secured by Liens (other than Non-Recourse Indebtedness secured by Liens) will
not exceed 40 percent of Consolidated Tangible Net Assets, (xii) any interest in
or title of a lessor to property subject to any Capitalized Lease Obligations
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incurred in compliance with the provisions of the Senior Indenture, (xiii) Liens
existing on the Issue Date, including, without limitation, Liens securing
Existing Indebtedness, (xiv) any option, contract or other agreement to sell an
asset; provided such sale is not otherwise prohibited under the Senior
Indenture, (xv) Liens securing Non-Recourse Indebtedness of the Company or a
Restricted Subsidiary thereof, (xvi) Liens on property or assets of any
Restricted Subsidiary securing Indebtedness of such Restricted Subsidiary owing
to the Company or one or more Restricted Subsidiaries, (xvii) Liens securing
Indebtedness of an Unrestricted Subsidiary, (xviii) any right of a lender or
lenders to which the Company or a Restricted Subsidiary may be indebted to
offset against, or appropriate and apply to the payment of, such Indebtedness
any and all balances, credits, deposits, accounts or monies of the Company or a
Restricted Subsidiary with or held by such lender or lenders and (xix) any
pledge or deposit of cash or property in conjunction with obtaining surety and
performance bonds and letters of credit required to engage in constructing
on-site and off-site improvements required by municipalities or other
governmental authorities in the ordinary course of business of the Company, by
the Company or any Restricted Subsidiary.
"Person" means any individual, corporation, partnership, joint venture,
limited liability company, incorporated or unincorporated association, joint
stock company, trust, unincorporated organization or government or other agency
or political subdivision thereof or other entity of any kind.
"Place of Payment", when used with respect to the Offered Debt Securities,
means the place or places where the principal of and interest on the Offered
Debt Securities are payable.
"Preferred Stock" of any Person means all Capital Stock of such Person
which has a preference in liquidation or with respect to the payment of
dividends.
"Refinancing Indebtedness" means Indebtedness that refunds, refinances or
extends any Existing Indebtedness or other Indebtedness permitted to be Incurred
by the Company or its Restricted Subsidiaries pursuant to the terms of the
Senior Indenture, but only to the extent that (i) the Refinancing Indebtedness
is subordinated to the Offered Debt Securities to the same extent as the
Indebtedness being refunded, refinanced or extended, if at all, (ii) the
Refinancing Indebtedness is scheduled to mature either (a) no earlier than the
Indebtedness being refunded, refinanced or extended, or (b) after the maturity
date of the Offered Debt Securities, (iii) the portion, if any, of the
Refinancing Indebtedness that is scheduled to mature on or prior to the Maturity
date of the Offered Debt Securities has a Weighted Average Life to Maturity at
the time such Refinancing Indebtedness is Incurred that is equal to or greater
than the Weighted Average Life to Maturity of the portion of the Indebtedness
being refunded, refinanced or extended that is scheduled to mature on or prior
to the Maturity date of the Offered Debt Securities, (iv) such Refinancing
Indebtedness is in an aggregate amount that is equal to or less than the
aggregate amount then outstanding under the Indebtedness being refunded,
refinanced or extended, (v) such Refinancing Indebtedness is Incurred by the
same Person that initially Incurred the Indebtedness being refunded, refinanced
or extended, except that the Company may Incur Refinancing Indebtedness to
refund, refinance or extend Indebtedness of any Restricted Subsidiary, and (vi)
such Refinancing Indebtedness is Incurred within 180 days after the Indebtedness
being refunded, refinanced or extended is so refunded, refinanced or extended;
provided that Refinancing Indebtedness shall include the amount of any
Indebtedness under the Existing Credit Facility which is Incurred within 180
days after the repayment of an equal amount of Indebtedness under the Existing
Credit Facility which was Incurred pursuant to the provisions of the Senior
Indenture described in the first paragraph under the caption "-- Limitations on
Additional Indebtedness."
"Registrar" has the meaning set forth in the "Registration, Registration of
Transfer and Exchange" section of the Senior Indenture.
"Restricted Investment" with respect to any Person means any Investment
(other than any Permitted Investment) by such Person in any (i) of its
Affiliates, (ii) executive officer or director of any Affiliate of such Person,
or (iii) other Person other than a Restricted Subsidiary which is a Wholly Owned
Subsidiary of the referent Person; provided, however, that with respect to the
Company and its Restricted Subsidiaries, any loan or advance to an executive
officer or director of the Company or a Subsidiary will not constitute a
Restricted Investment provided such loan or advance is made in the ordinary
course of business consistent with past practices, and, if such loan or advance
exceeds $100,000 (other than a readily marketable mortgage loan not
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<PAGE> 35
exceeding $500,000), such loan or advance has been approved by the Board of
Directors of the Company or a disinterested committee thereof.
"Restricted Payment" with respect to any Person means (i) the declaration
of any dividend or the making of any other payment or distribution of cash,
securities or other property or assets in respect of such Person's Capital Stock
(except that a dividend payable solely in Capital Stock (other than Disqualified
Stock) of such Person will not constitute a Restricted Payment), (ii) any
payment on account of the purchase, redemption, retirement or other acquisition
for value of such Person's Capital Stock or any other payment or distribution
made in respect thereof (other than payments or distributions excluded from the
definitions of Restricted Payment in clause (i) above), either directly or
indirectly, (iii) any Restricted Investment, and (iv) any principal payment,
redemption, repurchase, defeasance or other acquisition or retirement of any
Indebtedness of any Unrestricted Subsidiary or of Indebtedness of the Company or
its Restricted Subsidiaries which is subordinated in right of payment to the
Offered Debt Securities; provided, however, that with respect to the Company and
its Subsidiaries, Restricted Payments will not include (a) any payment described
in clause (i), (ii) or (iii) above made to the Company or any of its Restricted
Subsidiaries which are Wholly Owned Subsidiaries by any of the Company's
Subsidiaries, or (b) any proportionate payment in respect of minority interests
in Restricted Subsidiaries of the Company to the extent that the payment
constitutes a return of capital that was not included in the Company's
shareholders' equity or a dividend or similar distribution not included in
determining the Company's Consolidated Net Income, or (c) any purchase,
redemption, retirement or other acquisition for value of Indebtedness of the
Company or its Restricted Subsidiaries which is subordinated to the Offered Debt
Securities if the consideration therefor consists solely of, or is the proceeds
from, Indebtedness subordinated to the Offered Debt Securities to the same
extent as the Indebtedness being purchased, redeemed, retired or otherwise
acquired, or (d) any purchase, redemption, retirement or other acquisition for
value of Indebtedness or Capital Stock of such Person or its Subsidiaries if the
consideration therefor consists solely of Capital Stock (other than Disqualified
Stock) of such Person, or the proceeds from such sale of such Capital Stock or
(e) any loans or advances by the Company or any Restricted Subsidiary to
Unrestricted Subsidiaries which in an aggregate amount at any one time
outstanding do not exceed $25,000,000.
"Restricted Subsidiary" means each of the Subsidiaries of the Company which
is not an Unrestricted Subsidiary.
"Security Register" has the meaning set forth in the "Registration,
Registration of Transfer and Exchange" section of the Senior Indenture.
"Stated Maturity", when used with respect to any Offered Debt Security or
any installment of principal thereof or interest thereon, means the date
specified in such Offered Debt Security as the fixed date on which the principal
of such Offered Debt Security or such installment of principal or interest is
due and payable.
"Subsidiary" of any Person means any (i) corporation of which at least a
majority of the aggregate voting power of all classes of the Common Equity is
directly or indirectly beneficially owned by such Person, and (ii) entity other
than a corporation of which such Person directly or indirectly beneficially owns
at least a majority of the Common Equity.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
the Senior Indenture until a successor Trustee shall have become such pursuant
to the applicable provisions of the Senior Indenture, and thereafter "Trustee"
shall mean or include the Person who is then the Trustee thereunder.
"Unrestricted Subsidiary" means each of the Subsidiaries of the Company so
designated by a Board Resolution. The Board of Directors of the Company may
designate an Unrestricted Subsidiary to be a Restricted Subsidiary; provided
that (i) any such redesignation will be deemed to be an Incurrence by the
Company and its Restricted Subsidiaries of the Indebtedness (if any) of such
redesignated Subsidiary for purposes of the provisions of the Senior Indenture
described under the caption "-- Limitations on Additional Indebtedness" as of
the date of such redesignation and (ii) immediately after giving effect to such
redesignation and the Incurrence of any such additional Indebtedness, the
Company and its Restricted Subsidiaries could Incur $1.00 of additional
Indebtedness under the Consolidated Fixed Charge Coverage
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Ratio set forth in the first paragraph under the caption "-- Limitations on
Additional Indebtedness." Subject to the foregoing, the Board of Directors of
the Company also may designate any Restricted Subsidiary to be an Unrestricted
Subsidiary; provided that (i) all previous Investments by the Company and its
Restricted Subsidiaries in such Restricted Subsidiary will be deemed to be
Restricted Payments at the time of such designation and will reduce the amount
available for Restricted Payments under the provisions of the Senior Indenture
described under the caption "-- Limitations on Restricted Payments" and (ii)
immediately after giving effect to such designation and reduction of amounts
available for Restricted Payments under such provisions, the Company and its
Restricted Subsidiaries could Incur $1.00 of additional Indebtedness under the
Consolidated Fixed Charge Coverage Ratio set forth in the first paragraph under
the caption "-- Limitations on Additional Indebtedness." Any such designation or
redesignation by the Board of Directors of the Company will be evidenced to the
Trustee by the filing with the Trustee of a Board Resolution giving effect to
such designation or redesignation and an Officers' Certificate certifying that
such designation or redesignation complied with the foregoing conditions and
setting forth the underlying calculations of such Officers' Certificate.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
or portion thereof, at any date, the number of years obtained by dividing (i)
the sum of the products obtained by multiplying (a) the amount of each then
remaining installment, sinking fund, serial maturity or other required payment
of principal, including, without limitation, payment at final maturity, in
respect thereof, by (b) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the making of such payment
by (ii) the then outstanding principal amount of such Indebtedness or portion
thereof.
"Wholly Owned Subsidiary" of any Person means (i) a Subsidiary, of which
100 percent of the Common Equity (except for directors' qualifying shares or
certain minority interests owned by other Persons solely due to local law
requirements that there be more than one stockholder, but which interest is not
in excess of what is required for such purpose) is owned directly by such Person
or through one or more other Wholly Owned Subsidiaries of such Person, or (ii)
any entity other than a corporation in which such Person, directly or
indirectly, owns all of the Common Equity of such entity.
REDEMPTION
If and to the extent set forth in the applicable Prospectus Supplement, the
Company will have the right to redeem the Offered Debt Securities, in whole or
from time to time in part, after the date and at the redemption prices set forth
in the applicable Prospectus Supplement.
EVENTS OF DEFAULT
Except as may be described in the accompanying Prospectus Supplement, an
"Event of Default" will be defined in the Indenture for the Offered Debt
Securities as any of the following events (whatever the reason for such Event of
Default and whether it will be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or any order of any court
or any order, rule or regulation of any administrative or governmental body):
(i) the failure by the Company to pay interest on any Offered Debt
Security when the same becomes due and payable and the continuance of any
such failure for a period of 30 days;
(ii) the failure by the Company to pay the principal of any Offered
Debt Security when the same becomes due and payable at maturity, upon
acceleration or otherwise;
(iii) the failure by the Company to make any sinking fund payment when
the same becomes due and payable;
(iv) the failure by the Company to comply with any of its agreements
or covenants in, or provisions of, the Offered Debt Security or the
Indenture relating to the Offered Debt Security (other than an agreement or
covenant a default in whose performance or whose breach is elsewhere is
such Indenture specifically dealt with) and such failure continues for the
period and after the notice specified below;
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(v) the acceleration of any indebtedness for borrowed money or
guarantees thereof (other than Non-Recourse Indebtedness (as defined in the
applicable Indenture)) of the Company or any of its subsidiaries that has
an outstanding principal amount of $5,000,000 or more in the aggregate;
provided that, in the event any such acceleration is withdrawn or otherwise
rescinded within a period of five days after such acceleration by the
holders of such indebtedness, any Event of Default under the provisions of
the applicable Indenture described in this clause (v) relating to the
Offered Debt Securities will be deemed to be cured and any acceleration
under such Indenture will be deemed withdrawn or rescinded;
(vi) the failure by the Company or any of its subsidiaries to make any
principal or interest payment in respect of indebtedness for borrowed money
or guarantees thereof (other than Non-Recourse Indebtedness) of the Company
or any of its subsidiaries with an outstanding aggregate principal amount
of $5,000,000 or more within five days of such principal or interest
payment becoming due and payable (after giving effect to any applicable
grace period set forth in the documents governing such indebtedness);
(vii) a final judgment or judgments that exceed $5,000,000 or more in
the aggregate, for the payment of money, having been entered by a court or
courts of competent jurisdiction against the Company or any of its
subsidiaries and such judgment or judgments are not satisfied, stayed,
annulled or rescinded within 60 days of being entered;
(viii) the Company or any Material Subsidiary pursuant to or within
the meaning of any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief against it in an
involuntary case,
(C) consents to the appointment of a Custodian of it or for all or
substantially all of its property, or
(D) makes a general assignment for the benefit of its creditors;
(ix) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(A) is for relief against the Company or any Material Subsidiary as
debtor in an involuntary case,
(B) appoints a Custodian of the Company or any Material Subsidiary
or a Custodian for all or substantially all of the property of the
Company or any Material Subsidiary, or
(C) orders the liquidation of the Company or any Material
Subsidiary,
and the order or decree remains unstayed and in effect for 60 days; or
(x) any other Event of Default provided in the supplemental indenture
under which the Offered Debt Securities are issued or in the form of such
Offered Debt Security.
For purposes hereof, "Material Subsidiary" means any subsidiary of the
Company which accounted for three percent or more of the consolidated tangible
net assets or consolidated cash flow available for fixed charges of the Company
on a consolidated basis for the fiscal year ending immediately prior to any
default or Event of Default, all computed in accordance with generally accepted
accounting principles.
The Indenture relating to the Offered Debt Securities will provide that the
Trustee will not be deemed to know of a default unless a trust officer has
actual knowledge of such default or receives written notice of such default with
specific reference to such default.
The Indenture relating to the Offered Debt Securities will provide that a
default as described in sub-clause (iv) above is not an Event of Default until
the Trustee notifies the Company, or the holders of at least 25 percent in
aggregate principal amount of the then outstanding Offered Debt Securities under
the Indenture, or such other percentage as may be specified in the applicable
Prospectus Supplement, notify the Company and the Trustee, of the default and
the Company does not cure the default within 60 days after receipt of the
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notice, or for such other period as may be specified in the applicable
Prospectus Supplement. The notice must specify the default, demand that it be
remedied and state that the notice is a "Notice of Default." If such a default
is cured within the applicable time period, it ceases.
Except to the extent otherwise stated in the applicable Prospectus
Supplement, the Indenture for the Offered Debt Securities will provide that if
an Event of Default (other than an Event of Default described in sub-clause
(viii) or (ix) above) shall have occurred and be continuing under the Indenture,
the Trustee (after receiving indemnities from the holders of the Offered Debt
Securities to its satisfaction) by notice to the Company, or the holders of at
least 25 percent in principal amount of the Offered Debt Securities then
outstanding, or such other percentage as may be specified in the Prospectus
Supplement, by notice to the Company and the Trustee, may declare all of the
Offered Debt Securities to be due and payable immediately. Upon such
declaration, the amounts due and payable on the Offered Debt Securities, as
determined pursuant to the provisions of the "Acceleration" section of the
Indenture, will be due and payable immediately. Except to the extent otherwise
stated in the Prospectus Supplement, the Indenture for the Offered Debt
Securities will provide that if an Event of Default described in sub-clause
(viii) or (ix) above occurs, the Offered Debt Securities will ipso facto become
and be immediately due and payable without any declaration, notice or other act
on the part of the Trustee and the Company or any holder. The holders of a
majority in principal amount of the Offered Debt Securities then outstanding, or
such other percentage as may be specified in the applicable Prospectus
Supplement, by written notice to the Trustee and the Company, may waive such
Event of Default, rescind an acceleration and its consequences (except an
acceleration due to nonpayment of principal of or interest on the Offered Debt
Securities) if the rescission would not conflict with any judgment or decree and
if all existing Events of Default have been cured or waived.
Except to the extent otherwise stated in the applicable Prospectus
Supplement, the Indenture for the Offered Debt Securities will contain a
provision entitling the Trustee, subject to the duty of the Trustee during a
default to act with the required standard of care, to be indemnified by the
holders of Offered Debt Securities before proceeding to exercise any right or
power under the Indenture at the request of such holders. Subject to such
provisions in the Indenture for the Offered Debt Securities for the
indemnification of the Trustee and certain other limitations, the holders of a
majority in principal amount of the Offered Debt Securities then outstanding, or
such other percentage as may be specified in the applicable Prospectus
Supplement, may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or power
conferred on the Trustee. The Trustee may withhold from the holders of the
Offered Debt Securities notice of any continuing default or Event of Default
(except any default or Event of Default in payment of principal or interest on
the Offered Debt Securities) if the Trustee determines that withholding such
notice is in the holders' interest.
Except to the extent otherwise stated in the applicable Prospectus
Supplement, the Indenture for the Offered Debt Securities will provide that no
holder of Offered Debt Securities may institute any action against the Company
under the Indenture unless (i) such holder previously has given the Trustee
written notice of the default and continuance thereof, (ii) the holders of not
less than 25 percent in principal amount of the Offered Debt Securities then
outstanding, or such other percentage as may be specified in the applicable
Prospectus Supplement, have requested the Trustee to institute such action and
offered the Trustee reasonable indemnity, (iii) the Trustee has not instituted
such action within 60 days of the request and (iv) the Trustee has not received
direction inconsistent with such written request from the holders of a majority
in principal amount of the Offered Debt Securities then outstanding, or such
other amount as may be specified in the applicable Prospectus Supplement.
Notwithstanding any other provision of the applicable Indenture, the right of
any holder of Offered Debt Securities to receive payment of principal and
interest on such Offered Debt Security on or after the respective due dates
thereof, or, subject to the provisions of the applicable Indenture described in
the preceding sentence, to bring suit for the enforcement of any such payment on
or after such respective dates, will not be impaired or affected without the
consent of such holder.
The Indentures and the Offered Debt Securities will provide that no
director, officer or employee of the Company, as such, will have any liability
for any obligations of the Company under the Offered Debt Securities or the
Indentures. The Indentures and the Offered Debt Securities will also each
provide that each
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holder of the Offered Debt Securities, by accepting the Offered Debt Securities,
waives and releases all such liability.
Except to the extent otherwise stated in the Prospectus Supplement, the
Indenture for the Offered Debt Securities will provide that the Company will be
required to deliver to the Trustee an annual statement regarding compliance with
the Indenture, and include in such statement, if any officer of the Company is
aware of any default or Event of Default, a statement specifying such default or
Event of Default and what action the Company is taking or proposes to take with
respect thereto. In addition, the Company will be required to deliver to the
Trustee prompt written notice of the occurrence of any default or Event of
Default.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
Except to the extent otherwise stated in the applicable Prospectus
Supplement, the Company may terminate certain of its obligations under the
Indenture with respect to the Offered Debt Securities including its obligations
to comply with the restrictive covenants described herein or in the applicable
Prospectus Supplement, on the terms and subject to the conditions contained in
the Indenture, by depositing in trust with the Trustee money or obligations of,
or guaranteed by, the United States sufficient to pay the principal and
interest, if any, on such Offered Debt Securities to maturity (or earlier
redemption).
The Prospectus Supplement sets forth the specific provisions, if any,
permitting such defeasance or covenant defeasance, including any modifications
to the provisions described above, with respect to the Offered Debt Securities.
TRANSFER AND EXCHANGE
A holder of an Offered Debt Security will be able to transfer or exchange
the Offered Debt Securities only in accordance with the provisions of the
Indenture. The registrar may require a holder, among other things, to furnish
appropriate endorsements and transfer documents, and to pay any taxes and fees
required by law or permitted by the Indenture.
MODIFICATIONS TO THE INDENTURES
Except as may otherwise be set forth in the applicable Prospectus
Supplement, the Indenture for the Offered Debt Securities will provide that the
Company and the Trustee may enter into supplemental indentures without the
consent of the holders of Offered Debt Securities to, among other things: (i)
cure any ambiguity, defect or inconsistency in the Indenture for the Offered
Debt Securities; (ii) comply with the "Limitations on Mergers and
Consolidations" section set forth in the Indenture; (iii) provide for
uncertificated Offered Debt Securities in addition to certificated Offered Debt
Securities; (iv) make any change that does not adversely affect the legal rights
under the Indenture of holders of Offered Debt Securities; (v) add to the
covenants of the Company for the benefit of the holders of Offered Debt
Securities or to surrender any right or power in the Indenture conferred upon
the Company; (vi) add any additional Events of Default for the benefit of the
holders of Offered Debt Securities; (vii) change or eliminate any of the
provisions of the Indenture before Offered Debt Securities are issued
thereunder; (viii) establish the form or terms of the Offered Debt Securities;
(ix) evidence and provide for the acceptance of appointment under the Indenture
of a successor Trustee with respect to the Offered Debt Securities and to add to
or change any of the provisions of the Indenture as shall be necessary to
provide for or facilitate the administration of the trusts under the Indenture
by more than one Trustee; (x) supplement any of the provisions of the Indenture
to such extent as shall be necessary to permit or facilitate the defeasance or
discharge of Offered Debt Securities pursuant to the Indenture; or (xi) comply
with the qualification of the Indenture under the TIA.
Except as may otherwise be set forth in the applicable Prospectus
Supplement, the Indenture for the Offered Debt Securities also will contain
provisions permitting the Company and the Trustee, with the consent of the
holders of not less than a majority in principal amount of Offered Debt
Securities outstanding, or such other percentage as may be specified in the
applicable Prospectus Supplement, to add any provision to, change in any manner
or eliminate any of the provisions of the Indenture for the Offered Debt
Securities or modify in any manner the rights of the holders of the Offered Debt
Securities so affected; provided that the Company
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and the Trustee may not, without the consent of the holder of each outstanding
Offered Debt Security affected thereby, do, among other things, any of the
following: (i) change the stated maturity of the principal of, or any
installment of principal of, or interest on, any Offered Debt Security, or
reduce the principal amount thereof or the rate of interest thereon or any
premium payable upon the redemption thereof, or change the place of payment
where any Offered Debt Security or interest thereon is payable, or change the
coin or currency in which any Offered Debt Security or interest thereon is
payable, or impair the right to institute suit for the enforcement of any such
payment on or after the stated maturity thereof (or, in the case of redemption
or repayment at the option of the holder, on or after the redemption date or
repayment date); (ii) reduce the percentage in principal amount of the
outstanding Offered Debt Securities, the consent of whose holders is required
for any such amendment, or the consent of whose holders is required for any
waiver of compliance with certain provisions of the Indenture or certain
defaults thereunder and their consequences provided for in the Indenture; or
(iii) modify the ranking or priority of the Offered Debt Securities in a manner
adverse to the holders of Offered Debt Securities. The Senior Subordinated
Indenture and the Subordinated Indenture may not be amended to alter the
subordination of any outstanding Senior Subordinated Debt Securities or
Subordinated Debt Securities without the consent of each holder of Senior
Indebtedness then outstanding that would be adversely affected thereby.
Except as provided in the applicable Prospectus Supplement, the holders of
at least a majority in principal amount of the then outstanding Offered Debt
Securities may on behalf of the holders of all Offered Debt Securities, or such
other amount as may be specified in the applicable Prospectus Supplement, waive
(i) insofar as the Offered Debt Securities are concerned, compliance by the
Company with certain covenants of the Indenture and (ii) any past default under
the Indenture with respect to the Offered Debt Securities, except a default in
the payment of the principal of or interest on any Offered Debt Security or in
respect of a provision which under the Indenture cannot be modified or amended
without the consent of the holder of each outstanding Offered Debt Security
affected.
CONCERNING THE TRUSTEE
IBJ Schroder Bank & Trust Company is to be Trustee under each of the
Indentures and has been appointed by the Company as paying agent and registrar.
IBJ Schroder Bank & Trust Company is the trustee under the Indenture, dated as
of June 21, 1993, relating to the Senior Notes, and it or any other Trustee, or
their respective affiliates, may from time to time have lender or other business
arrangements with the Company. The Indenture will contain certain limitations on
the rights of the Trustee, should it or its affiliates become a creditor of the
Company, to obtain payment of claims in certain cases or to realize on certain
property received in respect of any such claim as security or otherwise. The
Trustee and its affiliates will be permitted to engage in other transactions;
however, if they acquire any conflicting interest, the conflict must be
eliminated or the Trustee must resign.
GOVERNING LAW
Unless otherwise specified in the accompanying Prospectus Supplement, the
Indenture for the Offered Debt Securities and the Offered Debt Securities will
be governed by the laws of the State of New York.
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities offered hereby (i) through agents,
(ii) through underwriters, (iii) through dealers, (iv) directly to purchasers
(through a specific bidding or auction process or otherwise) or (v) through a
combination of any such methods of sale. The distribution of 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 relating to such prevailing market prices or at negotiated
prices.
Each Prospectus Supplement will set forth the terms of the offering of the
particular issuance of Debt Securities to which such Prospectus Supplement
relates, including (i) the name or names of any underwriters or agents with whom
the Company has entered into arrangements with respect to the sale of such Debt
Securities, (ii) the initial public offering or purchase price of such Debt
Securities, (iii) any underwriting
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discounts, commissions and other items constituting underwriters' compensation
from the Company and any other discounts, concessions or commissions allowed or
reallowed or paid by any underwriters to other dealers, (iv) any commissions
paid to any agents, (v) the net proceeds to the Company, and (vi) the securities
exchange, if any, on which such Debt Securities will be listed.
If an underwriter or underwriters are utilized in the sale of Debt
Securities, the Company will execute an underwriting agreement with such
underwriter or underwriters at the time an agreement for such sale is reached,
and the names of the specific managing underwriter or underwriters, as well as
any other underwriters, and the terms of the transactions, including
compensation of the underwriters and dealers, if any, will be set forth in the
applicable Prospectus Supplement, which will be used by the underwriters to make
resales of the Debt Securities.
If a dealer is utilized in the sale of Debt Securities, the Company will
sell such Debt Securities to the dealer, as principal. The dealer may then
resell such Debt Securities to the public at varying prices to be determined by
such dealer at the time of resale. The name of the dealer and the terms of the
transactions will be set forth in the applicable Prospectus Supplement relating
thereto.
Offers to purchase the Debt Securities may be solicited directly by the
Company and sales thereof may be made by the Company directly to institutional
investors or others. The terms of any such sales, including the terms of any
bidding or auction process, if utilized, will be described in the applicable
Prospectus Supplement.
Agents, underwriters and dealers may be entitled under agreements which may
be entered into with the Company to indemnification by the Company against
certain liabilities, including liabilities under the Securities Act, and any
such agents, underwriters or dealers, or their affiliates may be customers of,
engage in transactions with or perform services for, the Company in the ordinary
course of business.
If so indicated in the applicable Prospectus Supplement, the Company will
authorize agents, underwriters and other persons to solicit offers by certain
institutions to purchase 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 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.
The Company may grant underwriters who participate in the distribution of
Debt Securities an option to purchase additional Debt Securities to cover
over-allotments, if any.
The place and date of delivery for Debt Securities in respect of which this
Prospectus is being delivered will be set forth in the applicable Prospectus
Supplement.
Unless otherwise indicated in the applicable Prospectus Supplement, the
Debt Securities in respect of which this Prospectus is being delivered will be a
new issue of securities, will not have an established trading market when issued
and will not be listed on any securities exchange. Any underwriters or agents to
or through whom such Debt Securities are sold by the Company for public offering
and sale may make a market in such Debt Securities, but such underwriters or
agents will not be obligated to do so and may discontinue any market making at
any time without notice. No assurance can be given as to the liquidity of the
trading market for any such Debt Securities.
LEGAL MATTERS
The legality of the Debt Securities will be passed upon for the Company by
Kaye, Scholer, Fierman, Hays & Handler, LLP, New York, New York. Certain legal
matters in connection with offerings made by this Prospectus may be passed on
for the underwriters, if any, by counsel named in the Prospectus Supplement.
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EXPERTS
The consolidated financial statements of the Company and subsidiaries
incorporated by reference in this Prospectus and elsewhere in the Registration
Statement have been audited by Arthur Andersen LLP, independent public
accountants, to the extent and for the periods indicated in their report with
respect thereto and have been so included in reliance upon the authority of said
firm as experts in accounting and auditing in giving said report.
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NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE AN REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND 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 BY THE UNDERWRITER. THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER TO BUY ANY
OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR
THAT THE OTHER INFORMATION CONTAINED HEREIN IS CORRECT AT ANY TIME SUBSEQUENT TO
THE DATE HEREOF.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
The Company........................... S-3
Risk Factors.......................... S-3
Use of Proceeds....................... S-5
Summary Consolidated Financial and
Operating Data...................... S-5
Description of Senior Notes........... S-7
Underwriting.......................... S-8
Legal Matters......................... S-8
Prospectus
Available Information................. 2
Incorporation of Certain Information
by Reference........................ 2
The Company........................... 3
Use of Proceeds....................... 3
Consolidated Ratio of Earnings to
FIxed Charges....................... 3
Description of Debt Securities........ 3
Plan of Distribution.................. 32
Legal Matters......................... 33
Experts............................... 34
</TABLE>
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U.S. HOME CORPORATION
$75,000,000
7.95% SENIOR NOTES DUE 2001
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PROSPECTUS SUPPLEMENT
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DILLON, READ & CO. INC.
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