<PAGE> 1
Filed Pursuant to Rule 424(b)(5)
Registration No. 333-31457
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED AUGUST 25, 1997)
$225,000,000
U.S. HOME CORPORATION
$100,000,000 8.25% SENIOR NOTES DUE 2004
$125,000,000 8.88% SENIOR SUBORDINATED NOTES DUE 2007
------------------------
The 8.25% Senior Notes due 2004 (the "Senior Notes") and 8.88% Senior
Subordinated Notes due 2007 (the "Senior Subordinated Notes," and together with
the Senior Notes, the "Notes") of U.S. Home Corporation (the "Company") are Debt
Securities of the Company described in the accompanying Prospectus to which this
Prospectus Supplement relates. Capitalized terms used but not defined in this
Prospectus Supplement are defined in the Prospectus.
The Senior Notes constitute Senior Debt Securities (as defined in the
Prospectus). Interest on the Senior Notes is payable on February 15 and August
15 of each year, commencing February 15, 1998. The Senior Notes are not
redeemable at the option of the Company prior to their maturity.
The Senior Subordinated Notes constitute Senior Subordinated Debt Securities
(as defined in the Prospectus). Interest on the Senior Subordinated Notes is
payable on February 15 and August 15 of each year, commencing February 15, 1998.
The Senior Subordinated Notes are not redeemable by the Company prior to August
15, 2002. Thereafter, the Senior Subordinated Notes are redeemable at any time
at the option of the Company, in whole or in part, at the redemption prices set
forth herein.
The Senior Subordinated Notes are unsecured obligations of the Company and
are subordinated in right of payment to all existing and future Senior
Indebtedness (as defined in the Prospectus) of the Company. At June 30, 1997, on
an as adjusted basis after giving effect to the sale of the Notes and the
anticipated use of the estimated net proceeds therefrom, the Senior Indebtedness
of the Company would have been $300.6 million (including $6.7 million of letters
of credit and guarantees).
Upon a Change of Control (as defined in the Prospectus), holders of the
Notes have the right to require the Company to purchase the 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 Notes will be issued only in book-entry form through the facilities of
The Depository Trust Company (the "Depository"). Interests in the 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, 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 NOTES.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
<TABLE>
<CAPTION>
PRICE TO DISCOUNTS AND PROCEEDS TO
INVESTORS* COMMISSIONS+ COMPANY++
<S> <C> <C> <C>
Per Senior Note........................................ 100.000% 1.250% 98.750%
Total.................................................. $100,000,000 $1,250,000 $98,750,000
Per Senior Subordinated Note........................... 100.000% 2.250% 97.750%
Total.................................................. $125,000,000 $2,812,500 $122,187,500
</TABLE>
- ---------------
* Plus accrued interest, if any, from the date of issuance.
+ 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 $521,000, which will be paid by the
Company.
------------------------
The 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 August 28, 1997, against
payment therefor in immediately available funds. The Underwriter is:
DILLON, READ & CO. INC.
The date of this Prospectus Supplement is August 25, 1997.
<PAGE> 2
THE UNDERWRITER MAY ENGAGE IN TRANSACTIONS THAT STABILIZE, MAINTAIN, OR
OTHERWISE AFFECT THE PRICE OF THE NOTES, SUCH TRANSACTIONS MAY INCLUDE
STABILIZING AND SHORT POSITIONS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."
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 215 new home communities in 31
market areas in 12 states. Since its formation, the Company has delivered more
than 271,000 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 Notes offered hereby.
SUBORDINATION OF THE SENIOR SUBORDINATED NOTES
The Senior Subordinated Notes will be subordinate and junior in right of
payment to all Senior Indebtedness (as defined in the Prospectus) of the
Company. At June 30, 1997, on an as adjusted basis after giving effect to the
sale of the Notes and the anticipated use of the estimated net proceeds
therefrom, the Senior Indebtedness of the Company would have been $300.6 million
(including $6.7 million of letters of credit and guarantees).
In the event of any payment or distribution of assets of the Company in any
dissolution, insolvency, bankruptcy or other similar proceeding, the
subordination provisions of the Senior Subordinated Notes require that holders
of Senior Indebtedness must be paid in full before the holders of Senior
Subordinated Notes may be paid and amounts otherwise payable to the holders of
Senior Subordinated Notes will be paid to the holders of Senior Indebtedness
until the Senior Indebtedness is paid in full. By reason of this subordination,
in the event of the dissolution, insolvency or bankruptcy of the Company,
holders of the Senior Subordinated Notes may recover less, ratably, than holders
of Senior Indebtedness and other creditors of the Company, or may recover
nothing. In addition, the Company is required to stop making all payments of
principal and interest on the Senior Subordinated Notes if there is a payment
default with respect to certain Senior Indebtedness and the Trustee (as defined)
receives notice of the default from a holder of such Senior Indebtedness
entitled to give that notice. Also, the Company is required to stop making
payments of principal and interest on the Senior Subordinated Notes during a
payment blockage period no longer than 179 days if there is any other continuing
default with respect to certain Senior Indebtedness that would permit the
holders of such Senior Indebtedness to accelerate payment of that debt and the
Trustee receives notice of the default from a holder of such Senior Indebtedness
entitled to give that notice.
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 and the level of consumer confidence. 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
S-3
<PAGE> 3
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.
The development of many of the Company's communities, particularly its
retirement and active adult communities, results from a lengthy, complex series
of events involving land purchase, regulatory compliance, capital availability,
marketing and sales, any of which can materially affect the financial results
for a community.
COMPETITION
The residential housing industry is a highly competitive and fragmented
industry, which places constant pressure on price (including the ability of the
Company to respond to increases in prices from its suppliers), quality and
marketing and particularly challenges the Company upon any entry into new
geographic markets. 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,
environmental protection, building design, construction, density and rate of
development and similar matters, including local regulation which imposes
restrictive zoning and density requirements in order to limit the numbers 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 June 30, 1997, as adjusted for
the issuance of the Notes and application of the estimated net proceeds
therefrom to purchase (the "Offer to Purchase") all of the
S-4
<PAGE> 4
Company's 9 3/4% Senior Notes due 2003, previously issued in the original
principal amount of $200,000,000 (the "1993 Senior Notes") and to redeem the
Company's 4 7/8% Convertible Subordinated Debentures due 2005, previously
issued in the original principal amount of $80,000,000 (the "Debentures"), the
Company would have had total housing debt of approximately $418.9 million and a
ratio of total housing debt to stockholders' equity of approximately 1.1 to l.
In addition, the Company expects to borrow additional amounts under its
unsecured revolving working capital facility (the "Credit Agreement") or
otherwise. There can be no assurance that the Company's Offer to Purchase will
result in the tender and purchase of all of the 1993 Senior Notes; however, the
Company currently intends to redeem any 1993 Senior Notes that are not so
purchased in June 1998, the time at which the 1993 Senior Notes first become
redeemable by the Company. 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.
The Company's access to capital sufficient to fund its development
activities is affected by the Company's financial leverage and by the
willingness of the capital markets and banks to absorb equity or debt of the
Company.
MARKET FOR THE NOTES
The Notes are new issues of securities, have no established trading market
and may not be widely distributed. Dillon, Read & Co. Inc. intends to make a
market in each class of 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 either class of 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 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 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 Notes upon the occurrence of a Change of Control. In addition, a
Change of Control may require the Company to offer to repurchase its other
outstanding debt securities and may cause a default under the Credit Agreement.
See "Description of Debt Securities -- Senior Indenture Covenants -- Change of
Control" and "Description of Debt Securities -- Senior Subordinated Indenture
Covenants -- Change of Control" in the Prospectus. The inability to repurchase
all of the tendered Notes would constitute an Event of Default (as defined in
the Prospectus) under each of the Senior Indenture and the Senior Subordinated
Indenture.
S-5
<PAGE> 5
CAUTIONARY DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
The Company desires to take advantage of the "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995 and is including this
disclosure in order to do so.
Certain statements in this Prospectus Supplement, the Prospectus and the
documents incorporated herein and therein by reference that are not historical
facts are, or may be considered to be, "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as
amended. Certain, but not necessarily all, of such forward-looking statements
can be identified by the use of forward-looking terminology such as "believes,"
"expects," "may," "will," "should" or "anticipates" or the negative thereof or
other variations thereof or comparable terminology, or by discussions of
strategies that involve risks and uncertainties. Given the risks, uncertainties
and contingencies of the Company's business, actual results may differ
materially from those expressed or implied by such forward-looking statements.
Further, certain forward-looking statements are based on assumptions concerning
future events which may not prove to be accurate.
Forward-looking statements by the Company regarding results of operations
and, ultimately, financial condition are subject to numerous risks and
assumptions, including the following:
- General economic and business conditions, the level and direction of
interest rates and the level of consumer confidence have a significant
impact on the willingness and ability of purchasers to enter into
contracts for homes and to consummate purchases of such homes under
contract (backlog), as well as on the performance of U.S. Home Mortgage
Corporation, the Company's principal subsidiary.
- The development of many of the Company's communities, particularly its
retirement and active adult communities, results from a lengthy, complex
series of events involving land purchase, regulatory compliance, capital
availability, marketing and sales, any of which can materially affect the
financial results for a community.
- The Company is in a highly competitive and fragmented industry, which
places constant pressure on price (including the ability of the Company
to respond to increases in prices from its suppliers), quality and
marketing and particularly challenges the Company upon any entry into new
geographic markets.
- The Company faces numerous regulatory hurdles in its development efforts,
such as laws and regulations regarding zoning, environmental protection,
building design and construction, density and rate of development.
- The Company's access to capital sufficient to fund its development
activities is affected by the Company's financial leverage and by the
willingness of the capital markets and banks to absorb equity or debt of
the Company.
- The Company may encounter other contingencies, including labor shortages,
work stoppages, product liability, litigation, natural risks such as
floods or hurricanes and other factors over which the Company has little
or no control.
As a result of the foregoing and other factors, no assurance can be given
as to future results, levels of activity and achievements, and neither the
Company nor any other person assumes responsibility for the accuracy and
completeness of these statements.
S-6
<PAGE> 6
USE OF PROCEEDS
The net proceeds (after deducting underwriting discounts and commissions
and estimated offering expenses) from the sale of the Notes offered hereby will
be approximately $220.4 million. The Company intends to apply such net proceeds
and additional borrowings under the Credit Agreement to make the Offer to
Purchase the 1993 Senior Notes and to redeem the Debentures. There can be no
assurance that the Company's Offer to Purchase will result in the tender and
retirement of all of the 1993 Senior Notes; however, the Company currently
intends to redeem any 1993 Senior Notes that are not so purchased in June 1998,
the time at which the 1993 Senior Notes first become redeemable by the Company.
The 1993 Senior Notes were previously issued in the original principal amount of
$200,000,000 at an interest rate of 9 3/4% and are scheduled to mature in 2003.
The Debentures were previously issued in the original principal amount of
$80,000,000 at an interest rate of 4 7/8% and are scheduled to mature in 2005.
The consummation of the Offer to Purchase and the redemption will result in an
extraordinary charge to earnings of approximately $13.3 million, net of income
tax benefit. Pending the Offer to Purchase and the redemption, the Company
intends to hold the net proceeds from the sale of the Notes in cash and
short-term investments.
S-7
<PAGE> 7
SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL
----------------------------------------------------------------
SIX MONTHS ENDED JUNE
YEAR ENDED DECEMBER 31, 30,
-------------------------------------- ---------------------
1994 1995 1996 1996 1997
-------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Housing operating revenues....... $982,378 $1,092,283 $1,191,206 $556,335 $644,659
Housing gross margin............. 187,426 201,120 219,310 102,422 113,438
Housing operating income......... 62,387 67,529 62,207 33,624 35,766
Financial services operating
income......................... 1,481 3,333 5,394 2,625 3,850
Income before income taxes....... 52,526 59,072 55,901 30,502 33,613
Net income....................... 32,829 36,920 44,188 19,369 21,176
</TABLE>
<TABLE>
<CAPTION>
AS OF JUNE 30, 1997
-------------------------
AS
HISTORICAL ADJUSTED(1)
---------- ----------
<S> <C> <C>
BALANCE SHEET DATA:
Housing Assets:
Cash................................................................ $ 17,282 $ 1,443
Other assets........................................................ 928,601 926,857
---------- ----------
Total Housing Assets........................................... 945,883 928,300
Financial services assets........................................... 83,188 83,188
---------- ----------
Total assets.............................................. $1,029,071 $1,011,488
========== ==========
Housing Debt:
Credit Agreement.................................................... $ 40,000 $ 100,000
Notes and mortgages payable......................................... 18,851 18,851
7.95% Senior Notes due 2001......................................... 75,000 75,000
9.75% Senior Notes due 2003......................................... 200,000 --
Senior Notes offered hereby......................................... -- 100,000
Senior Subordinated Notes offered hereby............................ -- 125,000
4.875% Convertible Subordinated Debentures due 2005................. 80,000 --
---------- ----------
Total housing debt............................................. 413,851 418,851
Financial services debt............................................. 32,158 32,158
---------- ----------
Total debt................................................ $ 446,009 $ 451,009
========== ==========
Stockholders' equity................................................ $ 391,536 $ 378,247
========== ==========
Total housing debt as a percent of total housing debt and
stockholders' equity.............................................. 51.4% 52.5%
Net housing debt as a percent of net housing debt and stockholders'
equity(2)......................................................... 50.3% 52.5%
</TABLE>
S-8
<PAGE> 8
<TABLE>
<CAPTION>
HISTORICAL
------------------------------------------------------------
SIX MONTHS ENDED JUNE
YEAR ENDED DECEMBER 31, 30,
---------------------------------- ---------------------
1994 1995 1996 1996 1997
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Operating Data:
New orders taken -- units(3)........ 6,234 6,959 7,406 4,478 4,663
Homes delivered -- units............ 6,387 6,779 7,099 3,365 3,799
Homes under contract at period end
(backlog) -- units(4)............. 2,551 2,731 3,038 3,844 3,902
Homes under contract at period end
(backlog) -- dollars(4)........... $414,351 $460,337 $530,857 $660,802 $686,231
Average sales price................. $151,000 $158,600 $166,100 $163,600 $168,100
Single-family homes gross margin
percentage........................ 19.1% 18.6% 18.4% 18.4% 17.7%
Selling, general and administrative
expenses as a percentage of
housing revenues.................. 9.8% 9.7% 9.5% 9.8% 9.4%
</TABLE>
- ---------------
(1) As adjusted for the sale of the Notes offered hereby, the Offer to Purchase
the 1993 Senior Notes and the redemption of the Debentures, assuming the
tender and retirement of 100% of the 1993 Senior Notes. See "Use of
Proceeds."
(2) Net housing debt is total housing debt less cash.
(3) New orders taken are net of cancellations. The Company recognizes revenue at
closing when title is transferred.
(4) Substantially all of the Company's backlog units at June 30, 1997, net of
cancellations, are expected to result in revenues in the subsequent twelve
month period.
S-9
<PAGE> 9
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 $100,000,000 principal amount, will be issued in book-entry form only and
will mature on August 15, 2004.
The Senior Notes will bear interest from August 28, 1997 or from the most
recent date to which interest has been paid or provided for, at the rate of
8.25% per annum, payable semi-annually on February 15 and August 15 commencing
on February 15, 1998, to the persons in whose names the Senior Notes are
registered at the close of business on the preceding February 1 and August 1,
respectively.
The Company shall not be obligated to make any mandatory sinking fund
payment or redemption of the Senior Notes.
The Senior Notes are not redeemable at the option of the Company.
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.
S-10
<PAGE> 10
DESCRIPTION OF SENIOR SUBORDINATED NOTES
The Senior Subordinated Notes constitute Senior Subordinated Debt
Securities (as defined in the Prospectus). The following description of the
particular terms of the Senior Subordinated 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 Subordinated Notes will constitute direct, unsecured general
obligations of the Company, will be issued under the Senior Subordinated
Indenture between the Company and IBJ Schroder Bank & Trust Company, as Trustee
(the "Trustee"), will be limited to $125,000,000 principal amount, will be
issued in book-entry form only and will mature on August 15, 2007.
The Senior Subordinated Notes will bear interest from August 28, 1997 or
from the most recent date to which interest has been paid or provided for, at
the rate of 8.88% per annum, payable semi-annually on February 15 and August 15
commencing on February 15, 1998, to the persons in whose names the Senior
Subordinated Notes are registered at the close of business on the preceding
February 1 and August 1, respectively.
The Company shall not be obligated to make any mandatory sinking fund
payment or redemption of the Senior Subordinated Notes.
On or after August 15, 2002, the Senior Subordinated Notes will be
redeemable at any time at the option of the Company, in whole or from time to
time in part, at the redemption prices set forth below (expressed as a
percentage of principal amount), plus accrued interest to the redemption date:
<TABLE>
<CAPTION>
IF
REDEEMED
DURING
THE
12-MONTH
PERIOD
BEGINNING REDEMPTION
AUGUST 15 PRICE
- ---- ----------
<S> <C>
2002... 104.44%
2003... 102.96%
2004... 101.48%
2005
and
thereafter... 100.00%
</TABLE>
Notice of redemption will be mailed to each holder at least 15 days but not
more than 60 days prior to the redemption date. On and after the redemption
date, interest ceases to accrue on Senior Subordinated Notes or portions thereof
called for redemption.
Upon issuance, the Senior Subordinated 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.
S-11
<PAGE> 11
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
August 25, 1997, incorporated by reference in the Registration Statement, all of
the Notes offered hereby. If any Notes are purchased by the Underwriter, all
Notes will be so purchased.
The Underwriter proposes to offer the 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 1.08% of the principal amount of
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
Notes on sales to certain other dealers.
The offering of the Notes is made for delivery when, as and if accepted by
the Underwriter and is 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 Notes. After the initial 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, 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. The Underwriter will act as dealer-manager in connection with
the Company's proposed Offer to Purchase the 1993 Senior Notes.
In connection with the sale of the Notes, the Underwriter or certain of its
affiliates may engage in transactions that stabilize, maintain or otherwise
affect the price of the Notes. Specifically, the Underwriter may overallot the
offering, creating a short position. In addition, the Underwriter may bid for,
and purchase, the Notes in the open market to cover short positions and may make
such bids and purchases to stabilize the price of the Notes. Any of these
activities may stabilize or maintain the market price of the Notes above
independent market levels. No representation is made that the Underwriter will
engage in such activities, or that such activities, once commenced, will not be
discontinued without notice.
LEGAL MATTERS
The legality of the 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-12
<PAGE> 12
$325,000,000
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
$325,000,000 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.
EACH PROSPECTUS SUPPLEMENT WILL DESCRIBE ANY RISKS ASSOCIATED WITH DEBT
SECURITIES OFFERED THEREBY OR APPLICABLE TO THE COMPANY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is August 25, 1997
<PAGE> 13
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 with the
Commission, 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 Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and Seven World Trade Center, 13th Floor, New York, New York
10048. The Commission also maintains an Internet Web Site at http://www.sec.gov
that contains reports, proxy and information statements, and other information
regarding registrants that file electronically with the Commission. 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 documents filed by the Company with the Commission (File No.
1-5899) pursuant to the Exchange Act are incorporated herein by reference:
(i) the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996;
(ii) the Company's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 1997; and
(iii) the Company's Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 1997.
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> 14
THE COMPANY
U.S. Home, organized in 1954 and incorporated in the State of Delaware in
1959, is one of the largest single-family home builders in the United States
based on homes delivered. The Company currently builds and sells homes in more
than 215 new home communities in 31 market areas in 12 states. Since its
formation, the Company has delivered more than 271,000 homes. In 1996, the
Company was the fifth largest single-family on-site home builder in the United
States based on homes completed and delivered and has been among the ten largest
single-family on-site home builders in the United States for more than 20 years.
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
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>
SIX MONTHS
ENDED
JUNE 30, FISCAL YEAR ENDED DECEMBER 31,
------------- ----------------------------------------
1997 1996 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges (unaudited)(1)....... 2.68 2.53 2.44 2.57 2.51 2.78 3.26
</TABLE>
- ---------------
(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.
3
<PAGE> 15
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 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; "Offered Senior Debt Securities" shall mean the Senior Debt
Securities so offered; "Offered Senior Subordinated Debt Securities" shall mean
the Senior Subordinated Debt Securities so offered and "Offered Subordinated
Debt Securities" shall mean Subordinated Debt Securities so offered.
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 and Senior
Subordinated 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," "-- Senior
Subordinated Indenture Covenants," "-- Status of Debt Securities" and
"Discharge, Defeasance and Covenant Defeasance."
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 and the
Senior Subordinated 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" and
"-- Senior Subordinated 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
4
<PAGE> 16
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 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 (as defined) and, in such case, the Depository or
Depositories for such Global Security or Global Securities 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 these 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 related to discharge,
defeasance or covenant defeasance, if other than as described under the caption
"-- Discharge, Defeasance and Covenant Defeasance"; 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
Offered Debt Securities will be issued as fully-registered securities 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"). One
fully
5
<PAGE> 17
registered Global Security certificate will be issued for each issue of the
global securities, each in the aggregate principal amount of such issue, and
will be deposited with the Depository. If, however, the aggregate principal
amount of any issue of the global securities exceeds $200 million, one
certificate will be issued with respect to each $200 million of principal amount
and an additional certificate will be issued with respect to any remaining
principal amount of such issue. The identity of the nominee appointed by the
Depository, if other than "Cede & Co.," 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, if other than as
described herein. 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 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. Beneficial owners of the Global Security
will not receive written confirmation from the Depository of their purchase of
the Global Security, but beneficial owners are expected to receive written
confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the participant through which the beneficial
owner entered into the transaction. Transfer of ownership interest in the Global
Security are to be accomplished by entries made on the books of participants
acting on behalf of beneficial owners. Beneficial owners will not receive
certificates representing their ownership interests in the Global Security,
except in the event that use of the book-entry system for the Global Security is
discontinued. The foregoing may impair the ability to transfer beneficial
interests in a Global Security.
To facilitate subsequent transfers, all Global Securities deposited by
participants with the Depository are registered in the name of the Depository's
nominee. The deposit of the Global Security with the Depository and their
registration in the name of the Depository's nominee effect no change in
beneficial ownership. The Depository has no knowledge of the actual beneficial
owners of the Global Security; the Depository's records reflect only the
identity of the direct participants (which include securities brokers and
dealers, banks, trust companies, clearing corporations, and certain other
organizations) to whose accounts the Global Security is credited, which may or
may not be the beneficial owners. The participants will remain responsible for
keeping account of their holdings on behalf of their customers.
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
6
<PAGE> 18
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 in bearer form or 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 Indentures 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 Indentures. 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 Indentures. The Indentures provide 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
Indentures. The Company 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 New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member
of the Federal Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code, and a "clearing agency" registered 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
7
<PAGE> 19
companies, that clear through or maintain a custodial relationship with a
participant, either directly or indirectly. The rules applicable to the
Depositary and its participants are on file with the Commission.
The above-mentioned information concerning the Depository and its
book-entry system has been obtained from sources that the Company believes to be
reliable, but the Company takes no responsibility for the accuracy thereof.
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, with the Company's 9 3/4% senior notes due 2003, previously issued in
the original principal amount of $200,000,000 under an Indenture, dated as of
June 21, 1993, between the Company and IBJ Schroder Bank & Trust Company, as
trustee (the "1993 Senior Notes"), and with the Company's 7.95% senior notes due
2001, previously issued in the original principal amount of $75,000,000 under an
Indenture, dated as of February 16, 1996, between the Company and IBJ Schroder
Bank & Trust Company, as trustee (the "1996 Senior Notes"). The Senior Debt
Securities offered hereby will be senior in right of payment to the Company's
4 7/8% convertible subordinated debentures due 2005, previously issued in the
original principal amount of $80,000,000 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
Senior Subordinated Indenture) or the appointment of a Custodian (as defined in
the Senior Subordinated 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 (as defined in the Senior Subordinated Indenture) 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 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.
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<PAGE> 20
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 (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 Subordinated
Indenture) or the appointment of a Custodian (as defined in the Subordinated
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 (as defined in the
Subordinated Indenture) 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 that
holders of Senior Subordinated Debt Securities and Subordinated Debt Securities
may receive securities that are subordinated at least to the same extent as such
Senior Subordinated Debt Securities or Subordinated Debt Securities, as the case
may be; (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 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 that holders of Subordinated Debt Securities may receive securities that
are subordinated at least to the same extent as such 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.
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<PAGE> 21
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 for cash or property (other than securities that are
subordinated at least to the same extent as such Senior Subordinated Debt
Securities or Subordinated Debt Securities, as the case may be), 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
Designated 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 Designated Senior Indebtedness, or
(ii) a default, other than a payment default, with respect to any Designated
Senior Indebtedness occurs and is continuing that permits the holders of the
Designated Senior Indebtedness to accelerate its maturity and the Trustee
receives a notice of the default from a person permitted to give such notice
under the Indenture requesting that payment of principal or interest with
respect to the Offered Debt Securities that are Senior Subordinated Debt
Securities or Subordinated Debt Securities be prohibited; provided that the
foregoing will not prohibit payments made in accordance with the defeasance or
satisfaction and discharge 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 upon the earlier of
(a) the date upon which the default or event of default with respect to such
Designated Senior Indebtedness is cured or waived or ceases to exist or (b) in
the case of an event of default referred to in (ii) above, the expiration of 179
days after notice is received (a "Payment Blockage Period"); provided that the
terms of the Indenture otherwise permit the payment or acquisition of such
Offered Debt Securities at the time in question. Only one Payment Blockage
Period may be commenced within any consecutive 365-day period in respect of the
Offered Debt Securities that are Senior Subordinated Debt Securities or
Subordinated Debt Securities, and in no event will a Payment Blockage Period
extend beyond 179 days from the date payment on such Offered Debt Securities is
due. For the purpose of the provisions described in this paragraph, no default
which, to the knowledge of certain specified authorized persons, existed or was
continuing on the date of the commencement of any Payment Blockage Period by
such person, shall be made the basis for the commencement of a subsequent
Payment Blockage Period by such person, whether or not within any consecutive
365-day period, unless such default is cured or waived or ceases to exist, or
the benefits of the provisions of the applicable Indenture described in this
paragraph are waived in writing by such authorized persons for a period of not
less than 90 consecutive days. Except to the extent set forth in the applicable
Prospectus Supplement, the Senior Subordinated Indenture and the Subordinated
Indenture will define "Designated Senior Indebtedness" of the Company as (i)
Senior Indebtedness of the Company permitted to be incurred under the applicable
Indenture under any institutional credit agreement (including, the Company's
existing principal credit facility) and (ii) any other Senior Indebtedness
permitted to be incurred under the applicable Indenture the principal amount of
which is $25,000,000 or more.
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 indentures for the 1993 Senior Notes and the 1996 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. For example, the indentures for the 1993 Senior
Notes and the 1996 Senior Notes contain similar covenants limiting the amount of
"restricted payments" made by the Company, including the acquisition of
subordinated debt. The amount of restricted payments permitted to be made by the
Company will vary depending upon, among other things, the Company's cumulative
earnings and restricted payments made other than acquisitions of subordinated
debt
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<PAGE> 22
(e.g., repurchases of stock by the Company). The Company's principal credit
facility generally prohibits the Company from acquiring subordinated debt, other
than by using the proceeds of new subordinated debt or equity 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 APPLICABLE TO BOTH SENIOR AND SENIOR
SUBORDINATED DEBT SECURITIES
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 and the Senior Subordinated Indenture, the
Indentures 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 Indentures may be served; (iii) deliver to the
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 each Indenture; (v) maintain its corporate existence
subject to the provisions described below under the captions "-- Senior
Indenture Covenants -- Limitations on Mergers and Consolidations" and "-- Senior
Subordinated Indenture Covenants -- 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 and the Senior Subordinated 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" and "-- Senior Subordinated Indenture Covenants."
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 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 principal amount of
the Offered Senior 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
Senior 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 Senior 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 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
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<PAGE> 23
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.
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)
$100,000,000, plus (2) 50 percent of the Company's Consolidated Net Income
accrued during the period (taken as a single period) since January 1, 1997
(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 additional 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 (a) Company's Consolidated
Fixed Charge Coverage Ratio on the date thereof would be at least 2.0 to 1.0;
and (b) ratio of the Company's Indebtedness (excluding, for purposes of this
calculation, 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> 24
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), (iii) and (iv) of this sentence and Indebtedness permitted to be
Incurred under the provisions of the Senior Indenture described in the preceding
paragraph, the Company and/or any Restricted Subsidiary 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), (ii), (iii) and (iv) 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 any 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.
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 Senior 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
such 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 Senior Debt Securities to the
Company.
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 Senior 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 Senior 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 Senior 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
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<PAGE> 25
Offered Senior Debt Securities or portions thereof so accepted and (iii)
deliver to the Paying Agent an Officers' Certificate identifying the
Offered Senior Debt Securities or portions thereof accepted for payment by
the Company. The Paying Agent will promptly authenticate and mail or
deliver to Holders of Offered Senior Debt Securities so accepted payment in
an amount equal to the Change of Control Price of the Offered Senior 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
Senior Debt Security equal in principal amount to any unpurchased portion
of the Offered Senior Debt Security surrendered. Any Offered Senior 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. Any excess cash held
by the Trustee after the expiration of the Change of Control Offer will be
returned to the Company.
(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, if applicable.
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 Senior 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 Restricted
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 Restricted 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 Restricted Subsidiaries (each an "Affiliate
Transaction"), except on terms that are no less favorable to the Company or the
relevant Restricted 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 Restricted Subsidiaries to, enter into an Affiliate
Transaction involving or having a value of more than $10,000,000, 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 Restricted 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 Restricted 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
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<PAGE> 26
by the Company's Board of Directors, (ii) Capital Stock issuances to members of
the Board of Directors, officers or 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 $50,000,000.
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, (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 and (g) any restrictions under any instrument
creating or evidencing any Acquisition Debt that was permitted to be Incurred
pursuant to the Senior Indenture and the Offered Senior Debt Securities and
which (1) only apply to assets that were subject to such restrictions and
encumbrances prior to the acquisition of such assets by the Company or any of
its Restricted Subsidiaries and (2) were not created in connection with, or in
contemplation of, such acquisition, and any restrictions replacing those
permitted by this clause (g) which are not more restrictive than, and do not
extend to any Persons or assets other than the Persons or assets subject to, the
restrictions and encumbrances so replaced.
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 Senior 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 Senior Debt Securities tendered pursuant to a Net Worth Offer is less
than the
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<PAGE> 27
Net Worth Amount relating thereto, then the Company may use the excess of the
Net Worth Amount over the amount of Offered Senior 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 such 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 Senior Debt Securities to the Company.
The Senior Indenture will also provide that:
(a) In the event that the aggregate principal amount of Offered Senior
Debt Securities surrendered by Holders exceeds the Net Worth Amount, the
Company will select the Offered Senior Debt Securities to be purchased on a
pro rata basis from all Offered Senior Debt Securities so surrendered, with
such adjustments as may be deemed appropriate by the Company so that only
Offered Senior 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 Senior Debt
Securities are purchased only in part will be issued new Offered Senior
Debt Securities equal in principal amount to the unpurchased portion of the
Offered Senior 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
Senior 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 Senior 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
Senior Debt Securities or portions thereof so accepted and (iii) deliver to
the Paying Agent with an Officers' Certificate identifying the Offered
Senior 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 Senior Debt Securities so accepted payment in an amount
equal to the Net Worth Offer Price of the Offered Senior 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 Senior Debt Security equal in principal amount to any unpurchased
portion of the Offered Senior Debt Security surrendered. Any Offered Senior
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 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. Any excess cash held by the Trustee
after the expiration of the Net Worth Offer will be returned to the
Company.
(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.
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<PAGE> 28
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 Senior 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 Senior Debt Securities and the Senior Indenture, (ii)
immediately after giving effect to such transaction, no Default or Event of
Default under the Senior Indenture 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, 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 "-- 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 Senior 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.
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 Senior 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."
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<PAGE> 29
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 Senior 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 Senior 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
Offered Senior 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 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 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 Senior Debt
Securities surrendered by Holders exceeds the amount of Excess Proceeds,
the Company will select the Offered Senior Debt Securities to be purchased
on a pro rata basis from all Offered Senior Debt Securities so surrendered,
with such adjustments as may be deemed appropriate by the Company so that
only Offered Senior 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 Senior Debt
Securities are purchased only in part will be issued new Offered Senior
Debt Securities equal in principal amount to the unpurchased portion of the
Offered Senior 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 Senior 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 Senior 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),
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<PAGE> 30
(ii) deposit with the Paying Agent money sufficient, in immediately
available funds, to pay the purchase price of all Offered Senior Debt
Securities or portions thereof so accepted and (iii) deliver to the Paying
Agent an Officers' Certificate identifying the Offered Senior Debt
Securities or portions thereof accepted for payment by the Company. The
Paying Agent will promptly mail or deliver to Holders of Offered Senior
Debt Securities so accepted payment in an amount equal to the Asset Sale
Offer Price of the Offered Senior 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 Senior Debt Security equal in
principal amount to any unpurchased portion of the Offered Senior Debt
Security surrendered. Any Offered Senior 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
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.
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 percent 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.
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 Senior 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.
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<PAGE> 31
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
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
Senior 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.
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<PAGE> 32
"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 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
21
<PAGE> 33
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, 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 Senior 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 Senior 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 Senior Debt Securities pursuant to the "Change of Control" covenant set
forth in the Senior Indenture.
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"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 Amended and Restated Credit Agreement,
dated as of May 28, 1997, 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.
"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 Senior 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
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<PAGE> 35
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.
"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 Senior Debt
Securities.
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<PAGE> 36
"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 Senior Debt Security,
means the date on which the principal of such Offered Senior 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 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" means Indebtedness of the Company or a
Restricted Subsidiary 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 the Company or such Restricted Subsidiary 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, the 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 Senior Debt Securities,
means, as of the date of determination, all Offered Senior Debt Securities
theretofore authenticated and delivered under the Senior Indenture, except:
(i) Offered Senior Debt Securities theretofore canceled by the Trustee
or delivered to the Trustee for cancellation;
(ii) Offered Senior 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)
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<PAGE> 37
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
Senior Debt Securities; provided that, if such Offered Senior 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 Senior Debt Securities as to which the Defeasance has
been effected pursuant to the defeasance provisions, if any, of the Senior
Indenture; and
(iv) Offered Senior 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
Senior Debt Securities have been authenticated and delivered pursuant to
the Senior Indenture, other than any such Offered Senior Debt Securities in
respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Offered Senior Debt Securities are held by a
bona fide purchaser in whose hands such Offered Senior 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 Senior Debt Securities have given
any request, demand, authorization, direction, notice, consent or waiver under
the Senior Indenture, (a) the principal amount of an Offered Senior 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 Senior Debt Security, and (b) Offered Senior Debt
Securities owned by the Company or any other obligor of the Offered Senior 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 relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Offered Senior Debt
Securities which the Trustee knows to be so owned shall be so disregarded.
Offered Senior 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 Senior
Debt Securities and that the pledgee is not the Company or any other obligor
upon the Offered Senior Debt Securities or any Subsidiary of the Company or of
such other obligor.
"Paying Agent" means any Person, including the Company, authorized by the
Company to pay the principal of or any interest on any Offered Senior 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
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<PAGE> 38
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
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 Senior Debt
Securities, means the place or places where the principal of and interest on the
Offered Senior 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 Senior 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 Senior 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 Senior Debt Securities has a Weighted Average Life to
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<PAGE> 39
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 Senior 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
before or 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 before or 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 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 Senior Debt Securities (provided, however, that the payment, redemption,
repurchase, defeasance or other acquisition or retirement of any such
subordinated Indebtedness by the Company or any Restricted Subsidiary on its
scheduled final Maturity date or on any other scheduled date for the payment of
any installment of principal thereof (whether pursuant to a sinking fund,
mandatory redemption or otherwise) shall not be a Restricted Payment); provided,
further, that with respect to the Company and its Subsidiaries, Restricted
Payments will not include (a) any payment or other obligation described in
clause (i), (ii) or (iii) above made to, or on behalf of or for the benefit of,
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 principal payment, redemption, repurchase, defeasance or other
acquisition or retirement of Indebtedness of the Company or its Restricted
Subsidiaries which is subordinated to the Offered Senior Debt Securities if the
consideration therefor consists solely of, or is the proceeds from, Indebtedness
subordinated to the Offered Senior Debt Securities to the same extent as the
Indebtedness being paid, redeemed, repurchased, defeased or otherwise acquired
or retired, or (d) any principal payment, redemption, repurchase, defeasance or
other acquisition or retirement of Indebtedness or Capital Stock of such Person
or its Subsidiaries if the consideration therefor consists solely of Capital
Stock
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<PAGE> 40
(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 $50,000,000, or (f) any principal
payment, redemption, repurchase, defeasance, or other acquisition or retirement
of the Debentures.
"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 Senior Debt
Security or any installment of principal thereof or interest thereon, means the
date specified in such Offered Senior Debt Security as the fixed date on which
the principal of such Offered Senior 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 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 each Person who is then a 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 Ratio. 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. 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
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<PAGE> 41
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.
SENIOR SUBORDINATED 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 Senior
Subordinated Debt Securities, the Senior Subordinated Indenture will include the
following covenants:
Reports to Holders of Senior Subordinated Debt Securities. The Senior
Subordinated Indenture will provide that as long as more than 10 percent of the
original amount of the Offered Senior Subordinated 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 Senior Subordinated Debt Securities,
securities analysts and broker-dealers upon their written request.
The Senior Subordinated Indenture will also provide that in the event that
(i) 10 percent or less of the original principal amount of the Offered Senior
Subordinated 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 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 Subordinated Indenture will also provide that the Company will
also comply with the other provisions of Section 314(a) of the TIA.
Limitations on Restricted Payments. The Senior Subordinated 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)
$100,000,000, plus (2) 50 percent of the Company's Consolidated Net Income
accrued during the period (taken as a single period) since January 1, 1997
(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 (c) 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
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<PAGE> 42
a Restricted Investment made pursuant to the provisions of the Senior
Subordinated 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 Subordinated Indenture and
described herein; or
(ii) the Company would be unable to incur an additional $1.00 of
Indebtedness under the ratio of the Company's Indebtedness (excluding
Non-Recourse Indebtedness) to Consolidated Tangible Net Worth 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 Subordinated
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 Subordinated 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 Subordinated Indenture
will provide that the Company will not, and will not permit any of its
Restricted Subsidiaries to, Incur any additional 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 ratio of the Company's
Indebtedness (excluding, for purposes of this calculation, Non-Recourse
Indebtedness) to Consolidated Tangible Net Worth on the date thereof is not
greater than 3.0 to 1.0.
Notwithstanding the foregoing, the provisions of the Senior Subordinated
Indenture will not prevent: (i) in addition to the Indebtedness permitted to be
Incurred under clauses (ii), (iii) and (iv) of this sentence and Indebtedness
permitted to be Incurred under the provisions of the Senior Subordinated
Indenture described in the preceding paragraph, the Company and/or any
Restricted Subsidiary 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 $50,000,000
(excluding any Indebtedness referred to in clauses (i)(A), (i)(B), (ii), (iii)
and (iv) of this paragraph), (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 any Restricted Subsidiary
consistent with past practice and (iv) Restricted Subsidiaries from guaranteeing
Indebtedness of the Company or another Restricted Subsidiary.
Change of Control. The Senior Subordinated 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 Senior Subordinated 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 Subordinated Indenture.
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<PAGE> 43
In addition, the Senior Subordinated 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 such 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 Senior Subordinated
Debt Securities to the Company.
The Senior Subordinated Indenture will also provide that:
(a) In the event of a Change of Control Offer, the Company will only
be required to accept Offered Senior Subordinated 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 Senior Subordinated Debt Securities tendered
for purchase in accordance with the provisions of the Senior Subordinated
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 Senior Subordinated
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
Senior Subordinated Debt Securities or portions thereof so accepted and
(iii) deliver to the Paying Agent an Officers' Certificate identifying the
Offered Senior Subordinated Debt Securities or portions thereof accepted
for payment by the Company. The Paying Agent will promptly authenticate and
mail or deliver to Holders of Offered Senior Subordinated Debt Securities
so accepted payment in an amount equal to the Change of Control Price of
the Offered Senior Subordinated 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 Senior Subordinated Debt Security
equal in principal amount to any unpurchased portion of the Offered Senior
Subordinated Debt Security surrendered. Any Offered Senior Subordinated
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 Subordinated Indenture described above, the Company will choose a
Paying Agent which will not be the Company or a Subsidiary thereof. Any
excess cash held by the Trustee after the expiration of the Change of
Control Offer will be returned to the Company.
(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, if applicable.
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 Subordinated Indenture.
The indentures for the 1993 Senior Notes and the 1996 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. For example, the indentures for the 1993 Senior
Notes and the 1996 Senior Notes contain similar covenants limiting the amount of
"restricted payments" made by the Company, including the acquisition of
subordinated debt. The amount of restricted payments permitted to be made by the
Company will vary depending upon, among other things, the Company's cumulative
earnings and restricted payments made other than acquisitions of subordinated
debt (e.g., repurchases of stock by the Company). The Company's principal credit
facility generally prohibits the
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<PAGE> 44
Company from acquiring subordinated debt, other than by using the proceeds of
new subordinated debt or equity securities.
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 Senior Subordinated 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 Subordinated
Indenture will provide that the Company will not, and will not permit any of its
Restricted 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 Restricted
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 Restricted
Subsidiaries (each an "Affiliate Transaction"), except on terms that are no less
favorable to the Company or the relevant Restricted 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 Subordinated Indenture will also provide that the Company will
not, and will not permit any of its Restricted Subsidiaries to, enter into an
Affiliate Transaction involving or having a value of more than $10,000,000,
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 Subordinated Indenture will also provide that the Company will
not, and will not permit any of its Restricted 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 Restricted Subsidiary, as the case may be, from a financial point
of view.
The Senior Subordinated 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 or
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 Subordinated 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 $50,000,000.
Limitations on Restrictions on Distributions from Restricted
Subsidiaries. The Senior Subordinated 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
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<PAGE> 45
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 Subordinated Indenture if such agreement does not expressly restrict the
ability of a Subsidiary of the Company to pay dividends or make loans or
advances, (f) reasonable and customary borrowing base covenants set forth in
credit agreements evidencing Indebtedness otherwise permitted by the Senior
Subordinated 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 and (g) any restrictions under any instrument
creating or evidencing any Acquisition Debt that was permitted to be Incurred
pursuant to the Senior Subordinated Indenture and the Offered Senior
Subordinated Debt Securities and which (1) only apply to assets that were
subject to such restrictions and encumbrances prior to the acquisition of such
assets by the Company or any of its Restricted Subsidiaries and (2) were not
created in connection with, or in contemplation of, such acquisition, and any
restrictions replacing those permitted by this clause (g) which are not more
restrictive than, and do not extend to any Persons or assets other than the
Persons or assets subject to, the restrictions and encumbrances so replaced.
Maintenance of Consolidated Tangible Net Worth. The Senior Subordinated
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 Senior Subordinated 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 Subordinated Indenture. To the extent that the aggregate
amount of Offered Senior Subordinated 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 Senior
Subordinated Debt Securities tendered, or a portion thereof, for general
corporate purposes.
The Senior Subordinated 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
such 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 Senior Subordinated Debt Securities to
the Company.
The Senior Subordinated Indenture will also provide that:
(a) In the event that the aggregate principal amount of Offered Senior
Subordinated Debt Securities surrendered by Holders exceeds the Net Worth
Amount, the Company will select the Offered Senior Subordinated Debt
Securities to be purchased on a pro rata basis from all Offered Senior
Subordinated Debt Securities so surrendered, with such adjustments as may
be deemed appropriate by the Company so that only Offered Senior
Subordinated 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
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<PAGE> 46
whose Offered Senior Subordinated Debt Securities are purchased only in
part will be issued new Offered Senior Subordinated Debt Securities equal
in principal amount to the unpurchased portion of the Offered Senior
Subordinated 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
Senior Subordinated Debt Securities tendered for purchase in accordance
with the provisions of the Senior Subordinated 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 Senior Subordinated 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 Subordinated
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 Senior Subordinated Debt Securities or portions
thereof so accepted and (iii) deliver to the Paying Agent an Officers'
Certificate identifying the Offered Senior Subordinated 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 Senior
Subordinated Debt Securities so accepted payment in an amount equal to the
Net Worth Offer Price of the Offered Senior Subordinated 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 Senior Subordinated Debt Security equal in principal amount to any
unpurchased portion of the Offered Senior Subordinated Debt Security
surrendered. Any Offered Senior Subordinated 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 Net Worth Offer on the Net Worth Offer Date. For
purposes of the provisions of the Senior Subordinated Indenture described
above, the Company will choose a Paying Agent which will not be the Company
or a Subsidiary thereof. Any excess cash held by the Trustee after the
expiration of the Net Worth Offer will be returned to the Company.
(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 Subordinated Indenture.
The indentures for the 1993 Senior Notes and the 1996 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. For example, the indentures for the 1993 Senior
Notes and the 1996 Senior Notes contain similar covenants limiting the amount of
"restricted payments" made by the Company, including the acquisition of
subordinated debt. The amount of restricted payments permitted to be made by the
Company will vary depending upon, among other things, the Company's cumulative
earnings and restricted payments made other than acquisitions of subordinated
debt (e.g., repurchases of stock by the Company). The Company's principal credit
facility generally prohibits the Company from acquiring subordinated debt, other
than by using the proceeds of new subordinated debt or equity securities.
Limitations on Mergers and Consolidations. The Senior Subordinated
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
Senior Subordinated Debt Securities (as an entirety or substantially an entirety
in one transaction or series of related transactions), to any Person unless: (i)
the
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<PAGE> 47
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 Senior Subordinated Debt
Securities and the Senior Subordinated 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 ratio of the Company's Indebtedness
(excluding Non-Recourse Indebtedness) to Consolidated Tangible Net Worth set
forth in the Senior Subordinated 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 ratio. 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 "-- 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 Senior Subordinated 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 Subordinated 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 Subordinated 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 Subordinated
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 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.
"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
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<PAGE> 48
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 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 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) the sale or other disposition
(including, without limitation, dispositions pursuant to sale and leaseback
transactions) of any asset of the Company which is not sold or disposed of in
the ordinary course of business 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
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<PAGE> 49
benefits are recognized by the Company. Consolidated Net Income will exclude any
noncash losses, 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 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
Subordinated 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 Senior Subordinated 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 Senior Subordinated
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 Subordinated 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 Senior Subordinated Debt
Securities pursuant to the "Change of Control" covenant set forth in the Senior
Subordinated Indenture.
"Event of Default" has the meaning set forth under the caption "-- Events
of Default."
"Existing Credit Facility" means the Amended and Restated Credit Agreement,
dated as of May 28, 1997, 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.
"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 Senior Subordinated Debt
Security is registered.
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"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
Subordinated Indenture or that fix the exchange rate in connection with
indebtedness denominated in a foreign currency and otherwise permitted by the
Senior Subordinated 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.
"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 Senior
Subordinated 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
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<PAGE> 51
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 Senior Subordinated Debt
Security, means the date on which the principal of such Offered Senior
Subordinated Debt Security or an installment of principal becomes due and
payable as therein provided or provided in the Senior Subordinated Indenture,
whether at the Stated Maturity or by declaration of acceleration, call for
redemption or otherwise.
"Non-Recourse Indebtedness" means Indebtedness of the Company or a
Restricted Subsidiary 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 the Company or such Restricted Subsidiary 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, the 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 Senior Subordinated Debt
Securities, means, as of the date of determination, all Offered Senior
Subordinated Debt Securities theretofore authenticated and delivered under the
Senior Subordinated Indenture, except:
(i) Offered Senior Subordinated Debt Securities theretofore canceled
by the Trustee or delivered to the Trustee for cancellation;
(ii) Offered Senior Subordinated 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 Senior
Subordinated Debt Securities; provided that, if such Offered Senior
Subordinated Debt Securities are to be redeemed, notice of such redemption
has been duly given pursuant to the Senior Subordinated Indenture or
provision therefor satisfactory to the Trustee has been made;
(iii) Offered Senior Subordinated Debt Securities as to which the
Defeasance has been effected pursuant to the defeasance provisions, if any,
of the Senior Subordinated Indenture; and
(iv) Offered Senior Subordinated Debt Securities which have been paid
pursuant to the "Mutilated, Destroyed, Lost and Stolen Securities" section
of the Senior Subordinated Indenture or in exchange for or in lieu of which
other Offered Senior Subordinated Debt Securities have been authenticated
and delivered pursuant to the Senior Subordinated Indenture, other than any
such Offered Senior Subordinated Debt Securities in respect of which there
shall have been presented to the Trustee proof satisfactory to it that such
Offered Senior Subordinated Debt Securities are held by a bona fide
purchaser in whose hands such Offered Senior Subordinated 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 Senior Subordinated Debt Securities
have given any request, demand, authorization, direction, notice, consent or
waiver under the Senior Subordinated Indenture, (a) the principal amount of an
Offered Senior Subordinated 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 Subordinated
Indenture on the Issue Date, of the principal amount of such Offered Senior
Subordinated Debt Security, and (b) Offered Senior Subordinated Debt Securities
owned by the Company or any other obligor of the Offered Senior Subordinated
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 relying upon any such request, demand,
authorization, direction, notice,
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<PAGE> 52
consent or waiver, only Offered Senior Subordinated Debt Securities which the
Trustee knows to be so owned shall be so disregarded. Offered Senior
Subordinated 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 Senior
Subordinated Debt Securities and that the pledgee is not the Company or any
other obligor upon the Offered Senior Subordinated Debt Securities or any
Subsidiary of the Company or of such other obligor.
"Paying Agent" means any Person, including the Company, authorized by the
Company to pay the principal of or any interest on any Offered Senior
Subordinated 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
Subordinated Indenture.
"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 Senior
Subordinated Debt Securities, means the place or places where the principal of
and interest on the Offered Senior Subordinated 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 Subordinated Indenture, but only to the extent that (i) the Refinancing
Indebtedness is subordinated to the Offered Senior Subordinated 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 Senior Subordinated 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 Senior Subordinated 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 Senior Subordinated 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 before or after the Indebtedness being
refunded, refinanced or extended is so refunded, refinanced or extended;
provided that Refinancing Indebted-
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ness shall include the amount of any Indebtedness under the Existing Credit
Facility which is Incurred within 180 days before or after the repayment of an
equal amount of Indebtedness under the Existing Credit Facility which was
Incurred pursuant to the provisions of the Senior Subordinated 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 Subordinated 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 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 Senior Subordinated Debt Securities (provided, however, that the
payment, redemption, repurchase, defeasance or other acquisition or retirement
of any such subordinated Indebtedness by the Company or any Restricted
Subsidiary on its scheduled final Maturity date or on any other scheduled date
for the payment of any installment of principal thereof (whether pursuant to a
sinking fund, mandatory redemption or otherwise) shall not be a Restricted
Payment); provided, further, that with respect to the Company and its
Subsidiaries, Restricted Payments will not include (a) any payment or other
obligation described in clause (i), (ii) or (iii) above made to, or on behalf of
or for the benefit of, 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 principal payment, redemption, repurchase,
defeasance or other acquisition or retirement of Indebtedness of the Company or
its Restricted Subsidiaries which is subordinated to the Offered Senior
Subordinated Debt Securities if the consideration therefor consists solely of,
or is the proceeds from, Indebtedness subordinated to the Offered Senior
Subordinated Debt Securities to the same extent as the Indebtedness being paid,
redeemed, repurchased, defeased or otherwise acquired or retired, or (d) any
principal payment, redemption, repurchase, defeasance or other acquisition or
retirement 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 $50,000,000 or (f) any principal payment,
redemption repurchase, defeasance, or other acquisition or retirement of the
Debentures.
"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 Subordinated
Indenture.
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<PAGE> 54
"Stated Maturity", when used with respect to any Offered Senior
Subordinated Debt Security or any installment of principal thereof or interest
thereon, means the date specified in such Offered Senior Subordinated Debt
Security as the fixed date on which the principal of such Offered Senior
Subordinated 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 Trustee in the first paragraph of the
Senior Subordinated Indenture until a successor Trustee shall have become such
pursuant to the applicable provisions of the Senior Subordinated Indenture, and
thereafter "Trustee" shall mean or include each Person who is then a 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
Subordinated 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 ratio of the Company's Indebtedness (excluding
Non-Recourse Indebtedness) to Consolidated Tangible Net Worth 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 Subordinated 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 ratio of the
Company's Indebtedness (excluding Non-Recourse Indebtedness) to Consolidated
Tangible Net Worth 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.
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REDEMPTION
If and to the extent set forth in the applicable Prospectus Supplement, the
Company will have the right to redeem any class of 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 each 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 such 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 such
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, such Offered Debt Security or the
applicable Indenture relating to such Offered Debt Security (other than an
agreement or covenant a default in whose performance or whose breach is
elsewhere in such Indenture specifically dealt with) and such failure
continues for the period and after the notice specified below;
(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 $10,000,000 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 such
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 $10,000,000 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 $10,000,000 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;
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<PAGE> 56
(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 applicable class of 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 Indentures 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 Indentures 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 applicable class of Offered
Debt Securities under such 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 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 Indentures for each class of 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 such
Offered Debt Securities to its satisfaction) by notice to the Company, or the
holders of at least 25 percent in principal amount of such 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 such Offered Debt Securities to be due and payable immediately. Upon such
declaration, the amounts due and payable on such 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 Indentures for the Offered Debt
Securities will provide that if an Event of Default described in sub-clause
(viii) or (ix) above occurs, such 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 such 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 such 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 Indentures 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 the applicable class 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 Indentures for the Offered Debt Securities for
the indemnification of the Trustee and certain other limitations, the holders of
a majority in principal amount of
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<PAGE> 57
the applicable class of 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 such 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 Indentures 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 applicable class of 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) such Holder or
Holders offer to the Trustee indemnity satisfactory to the Trustee against any
loss, liability or expense, (iv) the Trustee has not instituted such action
within 60 days of the request and (v) the Trustee has not received direction
inconsistent with such written request from the holders of a majority in
principal amount of such 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 the applicable class 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 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
Indentures 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
The Company can discharge or defease its obligations under the Indentures
for the Offered Debt Securities as set forth below.
The Company may discharge certain obligations to holders of the Offered
Debt Securities 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
Offered Debt Securities.
The Company may also discharge any and all of its obligations to holders of
the Offered Debt Securities at any time ("defeasance"), but may not thereby
avoid its duty to register the transfer or exchange of the Offered Debt
Securities, to replace any temporary, mutilated, destroyed, lost or stolen Notes
or to maintain an office or agency in respect of the Offered Debt Securities and
certain other obligations. Alternatively, the Company may be released with
respect to the Offered Debt Securities from the obligations imposed by certain
covenants of the Senior Indenture or the Senior Subordinated Indenture described
under the caption "-- Certain Covenants of the Company", "-- Senior Indenture
Covenants" and "-- Senior Subordinated Indenture Covenants" herein 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:
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(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 Notes; (b) no Event of Default under the Offered Debt Securities 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 Offered Debt Securities
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
Offered Debt Securities.
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) 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.
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
applicable 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 such 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 applicable Indenture for such
Offered Debt Securities; (ii) comply with the "Limitations on Mergers and
Consolidations" section set forth in such 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 each 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 Indentures
to such extent as shall be necessary to permit or facilitate the defeasance or
discharge of Offered Debt Securities pursuant to the applicable Indenture;
provided that any such action shall not adversely affect the interests of the
holders of Offered Debt Securities; 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 Indentures 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 each class of Offered
Debt Securities outstanding, or such other percentage as may be specified in the
applicable Prospectus Supplement, to add any
47
<PAGE> 59
provision to, change in any manner or eliminate any of the provisions of the
Indentures 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 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; (iii)
modify Section 13.02(d)(iii) or 8.07 of the Indentures; or (iv) 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 each class 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 applicable
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.
The Indenture will provide that upon execution and delivery of the Debt
Securities by the Company the Trustee shall authenticate and deliver the Debt
Securities in accordance with the order of the Company. IBJ Schroder Bank &
Trust Company is the trustee under the Indenture, dated as of June 21, 1993,
relating to the 1993 Senior Notes and the Indenture, dated as of February 16,
1996, relating to the 1996 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 Indentures 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
Indentures for the Offered Debt Securities and the Offered Debt Securities will
be governed by the laws of the State of New York.
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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 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
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<PAGE> 61
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.
EXPERTS
The audited 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, as indicated in their reports with respect thereto, and are so
included herein in reliance upon the authority of said firm as experts in giving
said reports.
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======================================================
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR BY ANY UNDERWRITER, AGENT OR DEALER. THIS
PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL
OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS AND
ANY PROSPECTUS SUPPLEMENT SHALL NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AT ANY TIME SUBSEQUENT TO THE DATE
HEREOF OR THEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
PROSPECTUS SUPPLEMENT
The Company........................... S-3
Risk Factors.......................... S-3
Cautionary Disclosure Regarding
Forward-Looking Statements.......... S-6
Use of Proceeds....................... S-7
Summary Consolidated Financial and
Operating Data...................... S-8
Description of Senior Notes........... S-10
Description of Senior Subordinated
Notes............................... S-11
Underwriting.......................... S-12
Legal Matters......................... S-12
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........ 4
Plan of Distribution.................. 49
Legal Matters......................... 50
Experts............................... 50
</TABLE>
======================================================
======================================================
U.S. HOME CORPORATION
$225,000,000
8.25% SENIOR NOTES DUE 2004
8.88% SENIOR SUBORDINATED NOTES DUE 2007
-----------------------------------------
PROSPECTUS SUPPLEMENT
-----------------------------------------
DILLON, READ & CO. INC.
======================================================
