<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 6, 1998
REGISTRATION NO. 333-46239
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
UNITED STATES SURGICAL CORPORATION
(Exact name of registrant as specified in its charter)
------------------------------
<TABLE>
<S> <C>
DELAWARE 13-2518270
(State of Incorporation) (IRS Employer
Identification No.)
</TABLE>
------------------------
150 GLOVER AVENUE
NORWALK, CONNECTICUT 06856
(203) 845-1000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive office)
------------------------------
SCOTT L. SPITZER, ESQ.
SENIOR COUNSEL AND SENIOR DIRECTOR
UNITED STATES SURGICAL CORPORATION
150 GLOVER AVENUE
NORWALK, CONNECTICUT 06856
(203) 845-1784
(Address, including zip code, and telephone number, including area code, of
agent for service)
------------------------------
Please send copies of all communications to:
<TABLE>
<S> <C>
FREDERICK W. KANNER, ESQ. MARC S. ROSENBERG, ESQ.
DEWEY BALLANTINE LLP CRAVATH, SWAINE & MOORE
1301 AVENUE OF THE AMERICAS 825 EIGHTH AVENUE
NEW YORK, NEW YORK 10019 NEW YORK, NEW YORK 10019
(212) 259-8000 (212) 474-1000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: FROM TIME TO
TIME AFTER THE EFFECTIVE DATE OF THE REGISTRATION STATEMENT.
------------------------
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(b)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
PURSUANT TO RULE 429, THE PROSPECTUS CONTAINED IN THIS REGISTRATION
STATEMENT WILL ALSO BE USED IN CONNECTION WITH THE OFFERING OF PREVIOUSLY
REGISTERED SECURITIES PURSUANT TO THE COMPANY'S REGISTRATION STATEMENT (FILE NO.
33-59729) AND NOT ISSUED. IN THE EVENT ANY SUCH PREVIOUSLY REGISTERED SECURITIES
ARE OFFERED PRIOR TO THE EFFECTIVE DATE OF THE REGISTRATION STATEMENT, THEY WILL
NOT BE INCLUDED IN ANY PROSPECTUS HEREUNDER.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION, DATED MARCH 6, 1998
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED , 1998)
$
UNITED STATES SURGICAL CORPORATION
% SENIOR NOTES DUE
------------------
Interest on the Senior Notes (the "Notes") is payable semiannually on
and of each year, commencing , 1998. The Notes are not redeemable
prior to maturity by the Company and will not be subject to any sinking fund.
The Notes will be represented by one or more book-entry securities
registered in the name of a nominee of The Depository Trust Company (the
"Depositary"). Beneficial interests in the Notes will be shown on, and transfers
thereof will be effected only through, records maintained by the Depositary and
its participants. Except as described in this Prospectus Supplement and the
accompanying Prospectus, Notes in certificated form will not be issued in
exchange for the book-entry securities.
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 3 OF THE ACCOMPANYING PROSPECTUS 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 (THE "COMMISSION") OR ANY STATE SECURITIES COMMISSION
NOR HAS THE 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>
<S> <C> <C> <C>
UNDERWRITING
DISCOUNTS AND PROCEEDS TO
PRICE TO PUBLIC(1) COMMISSIONS(2) COMPANY(1)(3)
Per Note % % %
Total $ $ $
</TABLE>
(1) Plus accrued interest, if any, from March , 1998.
(2) For information regarding indemnification of the Underwriters, see
"Underwriting."
(3) Before deducting expenses payable by the Company estimated at $400,000.
------------------------
The Notes are offered by the several Underwriters, subject to prior sale,
when, as and if accepted by them and subject to certain conditions. It is
expected that delivery of the Notes in book-entry form will be made through the
facilities of The Depository Trust Company on or about March , 1998.
------------------------
SALOMON SMITH BARNEY
MERRILL LYNCH & CO.
J.P. MORGAN & CO.
BANCAMERICA ROBERTSON STEPHENS
BNY CAPITAL MARKETS, INC.
CHASE SECURITIES INC.
NATIONSBANC MONTGOMERY SECURITIES LLC
, 1998
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES, INCLUDING
OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN SUCH SECURITIES,
AND THE IMPOSITION OF A PENALTY BID, IN CONNECTION WITH THE OFFERING OF THE
NOTES. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
Trademarks of the Company appear herein in italicized capital letters.
THE COMPANY
OVERVIEW
United States Surgical Corporation (together with its subsidiaries, the
"Company") is a Delaware corporation primarily engaged in developing,
manufacturing and marketing a proprietary line of technologically advanced
surgical products to hospitals throughout the world. The Company specializes in
technologies that improve patient care and lower health care costs. The Company
develops, manufactures and markets surgical staplers, laparoscopic products and
sutures and products in numerous surgical specialties including spine surgery;
vascular and cardiovascular surgery and interventional cardiology; urology; and
breastcare. The Company has also recently completed the acquisition of
Valleylab, the world's leading manufacturer and marketer of electrosurgical and
ultrasound surgical products. The Company currently operates domestically and
internationally through subsidiaries, divisions and distributors.
To respond to business conditions in the health care market, including cost
containment initiatives by health care providers and payors, the Company has
expanded its marketing efforts to meet the needs of hospital management through
cost effective pricing programs, by assisting hospitals in implementing more
efficient surgical practices and by demonstrating the favorable economics
associated with the use of the Company's products. The Company has also
implemented a strategy to expand its product lines beyond general surgery
through a program of acquisitions and alliances in a number of surgical
specialties where the Company believes market conditions and product innovation
offer substantial growth opportunities, including the following acquisitions:
Surgical Dynamics and the Smith & Nephew spinal products business (spine
surgery); Progressive Angioplasty Systems and a controlling interest in Medolas
(vascular and cardiovascular surgery and interventional cardiology); the
strategic alliance with Trex Medical and the acquisition of NeoVision
(breastcare); and the acquisition of Valleylab. In addition, the Company
continues to expand its product and technology base in its established
businesses through investment in internal research and development and
acquisition of new technologically advanced products that provide better patient
care and an effective means of reducing hospital costs.
The Company's principal executive offices are located at 150 Glover Avenue,
Norwalk, Connecticut 06856; telephone (203) 845-1000.
VALLEYLAB ACQUISITION
In December 1997, the Company entered into an agreement with Pfizer Inc. to
acquire Valleylab, the world's leading manufacturer of electrosurgical and
ultrasound surgical products, based in Boulder, Colorado and which has been in
existence for over 30 years. The Valleylab acquisition, which is the largest
acquisition in the Company's history, was completed in early 1998.
Valleylab's products consist primarily of electrosurgical generators,
pencils, accessories, and patient return pads. In addition, Valleylab's products
include ultrasound cutting devices including generators, handpieces, tubing and
titanium tips, and laparoscopic surgical devices. Electrocautery, which has been
utilized since the 1920s, offers a safe, versatile and effective method to cut
and coagulate tissue and is utilized in a broad range of surgical applications.
Electrical current flows from the generator to the active electrode (an
electrosurgical pencil or other surgical instrument) and then through the body
tissue to the patient return pad where it is collected and returned to the
generator. Ultrasonic aspiration systems use a
S-2
<PAGE>
combination of mechanical vibration and suction to selectively fragment tissue.
An ultrasonic aspirator system consists of an ultrasonic generator, a handpiece
and a single- use pack containing tubing and titanium tips. A transducer within
the handpiece vibrates the hollow titanium tip at ultrasonic frequencies while
suction is applied to the tip core. When applied to a surgical site, tissue with
high water content is fragmented and aspirated. Valleylab is currently
developing several additional products which use radio-frequency energy and are
designed to improve clinical outcomes and reduce procedure cost and duration.
The Valleylab acquisition constitutes a major milestone in the Company's
strategy to grow through acquisition. The Company believes that Valleylab offers
a major opportunity for the Company to acquire a leading medical device company
with strong brand name recognition, an established customer base and
demonstrated profitability. The Company believes that the Valleylab business
provides substantial growth opportunities principally through innovative product
upgrades, aggressive expansion of international sales through the Company's
subsidiaries and international distributor network, and through Valleylab's
substantial expertise and product development activities in women's health care
and radiofrequency energy which will complement the Company's internal product
development efforts in these areas.
S-3
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Notes are estimated to
be approximately $ , after deduction of underwriting discounts and
commissions and estimated offering expenses. The Company intends to use the net
proceeds from the sale of the Notes to reduce outstanding indebtedness under the
Company's $450,000,000 Credit Agreement dated as of January 30, 1998 among the
Company, the lenders party thereto, Bank of America National Trust and Savings
Association as Syndication Agent, The Bank of New York as Administrative Agent
and Morgan Guaranty Trust Company of New York as Documentation Agent (the
"364-Day Credit Facility"). Borrowings under the 364-Day Credit Facility bear
interest, at the election of the Company, at a rate equal to (i) the higher of
(a) the prime rate of The Bank of New York and (b) the sum of 1/2 of 1% plus the
federal funds rate or (ii) in the case of Eurodollar loans, the sum of between
.225% and .650% (dependent on a certain financial ratio) and adjusted LIBOR. The
outstanding indebtedness under the 364-Day Credit Facility was incurred solely
to finance the acquisition of Valleylab. Bank of America National Trust and
Savings Association, The Bank of New York, The Chase Manhattan Bank, Morgan
Guaranty Trust Company of New York and NationsBank, N.A., agent banks and
lenders under the 364-Day Credit Facility, are affiliated with BancAmerica
Robertson Stephens, BNY Capital Markets, Inc., Chase Securities Inc., J.P.
Morgan Securities Inc. and NationsBanc Montgomery Securities LLC, respectively,
each of which is an Underwriter of the offering being made hereby. See
"Underwriting."
RATIOS OF EARNINGS TO FIXED CHARGES AND OF
EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth the Company's ratios of consolidated earnings
to fixed charges and consolidated earnings to combined fixed charges and
preferred stock dividends for the periods indicated.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
<S> <C> <C> <C> <C>
1997 PRO
FORMA(3) 1997 1996 1995
------------- ----- ----- -----
Ratio of earnings to fixed charges and capitalized interest (1)........... 2.9 6.4 6.2 3.7
Ratio of earnings to combined fixed charges, capitalized interest and
preferred stock dividends (1)........................................... 2.6 4.9 3.0 1.9
<CAPTION>
<S> <C> <C>
1994 1993
----- ---------
Ratio of earnings to fixed charges and capitalized interest (1)........... 2.0 N.M.(2)
Ratio of earnings to combined fixed charges, capitalized interest and
preferred stock dividends (1)........................................... 1.2
</TABLE>
- ------------------------
(1) The ratios of earnings to fixed charges and capitalized interest and to
combined fixed charges, capitalized interest and preferred stock dividends
are computed by dividing the sum of earnings before provision for income
taxes and fixed charges (excluding capitalized interest) by total fixed
charges and capitalized interest, or by the sum of total fixed charges and
capitalized interest and preferred stock dividends. Total fixed charges and
capitalized interest includes all interest (including capitalized interest)
and the interest factor of all rentals, assumed to be one-third of
consolidated rent expense. Preferred stock dividends have been increased to
an amount representing the pretax earnings which would be required to cover
such dividend requirements, assuming a statutory tax rate of 35%.
(2) Earnings were inadequate to cover fixed charges. The dollar amount of the
deficiency for the year ended December 31, 1993 was $147 million. If
restructuring charges of $138 million were excluded from the calculation,
the dollar amount of the deficiency would have been $9 million.
(3) The 1997 Pro Forma calculation gives effect to the amount of debt required
to fund the acquisition of Valleylab ($425 million) assuming such debt was
outstanding since January 1, 1997. No other pro forma adjustments are
included in the pro forma calculation.
S-4
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
December 31, 1997, on an actual basis and as adjusted to give effect to the
acquisition of Valleylab and the sale of the Notes, after deducting underwriting
discounts and commissions and estimated offering expenses, and assumes the use
of the proceeds from the sale of the Notes to reduce outstanding borrowings as
described under "Use of Proceeds."
<TABLE>
<CAPTION>
DECEMBER 31, 1997
--------------------------
<S> <C> <C>
ACTUAL AS ADJUSTED
------------ ------------
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Long-term debt (less current maturities):
Long-term bank credit facilities.................................................. $ 28,800 $
% Senior Notes due ......................................................... --
Other long-term debt.............................................................. 102,500 102,500
------------ ------------
Total long-term debt.......................................................... $ 131,300 $
------------ ------------
------------ ------------
Stockholders' equity:
Preferred stock $5.00 par value, authorized 2,000,000 shares;
none outstanding................................................................ $ -- $ --
Common stock $.10 par value, authorized 250,000,000 shares; issued, 82,898,473.... 8,300 8,300
Additional paid-in capital--common stock.............................................. 973,600 973,600
Retained earnings..................................................................... 395,800 395,800
Treasury stock at cost; 7,015,207 shares.............................................. (96,800) (96,800)
Accumulated translation adjustments................................................... (28,300) (28,300)
Unrealized gain on marketable securities.............................................. 4,300 4,300
------------ ------------
Total stockholders' equity.................................................... 1,256,900 1,256,900
------------ ------------
Total capitalization.......................................................... $ 1,388,200 $
------------ ------------
------------ ------------
</TABLE>
S-5
<PAGE>
The following should be read in conjunction with the Consolidated Financial
Statements of the Company on Form 10-K which is incorporated by reference in
this Registration Statement.
SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1997(1) 1996 1995(2) 1994(3) 1993(4)
------------ ------------ ------------ ------------ ------------
Net sales.................................. $ 1,172,100 $ 1,112,700 $ 1,022,300 $ 918,700 $ 1,037,200
Income (loss) before income taxes.......... $ 121,000 $ 141,700 $ 89,800 $ 32,700 $ (137,400)
Net Income (loss).......................... $ 94,100 $ 109,100 $ 79,200 $ 19,200 $ (138,700)
Net Income (loss) per basic common share
(5)...................................... $ 1.24 $ 1.48 $ 1.05 $ .08 $ (2.48)
Average number of basic common shares
outstanding (5).......................... 72,100 60,500 57,000 56,600 56,000
Net Income (loss) per diluted common share
(5)...................................... $ 1.21 $ 1.43 $ 1.04 $ .08 $ (2.48)
Average number of diluted common shares
outstanding (5).......................... 73,700 62,600 57,400 56,900 56,000
Dividends paid per common share............ $ .16 $ .08 $ .08 $ .08 $ .245
At December 31,
Total assets............................... $ 1,726,000 $ 1,514,800 $ 1,265,500 $ 1,103,500 $ 1,170,500
Long-term debt............................. $ 131,300 $ 142,400 $ 256,500 $ 248,500 $ 505,300
Stockholders' equity (6)................... $ 1,256,900 $ 1,053,800 $ 741,100 $ 662,000 $ 443,900
</TABLE>
- ------------------------
(1) In the second quarter of 1997, the Company recorded litigation costs of $24
million ($.24 per basic common share), restructuring charges of $6 million
($.06 per basic common share), and the tax benefit resulting from an IRS
examination of $7 million ($.10 per basic common share). In the fourth
quarter of 1997, the Company recorded restructuring charges of $12 million
($.11 per basic common share), and wrote off the carrying value of two
terminated license/distribution agreements of $3 million each ($.05 per
basic common share). In addition, the Company expensed $4 million of certain
software related costs, previously capitalized ($.04 per basic common share)
as a result of a mandated change in accounting standards.
(2) In the third quarter of 1995, the Company reached an agreement with respect
to the settlement of all issues raised by the Internal Revenue Service in
the examination of the Company's income tax returns for the years 1984
through 1990. As a result of the agreement, the Company recognized a net
credit to the tax provision of $10 million ($.18 per basic common share) in
the third quarter of 1995.
(3) In the fourth quarter of 1994 the Company signed a letter of intent to
purchase certain assets of its independent distributor in Japan, which
included inventory of the Company's products purchased by the independent
distributor but not yet sold to third parties at December 31, 1994. Sales
and net income were reduced by $17 million and $8 million ($.14 per basic
common share), respectively, in anticipation of the pending reacquisition of
these products and valuing these products at the Company's cost.
(4) Income (loss) before income taxes and net income (loss) for 1993 include
restructuring charges of $137.6 million and $129.6 million ($2.31 per basic
common share), respectively.
(5) In the fourth quarter of 1997, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 128 "Earnings Per Share"
(FAS 128), as required. The previously reported earnings per share, and
share outstanding information, have been restated as required by FAS 128.
(6) Included in Stockholders' equity in 1996, 1995 and 1994 is $191.5 million of
convertible preferred stock which had a liquidation value of $200.0 million.
The preferred stock was redeemed and converted into common shares on April
1, 1997.
S-6
<PAGE>
The following should be read in conjunction with the Consolidated Financial
Statements of the Company on Form 10-K which is incorporated by reference in
this Registration Statement.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
In 1997 the Company attained sales of $1.17 billion compared with sales of
$1.11 billion in 1996 and $1.02 billion in 1995. Sales increased $59 million or
5% in 1997, increased $90 million or 9% in 1996, and increased $104 million or
11% in 1995. In 1997 the Company reported net income of $94.1 million. Net
income, as adjusted, for the effect of litigation costs ($24 million or $.24 per
basic common share), restructuring charges ($18 million or $.18 per basic common
share) , the termination of two distribution/ license agreements ($6 million or
$.05 per basic common share), the expensing, as a result of a mandated change in
accounting, of previously capitalized software related costs ($4 million or $.04
per basic common share), and the benefits resulting from an IRS examination ($7
million or $.10 per basic common share) was $124 million or $1.65 per basic
common share (after preferred stock dividends of $5 million) compared with $109
million or $1.48 per basic common share (after preferred stock dividends of $20
million) in 1996 and net income of $79 million or $1.05 per basic common share
(after preferred stock dividends of $20 million) in 1995. Net income and net
income per basic common share, as adjusted, increased $15 million and $.17,
respectively, in 1997 compared to 1996, increased $30 million and $.43,
respectively, in 1996 compared to 1995, and increased $60 million and $.97,
respectively, in 1995 compared to 1994. The effect of changes in foreign
currency exchange rates on results of operations was to decrease net income by
$27 million in 1997 in comparison to 1996, decrease net income by $8 million in
1996 in comparison to 1995, and increase net income by $14 million in 1995 in
comparison to 1994.
The increase in sales in 1997 to $1.17 billion compared to $1.11 billion in
1996 was primarily due to volume increases attributable to new product
introductions, specifically the substantial growth of the Company's Surgical
Dynamics (SDI) business, as well as the Company's ABBI device, and related
products. The increase in 1997 sales was partially offset by a reduction in the
Company's core mechanical products business as continuing industry pricing
pressures, and competition impact the marketplace in which the Company operates.
Sales were negatively impacted by the reduction of inventories at Just-in-Time
(JIT) distributors due to hospital purchases from JIT distributors exceeding
distributor purchases from the Company by $24.1 million and $13.1 million for
1996 and 1995, respectively. JIT inventories stabilized in 1997.
The following table analyzes the change in sales in 1997, 1996 and 1995
compared with the prior years.
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
(IN MILLIONS)
COMPOSITION OF SALES INCREASE:
Sales volume increase...................................................................... $ 144 $ 117 $ 64
Net price changes(A)(B).................................................................... (35) (12) 12
Effects of changes in foreign currency exchange rates...................................... (50) (15) 28
--------- --------- ---------
Sales increase............................................................................. $ 59 $ 90 $ 104
--------- --------- ---------
--------- --------- ---------
</TABLE>
- ------------------------
(A) Approximately $13 million and $36 million of the sales increase accounted
for in net price changes for 1996 and 1995, respectively, is the result of
the 1995 acquisition of the Company's former Japanese distributor and the
change from distributor pricing to subsidiary pricing as of April 1, 1995.
In addition, the sales for 1996 include twelve months of subsidiary
operations in Japan as compared to three months of distributor operations
through the former Japanese distributor and eight months of operations as a
subsidiary in 1995. The Company receives higher selling prices when selling
as a subsidiary to the ultimate customer than was previously recognized by
the Company when sales were made at distributor prices to the Company's
former distributor.
(B) Prices were adversely effected by approximately $16 million and $7 million,
respectively, in 1997 and 1996 due to changes in reimbursement to French
public hospitals by France's Social Security Administration.
S-7
<PAGE>
Sales volume accounted for all of the sales increases in 1997 and 1996 and
62% of the 1995 sales increase.
Gross margin from operations (sales less cost of products sold divided by
sales) was 60% in 1997 compared with 59% in 1996 and 56% in 1995. The reduction,
as a percentage of sales , in cost of products sold and improved gross margins
over the comparable 1996 period are primarily attributable to higher sales
volumes of the Company's SDI products and the ongoing corporate wide cost saving
initiatives. Gross margins continued to improve throughout 1995 and 1996 as a
result of the implementation of the 1993/1994 restructuring plans, higher sales
volumes and ongoing cost savings initiatives as well as the inclusion, effective
April 1, 1995, of higher margin sales resulting from the acquisition of certain
assets from the Company's former Japanese distributor. The reserves for
obsolescence of production tooling and inventories, which are an ongoing cost of
business, amounted to $12 million, $30 million and $45 million, respectively, in
the years ended December 31, 1997, 1996 and 1995. Changes in foreign currency
exchange rates from those existing in the prior year had the effect of
decreasing cost of products sold by $5 million in 1997, and were immaterial in
1996 and 1995.
The Company's investment in research and development during the past three
years (1997 - $72 million; 1996 - $58 million; 1995 - $43 million) has yielded
numerous product improvements as well as the development of numerous new product
lines as the Company continues to broaden its product offerings. The $14 million
increase in research and development expense in 1997 compared to 1996 is
primarily attributable to increased spending towards developing advanced
surgical techniques which could be used for additional surgical applications,
including surgical specialties, and significant clinical costs primarily in the
vascular, cardiovascular and interventional cardiology field in which the
Company plans to significantly increase its presence in 1998. The increase in
research and development expense in 1996 as compared to 1995 is also
attributable to increased spending towards developing advanced surgical
techniques and products, some of which were introduced throughout 1997. The
increase in research and development expense in 1995 compared to 1994 resulted
primarily from $4.6 million of charges during the third quarter of 1995 related
to certain technologies which the Company decided not to pursue. The Company is
continuing its on-going commitment to develop and acquire unique new products
and technologies for use in new surgical procedures and specialty areas.
Selling, general and administrative expenses expressed as a percentage of
sales were 40% in 1997 (38% after adjusting for the unusual termination costs of
distribution/license agreements and expensing of capitalized computer software
costs in the fourth quarter of 1997), 40% in 1996 and 41% in 1995. The increase
in selling, general, and administrative expenses in 1997 as compared to 1996, is
attributable to $10 million of fourth quarter expenses attributable to certain
previously capitalized software costs ($4 million), and two distribution/license
agreements ($6 million) which the Company decided to terminate. In addition,
1997 selling, general, and administrative expense contains the intangible
amortization, as well as the selling, general and administrative expense of its
recent 1997 acquisitions. The increase in 1996 and 1995 in selling, general and
administrative expenses is primarily due to the effects of the initiation by the
Company of the marketing of the Company's products to its Japanese customers as
a result of the acquisition of certain assets from the Company's former Japanese
distributor. Changes in foreign currency exchange rates from those existing in
the prior year had the effect of decreasing selling, general, and administrative
expenses by $19 million in 1997 and $6 million in 1996, and increasing selling,
general, and administrative expenses by $13 million in 1995.
The Company recorded restructuring charges of $6 million during the second
quarter of 1997 which related primarily to employee severance costs associated
with the Company's consolidation of manufacturing and certain marketing
operations. The Company had an additional restructuring of operations during the
fourth quarter of 1997 of $12 million which also related to additional employee
termination and facility disposals as part of the Company's cost cutting
objectives. Collectively, the 1997 restructuring charges resulted in over 450
employee terminations worldwide, which should save the Company approximately $19
million on an annual basis. The majority of the cash outlays relative to the
second quarter restructuring were made during the third and fourth quarter of
1997 with the remainder to be made in 1998. All of the cash outlays relative to
the fourth quarter 1997 restructuring will be made in 1998.
S-8
<PAGE>
The Company recorded restructuring charges of approximately $7 million
during the fourth quarter of 1995. These restructuring charges related primarily
to lease terminations and employee severance costs associated with the
relocation of one of the Company's largest international subsidiaries and the
plan to centralize the distribution of the Company's products to its European
customers. In addition, severance payments were incurred in relation to the
restructuring of the Company's manufacturing plants. The majority of the cash
outlays relative to these restructuring charges were made during the third and
fourth quarters of 1995, with the remainder made during 1996. The 1995
restructuring charges were basically offset by the reversal of restructuring
cost estimates in excess of ultimate costs which were originally recognized in
the Company's fourth quarter 1993 consolidated statements of operations. There
were no material adjustments to previously accrued restructuring charges in
1997.
The decrease in interest expense in 1997 and 1996 as compared to 1995 is
attributable to the reduction of bank borrowings with the proceeds from the
Company's public common stock offering in June 1996 and the interest income
generated by the investment of the remaining proceeds in high quality short-term
liquid money market instruments.
The tax provision for 1997 relates to domestic state and federal taxes,
including taxes in Puerto Rico, as well as foreign taxes, while the provisions
for 1996 and 1995 related primarily to foreign taxes and taxes in Puerto Rico.
The Company's tax provisions in 1997, 1996 and 1995 reflect the lower effective
tax rates on a subsidiary's operations in Puerto Rico and the availability of a
tax credit under Section 936 of the Internal Revenue Code and the tax benefit of
certain net operating loss and tax credit carryforwards which were not
previously considered recognizable. In addition, in 1997 the Company's tax
provision reflects a reduction in federal taxes due to certain tax benefits
arising from the operation of the Company's Foreign Sales Corporation.
The Company is currently in the process of having its federal income tax
returns for the years 1991 through 1993 surveyed by the Internal Revenue Service
(IRS). Incident to such examination, during the second quarter of 1997 the IRS
documented its intention to accept the Company's tax filing position with
respect to years 1991 through 1993 on a basis such that certain previously
established tax reserves are no longer required. As a result, in the second
quarter of 1997 the Company reduced its current liability by $7 million,
recognizing a credit to the tax provision of $7 million.
In August 1995, the Company reached agreement with respect to settlement of
all issues raised by the IRS in its examination of the Company's income tax
returns for the years 1984 through 1990. Prior to this resolution, a significant
portion of deferred tax assets related to available net operating loss and tax
credit carryforwards had been fully reserved by the Company because of
uncertainty over the future utilization of the tax benefits. Based upon
circumstances relative to the IRS audit and the Company's estimate of future
domestic taxable income, it is more likely than not that a significant portion
of such fully reserved assets will be realized in the future. As a result, in
the third quarter of 1995 the Company reduced the valuation allowances related
to a significant portion of these deferred tax assets by $54.3 million (change
in valuation allowances in 1995 was a reduction of $75.6 million), increased its
current tax liabilities by $28.6 million for the remaining estimated tax
liabilities relating to years subsequent to 1990, decreased tax assets by $7.4
million, recognized a net credit to the tax provision of $10.0 million ($.18 per
basic common share) and recorded a credit to Additional paid-in capital (for
windfall tax benefits related to net operating losses generated from stock
compensation deductions in prior years) of $8.3 million.
In the fourth quarter of 1997, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 128 "Earnings Per Share" (SFAS
128), as required and restated the previously reported earnings per share in
conformity with FAS 128. The new standard specifies the computation,
presentation, and disclosure requirements for earnings per share.
The Financial Accounting Standards Board issued Accounting Standards (SFAS
130), " Reporting Comprehensive Income", in June 1997 which requires a statement
of comprehensive income to be included in the financial statements for fiscal
years beginning after December 15, 1997. The Company is presently designing such
statement and, accordingly, will include such statement beginning with the first
quarter of 1998.
S-9
<PAGE>
In addition, in June of 1997, the FASB issued SFAS 131, "Disclosures About
Segments of an Enterprise and Related Information". SFAS 131 requires disclosure
of certain information about operating segments and about products and services,
geographic areas in which a company operates, and their major customers. The
Company is presently in the process of evaluating the effect that this new
standard will have on disclosures in the Company's financial statements and the
required information will be reflected in the year ended December 31, 1998
financial statements.
FINANCIAL CONDITION
The increase in Receivables results primarily from the $19 million increase
in sales in the fourth quarter 1997 when compared to the fourth quarter 1996 and
sales of the Company's ABBI system biopsy device which is a capital equipment
purchase by hospitals and, accordingly, results in longer payment periods. In
addition, in some competitive situations extended payment terms have also
contributed to the increase in accounts receivable.
Inventory was increased during 1997 in order to support a higher level of
sales in 1997 as compared to 1996. In addition, new products introduced late in
1997, primarily resulting from the Company's 1997 acquisitions, had the effect
of increasing inventory balances.
The increase in Other assets during 1997 is primarily attributable to the
intangibles acquired in the Company's 1997 acquisitions (see Note E of Notes to
Consolidated Financial Statements included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1997 incorporated by reference
herein), and the increase in prepaid rent related to the Company's North Haven
facility lease agreement.
The increase in Accrued liabilities of $33 million during 1997 results from
the accrual of estimated settlement and related costs relative to ongoing
litigation and litigation related matters in which the company is a defendant.
The Company's current cash and cash equivalent balances, existing borrowing
capacity and projected operating cash flows are currently in excess of its
foreseeable operating cash flow requirements. In the second quarter of 1996, the
Company sold 4.3 million shares of its common stock in a public offering for
approximately $141.8 million of proceeds net of issuance costs. A portion of the
proceeds were used to repay certain domestic bank debt and the balance of the
proceeds was used for general corporate purposes, including financing the
Company's 1997 various cash acquisitions.
The Company entered into a $325 million credit agreement in December 1995.
This credit agreement matures January 2001 and provides for certain covenants
such as restrictions on asset sales, common stock dividends in excess of 20% of
net income and subsidiary debt as well as required maintenance of certain
minimum levels of tangible net worth and fixed charge coverage ratios and a
stipulated level of debt to total capitalization. The credit facility provides
for borrowings up to $25 million worth of Japanese Yen. The Company entered into
an additional conditional committed bank term loan facility of $175 million
during the third quarter of 1996 to exclusively finance its pending tender offer
for Circon Corporation (see Note C of Notes to Consolidated Financial Statements
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1997 incorporated by reference herein). This conditional term loan facility
has similar terms and conditions to the Company's present syndicated bank credit
facility. Throughout 1997 and 1996, the Company entered into additional
uncommitted facilities for 6 billion Japanese Yen (approximately $50 million)
with three Japanese banks and $95 million with four other banks which are short
term in nature. Such borrowings under the uncommitted facilities have been
categorized as long-term debt as such borrowings will be refinanced under the
Company's long-term bank credit agreement. The Company is in full compliance
with all of its covenants associated with its various bank and leasing
agreements.
The Company increased its capital spending in 1997 by 31% compared to 1996
levels as a result of investing in new and more efficient production and
information processing equipment. The Company's building programs were
essentially completed by 1995 which enabled the Company to reduce its capital
spending by more than 28% in 1995 compared to 1994 levels. Additions to
Property, plant, and equipment
S-10
<PAGE>
on the accrual method totaled $59 million in 1997 ($56 million on a cash basis)
compared with $44 million in 1996, and $48 million in 1995, and consist
primarily of additions to machinery and equipment ($39 million), molds and dies
($13 million), land and buildings ($3 million), and leasehold improvements ($4
million). During 1997 the Company removed from its balance sheet, Property,
plant, and equipment which had an original cost of $29 million and is now fully
depreciated and out of service.
The Company's North Haven facilities are leased from a trust, of which the
original developer (the "Owner Participant") holds the beneficial interest. The
Owner Participant has the right to require the Company or the Company's designee
to purchase the Owner Participant's beneficial interest. During 1997, the
Company and the Owner Participant agreed to amend the date this right could be
exercised from January 1998 to no earlier than April 2000. The Company's
obligation, if the right is exercised, would be to take title to the beneficial
interest in the trust, or find another investor, suitable to the noteholders who
financed these facilities, to take such title. In either case the Company's
obligations as lessee under the lease would not change. The Company would be
obligated, whether or not the right is exercised, to make payments called for
under the existing lease of approximately $57 million annually through the year
2002, a payment of $28 million in January 2003 and nominal annual payments of
$100,000 through 2022. In addition, the Company is obligated to make contingent
rental payments based upon the consumer price index. There are presently several
alternatives available to the Owner Participant and the Company relative to the
additional contingent rental payments. The earliest potential payment of
approximately $19 million could be due as early as July 2000 if the Owner
Participant exercises the right to sell the facility to the Company, or the
Owner Participant elects the one-time lump sum payment of contingent rent. If
this right is not exercised, and the Owner Participant does not elect the one-
time payment of contingent rent of approximately $19 million, the determination
of the additional contingent rental payments will be based upon movements in the
consumer price index during the period September 1997 to September 2000 with an
annual cap on the consumer price index movement of 2.5% per year. If the second
option is chosen, additional contingent rental payments cannot exceed
approximately $39 million as stipulated in the agreement. Under the second
option, the Company can elect to pay free of interest from 2004 to 2023 the
additional contingent rental payments in excess of $19 million. The present
value of the contingent rental payments under the second option of approximately
$23 million would be a charge to rent expense during the contingent rent period,
September 1997 to September 2000, in comparison to the $19 million charge during
the period, September 1997 to June 2000, under the other option. Through
December 31, 1997, the Company has accrued $4.5 million related to contingent
rental payments. If, as described above, the Company takes title to the
beneficial interest in the facilities in July 2000, it is estimated that the
Company's balance sheet would be affected through an increase in Property, plant
and equipment of $339 million, a decrease in Other assets of $213 million and an
increase in Long-term debt of $126 million.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company has only limited involvement with derivative financial
instruments and does not use them for trading purposes. They are used to manage
well-defined interest rate and foreign exchange risks.
The Company routinely enters into contracts to reduce its exposure to and
risk from foreign exchange rate changes and interest rate fluctuations in the
regular course of the Company's global business. As of December 31, 1997 the
Company's foreign currency exchange contracts have all matured and the
outstanding foreign currency option contracts of $33 million will mature
throughout 1998. Realized and unrealized foreign currency gains and losses are
recognized when incurred and are included as a component of selling, general,
and administrative expenses in the consolidated statements of operations and
cash paid to vendors, suppliers and employees in the consolidated statements of
cash flows. Realized and unrealized foreign currency gains and losses relating
to the foreign exchange options and contracts were immaterial during the fourth
quarter and year ended December 31, 1997 in relation to the Company's projected
exposure to foreign exchange rate fluctuations.
In addition, the Company routinely enters into interest rate swap agreements
to reduce its exposure to interest rate fluctuations for a portion of its French
franc denominated financing lease. The net gain or loss from the exchange of
interest rate payments is included in interest (net) in the consolidated
statements of
S-11
<PAGE>
operations and interest paid (net) in the consolidated statements of cash flows.
As a result of the Company's interest rate hedging program, fluctuations in
interest rates have had an immaterial effect on the Company during the fourth
quarter and year ended December 31, 1997. The Company presently has a 200
million French franc denominated interest rate swap outstanding which expires in
December 1999, against its 458 million French franc denominated financing lease.
Historically, interest rate changes relative to this swap have had an immaterial
impact on the Company's Consolidated Financial Statements and are anticipated to
be immaterial in the future.
The Company maintains investments in marketable equity securities. The
securities are classified as available for sale and are recorded on the balance
sheet at fair value with unrealized gains or losses reported as a separate
component of shareholders' equity. The following analysis presents the
hypothetical change in fair values of the public equity investments held by the
Company that are sensitive to changes in the stock market. The modeling
technique used measures the hypothetical change in fair values arising from
selected hypothetical changes in the stock price for each security. Stock price
fluctuations of plus or minus 10% and plus or minus 25% were selected for
computational purposes. Estimates of fair value of these securities are as
follows assuming the respective percentage change in each share price (in
millions):
<TABLE>
<S> <C>
Current market value at December 31, 1997............................................. $ 40
10% decrease.......................................................................... $ 36
25% decrease.......................................................................... $ 30
10% increase.......................................................................... $ 44
25% increase.......................................................................... $ 50
</TABLE>
The Company operates in a global environment and, accordingly, is subject to
adverse fluctuations in foreign exchange rates in relation to the U.S. Dollar.
The fluctuations of foreign exchange rates may vary over time and could have a
materially adverse impact on the Company's Consolidated Financial Statements.
Historically, the Company's primary exposures have related to foreign currency
denominated revenues and operating expenses in Japan, France, and Germany, with
lesser exposures throughout the world. The Company has a limited exposure in the
Asian markets. Currently, the Company enters into foreign exchange contracts and
options primarily in the countries mentioned to attempt to manage its exposure.
The success of these instruments depends upon forecasts of activities
denominated in foreign currencies. To the extent the forecasts differ from
actual results, and unanticipated foreign currency volatility occurs, the
Company could experience unanticipated foreign currency gains or losses.
IMPACT OF THE YEAR 2000 ISSUE
The Year 2000 Issue is the result of potential problems with computer
systems or any equipment with computer chips that use dates where the date has
been stored as just two digits (e.g. 97 for 1997). On January 1, 2000, any clock
or date recording mechanism including date sensitive software which uses only
two digits to represent the year, may recognize a date using 00 as the year 1900
rather than the year 2000. This could result in a system failure or
miscalculations causing disruption of operations, including among other things,
a temporary inability to process transactions, send invoices, or engage in
similar activities.
The Company determined that it would be required to replace or modify
significant portions of its business application software so that its computer
systems would properly utilize dates beyond December 31, 1999. The Company
presently believes that with conversions to new systems and modifications to
existing software the Year 2000 Issue can be mitigated. However, if such
modifications and conversions are not made, or are not timely, the Year 2000
Issue could have a material impact on the operations of the Company.
During 1997, the Company initiated the implementation of Enterprise Resource
Planning (ERP) software to replace the Company's core business applications
which support sales and customer service, manufacturing, distribution, and
finance and accounting. The ERP software was selected to add functionality and
efficiency in the business processes of the Company in the normal course of
upgrading its systems
S-12
<PAGE>
to address its business needs. In addition, the Company also began a project to
analyze and assess the remainder of its business not addressed by the ERP
software. The scope of the project covers all computer systems, computer and
network hardware, production process controllers, office equipment, access
control, maintenance machinery, and the products it sells.
The Company is in the process of initiating formal communications with all
of its significant suppliers and large customers to determine the extent to
which the Company is vulnerable to those third parties failure to remediate
their own Year 2000 Issues. The Company can give no guarantee that the systems
of other companies on which the Company's systems rely will be converted on time
or that a failure to convert by another company or a conversion that is
incompatible with the Company's systems, would not have a material adverse
effect on the Company.
The Company is currently and will continue to utilize internal and external
resources to implement, reprogram, or replace and test software and related
assets affected by the Year 2000 Issue. The Company expects to complete the
majority of its efforts in this area by early 1999 leaving adequate time to
assess and correct any significant issues that may materialize. The total
remaining cost of the ERP system and the Year 2000 project is estimated at $30-
40 million and is being funded through operating cash flows. Of the total
project cost, approximately $25-30 million is attributable to the purchase and
implementation of the new software which will be capitalized. The remainder will
be expensed as incurred over the next two years and is not expected to have a
material effect on the results of operations during any quarterly or annual
reporting period. To date, the Company has incurred and expensed approximately
$4 million related to the assessment of, and preliminary efforts in connection
with, its Year 2000 project and the development of its remediation plan. All
cost estimates provided herein are inclusive of assessment, implementation,
training and education costs associated with the installation of the ERP
software which would have been incurred regardless of the Year 2000 Issue.
The costs of the project and the timetable in which the Company plans to
complete the Year 2000 compliance requirements are based on management's best
estimates, which were derived utilizing numerous assumptions of future events
including the continued availability of certain resources, third party
modification plans and other factors. However, there can be no guarantee that
these estimates will be achieved and actual results could differ materially from
these plans. Specific factors that might cause such material differences
include, but are not limited to, the availability and cost of personnel trained
in this area, the ability to locate and correct all relevant computer codes, and
similar uncertainties.
VALLEYLAB ACQUISITION
In December of 1997, the Company entered into an agreement with Pfizer Inc.
to purchase its Valleylab division for cash consideration of $425 million
payable at closing. The Valleylab acquisition was completed in early 1998.
Valleylab, based in Colorado is the world's leading manufacturer of
electrosurgical and ultrasonic products, with annual sales of approximately $200
million.
* * * * * *
The Company may, from time to time, provide estimates as to future
performance, including comments on financial estimates made by the analyst
community. These forward looking statements are estimates, and may or may not be
realized by the Company. The Company undertakes no duty to update such forward
looking statements. Many factors could cause actual results to differ from these
forward looking statements, including loss of market share through competition,
introduction of competing products by other firms, pressure on prices from
competition or purchasers of the Company's products, regulatory obstacles to
development of new products which are important to the Company's growth, lack of
acceptance of new products by the health care market, slow rates of conversion
by surgeons to procedures which utilize the Company's products, and interest
rate and foreign exchange fluctuations.
S-13
<PAGE>
DESCRIPTION OF THE NOTES
The following description of the Notes supplements, and should be read in
conjunction with, statements under "Description of Debt Securities" set forth in
the Prospectus. The Notes will be "Senior Debt Securities" (as defined in the
Prospectus). The Indenture pursuant to which the Notes will be issued is the
"Senior Indenture" (as defined in the Prospectus).
GENERAL
The Notes will be limited to $ in aggregate principal amount. The
Notes constitute part of the senior debt of the Company and will rank pari passu
with all other unsecured and unsubordinated debt of the Company, including
without limitation the following: (i) the Company's five year syndicated credit
agreement of $325 million, dated as of December 20, 1995, (ii) the Company's
conditional committed term loan facility of $175 million, entered into by the
Company during the third quarter of 1996 exclusively to finance its tender offer
for Circon Corporation and (iii) the Company's 364-day term loan facility of
$450 million, dated as of January 30, 1998, entered into by the Company to
finance the acquisition of Valleylab (see Note L of Notes to Consolidated
Financial Statements contained in the Company's Annual Report on Form 10-K for
the year ended December 31, 1997 incorporated by reference herein). Borrowings
by subsidiaries of the Company under the aforementioned agreement and facilities
or their successors, which are limited as described under "Description of Debt
Securities--Covenants--Limitation on Subsidiary Indebtedness," are structurally
senior to the Notes. The Notes will bear interest from , 1998, or
from the most recent date to which interest has been paid or provided for, at
the annual rate set forth on the cover page of this Prospectus Supplement, and
will mature on . Interest will be payable semi-annually on
and , commencing , 1998 to the persons in whose
names the Notes are registered at the close of business on the preceding
or , respectively. The Notes will be issued in fully
registered form only, in denominations of $1,000 and integral multiples thereof.
All payments of interest and principal will be payable in U.S. Dollars. Interest
will be paid on the basis of a 360-day year comprised of twelve 30-day months.
The Indenture permits the defeasance of the Notes upon the satisfaction of
the conditions described under "Description of Debt Securities--Defeasance and
Discharge" and "--Defeasance of Certain Obligations" in the Prospectus. The
Notes are subject to these defeasance provisions.
REDEMPTION AND SINKING FUND
The Notes will not be redeemable at the option of the Company prior to
maturity and will not be subject to any sinking fund.
BOOK-ENTRY, DELIVERY AND FORM
The Notes will be issued in the form of one or more Book-Entry Securities
(as defined in the Prospectus) which will be deposited with, or on behalf of,
the Depositary and registered in the name of the Depositary's nominee. See
"Description of Debt Securities--Global and Book-Entry Debt Securities" in the
Prospectus. Payments of principal of and interest on the Notes will be made to
the Depositary in immediately available funds.
The Depositary has advised as follows: It is a limited-purpose trust company
which was created to hold securities for its participating organizations (the
"Participants") and to facilitate the clearance and settlement of securities
transactions between Participants in such securities through electronic
book-entry changes in accounts of its Participants. Participants include
securities brokers and dealers (including the Underwriters), banks and trust
companies, clearing corporations and certain other organizations. Access to the
Depositary's system is also available to others such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a Participant. Persons who are not Participants may beneficially own securities
held by the Depositary only through Participants.
S-14
<PAGE>
The laws of some states require that certain persons take physical delivery
of securities which they own. Consequently, the ability to transfer beneficial
interest in the Book-Entry Securities is limited to the extent this requirement
may prevent certain potential purchasers of such beneficial interests from
purchasing them.
Under the terms of the Senior Indenture, the Company and the Trustee will
treat the persons in whose names the Notes are registered as the owners of such
Notes for the purpose of receiving payment of principal of and interest on the
Notes and for all other purposes whatsoever. Therefore, neither the Company, the
Trustee nor any paying agent has any direct responsibility or liability for the
payment of principal of or interest on the Notes to owners of beneficial
interests in the Notes.
S-15
<PAGE>
UNDERWRITING
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated the date hereof, the Underwriters named below have severally
agreed to purchase, and the Company has agreed to sell to them, severally, the
respective principal amounts of Notes set forth opposite their respective names
below:
<TABLE>
<CAPTION>
UNDERWRITER PRINCIPAL AMOUNT
- ------------------------------------------------------------------------------------------------ ----------------
<S> <C>
Salomon Brothers Inc............................................................................ $
Merrill Lynch, Pierce, Fenner & Smith
Incorporated..........................................................................
J.P. Morgan Securities Inc......................................................................
BancAmerica Robertson Stephens..................................................................
BNY Capital Markets, Inc........................................................................
Chase Securities Inc............................................................................
NationsBanc Montgomery Securities LLC...........................................................
----------------
Total..................................................................................... $
----------------
----------------
</TABLE>
Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all of the Notes, if any are
taken.
The Underwriters propose initially to offer the Notes directly to the public
at the public offering price set forth on the cover page hereof and to certain
dealers at such price less a concession not in excess of % of the principal
amount. The Underwriters may allow, and such dealers may reallow, a discount not
in excess of % of the principal amount to certain other dealers. After the
initial public offering, the public offering price, concession and discount may
be changed.
The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
In connection with the offering of the Notes, the Underwriters may purchase
and sell the Notes in the open market. These transactions may include
overallotment and stabilizing transactions and purchases to cover short
positions created by the Underwriters in connection with the offering of the
Notes. The Underwriters also may impose a penalty bid, whereby selling
concessions allowed to broker-dealers in respect of securities sold in the
offering may be retained by the Underwriters if such Notes are repurchased by
the Underwriters in stabilizing or covering transactions. These activities may
stabilize, maintain or otherwise affect the market price of the Notes, which may
be higher than the price that might otherwise prevail in the open market, and
these activities, if commenced, may be discontinued at any time. These
transactions may be effected in the over-the-counter market or otherwise.
The Company does not intend to apply for listing of the Notes on a national
securities exchange. The Notes are a new issue of securities with no established
trading market. The Underwriters have informed the Company that they intend to
make a market in the Notes, but are under no obligation to do so and such market
making activities may be terminated at any time. Therefore, no assurance can be
given as to the existence of a trading market in the Notes in the future.
Bank of America National Trust and Savings Association, The Bank of New
York, The Chase Manhattan Bank, Morgan Guaranty Trust Company of New York and
NationsBank, N.A., agent banks and lenders under the 364-Day Credit Facility,
are affiliates of BancAmerica Robertson Stephens, BNY Capital Markets, Inc.,
Chase Securities Inc., J.P. Morgan Securities Inc. and NationsBanc Montgomery
Securities LLC, respectively (each of which are Underwriters of the offering
being made hereby). Such lenders are
S-16
<PAGE>
expected to receive, in the aggregate, 28.9% of the estimated net proceeds of
the offering in repayment of a portion of amounts outstanding under the 364-Day
Credit Facility. See "Use of Proceeds."
The Company has agreed not to offer, sell, contract to sell or otherwise
dispose of any debt securities of the Company in an offering to the public (or
in a private offering where holders of the debt securities are granted rights to
have such debt securities registered under the Securities Act or to exchange
such debt securities for other debt securities that are so registered) from the
date of this Prospectus Supplement until the first business day after the
closing of the offering being made hereby without the prior consent of Salomon
Brothers Inc.
Certain of the Underwriters and their affiliates engage in transactions
(including commercial banking transactions) with and perform services for the
Company or one or more of its affiliates in the ordinary course of business
future. In particular, Chase Securities Inc. acted as financial advisor to the
Company in connection with the Valleylab acquisition, for which Chase Securities
Inc. received from the Company a customary fee.
LEGAL OPINIONS
The validity of the Notes will be passed upon for the Company by Thomas R.
Bremer, Senior Vice President and General Counsel of the Company. Certain other
legal matters will be passed upon for the Company by Dewey Ballantine LLP,
counsel for the Company, and certain legal matters will be passed upon for the
Underwriters by Cravath, Swaine & Moore, counsel for the Underwriters.
S-17
<PAGE>
SUBJECT TO COMPLETION, DATED MARCH 6, 1998
PROSPECTUS
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
UNITED STATES SURGICAL CORPORATION
DEBT SECURITIES, PREFERRED STOCK, DEPOSITARY SHARES,
COMMON STOCK AND WARRANTS
---------------------
United States Surgical Corporation (the "Company") may offer from time to
time, together or separately, (i) its debt securities (the "Debt Securities"),
which may be either senior debt securities (the "Senior Debt Securities") or
subordinated debt securities (the "Subordinated Debt Securities"), consisting of
notes, debentures or other unsecured evidences of indebtedness in one or more
series, (ii) shares of its preferred stock, par value $5.00 per share (the
"Preferred Stock"), which may be issued in the form of depositary shares
evidenced by depositary receipts (the "Depositary Shares"); (iii) shares of its
common stock, par value $.10 per share (the "Common Stock"), and (iv) warrants
to purchase Debt Securities, Preferred Stock, Depositary Shares, or Common Stock
or any combination thereof, as shall be designated by the Company at the time of
the offering (the "Warrants") in amounts, at prices and on terms to be
determined at the time of the offering. The Debt Securities, Preferred Stock,
the Depositary Shares, Common Stock, and Warrants are collectively called the
"Securities."
The Securities may be offered as separate series or issuances at an
aggregate initial public offering price not to exceed $500,000,000 or, if
applicable, the equivalent thereof in one or more foreign currencies, currency
units, composite currencies or in amounts determined by reference to an index as
shall be designated by the Company, in amounts, at prices and on terms to be
determined in light of market conditions at the time of sale and set forth in
the applicable Prospectus Supplement.
Unless otherwise specified in a Prospectus Supplement, the Senior Debt
Securities, when issued, will be unsecured and will rank on a parity with all
other unsecured and unsubordinated indebtedness of the Company. The Subordinated
Debt Securities, when issued, will be subordinated in right of payment to all
Senior Debt (as hereinafter defined) of the Company.
Certain specific terms of the particular Securities in respect of which this
Prospectus is being delivered will be set forth in the applicable Prospectus
Supplement, including, where applicable, (i) in the case of Debt Securities, the
title, aggregate principal amount, denominations, maturity, any interest rate
(which may be fixed or variable) and time of payment of any interest, any terms
for redemption at the option of the Company or the holder, any terms for sinking
fund payments, any terms for conversion or exchange into other Securities,
currency or currencies of denomination and payment, if other than U.S. dollars,
any listing on a securities exchange and any other terms in connection with the
offering and sale of the Debt Securities in respect of which this Prospectus is
delivered, as well as the initial public offering price; (ii) in the case of
Preferred Stock and Depositary Shares, the specific title, the aggregate amount,
any dividend (including the method of calculating payment of dividends),
seniority, liquidation, redemption, voting and other rights, any terms for any
conversion or exchange into other Securities, any listing on a securities
exchange, the initial public offering price and any other terms, (iii) in the
case of Common Stock, the number of shares of Common Stock and the terms of
offering thereof; and (iv) in the case of Warrants, the designation and number,
the exercise price, any listing of the Warrants or the underlying Securities on
a securities exchange and any other terms in connection with the offering, sale
and exercise of the Warrants. Any Prospectus Supplement relating to any series
of Securities will contain information concerning certain United States federal
income tax considerations, if applicable, to the Securities.
The Company's Common Stock is listed on the New York Stock Exchange under
the trading symbol "USS." Any Common Stock sold pursuant to a Prospectus
Supplement will be listed on such exchange, subject to official notice of
issuance.
The Securities may be sold directly, through agents, underwriters or dealers
as designated from time to time, or through a combination of such methods. See
"Plan of Distribution." If agents of the Company or any dealers or underwriters
are involved in the sale of the Securities in respect of which this Prospectus
is being delivered, the names of such agents, dealers or underwriters and any
applicable commissions or discounts will be set forth in or may be calculated
from the Prospectus Supplement with respect to such Securities. The net proceeds
to the Company from such sale also will be set forth in the applicable
Prospectus Supplement.
SEE "RISK FACTORS" BEGINNING ON PAGE 3 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is , 1998
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements, and other
information filed by the Company can be inspected and copied at the public
reference facilities of the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the following Regional Offices of
the Commission: 7 World Trade Center, 13th Floor, New York, New York 10048; and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
The Commission also maintains a site on the World Wide Web, the address of which
is http://www.sec.gov, that contains reports, proxy and information statements
and other information regarding issuers such as the Company, that file
electronically with the Commission. Copies of such material can be obtained from
the Public Reference Section of the Commission, Washington, D.C. 20549, at
prescribed rates. The Company's Common Stock is listed on, and reports, proxy
statements and other information concerning the Company can be inspected and
copied at the offices of, the New York Stock Exchange, Inc. ("New York Stock
Exchange"), 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission a registration statement on Form
S-3 under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the Securities offered hereby (the "Registration Statement"). This
Prospectus and the accompanying Prospectus Supplement does not contain all
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission.
Reference is made to the Registration Statement and to the exhibits relating
thereto for further information with respect to the Company and the Securities
offered hereby.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission pursuant to
the Exchange Act (File No. 1-9776) are incorporated herein by reference:
(1) Annual Report on Form 10-K for the year ended December 31, 1997;
(2) Current Report on Form 8-K, dated February 11, 1998, as amended; and
(3) The description of the Company's Common Stock, par value $.10 per share
(the "Common Stock"), contained in the Company's Registration Statement on Form
8-A, dated August 3, 1990.
All documents filed by the Company with the Commission 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 Securities made
by this Prospectus shall be deemed to be incorporated by reference in this
Prospectus and to be a part of this Prospectus from the date of filing of such
documents. Any statement contained in a document, all or a portion of which is
incorporated or deemed to be incorporated by reference herein, or contained in
this Prospectus, shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein 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 shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of such person, a
copy of any and all of the documents referred to above which have been or may be
incorporated by reference in this Prospectus (without exhibits to such documents
other than exhibits specifically incorporated by reference into such documents).
Such written or oral request should be directed to United States Surgical
Corporation, 150 Glover Avenue, Norwalk, Connecticut 06856, Attention: Investor
Relations Department (203) 845-1333.
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Trademarks of the Company appear herein in italicized capital letters.
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RISK FACTORS
THIS PROSPECTUS (INCLUDING THE DOCUMENTS INCORPORATED BY REFERENCE HEREIN)
CONTAINS, IN ADDITION TO HISTORICAL INFORMATION, FORWARD-LOOKING STATEMENTS THAT
INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER
MATERIALLY FROM SUCH HISTORICAL AND FORWARD-LOOKING STATEMENTS. FACTORS THAT
COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO,
THOSE DISCUSSED BELOW, AS WELL AS THOSE DISCUSSED ELSEWHERE IN THIS PROSPECTUS
(INCLUDING THE DOCUMENTS INCORPORATED BY REFERENCE HEREIN). EXCEPT WHERE THE
CONTEXT OTHERWISE REQUIRES, THE TERM "COMPANY" AS USED HEREIN INCLUDES THE
COMPANY'S SUBSIDIARIES AND DIVISIONS.
COMPETITION
There is intense competition in the markets in which the Company engages in
business. Many major companies that compete with the Company, such as Ethicon,
Inc. ("Ethicon"), a Johnson & Johnson subsidiary, and Sherwood-Davis & Geck (a
unit of Tyco International) have a wider range of other medical products than
the Company and dominate much of the markets for these other products. Ethicon
markets, in addition to sutures and other wound closure products, disposable
skin staplers, clip appliers, and internal staplers. Sherwood-Davis & Geck
markets disposable skin staplers, clip appliers and suture materials. The
Company believes that these major companies will continue their efforts to
develop and market competitive devices.
The market for products for minimally invasive surgery is highly
competitive. Ethicon, through a division known as Ethicon Endo-Surgery, markets
a line of endoscopic instruments which directly compete with the Company's
products and is its principal competitor in the minimally invasive surgery
market. The Company believes that Ethicon devotes considerable resources to
research and development and sales efforts in this field. Numerous other
companies manufacture and distribute disposable endoscopic instruments. In
addition, manufacturers of reusable trocars and other reusable endoscopic
instruments, including Richard Wolf Medical Instruments Corp. (a subsidiary of
Richard Wolf, GmbH) and Karl Storz Endoscopy-American Inc. (a subsidiary of Karl
Storz, GmbH), compete directly with the Company.
Industry studies show Ethicon currently has in excess of 70% of the domestic
suture market. The Company expects that, because the size of the total suture
market is relatively stable, any increase in the Company's market share in this
area will have to be earned at the expense of the other current market
participants.
There is intense competition in sales of products for use in spinal,
vascular, cardiovascular, interventional cardiology, breast biopsy, urologic,
orthopedic and oncological procedures. A broad range of companies presently
offer products or are developing products for use in such procedures. Many of
such companies have significantly greater capital than the Company and are
expected to devote substantial resources to development of newer technologies
which would be competitive with products which the Company may offer. There are
also a number of smaller companies which offer such products which present
additional competition. Competitors which are developing or offering products in
spine procedures include Spine-Tech, Inc. (recently acquired by Sulzer Medica)
and Sofamor Danek Group, Inc. Principal competitors which are developing or
offering cardiovascular, vascular and interventional cardiology products include
Johnson & Johnson's Ethicon and Cordis subsidiaries, Boston Scientific
Corporation, Medtronic, Inc., Guidant Corporation, C.R. Bard, Inc., Heartport,
Inc. and CardioThoracic Systems, Inc. Ethicon, through its acquisition of
Biopsys Medical, Inc. and its alliance with Fischer Imaging Corporation, offers
products which compete directly with the Company's ABBI System.
The market for the electrosurgical and ultrasound surgical products being
offered by the Company's recently-acquired Valleylab subsidiary is highly
competitive. Competitive pricing pressure and the introduction of new products
by competitors could have an adverse effect on Valleylab's revenues and
profitability. Competitors of Valleylab products include Minnesota Mining and
Manufacturing Company, CONMED Corporation and Erbe Electromedizin GmbH.
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The Company's principal methods of competing are the development of
innovative products, the performance and breadth of its products, its
technically trained sales force, educational services, including sponsorship of
training programs in advanced laparoscopic techniques, and more recently,
assisting hospital management with cost containment and marketing programs. Some
of the Company's major competitors have greater financial resources than the
Company. Some of its competitors, particularly Ethicon, have engaged in
substantial price discounting and other significant efforts to gain market
share, including bundled contracts for a wide variety of healthcare products
with group purchasing organizations. In the current health care environment,
cost containment has become the predominant factor in purchasing decisions by
hospitals. As a result, the Company's traditional reliance on the quality of its
products for marketing purposes has been adversely affected. Due to the
considerable competition in the industry, no assurance can be given as to the
Company's competitive position. The impact of competition will likely have a
continuing effect on sales volumes and on prices charged by the Company.
HEALTH CARE MARKET
The health care industry continues to undergo change, led primarily by
market forces which are demanding greater efficiencies and reduced costs.
Government proposed health care mandates in the United States have not occurred,
and it is unclear whether, and to what extent, any government mandate will
affect the domestic health care market. Industry led changes are expected to
continue irrespective of any governmental efforts toward health care reform. The
scope and timing of any further government sponsored proposals for health care
reform are presently unclear.
The primary trend in the industry is toward consolidation and cost
containment. Payors have been able to exercise greater influence through managed
treatment and hospitalization patterns, including a shift from reimbursement on
a cost basis to per capita limits for patient treatment. Hospitals have been
severely impacted by the resulting cost restraints. The increasing use of
managed care, centralized purchasing decisions through group purchasing
organizations, consolidations among hospitals and hospital groups, and
integration of health care providers are continuing to affect purchasing
patterns in the health care system. Purchasing decisions are often shared by a
coalition of surgeons, nursing staff, and hospital administrators, with
purchasing decisions taking into account whether a product reduces the cost of
treatment and/or attracts additional patients to a hospital. All of these
factors have contributed to reductions in prices for the Company's products, to
a reduction in the volume of hospital purchasing and, in the near term, slower
acceptance of more advanced surgical procedures in which the Company's products
are used, given hospital and surgeon concerns as to the costs of training and
reimbursement by payors. While the Company has implemented programs to assist
hospitals in cost containment through more efficient surgical practices and
application of minimally invasive surgery, there can be no assurance that the
Company will not continue to be adversely affected by these matters.
Internationally, several factors have slowed the pace of conversion from
traditional to minimally invasive procedures or acceptance of surgical
techniques that utilize the Company's products. The socialization of health care
in many developed, international countries results in surgeons and patients
having less influence on the type of care the patients receive. Cost containment
efforts by governments often slow down the process of obtaining reimbursement
for procedures that are performed with the Company's products. The Company
expects these factors to continue to impact growth in foreign countries. In
addition, the Company is experiencing pricing pressures from competition and
from cost containment efforts by health care payors in many foreign countries.
There can be no assurance as to the impact of cost containment on the
Company's future operations.
DEPENDENCE ON PATENTS AND PROPRIETARY RIGHTS; PATENT LITIGATION
The Company owns numerous United States and foreign patents and has numerous
patent applications pending. The Company also has license rights to certain
patents held by third parties. The Company
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is currently subject to claims of, and legal actions alleging, infringement by
the Company of the patent rights of others. An adverse outcome with respect to
one or more of these claims or actions or any future claims or actions could
have a material adverse effect on the Company. For a description of these legal
actions, see Item 3 (Legal Proceedings) of the Company's Annual Report on Form
10-K for the year ended December 31, 1997. In addition, there can be no
assurance that pending patent applications will result in issued patents, that
patents issued or licensed by the Company will not be challenged or circumvented
by competitors or that such patents will be found to be valid or sufficiently
broad to protect the Company's technology or provide the Company with any
competitive advantage. Third parties could also obtain patents that may require
licensing for the conduct of the Company's business.
STRINGENT GOVERNMENT REGULATION
The Company's products are subject to extensive regulation by the Federal
Food and Drug Administration ("FDA") and, in many instances, by comparable
agencies in the foreign countries in which these products are manufactured or
distributed. In particular, the Company must obtain specific clearance from the
FDA before it can market products in the United States. The process of obtaining
such clearances can be time consuming and expensive, and there can be no
assurance that all clearances sought by the Company will be granted or that FDA
review will not involve delays adversely affecting the marketing and sale of the
Company's products. In the past, the Company's stapling and endoscopic products
have been cleared by the FDA under the most expedited form of pre-market review
or have not required FDA approval. Many of the Company's new products under
development, however, may be subject to a more complex and time consuming
regulatory process. Many of these future products may require lengthy human
clinical trials and the Pre-Market Approval of the FDA relating to Class III
Medical Devices. Current FDA enforcement policy prohibits the promotion or
labeling of approved products for unapproved uses. The Company is also required
to adhere to the manufacturing, testing, control, labeling, documentation and
product surveillance requirements of the FDA. These regulations may have a
material impact on the Company's business. Laws regulating surgical products are
also in effect in many of the foreign countries where the Company does business.
The Company is now subject to uniform regulations for European Economic Area
nations which took effect on January 1, 1995 and which subject the Company to a
single regulatory scheme for all participating countries. Although the Company
has taken steps designed to comply with these new, more rigorous regulations,
including obtaining ISO 9000 certifications of its operations, there is no
assurance that these regulations will not have a material adverse effect on the
Company. Federal, state and foreign regulations regarding the manufacture and
sale of medical devices are subject to future changes. If the FDA believes that
a company is not in compliance with applicable regulations, it can institute
proceedings to detain or seize products, issue a recall, impose operating
restrictions, enjoin future violations and assess civil and criminal penalties
against the company, its officers or its employees and can recommend criminal
prosecution to the Department of Justice. Other regulatory agencies may have
similar powers. In addition, product approvals could be withdrawn due to the
failure to comply with regulatory standards or the occurrence of unforeseen
problems following initial marketing. In addition, any adverse regulatory
action, depending on its magnitude, may have a material adverse effect on the
Company.
EFFECT OF ACQUISITIONS AND ALLIANCES
The Company has implemented a strategy to expand its product lines beyond
general surgery through a program of acquisitions and alliances in a number of
surgical specialties where the Company believes market conditions and product
innovation offer substantial growth opportunities. Although the Company believes
that these areas of surgical practice offer significant opportunities for
revenue growth and profitability, considerable risks may be involved and there
can be no assurance that favorable results will be achieved. In January 1998,
the Company acquired the Valleylab division of Pfizer Inc. ("Valleylab"), the
Company's largest acquisition to date. The Company's future success is partially
dependent upon its ability effectively to integrate acquired businesses with the
Company's operations. In addition, the financial
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performance of the Company is now and will continue to be subject to various
risks associated with the acquisition of businesses, including the financial
effects associated with the integration of such businesses. There can be no
assurance that past or future acquisitions will be successfully integrated or
that any such acquisition will otherwise be successful. As part of its strategy
of expanding its product lines through a program of acquisitions and alliances,
the Company regularly engages in discussions with potential acquisition
candidates. Such acquisitions could be material in relation to the acquisitions
previously completed by the Company (including in relation to the Valleylab
acquisition). There can be no assurance that any such acquisitions will be
consummated.
RISKS RELATING TO INTERNATIONAL OPERATIONS
International sales represented approximately 47% of the Company's net sales
in 1997. As a result of its international operations, the Company is subject to
risks associated with operating in foreign countries, including devaluations and
fluctuations in currency exchange rates, imposition of limitations on
conversions of foreign currencies into dollars or remittance of dividends and
other payments by foreign subsidiaries, imposition or increase of withholding
and other taxes on remittances and other payments by foreign subsidiaries, trade
barriers, political risks, including political instability, hyperinflation in
certain foreign countries and imposition or increase of investment and other
restrictions by foreign governments. There can be no assurance that such risks
will not have a material adverse effect on the Company's business and operating
results. For a discussion of certain factors impacting the Company's growth
internationally, see "--Health Care Market."
POSSIBLE OBSOLESCENCE FROM TECHNOLOGICAL CHANGE AND NEED TO DEVELOP NEW PRODUCTS
The surgical products market is characterized by rapid product development
and technological change. The present or future products of the Company could be
rendered obsolete or uneconomical by technological advances by one or more of
the Company's current or future competitors. The Company's future success will
depend upon its ability to develop or acquire new products and technology to
remain competitive with other developers of surgical products. The Company's
business strategy emphasizes the continued development or acquisition and
commercialization of new products and the enhancement of existing products.
There can be no assurance that the Company will be able to continue to
successfully develop or acquire new products and to enhance existing products,
to manufacture these products in a commercially viable manner, to obtain
required regulatory approvals or to gain satisfactory market acceptance for such
products.
POTENTIAL PRODUCT LIABILITY
The Company's business exposes it to potential product liability risks which
are inherent in the design, manufacture and marketing of surgical products.
Manufacturing flaws, design defects or inadequate disclosure of product-related
risks with respect to products manufactured or sold by the Company could result
in an unsafe condition or injury to, or death of, the patient. The occurrence of
such a problem could result in product liability claims and/or a recall of, or
safety alert relating to, one or more of the Company's products. For example,
Surgical Dynamics, Inc. ("Surgical Dynamics"), a subsidiary of the Company,
offers spinal products, some of which are designed to be permanently implanted
in the human body. There has been substantial litigation in the spinal implant
industry in recent years and the Company faces the business risk of financial
exposure to product liability claims with respect to such products. There can be
no assurance that the Company's current product liability insurance will be
adequate or that the Company will be able to obtain insurance in the future at
satisfactory rates or in adequate amounts. Product liability claims or product
recalls in the future, regardless of their ultimate outcome, could have a
material adverse effect on the Company's business and reputation and on its
ability to attract and retain customers for its products.
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THE COMPANY
OVERVIEW
The Company is a Delaware corporation primarily engaged in developing,
manufacturing and marketing a proprietary line of technologically advanced
surgical products to hospitals throughout the world. The Company specializes in
technologies that improve patient care and lower health care costs. The Company
develops, manufactures and markets surgical staplers, laparoscopic products and
sutures and products in numerous surgical specialties including spine surgery;
vascular and cardiovascular surgery and interventional cardiology; urology; and
breastcare. The Company has also recently completed the acquisition of
Valleylab, the world's leading manufacturer and marketer of electrosurgical and
ultrasound surgical products. The Company currently operates domestically and
internationally through subsidiaries, divisions and distributors.
To respond to business conditions in the health care market, including cost
containment initiatives by health care providers and payors, the Company has
expanded its marketing efforts to meet the needs of hospital management through
cost effective pricing programs, by assisting hospitals in implementing more
efficient surgical practices and by demonstrating the favorable economics
associated with the use of the Company's products. The Company has also
implemented a strategy to expand its product lines beyond general surgery
through a program of acquisitions and alliances in a number of surgical
specialties where the Company believes market conditions and product innovation
offer substantial growth opportunities, including the following acquisitions:
Surgical Dynamics and the Smith & Nephew spinal products business (spine
surgery); Progressive Angioplasty Systems and a controlling interest in Medolas
(vascular and cardiovascular surgery and interventional cardiology); the
strategic alliance with Trex Medical and the acquisition of NeoVision
(breastcare); and the acquisition of Valleylab. In addition, the Company
continues to expand its product and technology base in its established
businesses through investment in internal research and development and
acquisition of new technologically advanced products that provide better patient
care and an effective means of reducing hospital costs.
The Company's principal executive offices are located at 150 Glover Avenue,
Norwalk, Connecticut 06856; telephone (203) 845-1000.
WOUND CLOSURE PRODUCTS
AUTO SUTURE STAPLING PRODUCTS, CLIP APPLIERS, PRODUCTS FOR MINIMALLY
INVASIVE SURGERY AND SUTURE PRODUCTS
The Company is a leading multinational developer, manufacturer and marketer
of innovative surgical wound closure products. In this category, principal
products consist of a series of surgical stapling instruments (both single use
and reusable), and single use loading units ("DLUs") for use with stapling
instruments and single use surgical clip appliers. The instruments are an
alternative to manual suturing techniques utilizing needle/suture combinations
which enable surgeons to reduce blood loss, tissue trauma and operating time
while joining internal tissue, reconstructing or sealing off organs, removing
diseased tissue, occluding blood vessels and closing skin, either with titanium,
stainless steel, or proprietary absorbable copolymer staples or with titanium,
stainless steel, or proprietary absorbable copolymer clips. Surgical stapling
also makes possible several surgical procedures which cannot be achieved with
surgical needles and suturing materials.
The Company is a leading manufacturer and marketer of specialized wound
management products designed for use in the field of minimally invasive surgery.
This surgical technique (also referred to as laparoscopic or endoscopic surgery)
requires incisions of up to one half inch in diameter through which various
procedures are performed using laparoscopic instruments and optical devices,
known as laparoscopes or endoscopes, for viewing inside the body cavity.
Laparoscopy generally provides patients with significant reductions in
post-operative hospital stay, pain, recuperative time and hospital costs, with
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improved cosmetic results, and with the ability to return to work and normal
life in a shorter time frame. The Company has developed and markets single use
surgical clip appliers and stapling instruments in a variety of sizes and
configurations designed for laparoscopic uses. The Company's products in this
area also include trocars, which provide entry ports to the body in laparoscopic
surgery, and a line of instruments which allows the surgeon to see, cut,
cauterize, clamp, retract, suction, irrigate or otherwise manipulate tissue
during a laparoscopic procedure. The Company also designs and markets
laparoscopes. Applications for minimally invasive surgery currently include
cholecystectomy (gall bladder removal), hysterectomy, hernia repair, bladder
suspension for urinary stress incontinence, anti-reflux procedures for
correction of heartburn, and various forms of bowel, stomach, gynecologic,
urologic, pediatric and thoracic (chest) surgery. The Company believes that
laparoscopy can also be used effectively in many other surgical procedures.
Sutures comprise a major portion of the wound closure market. Since most
surgical procedures which use staples also require manual suturing, the Company
considers sutures to be a natural complement to its stapling instrumentation.
The Company is continuing its expansion into this mature global market. The
Company offers a complete suture product line, including both absorbable
products and non-absorbable suture products.
SPINE SURGERY PRODUCTS
The Company, through its subsidiary Surgical Dynamics, is a leading
developer and manufacturer of spinal cages and other instrumentation for spine
surgery and instruments for arthroscopic procedures. During the latter part of
1997, Surgical Dynamics acquired Smith & Nephew's spinal product business,
including spinal instrumentation systems for cervical, thoracic and lumbar
procedures, and instruments for minimally invasive spinal surgery. The
acquisition enables Surgical Dynamics to offer spine surgeons a broader range of
products, including rigid spinal fixation systems.
VASCULAR THERAPIES
PRODUCTS FOR VASCULAR AND CARDIOVASCULAR SURGERY AND INTERVENTIONAL
CARDIOLOGY
During the latter part of 1997, the Company established Vascular Therapies,
a new division to develop and market the Company's products for vascular and
cardiovascular surgery and interventional cardiology. These products include:
(i) specialized instrumentation for use in vascular procedures, including the
Company's VCS vascular clip applier (a device which permits arteriotomies,
venotomies, and vascular anastomoses without penetration of the inner wall of
the vessel); (ii) the Company's ONE-SHOT instrument for joining small vessels,
including coronary arteries; (iii) the Company's MINI HARVEST system products,
which permit minimally invasive harvesting of the saphenous vein from a
patient's leg in connection with cardiovascular surgery; and (iv) the Company's
MINI-CABG line of instruments, which allows surgeons to operate on a beating
heart through a 3- to 4-inch incision between the ribs instead of the 12-inch
incision associated with traditional approaches and permits reduced operating
time, recuperating time and costs, and reduce risks associated with current
practices.
During the latter part of 1997, the Company acquired Progressive Angioplasty
Systems, Inc., a developer and marketer of a line of coronary stents and balloon
angioplasty catheters. In addition, the Company is continuing development of
intravascular radiation therapy, a new technology to reduce restenosis in
patients following balloon angioplasty and stenting procedures, and the
development of products for transmyocardial revascularization and percutaneous
transmyocardial revascularization (frequently known as TMR and PTMR,
respectively), promising cardiovascular surgical and interventional cardiology
procedures that are designed to create pathways for blood to reach
oxygen-starved heart tissue in patients with coronary artery problems.
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BREASTCARE PRODUCTS
The Company is continuing development of a comprehensive approach to breast
care. The Company's ABBI system incorporates a stereotactic table and the
Company's ABBI biopsy device. The ABBI biopsy device combines wire localization
with removal of a biopsy specimen. This system allows a one-step, minimally
invasive process for breast biopsy, offering the surgeon increased accuracy and
control, and helping hospitals reduce procedural and operating room costs. The
one piece larger specimen (5 mm to 20 mm in diameter) obtained by the ABBI
system aids in specimen orientation and diagnosis during pathology assessment,
and facilitates physicians' decision making for improved results. The Company
offers the stereotactic tables under a strategic alliance with Lorad, a unit of
Trex Medical Corporation and a leading manufacturer of stereotactic equipment.
The Company received FDA approval in the later part of 1997 to market its MIBB
minimally invasive breast biopsy device. MIBB permits doctors to remove multiple
tissue samples as small as 2 mm in diameter using either stereotactic x-ray (the
ABBI system) or 3-D ultrasound (the SONOPSY system) technology.
The Company's SONOPSY system incorporates a proprietary breast compression
device with an automated three-dimensional ultrasound scanner to accurately
locate and biopsy suspicious lesions using MIBB or the Company's core needle
biopsy products. The Company acquired the SONOPSY system during the latter part
of 1997 in connection with its acquisition of NeoVision Corporation, with which
it previously had a sales and marketing agreement. The Company expects to offer
multiple versions of SONOPSY, including a version that integrates ABBI and
SONOPSY so that the clinician can simultaneously image by ultrasound or x-ray
for biopsy guidance, potentially increasing the number of lesions that can
benefit from ABBI or MIBB biopsies. During the latter part of 1997, the Company
enhanced its ultrasound technology capabilities by acquiring the assets of DRS
Medical Systems, Inc., a developer and marketer of ultrasound systems for
medical applications.
In January 1998, the Company introduced its NAVIGATOR Gamma Guidance System.
The NAVIGATOR System and the Company's LYMPHAZURIN Blue Dye are principal
products designed for use by surgeons during a lymphatic mapping procedure.
Current treatment standards for many cancer patients call for an Axiallary Lymph
Node Dissection (ALND) in conjunction with resection of the primary tumor. In
this procedure, up to 25 lymph nodes are harvested in order to obtain critical
staging information. Due to the radical nature of this surgery, ALND is
associated with a high degree of post-operative morbidity. Lymphatic mapping is
a minimally invasive technique that allows the surgeon to harvest the sentinel
(primary) lymph node from the affected nodal basin through a small incision. The
NAVIGATOR System is used to track a radioactive mapping agent in the lymph node
basin while the LYMPHAZURIN is used to dye the appropriate lymph nodes blue,
thus aiding in the identification of the sentinel node. The procedure is
designed to provide a less traumatic patient staging with lower morbidity and
costs compared to the more radical ALND procedure. The lymphatic mapping
procedure is currently being utilized for staging patients who have been
diagnosed with malignant melanoma and breast cancer.
VALLEYLAB ACQUISITION
In December 1997, the Company entered into an agreement with Pfizer Inc. to
acquire Valleylab, the world's leading manufacturer of electrosurgical and
ultrasound surgical products based in Boulder, Colorado and which has been in
existence for over 30 years. The Valleylab acquisition, which is the largest
acquisition in the Company's history, was completed in early 1998.
Valleylab's products consist primarily of electrosurgical generators,
pencils, accessories, and patient return pads. In addition, Valleylab's products
include ultrasound cutting devices including generators, handpieces, tubing and
titanium tips, and laparoscopic surgical devices. Electrocautery, which has been
utilized since the 1920s, offers a safe, versatile and effective method to cut
and coagulate tissue and is utilized in a broad range of surgical applications.
Electrical current flows from the generator to the active electrode (an
electrosurgical pencil or other surgical instrument) and then through the body
tissue to the
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patient return pad where it is collected and returned to the generator.
Ultrasonic aspiration systems use a combination of mechanical vibration and
suction to selectively fragment tissue. An ultrasonic aspirator system consists
of an ultrasonic generator, a handpiece and a single-use pack containing tubing
and titanium tips. A transducer within the handpiece vibrates the hollow
titanium tip at ultrasonic frequencies while suction is applied to the tip core.
When applied to a surgical site, tissue with high water content is fragmented
and aspirated. Valleylab is currently developing several additional products
which use radio-frequency energy and are designed to improve clinical outcomes
and reduce procedure cost and duration.
The Valleylab acquisition constitutes a major milestone in the Company's
strategy to grow through acquisition. The Company believes that Valleylab offers
a major opportunity for the Company to acquire a leading medical device company
with strong brand name recognition, an established customer base and
demonstrated profitability. The Company believes that the Valleylab business
provides substantial growth opportunities principally through innovative product
upgrades, aggressive expansion of international sales through the Company's
subsidiaries and international distributor network, and through Valleylab's
substantial expertise and product development activities in women's health care
and radiofrequency energy which will complement the Company's internal product
development efforts in these areas.
OTHER PRODUCTS
The Company is continuing development of its Radio Frequency Therapy ("RFT")
system, a new technology for treating benign prostate hyperplasia ("BPH"), an
enlargement of the prostate that constricts the urethra, making urination
difficult and causing other bothersome symptoms. The most common procedure for
BPH uses electrocautery to burn away prostate tissue. Although effective, the
procedure requires general or spinal anesthesia, uncomfortable and confining
post-operative catheterization and a four to six week recovery period. The
procedure also has potentially serious side effects-- including impotence--and
costs more than $8,000.
RFT is completely automated and uses radio waves and a flexible scope, which
most surgeons already own. The Company's system, combined with the scope, is
designed to allow surgeons to perform the procedure in their offices using only
local anesthesia and with shorter operating time. Patients should not require
postoperative catheterization and should be able to resume normal activities in
a few days. The RFT system will not only be better for the patient, but will
offer the first truly cost-effective minimally invasive approach to BPH. It will
be available outside the United States during the first half of 1998.
The Company maintains an alliance with V.I. Technologies, Inc. and has
obtained exclusive worldwide rights to market V.I. Technologies' human fibrin
glue for wound healing applications. The product is a tissue adhesive, treated
by a unique method to address viral transmission concerns, and is intended to be
used during surgical procedures to augment or replace sutures or staples for
wound closure. The Company also owns approximately 9% of the outstanding shares
of Alexion Pharmaceuticals, Inc. which is traded on the Nasdaq System. The
Company maintains an alliance with Alexion with respect to worldwide
manufacturing and marketing rights to market Alexion's transgenetically
engineered non-human cells, tissues and organs. The Company has certain options
to fund Alexion's future research and development and pay royalties on any
resulting product sales. During the latter part of 1997, the Company purchased
additional equity, exclusive licensing rights and certain xenograft
manufacturing assets from Alexion.
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RATIOS OF EARNINGS TO FIXED CHARGES AND OF
EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth the Company's ratios of consolidated earnings
to fixed charges and consolidated earnings to combined fixed charges and
preferred stock dividends for the periods indicated.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
<S> <C> <C> <C> <C> <C>
1997 1996 1995 1994 1993
--------- --------- --------- --------- ---------
Ratio of earnings to fixed charges and capitalized interest (1).......... 6.4 6.2 3.7 2.0 N.M.(2)
Ratio of earnings to combined fixed charges, capitalized interest and
preferred stock dividends (1).......................................... 4.9 3.0 1.9 1.2
</TABLE>
- ------------------------
(1) The ratios of earnings to fixed charges and capitalized interest and to
combined fixed charges, capitalized interest and preferred stock dividends
are computed by dividing the sum of earnings before provision for income
taxes and fixed charges (excluding capitalized interest) by total fixed
charges and capitalized interest, or by the sum of total fixed charges and
capitalized interest and preferred stock dividends. Total fixed charges and
capitalized interest includes all interest (including capitalized interest)
and the interest factor of all rentals, assumed to be one-third of
consolidated rent expense. Preferred stock dividends have been increased to
an amount representing the pretax earnings which would be required to cover
such dividend requirements, assuming a statutory tax rate of 35%.
(2) Earnings were inadequate to cover fixed charges. The dollar amount of the
deficiency for the year ended December 31, 1993 was $147 million. If
restructuring charges of $138 million were excluded from the calculation,
the dollar amount of the deficiency would have been $9 million.
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the
Securities offered hereby will be used for general corporate purposes, including
possible acquisitions of technologies or the stock or assets of other companies,
repurchase of shares of the Company's Common Stock, retirement of short-term or
long-term indebtedness, or expenditures for property, plant and equipment, or
for such other uses as may be set forth in a prospectus supplement.
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DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and provisions of
the Debt Securities to which any Prospectus Supplement may relate. The
particular terms of the Debt Securities offered by any Prospectus Supplement and
the extent, if any, to which such general provisions may not apply to the Debt
Securities so offered will be described in the Prospectus Supplement relating to
such Debt Securities.
The Senior Debt Securities will be issued under an Indenture (the "Senior
Indenture"), to be entered into between the Company and The Bank of New York, as
trustee. The Subordinated Debt Securities will be issued under a separate
Indenture (the "Subordinated Indenture"), to be entered into between the Company
and The Bank of New York, as trustee. The Senior Indenture and the Subordinated
Indenture are sometimes referred to collectively as the "Indentures." Copies of
the forms of the Senior Indenture and the Subordinated Indenture have been filed
as exhibits to the Registration Statement. The trustee under the Senior
Indenture and under the Subordinated Indenture is referred to herein as the
"Trustee."
The following summaries of certain provisions of the Senior Debt Securities,
the Subordinated Debt Securities and the Indentures do not purport to be
complete and are subject to, and qualified in their entirety by reference to,
all the provisions of the Indenture applicable to a particular series of Debt
Securities, including the definitions therein of certain terms. Wherever
particular Sections, Articles or defined terms of the Indentures are referred to
herein or in a Prospectus Supplement, it is intended that such Sections,
Articles or defined terms shall be incorporated by reference herein or therein,
as the case may be. Section and Article references used herein are references to
the applicable Indenture. Except as otherwise indicated, the terms of the Senior
Indenture and the Subordinated Indenture are identical. Capitalized terms not
otherwise defined herein shall have the meanings given to them in the applicable
Indenture.
GENERAL
The Indentures will not limit the aggregate principal amount of Debt
Securities which may be issued thereunder, and each Indenture provides that Debt
Securities may be issued thereunder from time to time in one or more series up
to the aggregate amount from time to time authorized by the Company for each
series. (Section 3.1) Unless otherwise specified in the Prospectus Supplement,
the Senior Debt Securities when issued will be unsecured and unsubordinated
obligations of the Company and will rank equally and ratably with all other
unsecured and unsubordinated indebtedness of the Company. The Subordinated Debt
Securities when issued will be unsecured obligations of the Company,
subordinated in right of payment to the prior payment in full of all Senior Debt
(as defined in the Subordinated Indenture) of the Company as described in the
applicable Prospectus Supplement. (Section 15.1 of the Subordinated Indenture)
Reference is made to the Prospectus Supplement relating to the particular
series of Debt Securities offered thereby for a description of the following
terms or additional provisions of the Debt Securities: (1) the title of the Debt
Securities; (2) whether the Debt Securities are Senior Debt Securities or
Subordinated Debt Securities; (3) any limit on the aggregate principal amount of
the Debt Securities; (4) whether the Debt Securities are to be issuable as
Registered Securities or Bearer Securities or both, whether any of the Debt
Securities shall be issuable in whole or in part in temporary or permanent
global form or in the form of Book-Entry Securities and, if so, the
circumstances under which any such global securities or Book-Entry Securities
may be exchanged for Debt Securities registered in the name of, and any transfer
of such global or Book-Entry Securities may be registered in the name of, a
Person other than the depositary for such temporary or permanent global
securities or Book-Entry Securities or its nominee; (5) the price or prices
(expressed as a percentage of the aggregate principal amount thereof) at which
the Debt Securities will be issued; (6) the date or dates on which the Debt
Securities will mature; (7) the rate or rates per annum at which the Debt
Securities will bear interest, if any, and the date from which any such interest
will accrue; (8) the Interest Payment Dates on which any such interest on the
Debt Securities will be payable,
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the Regular Record Date for any interest payable on any Debt Securities which
are Registered Securities on any Interest Payment Date and the extent to which,
or the manner in which, any interest payable on a temporary global Security on
an Interest Payment Date will be paid; (9) any mandatory or optional sinking
fund or analogous provisions; (10) each office or agency where, subject to the
terms of the applicable Indenture as described below under "Payment and Paying
Agents," the principal of and any premium and interest on the Debt Securities
will be payable and each office or agency where, subject to the terms of the
applicable Indenture as described below under "Form, Exchange, Registration and
Transfer," the Debt Securities may be presented for registration of transfer or
exchange; (11) the date, if any, after which and the price or prices at which
the Debt Securities may, pursuant to any optional or mandatory redemption
provisions, be redeemed, in whole or in part, and the other detailed terms and
provisions of any such optional or mandatory redemption provisions, which may
include with respect to a particular series or particular Debt Securities within
a series, redemption at the option of Holders upon certain conditions; (12) the
denominations in which any Debt Securities which are Registered Securities will
be issuable, if other than denominations of $1,000 and any integral multiple
thereof, and the denomination or denominations in which any Debt Securities
which are Bearer Securities will be issuable, if other than the denomination of
$5,000; (13) the currency or currency units of payment of the principal of (and
premium, if any) and interest on the Debt Securities; (14) any index used to
determine the amount of payments of the principal of (and premium, if any) and
interest on the Debt Securities and the manner in which such amounts shall be
determined; (15) the terms and conditions, if any, pursuant to which such Debt
Securities are convertible or exchangeable into a security or securities of the
Company; (16) the terms pursuant to which such Debt Securities are subject to
defeasance; and (17) any other terms of the Debt Securities not inconsistent
with the provisions of the applicable Indenture. Any such Prospectus Supplement
will also describe any special provisions for the payment of additional amounts
with respect to the Debt Securities. Debt Securities may also be issued under
the Indenture upon the exercise of Warrants. See "Description of Warrants."
Debt Securities may be issued as Original Issue Discount Securities. An
Original Issue Discount Security is a Debt Security, including any zero-coupon
security, which is issued at a price lower than the amount payable upon the
Stated Maturity thereof and which provides that upon redemption or acceleration
of the maturity, an amount less than the amount payable upon the Stated
Maturity, determined in accordance with the terms of such Debt Security, shall
become due and payable. Certain special United States federal income tax
considerations applicable to Debt Securities sold at an original issue discount
will be described in the Prospectus Supplement relating thereto. In addition,
certain special United States federal income tax or other considerations
applicable to any Debt Securities which are denominated in a currency or
currency unit other than United States dollars may be described in the
applicable Prospectus Supplement relating thereto.
FORM, EXCHANGE, REGISTRATION AND TRANSFER
Debt Securities of a series may be issuable in definitive form solely as
Registered Securities, solely as Bearer Securities or as both Registered
Securities and Bearer Securities. (Section 3.1) Unless otherwise indicated in an
applicable Prospectus Supplement, Bearer Securities will have interest coupons
attached. (Section 2.1) The Indentures also will provide that Debt Securities of
a series may be issuable in temporary or permanent global form and may be issued
as Book-Entry Securities that will be deposited with, or on behalf of, The
Depository Trust Company ("DTC") or another depositary named by the Company and
identified in a Prospectus Supplement with respect to such series. See "Global
and Book-Entry Debt Securities."
In connection with its original issuance, no Bearer Security (including a
Debt Security exchangeable for a Bearer Security or a Debt Security in global
form that is either a Bearer Security or exchangeable for Bearer Securities)
shall be mailed or otherwise delivered to any location in the United States (as
defined under "Limitations on Issuance of Bearer Securities") and a Bearer
Security may be delivered in
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connection with its original issuance only if the Person entitled to receive
such Bearer Security furnishes written certification of the beneficial ownership
of the Bearer Security as required by Treasury Regulation Section
1.163-5(c)(2)(i)(D)(3) (or any comparable successor provisions). In the case of
a Bearer Security in permanent global form, such certification must be given in
connection with notation of a beneficial owner's interest therein in connection
with the original issuance of such Debt Security. See "Global and Book-Entry
Debt Securities" and "Limitations on Issuance of Bearer Securities."
Registered Securities of any series will be exchangeable for other
Registered Securities of the same series of any authorized denominations and of
a like aggregate principal amount and tenor. In addition, if Debt Securities of
any series are issuable as both Registered Securities and Bearer Securities, at
the option of the Holder upon request confirmed in writing, and subject to the
terms of the applicable Indenture, Bearer Securities (with all unmatured
coupons, except as provided below, and all matured coupons in default) of such
series will be exchangeable into Registered Securities of the same series of any
authorized denominations and of a like aggregate principal amount and tenor.
Bearer Securities surrendered in exchange for Registered Securities between a
Regular Record Date or a Special Record Date and the relevant date for payment
of interest shall be surrendered without the coupon relating to such date for
payment of interest and interest accrued as of such date will not be payable in
respect of the Registered Security issued in exchange for such Bearer Security,
but will be payable only to the Holder of such coupon when due in accordance
with the terms of the applicable Indenture. Registered Securities may not be
exchanged for Bearer Securities. (Section 3.5) Each Bearer Security, and any
coupon attached thereto, other than a temporary global Bearer Security will bear
the following legend: "Any United States person who holds this obligation will
be subject to limitations under the United States income tax laws, including the
limitations provided in Sections 165(j) and 1287(a) of the Internal Revenue
Code." A Book-Entry Security may not be registered for transfer or exchange
(other than as a whole by DTC to a nominee or by such nominee to such DTC)
unless DTC or such nominee notifies the Company that it is unwilling or unable
to continue as depositary or DTC ceases to be qualified as required by the
applicable Indenture or the Company instructs the Trustee in accordance with the
applicable Indenture that such Book-Entry Securities shall be so registrable and
exchangeable or there shall have occurred and be continuing an Event of Default
or an event which after notice or lapse of time would be an Event of Default
with respect to the Debt Securities evidenced by such Book-Entry Securities or
there shall exist such other circumstances, if any, as may be specified in the
applicable Prospectus Supplement.
Debt Securities may be presented for exchange as provided above, and
Registered Securities may be presented or surrendered for registration of
transfer or for exchange (with the form of transfer endorsed thereon duly
executed), at the office of the Security Registrar or at the office of any
transfer agent designated by the Company for such purpose with respect to any
series of Debt Securities and referred to in an applicable Prospectus
Supplement, without service charge and upon payment of any taxes and other
governmental charges as described in the applicable Indenture. Such transfer or
exchange will be effected upon the Security Registrar or such transfer agent, as
the case may be, being satisfied with the documents of title and identity of the
person making the request. (Section 3.5) If a Prospectus Supplement refers to
any transfer agents (in addition to the Security Registrar) initially designated
by the Company with respect to any series of Debt Securities, the Company may at
any time rescind the designation of any such transfer agent or approve a change
in the location through which any such transfer agent acts, except that, if Debt
Securities of a series are issuable solely as Registered Securities, the Company
will be required to maintain a transfer agent in each Place of Payment for such
series and, if Debt Securities of a series are issuable as Bearer Securities,
the Company will be required to maintain (in addition to the Security Registrar)
a transfer agent in a Place of Payment for such series located outside the
United States. The Company may at any time designate additional transfer agents
with respect to any series of Debt Securities. (Section 10.2)
In the event of any redemption in part, the Company shall not be required to
(i) issue, register the transfer of or exchange Debt Securities of any series
during a period beginning at the opening of business 15 days before the mailing
of a notice of redemption of Debt Securities of that series to be redeemed and
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ending at the close of business on (A) if Debt Securities of the series are
issuable only as Registered Securities, the day of mailing of the relevant
notice of redemption and (B) if Debt Securities of the series are issuable as
Bearer Securities, the day of the first publication of the relevant notice of
redemption or, if Debt Securities of the series are also issuable as Registered
Securities and there is no publication, the mailing of the relevant notice of
redemption; (ii) register the transfer of or exchange any Registered Security
being redeemed in part, except the unredeemed portion of any Registered Security
being redeemed in part; or (iii) exchange any Bearer Security so selected for
redemption, except that such Bearer Security may be exchanged for a Registered
Security of that series and like tenor, provided, that such Registered Security
shall be simultaneously surrendered for redemption. (Section 3.5)
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of the principal of (and premium, if any) and interest on Bearer Securities will
be payable, subject to any applicable laws and regulations, at the offices of
such Paying Agents outside the United States as the Company may designate from
time to time, at the option of the Holder, by check or by transfer to an account
maintained by the payee with a bank located outside the United States. Unless
otherwise indicated in an applicable Prospectus Supplement, payment of interest
on Bearer Securities on any Interest Payment Date will be made only against
surrender to the Paying Agent of such coupon relating to such Interest Payment
Date. (Section 10.1) No payment with respect to any Bearer Security will be made
at any office or agency of the Company in the United States or by check mailed
to any address in the United States or by transfer to an account maintained with
a bank located in the United States. Notwithstanding the foregoing, payments of
the principal of (and premium, if any) and interest on Bearer Securities
denominated and payable in U.S. dollars will be made at the office of the
Company's Paying Agent in the Borough of Manhattan, The City of New York, if
(but only if) payment of the full amount thereof in U.S. dollars at all offices
or agencies outside the United States is illegal or effectively precluded by
exchange controls or other similar restrictions. (Section 10.2)
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of the principal of (and premium, if any) and interest on Registered Securities
will be made at the office of such Paying Agent or Paying Agents as the Company
may designate from time to time, except that payment of any interest may be made
at the option of the Company by check mailed to the address of the person
entitled thereto as such address shall appear in the Security Register or, if so
provided in the applicable Prospectus Supplement, at the option of the Holder by
wire transfer to an account designated by the Holder. Unless otherwise indicated
in an applicable Prospectus Supplement, payment of any installment of interest
on Registered Securities will be made to the Person in whose name such
Registered Security is registered at the close of business on the Regular Record
Date for such interest. (Section 3.7)
Unless otherwise indicated in an applicable Prospectus Supplement, the
Corporate Trust Office of the Trustee in The City of New York will be designated
as a Paying Agent for the Company for payments with respect to Debt Securities
that are issuable solely as Registered Securities and the Company will maintain
a Paying Agent outside of the United States for payments with respect to Debt
Securities (subject to the limitations described above in the case of Bearer
Securities) that are issuable solely as Bearer Securities or both Registered
Securities and Bearer Securities. (Section 10.2) Any Paying Agents outside the
United States and any other Paying Agent in the United States initially
designated by the Company for the Debt Securities will be named in an applicable
Prospectus Supplement. The Company may at any time designate additional Paying
Agents or rescind the designation of any Paying Agent or approve a change in the
office through which any Paying Agent acts, except that, if Debt Securities of a
series are issuable solely as Registered Securities, the Company will be
required to maintain a Paying Agent in each Place of Payment for such series
and, if Debt Securities of a series are issuable as Bearer Securities, the
Company will be required to maintain (i) a Paying Agent in the Borough of
Manhattan, The City of New York for payments with respect to any Registered
Securities of the series (and for payments with respect to Bearer Securities
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of the series in the circumstances described above, but not otherwise), and (ii)
a Paying Agent in a Place of Payment located outside the United States where
Debt Securities of such series and any coupons appertaining thereto may be
presented and surrendered for payment; provided that if the Debt Securities of
such series are listed on The Stock Exchange of the United Kingdom and the
Republic of Ireland or the Luxembourg Stock Exchange or any other stock exchange
located outside the United States and such stock exchange shall so require, the
Company will maintain a Paying Agent in London or Luxembourg or any other
required city located outside the United States, as the case may be, for the
Debt Securities of such series. (Section 10.2)
Payments of the principal of (and premium, if any) and interest on
Book-Entry Securities registered in the name of any depositary or its nominee
will be made to the depositary or its nominee, as the case may be, as the
registered owner of the global security representing such Book-Entry Securities.
The Company expects that the depositary, upon receipt of any payment of the
principal of (and premium, if any) or interest, will credit immediately
participants' accounts with payments in amounts proportionate to their
respective beneficial interests as shown on the records of such depositary or
its nominee. Neither the Company, the Trustee, any Paying Agent nor the
Securities Registrar for such Debt Securities will have any responsibility or
liability for any aspects of the records relating to, or payments made on
account of, such beneficial ownership interests in the Book-Entry Securities or
for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
All moneys paid by the Company to a Paying Agent for the payment of the
principal of (and premium, if any) or interest on any Debt Securities which
remain unclaimed at the end of two years after such principal, premium or
interest shall have become due and payable will be repaid to the Company and the
Holder of such Debt Security or any coupon will thereafter, as an unsecured
general creditor, look only to the Company for payment thereof. (Section 10.3)
GLOBAL AND BOOK-ENTRY DEBT SECURITIES
If so specified in an applicable Prospectus Supplement, the portion of the
Debt Securities of a series that are issuable as Bearer Securities will
initially be represented by one or more temporary or permanent global Debt
Securities, without interest coupons, to be deposited with a common depositary
in London for the benefit of Euro-clear System ("Euro-clear") and CEDEL Bank,
SOCIETE ANONYME ("CEDEL") for credit to the respective accounts of the
beneficial owners of such Debt Securities (or to such other accounts as they may
direct). (Section 3.4) Unless otherwise indicated by an applicable Prospectus
Supplement, on or after 40 days following its issuance, each such temporary
global Debt Security will be exchangeable for definitive Bearer Securities,
definitive Registered Securities or all or a portion of a permanent global Debt
Security, or any combination thereof, as specified in an applicable Prospectus
Supplement, only upon written certification in the form and to the effect
described under "Form, Exchange, Registration and Transfer." No Bearer Security
(including a Debt Security in permanent global form) delivered in exchange for a
portion of a temporary or permanent global Debt Security shall be mailed or
otherwise delivered to any location in the United States in connection with such
exchange. (Section 3.5)
A person having a beneficial interest in a permanent global Debt Security
will, except with respect to payment of the principal of (and premium, if any)
and interest on such permanent global Debt Security, be treated as a Holder of
such principal amount of Outstanding Debt Securities represented by such
permanent global Debt Security as shall be specified in a written statement of
the Holder of such permanent global Debt Security or, in the case of a permanent
global Debt Security in bearer form, of the operator of Euro-clear or CEDEL
which is provided to the Trustee by such Person. (Section 2.3)
If Debt Securities to be sold in the United States are designated by the
Company in a Prospectus Supplement as Book-Entry Securities, a global security
representing the Book-Entry Securities will be deposited in the name of Cede &
Co., as nominee for DTC representing the securities to be sold in the
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United States. Upon such deposit of the Book-Entry Securities, DTC shall credit
an account maintained or designated by an institution to be named by the Company
or any purchaser of the Debt Securities represented by the Book-Entry Securities
with an aggregate amount of Debt Securities equal to the total number of Debt
Securities that have been so purchased. The specific terms of any depositary
arrangement with respect to any portion of a series of Debt Securities to be
represented by one or more global securities will be described in the applicable
Prospectus Supplement. Beneficial interests in such Book-Entry Securities will
only be evidenced by, and transfers thereof will only be effected through,
records maintained by DTC and the institutions that are DTC participants.
SUBORDINATION OF SUBORDINATED DEBT SECURITIES
Unless otherwise indicated in the Prospectus Supplement, the following
provisions will apply to the Subordinated Debt Securities.
The Subordinated Debt Securities will, to the extent set forth in the
Subordinated Indenture, be subordinate in right of payment to the prior payment
in full of all Senior Debt. (Section 15.1 of the Subordinated Indenture) In the
event of (a) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or proceeding in
connection therewith, relative to the Company or to its creditors, as such, or
to its assets, or (b) any liquidation, dissolution or other winding up of the
Company, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy, or (c) any assignment for the benefit of creditors or
any other marshaling of assets and liabilities of the Company, then and in any
such event the holders of Senior Debt shall be entitled to receive payment in
full of all amounts due or to become due on or in respect of all Senior Debt, or
provision shall be made for such payment in cash, before the Holders of
Subordinated Debt Securities are entitled to receive any payment on account of
principal of (or premium, if any) or interest on Subordinated Debt Securities,
and to that end the holders of Senior Debt shall be entitled to receive, for
application to the payment thereof, any payment or distribution of any kind or
character, whether in cash, property or securities, including any such payment
or distribution which may be payable or deliverable by reason of the payment of
any other indebtedness of the Company being subordinated to the payment of
Subordinated Debt Securities, which may be payable or deliverable in respect of
the Subordinated Debt Securities in any such case, proceeding, dissolution,
liquidation or other winding up event. (Section 15.2 of the Subordinated
Indenture)
By reason of such subordination, in the event of liquidation or insolvency,
creditors of the Company who are Holders of Senior Debt may recover more,
ratably, than the Holders of Subordinated Debt Securities, and creditors who are
not Holders of Senior Debt may recover less, ratably, than Holders of Senior
Debt and may recover more, ratably, than the Holders of the Subordinated Debt
Securities.
In the event of the acceleration of the maturity of any Subordinated Debt
Securities, the Holders of all Senior Debt outstanding at the time of such
acceleration will first be entitled to receive payment in full of all amounts
due thereon before the Holders of the Subordinated Debt Securities will be
entitled to receive any payment upon the principal of (and premium, if any) or
interest on the Subordinated Debt Securities. (Section 15.3 of the Subordinated
Indenture)
No payments on account of the principal of (and premium, if any) or interest
in respect of the Subordinated Debt Securities may be made if there shall have
occurred and be continuing a default in any payment with respect to Senior Debt,
or an event of default with respect to any Senior Debt resulting in the
acceleration of the maturity thereof, or if any judicial proceeding shall be
pending with respect to any such default. (Section 15.4 of the Subordinated
Indenture) For purposes of the subordination provisions, the payment, issuance
and delivery of cash, property or securities (other than stock and certain
subordinated securities of the Company) upon conversion of a Subordinated Debt
Security will be deemed to constitute payment on account of the principal of
such Subordinated Debt Security. (Section 15.15 of the Subordinated Indenture)
The Subordinated Indenture does not limit or prohibit the incurrence of
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additional Senior Debt, which may include indebtedness that is senior to the
Subordinated Debt Securities, but subordinate to other obligations of the
Company. The Senior Debt Securities constitute Senior Debt under the
Subordinated Indenture.
"Senior Debt" is defined to include the principal of (and premium, if any)
and interest (including interest accrued on or after the filing of any petition
in bankruptcy or for reorganization relating to the Company whether or not such
claim for post-petition interest is allowed in such proceeding) on all
indebtedness of the Company (including, without limitation, indebtedness
incurred pursuant to any long-term credit arrangement or facility (or any
refinancing thereof) to which the Company is a party and indebtedness of others
guaranteed by the Company), other than the Subordinated Debt Securities, whether
outstanding on the date of the Subordinated Indenture or thereafter created,
incurred or assumed, which is (i) for money borrowed, (ii) evidenced by a note
or similar instrument given in connection with the acquisition of any
businesses, properties or assets of any kind, (iii) obligations of the Company
for rent and other amounts payable in respect of the Company's leased facilities
located at North Haven, Connecticut (the "North Haven Facilities") under a lease
agreement and participation agreement, each dated January 14, 1993, as amended
from time to time, to the extent such obligations equal principal and interest
payable to holders of notes from time to time issued by the lessor of the North
Haven Facilities pursuant to a trust indenture dated as of January 14, 1993, as
amended from time to time, or (iv) obligations of the Company as lessee under
leases required to be capitalized on the balance sheet of the lessee under
generally accepted accounting principles or leases of property or assets made as
part of any sale and leaseback transaction to which the Company is a party,
including amendments, renewals, extensions, modifications and refundings of any
such indebtedness or obligation, unless in any case the instrument creating or
evidencing any such indebtedness or obligation or pursuant to which the same is
outstanding provides that such indebtedness or obligation is not superior in
right of payment to the Subordinated Debt Securities; provided however, Senior
Debt will not include (1) any obligation of the Company to any Subsidiary, (2)
any liability for Federal, state, local or other taxes owed or owing by the
Company, (3) any accounts payable or other liability to trade creditors arising
in the ordinary course of business (including guarantees thereof or instruments
evidencing such liabilities), (4) any obligations with respect to any capital
stock of the Company or (5) any indebtedness incurred in violation of the
applicable Indenture. (Section 1.1 of the Subordinated Indenture) The Prospectus
Supplement may further describe the provisions, if any, applicable to the
subordination of the Subordinated Debt Securities of a particular series.
CONVERSION OR EXCHANGE RIGHTS
The terms on which Debt Securities of any series are convertible into or
exchangeable for Common Stock or other securities of the Company will be set
forth in the Prospectus Supplement relating thereto. Such terms will include
provisions as to whether conversion or exchange is mandatory, at the option of
the Holder or at the option of the Company, and may include provisions pursuant
to which the number of shares of Common Stock or other securities of the Company
to be received by the Holders of Debt Securities would be subject to adjustment.
(Section 3.1 and Article XIV)
COVENANTS
LIMITATIONS ON LIENS
Unless otherwise provided in the applicable Prospectus Supplement, pursuant
to the Senior Indenture the Company will covenant not to create, assume or
suffer to exist any Lien on any Restricted Property to secure any indebtedness
for money borrowed of the Company, any Subsidiary or any other Person, or permit
any Subsidiary so to do, without securing the Senior Debt Securities of any
series having the benefit of the "Limitation on Liens" covenant by such Lien
equally and ratably with such indebtedness for so long as such indebtedness
shall be so secured, subject to the following exceptions: (i) with respect to
any series
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of Senior Debt Securities, any Lien existing on the date of issuance of such
series; (ii) any Lien existing on property owned or leased by a corporation at
the time it becomes a Subsidiary; (iii) any Lien existing on property at the
time of the acquisition thereof by the Company or any Subsidiary; (iv) any Lien
to secure any indebtedness incurred prior to, at the time of, or within 12
months after the acquisition of Restricted Property for the purpose of financing
all or any part of the purchase price thereof and any Lien to the extent that it
secures indebtedness which is in excess of the purchase price and for the
payment of which recourse may be had only against such Restricted Property; (v)
any Lien to secure any indebtedness incurred prior to, at the time of, or within
12 months after the completion of the construction, alteration, repair or
improvement of Restricted Property for the purpose of financing all or any part
of the cost thereof and any Lien to the extent that it secures indebtedness
which is in excess of such cost and for the payment of which recourse may be had
only against such Restricted Property; (vi) any Lien securing indebtedness of a
Subsidiary owing to the Company or to another Subsidiary of the Company; (vii)
any Liens securing industrial development, pollution control, or similar revenue
bonds or indebtedness issued by or guaranteed by the United States of America,
any State thereof or any other country or any department, agency or
instrumentality thereof; (viii) Liens resulting from the deposit of funds or
evidences of indebtedness in trust for the purpose of defeasing indebtedness of
the Company or any of its Subsidiaries; (ix) Liens securing Hedging Obligations;
(x) any extension, renewal or replacement (or successive extensions, renewals or
replacements) in whole or in part of any Lien referred to in clauses (i) through
(ix) above, so long as the Lien as so extended, renewed or replaced is limited
to the same property or properties subject to the Lien so extended, renewed or
replaced (plus improvements and additions on such property or properties); and
(xi) any Lien not permitted by the foregoing clauses (i) through (x) securing
indebtedness, if the outstanding principal amount of such indebtedness, together
with the aggregate outstanding principal amount of all other indebtedness of the
Company and its Subsidiaries owning Restricted Property which would otherwise be
subject to the foregoing restrictions and the aggregate Value of existing Sale
and Leaseback Transactions which would be subject to the restrictions of the
covenant described in the "Limitation on Sale and Leaseback Transactions"
covenant but for this clause (xi), does not exceed 10.0% of Consolidated Net
Tangible Assets at the time such Lien is incurred. (Section 10.7)
LIMITATION ON SALE AND LEASEBACK TRANSACTIONS
Unless otherwise provided in the applicable Prospectus Supplement, pursuant
to the Senior Indenture the Company will covenant not to, and not to permit any
Subsidiary to, enter into any Sale and Leaseback Transaction covering any
Restricted Property unless (a) the Company or such Subsidiary would be entitled
under the provisions described under "Limitations on Liens" above to incur
indebtedness, in a principal amount at least equal to the Value of such Sale and
Leaseback Transaction, secured by Liens on the property to be leased, without
equally and ratably securing the Debt Securities, or (b) the Company, during the
six months following the effective date of such Sale and Leaseback Transaction,
applies an amount equal to the Value of such Sale and Leaseback Transaction to
the voluntary retirement of Funded Debt (whether by redemption, defeasance,
repurchase or otherwise) or to the acquisition of Restricted Property. (Section
10.8)
LIMITATION ON SUBSIDIARY INDEBTEDNESS
Unless otherwise provided in the applicable Prospectus Supplement, pursuant
to the Senior Indenture, the Company will covenant not to permit any Subsidiary
to incur any indebtedness for borrowed money, other than indebtedness to the
Company or another Subsidiary, if after giving effect to the incurrence of such
indebtedness and the application of the proceeds thereof, the Subsidiaries would
have outstanding indebtedness for borrowed money, other than indebtedness to the
Company or another Subsidiary, in an aggregate amount in excess of 10% of the
total amount of assets (less applicable reserves and other properly deductible
items), as set forth on or included in the most recent balance sheet of the
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Company and its consolidated Subsidiaries and determined in accordance with
generally accepted accounting principles; PROVIDED, HOWEVER, that if and for so
long as the Notes are assigned a rating of Baa1 (or the equivalent) or higher by
Moody's Investors Service, Inc. or its successors ("Moody's") and a rating of
BBB+ (or the equivalent) or higher by Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc. or its successors ("S&P"), such
limitation shall cease to be applicable; PROVIDED, FURTHER, that in the event
Moody's or S&P is no longer in existence or issuing ratings, for purposes of
determining whether such limitation shall be applicable, such organization may
be replaced by a nationally recognized statistical rating organization (as
defined in Rule 436 under the Securities Act) designated by the Company with
notice to the Trustee and the provisions of such limitation shall apply to the
rating issued by such replacement rating agency.
CERTAIN DEFINITIONS
"CONSOLIDATED NET TANGIBLE ASSETS" means the total amount of assets (less
applicable reserves and other properly deductible items) after deducting (1) all
current liabilities (excluding the amount of those which are by their terms
extendable or renewable at the option of the obligor to a date more than 12
months after the date as of which the amount is being determined) and (2) all
intangible assets other than patents, patent applications pending and licenses,
all as set forth on or included in the most recent balance sheet of the Company
and its consolidated Subsidiaries and determined in accordance with generally
accepted accounting principles.
"FUNDED DEBT" means indebtedness of the Company or a Subsidiary owning
Restricted Property maturing by its terms more than one year after its creation
and indebtedness classified as long-term debt under generally accepted
accounting principles and in each case ranking at least PARI PASSU with the
outstanding Senior Debt Securities. The foregoing notwithstanding, "Funded Debt"
shall also include indebtedness incurred pursuant to that certain Credit
Agreement dated as of January 30, 1998 among the Company, the lenders party
thereto, Bank of America National Trust and Savings Association, as Syndication
Agent, The Bank of New York, as Administrative Agent, and Morgan Guaranty Trust
Company of New York, as Documentation Agent.
"HEDGING OBLIGATION" of any Person means an obligation of such Person
pursuant to any rate swap transaction, basis swap, forward rate transaction,
commodity swap, commodity option, equity or equity index swap, equity or equity
index option, bond option, interest rate option, foreign exchange transaction,
cap transaction, floor transaction, collar transaction, currency swap
transaction, cross-currency rate swap transaction, currency option or any other
similar transaction (including any option with respect to any of the foregoing
transactions) or any combination of the foregoing transactions.
"LIEN" means any mortgage, pledge, lien, encumbrance, charge or security
interest.
"RESTRICTED PROPERTY" means (1) any manufacturing facility, or portion
thereof, owned or leased by the Company or any Subsidiary which, in the opinion
of the Board of Directors, is of material importance to the business of the
Company and its Subsidiaries taken as whole, but no such manufacturing facility,
or portion thereof, shall be deemed of material importance if its gross book
value (before deducting accumulated depreciation) is less than 5% of
Consolidated Net Tangible Assets, or (2) any shares of capital stock or
indebtedness of any Subsidiary owning any such manufacturing facility. As used
in this definition, "manufacturing facility" means any real property (or portion
thereof) used for actual commercial scale manufacturing and excludes, without
limitation, sales offices, research facilities, pilot production facilities, and
any facility (or portion thereof) used primarily for warehousing or general
administration.
"SALE AND LEASEBACK TRANSACTION" means any arrangement with any Person
pursuant to which the Company or any Subsidiary leases any Restricted Property
that has been or is to be sold or transferred by the Company or the Subsidiary
to such Person, other than (1) temporary leases for a term, including renewals
at the option of the lessee, of not more than five years, (2) leases between the
Company and a
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Subsidiary or between Subsidiaries, and (3) leases of a Restricted Property
executed by the time of, or within 12 months after the latest of, the
acquisition, the completion of construction or improvement, or the commencement
of commercial operation of the Restricted Property.
"SUBSIDIARY" of any Person means (i) any Person of which more than 50% of
the total voting power of shares of capital stock entitled (without regard to
the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by any Person or one or more of the Subsidiaries of that Person or a
combination thereof, and (ii) any partnership, joint venture or other Person in
which such Person or one or more of the Subsidiaries of that Person or a
combination thereof has the power to control by contract or otherwise the board
of directors or equivalent governing body or otherwise controls such entity.
"VALUE" means, with respect to a Sale and Leaseback Transaction, an amount
equal to the present value of the lease payments with respect to the term of the
lease remaining on the date as of which the amount is being determined, without
regard to any renewal or extension options contained in the lease, discounted at
the weighted average interest rate on the Senior Debt Securities of all series
(including the effective interest rate on any Original Issue Discount
Securities) which are outstanding on the effective date of such Sale and
Leaseback Transaction and which have the benefit of the "Limitation on Sale and
Leaseback Transactions" covenant above.
Unless so specified in the Prospectus Supplement, the applicable Securities
and the Indentures will not provide for any restrictive covenants that would
afford holders of the Debt Securities protection in the event of a highly
leveraged transaction involving the Company or any of its affiliates or any
covenants relating to total indebtedness, interest coverage, stock repurchases,
recapitalizations, dividends and distributions to shareholders and current
ratios.
CONSOLIDATION, MERGER, SALE OF ASSETS
The Company, without the consent of the Holders of any of the Outstanding
Debt Securities under the applicable Indenture, may consolidate with or merge
with or into, or sell, lease, transfer or otherwise dispose of its assets
substantially as an entirety to, any Person which is a corporation, partnership
or trust organized and validly existing under the laws of any domestic
jurisdiction, or may permit any such Person to consolidate with or merge with or
into the Company or sell, lease, transfer or otherwise dispose of its assets
substantially as an entirety to the Company, provided that, among other things,
any successor Person assumes the Company's obligations on the Debt Securities
and under the applicable Indenture, that after giving effect to the transaction
no Event of Default, and no event which, after notice or lapse of time, would
become an Event of Default, shall have occurred and be continuing, and that
certain other conditions are met. (Section 8.1) Other than the provisions in the
Indenture described above, there are no covenants or provisions in the Indenture
which would provide the Holders of the Debt Securities with any special
protection or rights in the event the Company is involved in a change in control
or other highly leveraged transaction, reorganization, restructuring or merger,
or similar transaction involving the Company that may adversely affect Holders
of the Debt Securities.
EVENTS OF DEFAULT
Any one of the following events will constitute an Event of Default under
the applicable Indenture with respect to Debt Securities of any series: (a)
failure to pay any interest on any Debt Security of that series when due,
continued for 30 days (in the case of the Subordinated Indenture, whether or not
such payment is prohibited by the subordination provisions); (b) failure to pay
the principal of (or premium, if any) on any Debt Security of that series when
due (in the case of the Subordinated Indenture, whether or not such payment is
prohibited by the subordination provisions); (c) failure to deposit any sinking
fund payment, when due, in respect of any Debt Security of that series (in the
case of the Subordinated Indenture, whether or not such deposit is prohibited by
the subordination provisions); (d) failure to
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perform any other covenant of the Company in the applicable Indenture or such
Debt Security (other than a covenant included in the applicable Indenture solely
for the benefit of a series of Debt Securities other than that series),
continued for 60 days after written notice has been given as provided in the
applicable Indenture; (e) certain events in bankruptcy, insolvency or
reorganization involving the Company; or (f) any other Event of Default provided
with respect to the Debt Securities of that series. (Section 5.1)
If an Event of Default with respect to the Debt Securities of any series at
the time Outstanding occurs and is continuing, then in every such case other
than an Event of Default resulting from bankruptcy, insolvency or reorganization
involving the Company, the Trustee or the Holders of not less than 25% in
principal amount of the Outstanding Debt Securities of that series by notice as
provided in the applicable Indenture may declare the principal amount of the
Debt Securities of that series (or, if any of the Debt Securities of that series
are Original Issue Discount Securities, such portion of the principal amount of
such Debt Securities, as may be specified in the terms thereof) to be due and
payable immediately. If an Event of Default with respect to the Debt Securities
of any series results from bankruptcy, insolvency or reorganization involving
the Company, all outstanding Debt Securities or such series shall become due and
payable without any further action or notice. At any time after a declaration of
acceleration with respect to Debt Securities of any series has been made and
before a judgment or decree for payment of money due has been obtained by the
Trustee, the Holders of a majority in principal amount of the Outstanding Debt
Securities of that series may, under certain circumstances, rescind and annul
such declaration. (Section 5.2)
The Indentures will provide that, subject to the duty of the Trustee during
default to act with the required standard of care, the Trustee will be under no
obligation to exercise any of its rights or powers under the applicable
Indenture at the request or direction of any of the Holders, unless such Holders
shall have offered to the Trustee reasonable security or indemnity. (Section
6.1) Subject to such provisions for the indemnification of the Trustee, the
Holders of a majority in aggregate principal amount of the Outstanding Debt
Securities of any series will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee, with respect to the Debt
Securities of that series. (Section 5.12)
The Company will be required to furnish to the Trustee annually a statement
as to the performance of certain of its obligations under the applicable
Indenture and as to any default in such performance. (Section 10.10)
DEFEASANCE AND DISCHARGE
If so specified with respect to any particular series of Debt Securities,
the Company may discharge its indebtedness and its obligations or certain of its
obligations under the applicable Indenture with respect to such series by
depositing funds or obligations issued or guaranteed by the United States of
America with the Trustee. (Section 4.3)
The Indentures will provide that, if so specified with respect to the Debt
Securities of any series, the Company will be discharged from any and all
obligations in respect of the Debt Securities of such series (including, in the
case of Subordinated Debt Securities, the subordination provisions described
under "Subordination of Subordinated Debt Securities" herein and, except for
certain obligations relating to temporary Debt Securities and exchange of Debt
Securities, registration of transfer or exchange of Debt Securities of such
series, replacement of stolen, lost or mutilated Debt Securities of such series,
maintenance of paying agencies, to hold monies for payment in trust and payment
of additional amounts, if any, required in consequence of United States
withholding taxes imposed on payments to non-United States persons) upon the
deposit with the Trustee, in trust, of money and/or U.S. Government Obligations
which through the payment of interest and principal in respect thereof in
accordance with their terms will provide money in an amount sufficient to pay
the principal of (and premium, if any), each installment of interest on, and any
sinking fund payments on, the Debt Securities of such series on the Stated
Maturity of such payments in accordance with the terms of the applicable
Indenture and the Debt Securities of such series.
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(Section 4.6) Such a trust may only be established if, among other things, (a)
the Company has delivered to the Trustee an Opinion of Counsel to the effect
that (i) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (ii) since the date of the applicable
Indenture there has been a change in applicable federal income tax law, in
either case to the effect that, and based thereon such Opinion of Counsel shall
confirm that, the Holders of Debt Securities of such series will not recognize
income, gain or loss for federal income tax purposes as a result of such
deposit, defeasance and discharge, and will be subject to federal income tax on
the same amounts and in the same manner and at the same times as would have been
the case if such deposit, defeasance and discharge had not occurred; (b) the
Debt Securities of such series, if then listed on any domestic or foreign
securities exchange, will not be delisted as a result of such deposit,
defeasance and discharge; and (c) in the case of the Subordinated Debt
Securities, (x) no default in the payment of the principal of (and premium, if
any) or any interest on any Senior Debt beyond any applicable grace period shall
have occurred and be continuing, or (y) no other default with respect to any
Senior Debt shall have occurred and be continuing and shall have resulted in the
acceleration of such Senior Debt. In the event of any such defeasance and
discharge of Debt Securities of such series, Holders of Debt Securities of such
series would be able to look only to such trust fund for payment of principal of
and any premium and any interest on their Debt Securities until Maturity.
(Section 4.6)
DEFEASANCE OF CERTAIN OBLIGATIONS
The Indentures will provide that, if so specified with respect to the Debt
Securities of any series, the Company may omit to comply with any covenants
applicable to such Debt Securities (including, in the case of Senior Debt
Securities, the restrictive covenants described under "Covenants" above) which
are subject to covenant defeasance and any such omission shall not be an Event
of Default with respect to the Debt Securities of such series, upon the
irrevocable deposit with the Trustee, in trust, of money and/or U.S. Government
Obligations which through the payment of interest and principal in respect
thereof in accordance with their terms will provide money in an amount
sufficient to pay the principal of (and premium, if any), and each installment
of principal (and premium, if any) and interest on the Debt Securities of such
series on the Stated Maturity of such payments or upon optional redemption and
any mandatory sinking fund payments or analogous payments on the Debt Securities
of such series on the day on which such payments are due and payable in
accordance with the terms of the applicable Indenture and the Debt Securities of
such series. (Sections 4.5 and 4.6) The obligations of the Company under the
applicable Indenture and the Debt Securities of such series other than with
respect to such covenants shall remain in full force and effect. (Section 4.5)
Such a trust may be established only if, among other things, the Company has
delivered to the Trustee an Opinion of Counsel to the effect that (i) the
Holders of the Debt Securities of such series will not recognize income, gain or
loss for federal income tax purposes as a result of such deposit, defeasance and
discharge of certain obligations and will be subject to federal income tax on
the same amount and in the same manner and at the same times as would have been
the case if such deposit, defeasance and discharge had not occurred and (ii) the
Debt Securities of such series, if then listed on any domestic or foreign
securities exchange, will not be delisted as a result of such deposit,
defeasance and discharge. (Section 4.6)
In the event the Company exercises its option to omit compliance with the
covenants applicable with respect to the Debt Securities of any series as
described above and the Debt Securities of such series are declared due and
payable because of the occurrence of any Event of Default, then the amount of
money and U.S. Government Obligations on deposit with the Trustee will be
sufficient to pay amounts due on the Debt Securities of such series at the time
of their Stated Maturity but may not be sufficient to pay amounts due on the
Debt Securities of such series at the time of the acceleration resulting from
such Event of Default. The Company shall in any event remain liable for such
payments as provided in the applicable Indenture.
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The Trustee must deliver or pay to the Company from time to time, upon
request of the Company, any amounts held by it with respect to any Securities
which, in the opinion of a nationally recognized firm of independent public
accountants, are in excess of the amount which would then be required to be
deposited to effect a satisfaction, discharge or defeasance, as the case may be,
with respect to such Securities.
MEETINGS, MODIFICATION AND WAIVER
Modifications and amendments of the Indentures may be made by the Company
and the Trustee under the applicable Indenture only with the consent of the
Holders of not less than a majority in principal amount of the Outstanding Debt
Securities issued under the applicable Indenture and affected by such
modification or amendment unless a greater percentage of such principal amount
is specified in the applicable Prospectus Supplement; provided, however, that no
such modification or amendment may, without the consent of each Holder of such
Outstanding Debt Security affected thereby, (a) change the Stated Maturity of
the principal of, or any installment of principal of or interest on, any such
Debt Security, (b) reduce the principal amount of (and premium, if any) or
interest on, any such Debt Security, (c) change any obligation of the Company to
pay additional amounts, (d) reduce the amount of principal of an Original Issue
Discount Security or any other Debt Security payable upon acceleration of the
maturity thereof, (e) change the coin or currency in which any Debt Security or
any premium or interest thereon is payable, (f) impair the right to institute
suit for the enforcement of any payment on or with respect to any such Debt
Security, (g) adversely change the right to convert or exchange, including
decreasing the conversion rate or increasing the conversion price of, such Debt
Security other than in accordance with the terms of the applicable Indenture (if
applicable), (h) in the case of the Subordinated Indenture, modify the
subordination provisions in a manner adverse to the Holders of the Subordinated
Debt Securities, (i) reduce the percentage in principal amount of Outstanding
Debt Securities of any series, the consent of whose Holders is required for
modification or amendment of the applicable Indenture or for waiver of
compliance with certain provisions of the applicable Indenture or for waiver of
certain defaults, (j) reduce the requirements contained in the applicable
Indenture for quorum or voting, (k) change any obligations of the Company to
maintain an office or agency for the purposes required by the Indentures, or (l)
modify any of the above provisions. (Section 9.2)
The Holders of at least a majority in principal amount of the Outstanding
Debt Securities of each series may, on behalf of the Holders of all the Debt
Securities of that series, waive, insofar as that series is concerned,
compliance by the Company with certain restrictive provisions of the applicable
Indenture and, if applicable, such Debt Securities, unless a greater percentage
of such principal amount is specified in the applicable Prospectus Supplement.
The Holders of not less than a majority in principal amount of the Outstanding
Debt Securities of each series may, on behalf of all Holders of Debt Securities
of that series and any coupons pertaining thereto, waive any past default under
the applicable Indenture, except a default (a) in the payment of principal of
(and premium, if any) or any interest on any Debt Security of such series, and
(b) in respect of a covenant or provision of the applicable Indenture and, if
applicable, such Debt Securities which cannot be modified or amended without the
consent of the Holder of each Outstanding Debt Security of such series affected.
(Section 5.13)
The applicable Indenture will provide that in determining whether the
Holders of the requisite principal amount of the Outstanding Debt Securities
have given any request, demand, authorization, direction, notice, consent or
waiver thereunder or are present at a meeting of Holders of Debt Securities for
quorum purposes, (i) the principal amount of an Original Issue Discount Security
that shall be deemed to be Outstanding shall be the amount of the principal
thereof that would be due and payable as of the date of such determination upon
acceleration of the Maturity thereof, and (ii) the principal amount of a Debt
Security denominated in a foreign currency or currency units shall be the U.S.
dollar equivalent, determined on the date of original issuance of such Debt
Security, of the principal amount of such Debt Security or, in the case of an
Original Issue Discount Security, the U.S. dollar equivalent, determined on the
date of original issuance of such Debt Security, of the amount determined as
provided in (i) above.
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The applicable Indenture will contain provisions for convening meetings of
the Holders of Debt Securities of a series if Debt Securities of that series are
issuable as Bearer Securities. A meeting may be called at any time by the
Trustee, and also, upon request, by the Company or the Holders of at least 25%
in principal amount of the Outstanding Debt Securities of such series, in any
such case upon notice given in accordance with "Notices" below. (Sections 13.1
and 13.2) Except for any consent which must be given by the Holder of each
Outstanding Debt Security affected thereby, as described above, any resolution
presented at a meeting or adjourned meeting at which a quorum is present may be
adopted by the affirmative vote of the Holders of a majority in principal amount
of the Outstanding Debt Securities of that series; provided, however, that,
except for any consent which must be given by the Holder of each Outstanding
Debt Security affected thereby, as described above, any resolution with respect
to any consent or waiver which may be given by the Holders of not less than a
majority in principal amount of the Outstanding Debt Securities of a series may
be adopted at a meeting or an adjourned meeting at which a quorum is present
only by the affirmative vote of a majority in principal amount of the
Outstanding Debt Securities of that series; and provided, further, that, except
for any consent which must be given by the Holder of each Outstanding Debt
Security affected thereby, as described above, any resolution with respect to
any request, demand, authorization, direction, notice, consent, waiver or other
action which may be made, given or taken by the Holders of a specified
percentage, which is less than or greater than a majority in principal amount of
the Outstanding Debt Securities of a series may be adopted at a meeting or
adjourned meeting duly reconvened at which a quorum is present by the
affirmative vote of the Holders of such specified percentage of the principal
amount of the Outstanding Debt Securities of that series. Any resolution passed
or decision taken at any meeting of Holders of Debt Securities of any series
duly held in accordance with the applicable Indenture will be binding on all
Holders of Debt Securities of that series and the related coupons. The quorum at
any meeting called to adopt a resolution or with respect to a consent or waiver
which may be given by the Holders of not less than a majority in principal
amount of the Outstanding Debt Securities of a series, and at any reconvened
meeting, will be persons holding or representing a majority in principal amount
of the Outstanding Debt Securities of a series. (Section 13.4)
NOTICES
Except as otherwise provided in the applicable Indenture, notices to Holders
of Bearer Securities will be given by publication at least twice in a daily
newspaper in The City of New York and in such other city or cities as may be
specified in such Debt Securities. Notices to Holders of Registered Securities
will be given by mail to the address of such Holders as they appear in the
Security Register. (Section 1.6)
TITLE
Title to any Bearer Securities (including Bearer Securities in temporary or
permanent global form) and any coupons appertaining thereto will pass by
delivery. The Company, the Trustee and any agent of the Company or the Trustee
may treat the bearer of any Bearer Security and the bearer of any coupon and the
registered owner of any Registered Security as the absolute owner thereof
(whether or not such Debt Security or coupon shall be overdue and
notwithstanding any notice to the contrary) for the purpose of making payment
and for all other purposes. (Section 3.8)
REPLACEMENT OF DEBT SECURITIES AND COUPONS
Any mutilated Debt Security or a Debt Security with a mutilated coupon
appertaining thereto will be replaced by the Company at the expense of the
Holder upon surrender of such Debt Security to the Trustee. Debt Securities or
coupons that became destroyed, stolen or lost will be replaced by the Company at
the expense of the Holder upon delivery to the Trustee of the Debt Security and
coupons or evidence of the destruction, loss or theft thereof satisfactory to
the Company and the Trustee; in the case of any coupon which becomes destroyed,
stolen or lost, such coupon will be replaced by issuance of a new Debt Security
in exchange for the Debt Security to which such coupon appertains. In the case
of a destroyed, lost
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or stolen Debt Security or coupon, an indemnity satisfactory to the Trustee and
the Company may be required at the expense of the Holder of such Debt Security
or coupon before a replacement Debt Security will be issued. (Section 3.6)
GOVERNING LAW
The Indentures, the Debt Securities and the coupons will be governed by, and
construed in accordance with, the laws of the State of New York without regard
to principles of conflicts of laws. (Section 1.13)
REGARDING THE TRUSTEE
The Indentures contain limitations on the right of the Trustee, as 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. (Section 6.10) In addition, the Trustee may be deemed to have a
conflicting interest and may be required to resign as Trustee if at the time of
a default under one of the Indentures it is a creditor of the Company. (Section
6.8)
The Company may from time to time maintain deposit accounts and conduct its
banking transactions with the Trustee in the ordinary course of business.
(Section 6.3)
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DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of (i) 250,000,000
shares of common stock, $.10 par value per share (the "Common Stock"), and (ii)
2,000,000 shares of preferred stock, $5.00 par value (the "Preferred Stock"). At
December 31, 1997, there were (a) 75,883,266 shares of Common Stock outstanding,
(b) 25,268,549 shares of Common Stock reserved for issuance in connection with
restricted stock rewards, stock option plans and employee stock purchase plans
and (c) no shares of Preferred Stock outstanding.
DESCRIPTION OF PREFERRED STOCK
The following summary contains a description of certain general terms of the
Company's Preferred Stock to which any Prospectus Supplement may relate. Certain
terms of any series of Preferred Stock offered by any Prospectus Supplement will
be described in the Prospectus Supplement relating thereto. If so indicated in
the Prospectus Supplement, the terms of any series may differ from the terms set
forth below. The description of certain provisions of the Company's Preferred
Stock does not purport to be complete and is subject to and qualified in its
entirety by reference to the provisions of the Company's Certificate of
Incorporation, and the Certificate of Designation (the "Certificate of
Designation") relating to each particular series of Preferred Stock which will
be filed or incorporated by reference, as the case may be, as an exhibit to the
Registration Statement of which this Prospectus is a part at or prior to the
time of the issuance of such Preferred Stock.
GENERAL
Under the Company's Certificate of Incorporation, 2,000,000 shares of
Preferred Stock are authorized for issuance. The Preferred Stock may be issued
in one or more series, with such designations of titles; dividend rates; any
redemption provisions; special or relative rights in the event of liquidation,
dissolution, distribution or winding up of the Company; any sinking fund
provisions; any conversion provisions; any voting rights thereof; and any other
preferences, privileges, powers, rights, qualifications, limitations and
restrictions, as shall be set forth as and when established by the Board of
Directors of the Company. The shares of any series of Preferred Stock will be,
when issued, fully paid and non-assessable and holders thereof will have no
preemptive rights in connection therewith.
RANK
Any series of Preferred Stock will, with respect to rights on liquidation,
winding up and dissolution, rank (i) senior to all classes of Common Stock and
to all equity securities issued by the Company, the terms of which specifically
provide that such equity securities will rank junior to such series of Preferred
Stock; (ii) on a parity with all equity securities issued by the Company, the
terms of which specifically provide that such equity securities will rank on a
parity with such series of Preferred Stock (see "Preferred Stock Outstanding");
(iii) junior to all equity securities issued by the Company, the terms of which
specifically provide that such equity securities will rank senior to such series
of Preferred Stock. In addition, any series of Preferred Stock will, with
respect to dividend rights, rank (i) senior to all equity securities issued by
the Company, the terms of which specifically provide that such equity securities
will rank junior to such series of Preferred Stock and, to the extent provided
in the applicable Certificate of Designation, to Common Stock, (ii) on a parity
with all equity securities issued by the Company, the terms of which
specifically provide that such equity securities will rank on a parity with such
series of Preferred Stock and, to the extent provided in the applicable
Certificate of Designation, to Common Stock, and (iii) junior to all equity
securities issued by the Company, the terms of which specifically provide that
such equity securities will rank senior to such series of Preferred Stock. As
used in any Certificate of Designation for these purposes, the term "equity
securities" will not include debt securities convertible into or exchangeable
for equity securities.
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DIVIDENDS
Holders of each series of Preferred Stock will be entitled to receive, when,
as and if declared by the Board of Directors of the Company out of funds legally
available therefor, cash dividends at such rates and on such dates as are set
forth in the Prospectus Supplement relating to such series of Preferred Stock.
Such rate may be fixed or variable or both. Dividends will be payable to holders
of record of Preferred Stock as they appear on the books of the Company (or, if
applicable, the records of the Depositary referred to below under "Description
of Depositary Shares") on such record dates as shall be fixed by the Board of
Directors. Dividends on any series of Preferred Stock may be cumulative or
noncumulative.
No full dividends may be declared or paid on funds set apart for the payment
of dividends on any series of Preferred Stock unless dividends shall have been
paid or set apart for such payment on equity securities ranking on a parity with
respect to dividends with such series of Preferred Stock. If full dividends are
not so paid, such series of Preferred Stock shall share dividends pro rata with
such other equity securities.
CONVERSION AND EXCHANGE
The Prospectus Supplement for any series of Preferred Stock will state the
terms, if any, on which shares of that series are convertible into shares of
another series of Preferred Stock or Common Stock or exchangeable for another
series of Preferred Stock, Common Stock or Debt Securities of the Company. The
Common Stock of the Company is described below under "Description of Common
Stock."
REDEMPTION
A series of Preferred Stock may be redeemable at any time, in whole or in
part, at the option of the Company or the holder thereof and may be subject to
mandatory redemption pursuant to a sinking fund or otherwise upon terms and at
the redemption prices set forth in the Prospectus Supplement relating to such
series.
In the event of partial redemptions of Preferred Stock, whether by mandatory
or optional redemption, the shares to be redeemed will be determined by lot or
pro rata, as may be determined by the Board of Directors of the Company, or by
any other method determined to be equitable by the Board of Directors.
On and after a redemption date, unless the Company defaults in the payment
of the redemption price, dividends will cease to accrue on shares of Preferred
Stock called for redemption and all rights of holders of such shares will
terminate except for the right to receive the redemption price.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding up of
the Company, holders of each series of Preferred Stock will be entitled to
receive out of assets of the Company available for distribution to shareholders,
before any distribution is made on any securities ranking junior with respect to
liquidation, including Common Stock, distributions upon liquidation in the
amount set forth in the Prospectus Supplement relating to such series of
Preferred Stock, plus an amount equal to any accrued and unpaid dividends. If,
upon any voluntary or involuntary liquidation, dissolution or winding up of the
Company, the amounts payable with respect to the Preferred Stock of any series
and any other securities ranking on a parity with respect to liquidation rights
are not paid in full, the holders of the Preferred Stock of such series and such
other securities will share ratably in any such distribution of assets of the
Company in proportion to the full liquidation preferences to which each is
entitled. After payment of the full amount of the liquidation preference to
which they are entitled, the holders of such series of Preferred Stock will not
be entitled to any further participation in any distribution of assets of the
Company.
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VOTING RIGHTS
Except as set forth in the Prospectus Supplement relating to a particular
series of Preferred Stock or except as expressly required by applicable law, the
holders of shares of Preferred Stock will have no voting rights.
TRANSFER AGENT AND REGISTRAR
The transfer agent for each series of Preferred Stock will be described in
the applicable Prospectus Supplement.
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DESCRIPTION OF DEPOSITARY SHARES
The description set forth below of certain provisions of the Deposit
Agreement (as defined below) and of the Depositary Shares and Depositary
Receipts (as defined below) does not purport to be complete and is subject to
and qualified in its entirety by reference to the forms of Deposit Agreement and
Depositary Receipt relating to the Preferred Stock, which will be filed or
incorporated by reference, as the case may be, as exhibits to the Registration
Statement of which this Prospectus is a part.
GENERAL
The Company may, at its option, elect to offer fractional shares of
Preferred Stock, rather than full shares of Preferred Stock. In such event, the
Company will issue receipts for Depositary Shares, each of which will represent
a fraction (to be set forth in the Prospectus Supplement relating to a
particular series of Preferred Stock) of a share of a particular series of
Preferred Stock as described below.
The shares of any series of Preferred Stock represented by Depositary Shares
will be deposited under a Deposit Agreement (the "Deposit Agreement") between
the Company and a bank or trust company selected by the Company having its
principal office in the United States and having a combined capital and surplus
of at least $50,000,000 (the "Depositary"). Subject to the terms of the Deposit
Agreement, each owner of a Depositary Share will be entitled, in proportion to
the applicable fraction of a share of Preferred Stock represented by such
Depositary Share, to all the rights and preferences of the Preferred Stock
represented thereby (including dividend, voting, redemption, conversion and
liquidation rights).
The Depositary Shares will be evidenced by depositary receipts issued
pursuant to the Deposit Agreement (the "Depositary Receipts"). Depositary
Receipts will be distributed to those persons purchasing the fractional shares
of Preferred Stock in accordance with the terms of the offering.
Pending the preparation of definitive Depositary Receipts, the Depositary
may, upon the written order of the Company or any holder of deposited Preferred
Stock, execute and deliver temporary Depositary Receipts which are substantially
identical to, and entitle the holders thereof to all the rights pertaining to,
the definitive Depositary Receipts. Depositary Receipts will be prepared
thereafter without unreasonable delay, and temporary Depositary Receipts will be
exchangeable for definitive Depositary Receipts.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other cash
distributions received in respect of the deposited Preferred Stock to the record
holders of Depositary Shares relating to such Preferred Stock in proportion to
the numbers of such Depositary Shares owned by such holders.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Shares
entitled thereto. If the Depositary determines that it is not feasible to make
such distribution, it may, with the approval of the Company, sell such property
and distribute the net proceeds from such sale to such holders.
REDEMPTION OF STOCK
If a series of Preferred Stock represented by Depositary Shares is to be
redeemed, the Depositary Shares will be redeemed from the proceeds received by
the Depositary resulting from the redemption, in whole or in part, of such
series of Preferred Stock held by the Depositary. The Depositary Shares will be
redeemed by the Depositary at a price per Depositary Share equal to the
applicable fraction of the redemption price per share payable in respect of the
shares of Preferred Stock so redeemed. Whenever the Company redeems shares of
Preferred Stock held by the Depositary, the Depositary will redeem as of the
same date the number of Depositary Shares representing shares of Preferred Stock
so redeemed. If fewer than all the Depositary Shares are to be redeemed, the
Depositary Shares to be redeemed will be selected
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by the Depositary by lot or pro rata or by any other equitable method as may be
determined by the Depositary.
WITHDRAWAL OF STOCK
Any holder of Depositary Shares may, upon surrender of the Depositary
Receipts at the corporate trust office of the Depositary (unless the related
Depositary Shares have previously been called for redemption), receive the
number of whole shares of the related series of Preferred Stock and any money or
other property represented by such Depositary Receipts. Holders of Depositary
Shares making such withdrawals will be entitled to receive whole shares of
Preferred Stock on the basis set forth in the related Prospectus Supplement for
such series of Preferred Stock, but holders of such whole shares of Preferred
Stock will not thereafter be entitled to deposit such Preferred Stock under the
Deposit Agreement or to receive Depositary Receipts therefor. If the Depositary
Shares surrendered by the holder in connection with such withdrawal exceed the
number of Depositary Shares that represent the number of whole shares of
Preferred Stock to be withdrawn, the Depositary will deliver to such holder at
the same time a new Depositary Receipt evidencing such excess number of
Depositary Shares.
VOTING DEPOSITED PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of any series of
deposited Preferred Stock are entitled to vote, the Depositary will mail the
information contained in such notice of meeting to the record holders of the
Depositary Shares relating to such series of Preferred Stock. Each record holder
of such Depositary Shares on the record date (which will be the same date as the
record date for the relevant series of Preferred Stock) will be entitled to
instruct the Depositary as to the exercise of the voting rights pertaining to
the amount of the Preferred Stock represented by such holder's Depositary
Shares. The Depositary will endeavor, insofar as practicable, to vote the amount
of such series of Preferred Stock represented by such Depositary Shares in
accordance with such instructions, and the Company will agree to take all
reasonable actions that may be deemed necessary by the Depositary in order to
enable the Depositary to do so. The Depositary will abstain from voting shares
of the Preferred Stock to the extent it does not receive specific instructions
from the holder of Depositary Shares representing such Preferred Stock.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between the Company and the Depositary. However, any amendment which materially
and adversely alters the rights of the holders of the Depositary Shares
representing Preferred Stock of any series will not be effective unless such
amendment has been approved by the holders of at least the amount of the
Depositary Shares then outstanding representing the minimum amount of Preferred
Stock of such series necessary to approve any amendment that would materially
and adversely affect the rights of the holders of the Preferred Stock of such
series. Every holder of an outstanding Depositary Receipt at the time any such
amendment becomes effective, or any transferee of such holder, shall be deemed,
by continuing to hold such Depositary Receipt, or by reason of the acquisition
thereof, to consent and agree to such amendment and to be bound by the Deposit
Agreement as amended thereby. The Deposit Agreement automatically terminates if
(i) all outstanding Depositary Shares have been redeemed; or (ii) each share of
Preferred Stock has been converted into other preferred stock or Common Stock or
has been changed for debt securities; or (iii) there has been a final
distribution in respect of the Preferred Stock in connection with any
liquidation, dissolution or winding up of the Company and such distribution has
been distributed to the holders of Depositary Shares.
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CHARGES OF DEPOSITARY
The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of the depositary arrangements. The Company
will pay all charges of the Depositary in connection with the initial deposit of
the relevant series of Preferred Stock and any redemption of such Preferred
Stock. Holders of Depositary Receipts will pay other transfer and other taxes
and governmental charges and such other charges or expenses as are expressly
provided in the Deposit Agreement to be for their accounts.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Depositary may resign at any time by delivering to the Company notice of
its intent to do so, and the Company may at any time remove the Depositary, any
such resignation or removal to take effect upon the appointment of a successor
Depositary and its acceptance of such appointment. Such successor Depositary
must be appointed within 60 days after delivery of the notice of resignation or
removal and must be a bank or trust company having its principal office in the
United States and having a combined capital and surplus of at least $50,000,000.
MISCELLANEOUS
The Depositary will forward all reports and communications from the Company
which are delivered to the Depositary and which the Company is required to
furnish to the holders of the deposited Preferred Stock.
Neither the Depositary nor the Company will be liable if it is prevented or
delayed by law or any circumstances beyond its control in performing its
obligations under the Deposit Agreement. The obligations of the Company and the
Depositary under the Deposit Agreement will be limited to performance in good
faith of their duties thereunder and they will not be obligated to prosecute or
defend any legal proceeding in respect of any Depositary Shares, Depositary
Receipts or shares of Preferred Stock unless satisfactory indemnity is
furnished. They may rely upon written advice of counsel or accountants, or upon
information provided by holders of Depositary Receipts or other persons believed
to be competent and on documents believed to be genuine.
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DESCRIPTION OF COMMON STOCK
GENERAL
Subject to the rights of the holders of any shares of the Company's
Preferred Stock, holders of Common Stock are entitled to receive such dividends
as may be declared from time to time by the Board of Directors out of funds
legally available therefor.
The holders of Common Stock are entitled to one vote per share on all
matters submitted to a vote of shareholders and do not have cumulative voting
rights. Holders of Common Stock are entitled to receive, upon any liquidation of
the Company, all remaining assets available for distribution to shareholders
after satisfaction of the Company's liabilities and the preferential rights of
any preferred stock that may then be issued and outstanding. The outstanding
shares of Common Stock are, and the shares offered hereby will be, fully paid
and nonassessable. The holders of Common Stock have no preemptive, conversion or
redemption rights. The Common Stock is listed on the New York Stock Exchange.
The registrar and transfer agent for the Common Stock is First Chicago Trust
Company of New York.
CERTAIN PROVISIONS
The Board of Directors, generally without further action by the
shareholders, is authorized to issue Preferred Stock in one or more series and
to designate as to any such series the dividend rate, redemption prices,
preferences on liquidation or dissolution, conversion rights, voting rights and
any other preferences, and relative, participating, optional or other special
rights and qualifications, limitations and restrictions. The rights of the
holders of Common Stock will be subject to, and may be adversely affected by,
the rights of the holders of any Preferred Stock that may be issued in the
future. Issuance of a new series of Preferred Stock, while providing desirable
flexibility in connection with possible acquisitions or other corporate
purposes, could have the effect of making it more difficult for a third party to
acquire, or discouraging a third party from acquiring, a majority of the
outstanding voting stock of the Company.
Generally, Section 203 of the Delaware General Corporation Law prohibits a
publicly held Delaware corporation from engaging in any "business combination"
with any "interested stockholder" for a period of three years following the date
that such stockholder became an interested stockholder, unless (i) prior to such
date either the business combination or the transaction which resulted in the
stockholder being an interested stockholder is approved by the board of
directors of the corporation, (ii) upon consummation of the transaction which
resulted in the stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding for purposes of
determining the number of shares outstanding those shares owned (A) by persons
who are both directors and officers and (B) certain employee stock plans, or
(iii) on or after such date the business combination is approved by the board
and authorized at an annual or special meeting of stockholders, and not by
written consent, by the affirmative vote of at least 66 2/3% of the outstanding
voting stock which is not owned by the interested stockholder. A "business
combination" includes certain mergers, consolidations, asset sales, transfers
and other transactions resulting in a financial benefit to the interested
stockholder. An "interested stockholder" is a person who, together with
affiliates and associates, owns (or within the preceding three years, did own)
15% or more of the corporation's voting stock. The overall effect of these
provisions may be to deter or discourage hostile takeover attempts by making it
more difficult for a person who has gained a substantial equity interest in the
Company effectively to exercise control.
DESCRIPTION OF WARRANTS
The Company may issue Warrants, including Warrants to purchase Debt
Securities ("Debt Warrants"), Preferred Stock, including Preferred Stock
represented by Depositary Shares ("Preferred Stock Warrants"), Common Stock
("Common Stock Warrants"), or any combination thereof. Warrants may be issued
independently or together with any Securities and may be attached to or separate
from such
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Securities. The Warrants are to be issued under warrant agreements (each a
"Warrant Agreement") to be entered into between the Company and a bank or trust
company, as warrant agent (the "Warrant Agent"), all as shall be set forth in
the Prospectus Supplement relating to Warrants being offered pursuant thereto.
DEBT WARRANTS
The applicable Prospectus Supplement will describe the terms of Debt
Warrants offered thereby, the Warrant Agreement relating to such Debt Warrants
and the certificates representing such Debt Warrants, including the following:
(1) the title of such Debt Warrants; (2) the aggregate number of such Debt
Warrants; (3) the price or prices at which such Debt Warrants will be issued;
(4) the currency or currencies, including composite currencies or currency
units, in which the price of such Debt Warrants may be payable; (5) the
designation, aggregate principal amount and terms of the Debt Securities
purchasable upon exercise of such Debt Warrants, and the procedures and
conditions relating to the exercise of such Debt Warrants; (6) the designation
and terms of any related Debt Securities with which such Debt Warrants are
issued, and the number of such Debt Warrants issued with each such Debt
Security; (7) the currency or currencies, including composite currencies or
currency units, in which the principal of or any premium or interest on the Debt
Securities purchasable upon exercise of such Debt Warrants will be payable; (8)
the date, if any, on and after which such Debt Warrants and the related Debt
Securities will be separately transferable; (9) the principal amount of Debt
Securities purchasable upon exercise of each Debt Warrant, and the price at
which and the currency or currencies, including composite currencies or currency
units, in which such principal amount of Debt Securities may be purchased upon
such exercise; (10) the date on which the right to exercise such Debt Warrants
will commence, and the date on which such right will expire; (11) the maximum or
minimum number of such Debt Warrants which may be exercised at any time; (12) a
discussion of any material federal income tax considerations; and (13) any other
terms of such Debt Warrants and terms, procedures and limitations relating to
the exercise of such Debt Warrants.
Certificates representing Debt Warrants will be exchangeable for new
certificates representing Debt Warrants of different denominations, and Debt
Warrants may be exercised at the corporate trust office of the Warrant Agent or
any other office indicated in the Prospectus Supplement. Prior to the exercise
of their Debt Warrants, holders of Debt Warrants will not have any of the rights
as holders of the Debt Securities purchasable upon such exercise and will not be
entitled to payment of principal of or any premium or interest on the Debt
Securities purchasable upon such exercise.
PREFERRED STOCK WARRANTS
The applicable Prospectus Supplement will describe the terms of Preferred
Stock Warrants offered thereby, the Warrant Agreement relating to such Preferred
Stock Warrants and the certificates representing such Preferred Stock Warrants,
including the following: (1) the title of such Preferred Stock Warrants; (2) the
aggregate number of such Preferred Stock Warrants; (3) the price or prices at
which such Preferred Stock Warrants will be issued; (4) the currency or
currencies, including composite currencies or currency units, in which the price
of such Preferred Stock Warrants may be payable; (5) the designation, number of
shares and terms (including, among others, dividend, liquidation, redemption and
voting rights) of the Preferred Stock (including Preferred Stock represented by
Depositary Shares) purchasable upon exercise of such Preferred Stock Warrants,
and the procedures and conditions relating to the exercise of such Preferred
Stock Warrants; (6) the designation and terms of any related Securities of the
Company with which such Warrants are issued, and the number of such Preferred
Stock Warrants issued with each such Security; (7) the date, if any, on and
after which such Preferred Stock Warrants and the related Securities will be
separately transferable; (8) the maximum or minimum number of Preferred Stock
Warrants which may be exercised at any time; (9) if applicable, a discussion of
any material federal income tax considerations; and (10) any other terms of such
Preferred Stock Warrants, including terms, procedures and limitations relating
to the exchange and exercise of such Preferred Stock Warrants.
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Certificates representing Preferred Stock Warrants will be exchangeable for
new certificates representing Preferred Stock Warrants of different
denominations, and Preferred Stock Warrants may be exercised at the corporate
trust office of the Warrant Agent or any office indicated in the Prospectus
Supplement. Prior to the exercise of their Preferred Stock Warrants, holders of
such Preferred Stock Warrants will not have any of the rights as holders of the
Preferred Stock purchasable upon such exercise and will not be entitled to any
dividend payments, liquidation premiums or voting rights of the Preferred Stock
(including Preferred Stock represented by Depositary Shares) purchasable upon
such exercise.
COMMON STOCK WARRANTS
The applicable Prospectus Supplement will describe the terms of any Common
Stock Warrants, the Warrant Agreement relating to such Common Stock Warrants and
the certificates representing such Common Stock Warrants in respect of which
this Prospectus is being delivered which may include: (1) the title of such
Common Stock Warrants; (2) the aggregate number of such Common Stock Warrants;
(3) the price or prices at which such Common Stock Warrants will be issued; (4)
the currency or currencies, including composite currencies or currency units, in
which the price of such Common Stock Warrants may be payable; (5) if applicable,
the designation and terms of any related Security with which such Common Stock
Warrants are issued, and the number of such Common Stock Warrants issued with
each such related Security; (6) if applicable, the date on and after which such
Common Stock Warrants and the related Security will be separately transferable;
(7) the date on which the right to exercise such Common Stock Warrants will
commence, and the date on which such right will expire; (8) the maximum or
minimum number of such Common Stock Warrants which may be exercised at any time;
(9) if applicable, a discussion of any material federal income tax
considerations; and (10) any other terms of such Common Stock Warrants,
including terms, procedures and limitations relating to the exchange and
exercise of such Common Stock Warrants.
Certificates representing Common Stock Warrants will be exchangeable for new
certificates representing Common Stock Warrants of different denominations, and
Common Stock Warrants may be exercised at the corporate trust office of the War
ant Agent or any other office indicated in the Prospectus Supplement. Prior to
the exercise of their Common Stock Warrants, holders of Common Stock Warrants
will not have any of the rights as holders of Common Stock purchasable upon such
exercise and will not be entitled to dividend payments, if any, or voting rights
of the Common Stock purchasable upon such exercise.
EXERCISE OF WARRANTS
Each Warrant will entitle the holder to purchase for cash such principal
amount of Debt Securities or number of shares of Preferred Stock or Common Stock
at such exercise price as shall in each case be set forth in, or be determinable
as set forth in, the Prospectus Supplement relating to the Warrants offered
thereby. Warrants may be exercised at any time up to the close of business on
the expiration date set forth in the Prospectus Supplement relating to the
Warrants offered thereby. After the close of business on the expiration date,
unexercised Warrants will become void. Warrants may be exercised as set forth in
the Prospectus Supplement relating to the Warrants offered thereby. Upon receipt
of payment and the certificate representing the Warrant properly completed and
duly executed at the corporate trust office of the Warrant Agent or any other
office indicated in the Prospectus Supplement, the Company will, as soon as
practicable, forward the Securities purchasable upon such exercise. If less than
all of the Warrants represented by such certificate are exercised, a new
certificate will be issued for the remaining Warrants.
LIMITATIONS ON ISSUANCE OF BEARER SECURITIES
Unless otherwise provided in the applicable Prospectus Supplement, in
compliance with United States federal tax laws and regulations, Bearer
Securities (including Debt Securities in global form) may not be offered, sold,
resold or delivered in connection with their original issuance in the United
States or to
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United States persons (each as defined below) other than to a Qualifying Branch
of a United States Financial Institution (as defined below) or a United States
person acquiring Bearer Securities through a Qualifying Branch of a United
States Financial Institution. Any underwriters, agents and dealers participating
in the offering of Debt Securities must agree that they will not offer any
Bearer Securities for sale or resale in the United States or to United States
persons (other than a Qualifying Branch of a United States Financial Institution
or a United States person acquiring Bearer Securities through a Qualifying
Branch of a United States Financial Institution) or deliver Bearer Securities
within the United States. In addition, any such underwriters, agents and dealers
must represent in writing that they have in effect, in connection with the offer
and sale of the Debt Securities, procedures reasonably designed to ensure that
their employees or agents who are directly engaged in selling the Debt
Securities are aware that Bearer Securities cannot be offered or sold to a
person who is within the United States or is a United States person (other than
a Qualifying Branch of a United States Financial Institution or a United States
person acquiring Bearer Securities through a Qualifying Branch of a United
States Financial Institution). Furthermore, the owner of the obligation (or
financial institution or clearing organization through which the owner holds the
obligation) must certify that the owner is not a United States person. The term
"Qualifying Branch of a United States Financial Institution" means a branch
located outside the United States of a United States securities clearing
organization, bank or other financial institution listed under Treasury
Regulation Section 1.165-12(c)(1)(v) that agrees to comply with the requirements
of Section 165(j)(3)(A), (B) or (C) of the United States Internal Revenue Code
of 1986, as amended (the "Code"), and the regulations thereunder.
Bearer Securities and any coupons appertaining thereto will bear the
following legend: "Any United States person who holds this obligation will be
subject to limitations under the United States income tax laws, including the
limitations provided in Sections 165(j) and 1287(a) of the Internal Revenue
Code." Under Sections 165(j) and 1287(a) of the Code, holders that are United
States persons, with certain exceptions, will not be entitled to deduct any loss
on Bearer Securities and must treat as ordinary income any gain realized on the
sale or other disposition of Bearer Securities.
The term "United States person" means a citizen or resident of the United
States, a corporation, partnership or other entity created or organized in or
under the laws of the United States or of any political subdivision thereof, an
estate the income of which is subject to United States federal income taxation
regardless of its source, or a trust if a court within the United States is able
to exercise primary supervision over the administration of the trust and one or
more United States persons have the authority to control all substantial
decisions of the trust. The term "United States" means the United States of
America (including the states and the District of Columbia), its territories,
its possessions and other areas subject to its jurisdiction.
36
<PAGE>
PLAN OF DISTRIBUTION
The Company may sell Securities to or through underwriters or dealers,
directly to other purchasers, or through agents. The Prospectus Supplement with
respect to the Securities will set forth the terms of the offering of the
Securities, including the name or names of any underwriters, dealers or agents,
the price of the offered Securities and the net proceeds to the Company from
such sale, any delayed delivery arrangements, any underwriting discounts or
other items constituting underwriters' compensation, any discounts or
concessions allowed or reallowed or paid to dealers and any securities exchanges
on which the Securities may be listed. If underwriters are used in the sale, the
Securities will be acquired by the underwriters for their own account and may be
resold from time to time in one or more transactions, including negotiated
transactions, at a fixed public price or at varying prices determined at the
time of sale. The underwriter or underwriters with respect to a particular
underwritten offering of Securities will be named in the Prospectus Supplement
relating to such offering, and if an underwriting syndicate is used, the
managing underwriter or underwriters will be set forth on the cover of such
Prospectus Supplement. Unless otherwise set forth in the Prospectus Supplement,
the obligations of the underwriters or agents to purchase the Securities will be
subject to certain conditions precedent and the underwriters will be obligated
to purchase all the Securities if any are purchased. Any initial public offering
price and any discounts or concessions allowed or reallowed or paid to dealers
may be changed from time to time.
If a dealer is utilized in the sale of any Securities in respect of which
this Prospectus is delivered, the Company will sell such Securities to the
dealer, as principal. The dealer may then resell such 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 transaction will be set forth in the
Prospectus Supplement relating thereto.
Securities may be sold directly by the Company to one or more institutional
purchasers, or through agents designated by the Company from time to time, at a
fixed price or prices, which may be changed, or at varying prices determined at
time of sale. Any agent involved in the offer or sale of the Securities will be
named, and any commissions payable by the Company to such agent will be set
forth, in the Prospectus Supplement relating thereto. Unless otherwise indicated
in the Prospectus Supplement, any such agent will be acting on a best efforts
basis for the period of its appointment.
In connection with the sale of the Securities, underwriters or agents may
receive compensation from the Company or from purchasers of Securities for whom
they may act as agents in the form of discounts, concessions, or commissions.
Underwriters, agents, and dealers participating in the distribution of the
Securities may be deemed to be underwriters, and any discounts or commissions
received by them from the Company and any profit on the resale of the Securities
by them may be deemed to be underwriting discounts or commissions under the
Securities Act. If so indicated in the Prospectus Supplement, the Company will
authorize agents, underwriters or dealers to solicit offers by certain specified
institutions to purchase Securities from the Company at the public offering
price set forth in such Prospectus Supplement pursuant to delayed delivery
contracts providing for payment and delivery on a specified date in the future.
Such contracts will be subject only to those conditions set forth in the
Prospectus Supplement, and the Prospectus Supplement will set forth the
commission payable for solicitation of such contracts.
Each underwriter, dealer and agent participating in the distribution of any
Debt Securities which are issuable in bearer form will agree that it will not
offer, sell or deliver, directly or indirectly, Debt Securities in bearer form
in the United States or to United States persons except as otherwise permitted
by Treasury Regulation Section 1.163- 5(c)(2)(i)(D). See "Limitations on
Issuance of Bearer Securities." The Securities may not be offered or sold
directly or indirectly in Great Britain other than to persons whose ordinary
business it is to buy or sell shares or debentures (except in circumstances
which do not constitute an offer to the public within the meaning of the
Companies Act of 1985), and this Prospectus and any Prospectus Supplement or any
other offering material relating to the Securities may not be distributed in or
from Great Britain other than to persons whose business involves the acquisition
and disposal, or the holding, of securities whether as principal or as agent.
37
<PAGE>
Each series of Securities will be a new issue with no established trading
market, other than the Common Stock which is listed on the New York Stock
Exchange. Any Common Stock sold pursuant to a Prospectus Supplement will be
listed on the New York Stock Exchange, subject to official notice of issuance.
Any underwriters to whom Securities are sold by the Company for public
offering and sale may make a market in such Securities, but such underwriters
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 Securities.
Agents, dealers, and underwriters may be entitled under agreements entered
into with the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to contribution
with respect to payments that such agents, dealers, or underwriters may be
required to make with respect thereto. Underwriters, dealers, or agents and
their associates may be customers of, engage in transactions with and perform
services for, the Company in the ordinary course of business.
In connection with underwritten offerings of the Securities and in
accordance with applicable law and industry practice, underwriters may
over-allot or effect transactions which stabilize, maintain or otherwise affect
the market price of the Securities at levels above those which might otherwise
prevail in the open market, including by entering stabilizing bids, effecting
syndicate covering transactions or imposing penalty bids. A stabilizing bid
means the placing of any bid, or the effecting of any purchase, for the purpose
of pegging, fixing or maintaining the price of a security. A syndicate covering
transaction means the placing of any bid on behalf of the underwriting syndicate
or effecting of any purchase to reduce a short position created in connection
with the offering. A penalty bid means an arrangement that permits the managing
underwriter to reclaim a selling concession from a syndicate member in
connection with the offering when Securities originally sold by the syndicate
member are purchased in syndicate covering transactions. Such transactions may
be effected on the NYSE, in the over-the-counter market, or otherwise.
Underwriters are not required to engage in any of these activities. Any such
activities, if commenced, may be discontinued at any time.
LEGAL OPINIONS
The validity of the Securities will be passed upon for the Company by Thomas
R. Bremer, Senior Vice President and General Counsel of the Company. Certain
other legal matters will be passed upon for the Company by Dewey Ballantine LLP,
counsel for the Company, and certain legal matters will be passed upon for any
underwriters or agents, by Cravath, Swaine & Moore, counsel for such
underwriters or agents.
EXPERTS
The financial statements and the related financial statement schedule
incorporated in this prospectus by reference from the Company's Annual Report on
Form 10-K for the year ended December 31, 1997, have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their report, which is
incorporated herein by reference, and have been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing. The combined financial statements of Valleylab, a Business of Pfizer
Inc., as of December 31, 1997, and for the year then ended, have been
incorporated by reference herein and in the registration statement in reliance
upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
38
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE
HEREUNDER AND THEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE AN IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
--------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PROSPECTUS SUPPLEMENT PAGE
---------
<S> <C>
The Company............................... S-2
Use of Proceeds........................... S-4
Ratios of Earnings to Fixed Charges and of
Earnings to Combined Fixed Charges and
Preferred Stock Dividends............... S-4
Capitalization............................ S-5
Selected Financial Data................... S-6
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.............................. S-7
Description of the Notes.................. S-14
Underwriting.............................. S-15
Legal Opinions............................ S-17
<CAPTION>
PROSPECTUS PAGE
---------
<S> <C>
Available Information..................... 2
Incorporation of Certain Documents by
Reference............................... 2
Risk Factors.............................. 3
The Company............................... 7
Ratios of Earnings to Fixed Charges and of
Earnings to Combined Fixed Charges and
Preferred Stock Dividends............... 11
Use of Proceeds........................... 11
Description of Debt Securities............ 12
Description of Capital Stock.............. 27
Description of Preferred Stock............ 27
Description of Depositary Shares.......... 30
Description of Common Stock............... 33
Description of Warrants................... 33
Limitations on Issuance of Bearer
Securities.............................. 35
Plan of Distribution...................... 37
Legal Opinions............................ 38
Experts................................... 38
</TABLE>
$
UNITED STATES
SURGICAL CORPORATION
% SENIOR NOTES
DUE
---------------
PROSPECTUS SUPPLEMENT
, 1998
--------------------------
SALOMON SMITH BARNEY
MERRILL LYNCH & CO.
J.P. MORGAN & CO.
BANCAMERICA ROBERTSON STEPHENS
BNY CAPITAL MARKETS, INC.
CHASE SECURITIES INC.
NATIONSBANC MONTGOMERY
SECURITIES LLC
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION*
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission Registration Fee............... $ 131,947
Trustees and Depositary's Fees and Expenses....................... 15,000
Printing and Engraving Fees and Expenses.......................... 50,000
Accounting Fees and Expenses...................................... 75,000
Legal Fees........................................................ 50,000
Rating Agency Fees................................................ 50,000
Miscellaneous (including Listing Fees, if applicable)............. 28,053
---------
TOTAL....................................................... $ 400,000
---------
---------
</TABLE>
- ------------------------
* All fees are estimates except for the Securities and Exchange Commission
filing fee.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware Corporation Law empowers a corporation to
indemnify its directors and officers or former directors and officers and to
purchase insurance with respect to liability arising out of their capacity or
status as directors and officers. Such law provides further that the
indemnification permitted thereunder shall not be deemed exclusive of any other
rights to which the directors and officers may be entitled under a corporation's
Certificate of Incorporation, Bylaws, any agreement or otherwise.
Article Eight of the Company's Certificate of Incorporation, as amended,
provides that, to the fullest extent permitted by the Delaware General
Corporation Law, as the same exists or may hereafter be amended, a director of
the Company shall not be liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director. Article XI of the Company's
By-laws provides for indemnification of officers and directors to the fullest
extent permitted by law.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been advised that in the
opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
The Company has purchased certain liability insurance for its officers and
directors as permitted by Section 145(g) of the Delaware General Corporation Law
and has entered into indemnity agreements with certain directors and officers
providing indemnification in addition to that provided under the Delaware
General Corporation Law, as permitted by Section145(f) of the Delaware General
Corporation Law.
II-1
<PAGE>
ITEM 16. EXHIBITS
The following is a list of all exhibits filed as a part of this Registration
Statement on Form S-3, including those incorporated herein by reference.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ----------- ------------------------------------------------------------------------------------------------------
<S> <C>
1(a) Form of Underwriting Agreement.*
4(a) Form of Indenture for Senior Debt Securities between United States Surgical Corporation and The Bank
of New York, as trustee.
4(b) Form of Indenture for Subordinated Debt Securities between United States Surgical Corporation and The
Bank of New York, as trustee.*
4(c) The form or forms of Securities with respect to each particular series of Securities registered
hereunder will be filed as an exhibit to a Current Report of the Registrant on Form 8-K and
incorporated herein by reference.
5 Opinion of Thomas R. Bremer.*
12 Statement re: Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed
Charges and Preferred Stock Dividends.*
23(a) Consent of Deloitte & Touche LLP, Independent Auditors.
23(b) Consent of KPMG Peat Marwick LLP, Independent Certified Public Accountants.
24 Power of Attorney.*
25(a) Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of the Trustee for the Senior
Indenture.*
25(b) Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of the Trustee for the
Subordinated Indenture.*
</TABLE>
- ------------------------
* Previously filed.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes: (1) To file, during any period
in which offers or sales are being made, a post-effective amendment to this
registration statement: (i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any
facts or events arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set forth in
the registration statement; notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement; provided,
however, that paragraphs (1)(i) and (1)(ii) do not apply if the registration
statement is on Form S-3 or Form S-8, and the information required to be
included in a post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by the
II-2
<PAGE>
registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in the registration statement;
(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof; (3) To remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes that (i) for purposes of
determining any liability under the Securities Act of 1933, the information
omitted from the form of prospectus filed as part of this registration statement
in reliance upon Rule 430A and contained in a form of prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
shall be deemed to be part of this registration statement as of the time it was
declared effective and (ii) for the purpose of determining any liability under
the Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes to file an application for the
purpose of determining the eligibility of the trustee to act under subsection
(a) of Section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under Section 305(b)(2) of the Act.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions set forth in Item 15, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this amendment to the
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Norwalk, State of Connecticut, on March 6, 1998.
<TABLE>
<S> <C> <C>
UNITED STATES SURGICAL CORPORATION
(Registrant)
By: /s/ THOMAS R. BREMER
-----------------------------------------
Thomas R. Bremer,
SENIOR VICE PRESIDENT AND
GENERAL COUNSEL
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the registration statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURES TITLE DATE
- ------------------------------ -------------------------- -------------------
Chairman of the Board,
/s/ LEON C. HIRSCH* Chief Executive Officer
- ------------------------------ and Director (Principal March 6, 1998
Leon C. Hirsch Executive Officer)
/s/ JULIE K. BLAKE*
- ------------------------------ Director March 6, 1998
Julie K. Blake
/s/ JOHN A. BOGARDUS, JR.*
- ------------------------------ Director March 6, 1998
John A. Bogardus, Jr.
/s/ THOMAS R. BREMER*
- ------------------------------ Director March 6, 1998
Thomas R. Bremer
/s/ TURI JOSEFSEN*
- ------------------------------ Director March 6, 1998
Turi Josefsen
/s/ DOUGLAS L. KING*
- ------------------------------ Director March 6, 1998
Douglas L. King
- ------------------------------ Director March , 1998
Robert A. Knarr
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ------------------------------ -------------------------- -------------------
/s/ WILLIAM F. MAY*
- ------------------------------ Director March 6, 1998
William F. May
<C> <S> <C>
/s/ JAMES R. MELLOR*
- ------------------------------ Director March 6, 1998
James R. Mellor
/s/ BARRY D. ROMERIL*
- ------------------------------ Director March 6, 1998
Barry D. Romeril
/s/ HOWARD M. ROSENKRANTZ*
- ------------------------------ Director March 6, 1998
Howard M. Rosenkrantz
/s/ MARIANNE SCIPIONE*
- ------------------------------ Director March 6, 1998
Marianne Scipione
/s/ JOHN R. SILBER*
- ------------------------------ Director March 6, 1998
John R. Silber
Senior Vice President and
/s/ RICHARD A. DOUVILLE* Chief Financial Officer
- ------------------------------ (Principal Financial March 6, 1998
Richard A. Douville Officer)
/s/ JOSEPH C. SCHERPF* Vice President and
- ------------------------------ Controller (Principal March 6, 1998
Joseph C. Scherpf Accounting Officer)
</TABLE>
*By: /s/ THOMAS R. BREMER
-------------------------
Thomas R. Bremer,
(ATTORNEY IN FACT)
II-5
<PAGE>
Exhibit 4(a)
- -------------------------------------------------------------------------------
UNITED STATES SURGICAL CORPORATION
TO
THE BANK OF NEW YORK,
Trustee
INDENTURE
Dated as of ________________
Senior Debt Securities
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS (1)
<TABLE>
<CAPTION>
Page
----
<S> <C>
Recitals of the Company. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I Definitions And Other Provisions Of General Application
SECTION 1.1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Act" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Affiliate" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Authenticating Agent" . . . . . . . . . . . . . . . . . . . . . . 2
"Authorized Newspaper" . . . . . . . . . . . . . . . . . . . . . . 2
"Bearer Security" . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Board of Directors" . . . . . . . . . . . . . . . . . . . . . . . 2
"Board Resolution" . . . . . . . . . . . . . . . . . . . . . . . . 2
"Book-Entry Security" . . . . . . . . . . . . . . . . . . . . . . . 2
"Business Day" . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"CEDEL S.A." . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Commission" . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Common Stock" . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Company" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Company Request" . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Consolidated Net Tangible Assets" . . . . . . . . . . . . . . . . 3
"Corporate Trust Office . . . . . . . . . . . . . . . . . . . . . . 3
"Corporation" . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Coupon" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Defaulted Interest" . . . . . . . . . . . . . . . . . . . . . . . 4
"Depositary" . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Dollar" or "$" . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Euro-clear" . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Event of Default" . . . . . . . . . . . . . . . . . . . . . . . . 4
"Exchange Date" . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Funded Debt" . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Hedging Obligation" . . . . . . . . . . . . . . . . . . . . . . . 5
"Holder" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Indenture" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Interest" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Interest Payment Date" . . . . . . . . . . . . . . . . . . . . . . 5
"Lien" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Maturity" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Officers' Certificate" . . . . . . . . . . . . . . . . . . . . . . 6
"Opinion of Counsel" . . . . . . . . . . . . . . . . . . . . . . . 6
"Original Issue Discount Security" . . . . . . . . . . . . . . . . 6
</TABLE>
- -------------------
(1) NOTE: This table of contents shall not, for any purpose, be deemed to
be a part of the Indenture.
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
"Outstanding" . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Paying Agent" . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Person" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Place of Payment" . . . . . . . . . . . . . . . . . . . . . . . . 7
"Predecessor Security" . . . . . . . . . . . . . . . . . . . . . . 7
"Redemption Date" . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Redemption Price" . . . . . . . . . . . . . . . . . . . . . . . . 8
"Registered Security" . . . . . . . . . . . . . . . . . . . . . . . 8
"Regular Record Date" . . . . . . . . . . . . . . . . . . . . . . . 8
"Responsible Officer" . . . . . . . . . . . . . . . . . . . . . . . 8
"Restricted Property" . . . . . . . . . . . . . . . . . . . . . . . 8
"Sale and Leaseback Transaction" . . . . . . . . . . . . . . . . . 8
"Securities" . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
"Security Register" and "Security Registrar" . . . . . . . . . . . 9
"Special Record Date" . . . . . . . . . . . . . . . . . . . . . . . 9
"Stated Maturity" . . . . . . . . . . . . . . . . . . . . . . . . . 9
"Subsidiary" . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
"Trustee" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
"Trust Indenture Act" . . . . . . . . . . . . . . . . . . . . . . . 10
"United States" . . . . . . . . . . . . . . . . . . . . . . . . . . 10
"United States Alien" . . . . . . . . . . . . . . . . . . . . . . . 10
"U.S. Government Obligations" . . . . . . . . . . . . . . . . . . . 10
"Value" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 1.2. Compliance Certificates and Opinions . . . . . . . . . . . . . 11
SECTION 1.3. Form of Documents Delivered to Trustee . . . . . . . . . . . . 11
SECTION 1.4. Acts of Holders. . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 1.5. Notices, etc., to Trustee and Company. . . . . . . . . . . . . 14
SECTION 1.6. Notice to Holders of Securities; Waiver. . . . . . . . . . . . 15
SECTION 1.7. Language of Notices, etc . . . . . . . . . . . . . . . . . . . 16
SECTION 1.8. Conflict with Trust Indenture Act. . . . . . . . . . . . . . . 16
SECTION 1.9. Effect of Headings and Table of Contents . . . . . . . . . . . 16
SECTION 1.10. Successors and Assigns . . . . . . . . . . . . . . . . . . . . 16
SECTION 1.11. Separability Clause. . . . . . . . . . . . . . . . . . . . . . 16
SECTION 1.12. Benefits of Indenture . . . . . . . . . . . . . . . . . . . . 16
SECTION 1.13. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 1.14. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 1.15. Judgment Currency. . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE II Security Forms
SECTION 2.1. Forms Generally. . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 2.2. Form of Trustee's Certificate of Authentication. . . . . . . . 18
SECTION 2.3. Securities in Global Form. . . . . . . . . . . . . . . . . . . 19
SECTION 2.4. Form of Legend for Book-Entry Securities . . . . . . . . . . . 20
SECTION 2.5. Form of Conversion Notice. . . . . . . . . . . . . . . . . . . 20
</TABLE>
ii
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ARTICLE III The Securities
SECTION 3.1. Amount Unlimited; Issuable in Series . . . . . . . . . . . . . 20
SECTION 3.2. Denominations. . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 3.3. Execution, Authentication, Delivery and Dating . . . . . . . . 23
SECTION 3.4. Temporary Securities . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.5. Registration, Registration of Transfer and Exchange. . . . . . 28
SECTION 3.6. Mutilated, Destroyed, Lost and Stolen Securities and Coupons . 31
SECTION 3.7. Payment of Interest; Interest Rights Preserved . . . . . . . . 32
SECTION 3.8. Persons Deemed Owners. . . . . . . . . . . . . . . . . . . . . 33
SECTION 3.9. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 3.10. Computation of Interest. . . . . . . . . . . . . . . . . . . . 34
SECTION 3.11. Electronic Security Issuance . . . . . . . . . . . . . . . . . 34
ARTICLE IV Satisfaction and Discharge
SECTION 4.1. Satisfaction and Discharge of Indenture. . . . . . . . . . . . 35
SECTION 4.2. Application of Trust Money . . . . . . . . . . . . . . . . . . 36
SECTION 4.3. Company's Option to Effect Defeasance or Covenant Defeasance . 36
SECTION 4.4. Discharge and Defeasance . . . . . . . . . . . . . . . . . . . 36
SECTION 4.5. Covenant Defeasance. . . . . . . . . . . . . . . . . . . . . . 37
SECTION 4.6. Conditions to Defeasance or Covenant Defeasance. . . . . . . . 37
ARTICLE V Remedies
SECTION 5.1. Events of Default. . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment . . . . . . 41
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by
Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 5.4. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . 43
SECTION 5.5. Trustee May Enforce Claims Without Possession of
Securities or Coupons. . . . . . . . . . . . . . . . . . . . 44
SECTION 5.6. Application of Money Collected . . . . . . . . . . . . . . . . 44
SECTION 5.7. Limitation on Suits. . . . . . . . . . . . . . . . . . . . . . 44
SECTION 5.8. Unconditional Right of Holders to Receive Principal,
Premium and Interest . . . . . . . . . . . . . . . . . . . . 45
SECTION 5.9. Restoration of Rights and Remedies . . . . . . . . . . . . . . 45
SECTION 5.10. Rights and Remedies Cumulative . . . . . . . . . . . . . . . . 46
SECTION 5.11. Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . 46
SECTION 5.12. Control by Holders of Securities . . . . . . . . . . . . . . . 46
SECTION 5.13. Waiver of Past Defaults. . . . . . . . . . . . . . . . . . . . 46
SECTION 5.14. Undertaking for Costs. . . . . . . . . . . . . . . . . . . . . 47
SECTION 5.15. Waiver of Stay or Extension Laws . . . . . . . . . . . . . . . 47
ARTICLE VI The Trustee
SECTION 6.1. Certain Rights of Trustee. . . . . . . . . . . . . . . . . . . 48
</TABLE>
iii
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<S> <C>
SECTION 6.2. Not Responsible for Recitals or Issuance of Securities . . . . 49
SECTION 6.3. May Hold Securities. . . . . . . . . . . . . . . . . . . . . . 49
SECTION 6.4. Money Held in Trust. . . . . . . . . . . . . . . . . . . . . . 49
SECTION 6.5. Compensation and Reimbursement . . . . . . . . . . . . . . . . 49
SECTION 6.6. Resignation and Removal; Appointment of Successor. . . . . . . 50
SECTION 6.7. Acceptance of Appointment by Successor . . . . . . . . . . . . 51
SECTION 6.8. Disqualification; Conflicting Interests. . . . . . . . . . . . 52
SECTION 6.9. Corporate Trustee Required; Eligibility. . . . . . . . . . . . 53
SECTION 6.10. Preferential Collection of Claims Against Company. . . . . . . 53
SECTION 6.11. Merger, Conversion Consolidation or Succession to Business . . 53
SECTION 6.12. Appointment of Authenticating Agent. . . . . . . . . . . . . . 53
SECTION 6.13. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE VII Holders' Lists and Reports by Trustee and Company
SECTION 7.1. Preservation of Information; Communications to Holders . . . . 55
SECTION 7.2. Reports by Trustee . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 7.3. Reports by Company . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE VIII Consolidation, Merger, Sale, Lease, Transfer or Other Disposition
SECTION 8.1. Company May Consolidate, etc. Only on Certain Terms. . . . . . 57
SECTION 8.2. Successor Substituted. . . . . . . . . . . . . . . . . . . . . 58
ARTICLE IX Supplemental Indentures
SECTION 9.1. Supplemental Indentures Without Consent of Holders . . . . . . 59
SECTION 9.2. Supplemental Indentures with Consent of Holders. . . . . . . . 60
SECTION 9.3. Execution of Supplemental Indentures . . . . . . . . . . . . . 61
SECTION 9.4. Effect of Supplemental Indentures. . . . . . . . . . . . . . . 62
SECTION 9.5. Conformity with Trust Indenture Act. . . . . . . . . . . . . . 62
SECTION 9.6. Reference in Securities to Supplemental Indentures . . . . . . 62
ARTICLE X Covenants
SECTION 10.1. Payment of Principal, Premium and Interest . . . . . . . . . . 62
SECTION 10.2. Maintenance of Office or Agency. . . . . . . . . . . . . . . . 63
SECTION 10.3. Money for Securities Payments to Be Held in Trust. . . . . . . 64
SECTION 10.4. Additional Amounts . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 10.5. Existence. . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 10.6. Purchase of Securities by Company or Subsidiary. . . . . . . . 67
SECTION 10.7. Limitation on Liens. . . . . . . . . . . . . . . . . . . . . . 67
SECTION 10.8. Limitation on Sale and Leaseback Transactions. . . . . . . . . 68
SECION 10.9. Limitation on Subsidiary Indebtedness. . . . . . . . . . . . . 68
SECTION 10.10.Statement by Officers as to Default. . . . . . . . . . . . . . 69
ARTICLE XI Redemption of Securities
SECTION 11.1. Applicability of Article . . . . . . . . . . . . . . . . . . . 69
</TABLE>
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SECTION 11.2. Election to Redeem; Notice to Trustee . . . . . . . . . . . . 69
SECTION 11.3. Selection by Trustee of Securities to Be Redeemed . . . . . . 69
SECTION 11.4. Notice of Redemption . . . . . . . . . . . . . . . . . . . . 70
SECTION 11.5. Deposit of Redemption Price . . . . . . . . . . . . . . . . . 71
SECTION 11.6. Securities Payable on Redemption Date . . . . . . . . . . . . 71
SECTION 11.7. Securities Redeemed in Part . . . . . . . . . . . . . . . . . 72
ARTICLE XII Sinking Funds
SECTION 12.1. Applicability of Article . . . . . . . . . . . . . . . . . . 72
SECTION 12.2. Satisfaction of Sinking Fund Payments with Securities . . . . 73
SECTION 12.3. Redemption of Securities for Sinking Fund . . . . . . . . . . 73
ARTICLE XIII Meetings of Holders of Securities
SECTION 13.1. Purposes for Which Meetings May Be Called . . . . . . . . . . 74
SECTION 13.2. Call, Notice and Place of Meetings . . . . . . . . . . . . . 74
SECTION 13.3. Persons Entitled to Vote at Meetings . . . . . . . . . . . . 74
SECTION 13.4. Quorum; Action . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 13.5. Determination of Voting Rights; Conduct and Adjournment of
Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 13.6. Counting Votes and Recording Action of Meetings . . . . . . . 77
ARTICLE XIV Conversion of Securities
SECTION 14.1. Applicability of Article . . . . . . . . . . . . . . . . . . 77
SECTION 14.2. Exercise of Conversion Privilege . . . . . . . . . . . . . . 78
SECTION 14.3. No Fractional Shares . . . . . . . . . . . . . . . . . . . . 79
SECTION 14.4. Adjustment of Conversion Price . . . . . . . . . . . . . . . 79
SECTION 14.5. Notice of Certain Corporate Actions . . . . . . . . . . . . . 80
SECTION 14.6. Reservation of Shares of Common Stock . . . . . . . . . . . . 81
SECTION 14.7. Payment of Certain Taxes upon Conversion . . . . . . . . . . 81
SECTION 14.8. Nonassessability . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 14.9. Effect of Consolidation or Merger on Conversion Privilege . . 81
SECTION 14.10. Duties of Trustee Regarding Conversion . . . . . . . . . . . 82
SECTION 14.11. Repayment of Certain Funds upon Conversion . . . . . . . . . 83
</TABLE>
v
<PAGE>
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
<S> <C>
Section 310(a)(1). . . . . . . . . . . . . 6.9
(a)(2). . . . . . . . . . . . . 6.9
(a)(3). . . . . . . . . . . . . Not Applicable
(a)(4). . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . 6.8
6.6
Section 311(a) . . . . . . . . . . . . . . 6.10
(b) . . . . . . . . . . . . . . 6.10
Section 312(a) . . . . . . . . . . . . . . 7.1
(b) . . . . . . . . . . . . . . 7.1
(c) . . . . . . . . . . . . . . 7.1
Section 313(a) . . . . . . . . . . . . . . 7.2
(b) . . . . . . . . . . . . . . 7.2
(c) . . . . . . . . . . . . . . 7.2
(d) . . . . . . . . . . . . . . 7.2
Section 314(a) . . . . . . . . . . . . . . 7.3
(a)(4). . . . . . . . . . . . . 1.1
10.10
(b) . . . . . . . . . . . . . . Not Applicable
(c)(1). . . . . . . . . . . . . 1.2
(c)(2). . . . . . . . . . . . . 1.2
(c)(3). . . . . . . . . . . . . Not Applicable
(d) . . . . . . . . . . . . . . Not Applicable
(e) . . . . . . . . . . . . . . 1.2
Section 315(a) . . . . . . . . . . . . . . 6.1
(b) . . . . . . . . . . . . . . 6.13
(c) . . . . . . . . . . . . . . 6.1
(d) . . . . . . . . . . . . . . 6.1
(e) . . . . . . . . . . . . . . 5.14
Section 316(a) . . . . . . . . . . . . . . 1.1
(a)(1)(A) . . . . . . . . . . . 5.2
5.12
(a)(1)(B) . . . . . . . . . . . 5.13
(a)(2). . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . 5.8
(c) . . . . . . . . . . . . . . 1.4
Section 317(a)(1). . . . . . . . . . . . . 5.3
(a)(2). . . . . . . . . . . . . 5.4
(b) . . . . . . . . . . . . . . 10.3
Section 318(a) . . . . . . . . . . . . . . 1.8
</TABLE>
- --------------------
* Note: This Cross-Reference Table is not part of the Indenture.
vi
<PAGE>
INDENTURE, dated as of ______________, between UNITED STATES
SURGICAL CORPORATION, a corporation duly organized and existing under the
laws of the State of Delaware (herein called the "Company"), having its
principal office at 150 Glover Avenue, Norwalk, Connecticut 06856, and The
Bank of New York, as Trustee (herein called the "Trustee") .
Recitals of the Company
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured and
unsubordinated debentures, notes or other evidences of indebtedness (herein
called the "Securities"), to be issued in one or more series as in this
Indenture provided.
All things necessary to make this Indenture a valid agreement of
the Company, in accordance with its terms, have been done.
Now, Therefore, This Indenture Witnesseth:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities or of a series
thereof, as follows:
ARTICLE I
Definitions And Other Provisions Of General Application
SECTION 1.1. Definitions.
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular;
(2) all other terms used herein which are defined in the
Trust Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein; and
(3) all accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with generally accepted
accounting principles in the United States of America, and, except as
otherwise herein expressly provided, the term "generally accepted accounting
principles" with respect to any computation required or permitted hereunder
shall mean such accounting principles as are generally accepted in the United
States of America at the date of such computation.
"Act", when used with respect to any Holder of a
Security, has the meaning specified in Section 1.4.
<PAGE>
"Affiliate" of any specified Person means any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of this
definition, "control", when used with respect to any specified Person, means
the power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Authenticating Agent" means any Person authorized by the
Trustee pursuant to Section 6.12 to act on behalf of the Trustee to
authenticate Securities of one or more series.
"Authorized Newspaper" means a newspaper, in the English
language or in an official language of the country of publication,
customarily published on each Business Day, whether or not published on
Saturdays, Sundays or holidays, and of general circulation in the place, in
connection with which the term is used, or in the financial community of such
place. Where successive publications are required to be made in Authorized
Newspapers, the successive publications may be made in the same or in
different newspapers in the same city meeting the foregoing requirements and
in each case on any Business Day.
"Bearer Security" means any Security in the form
established pursuant to Section 2.1 which is payable to bearer.
"Board of Directors" means either the board of directors
of the Company or any duly authorized committee of that board.
"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.
"Book-Entry Security" means a Security bearing the legend
specified in Section 2.4, evidencing all or part of a series of Securities,
issued to the Depositary for such series or its nominee, and registered in
the name of such Depositary or nominee. Book-Entry Securities shall not be
deemed to be securities in global form for purposes of Sections 2.1 and 2.3
and Article III of the Indenture.
"Business Day", when used with respect to any Place of
Payment or any other particular location referred to in this Indenture or in
the Securities, means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in that Place of Payment or
other location are authorized or obligated by law or executive order to close.
"CEDEL S.A." means CEDEL BANK, SOCIETE ANONYME.
"Commission" means the United States Securities and
Exchange Commission.
2
<PAGE>
"Common Stock" includes any stock of any class of the
Company which has no preference in respect of dividends or of amounts payable
in the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company and which is not subject to redemption by the
Company.
"Company" means the Person named as the "Company" in the
first paragraph of this instrument until a successor Person shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written
request or order signed in the name of the Company by its Chairman of the
Board, its President, its Chief Financial Officer, or its Treasurer, and
delivered to the Trustee.
"Consolidated Net Tangible Assets" means the total amount
of assets (less applicable reserves and other properly deductible items)
after deducting (1) all current liabilities (excluding the amount of those
which are by their terms extendable or renewable at the option of the obligor
to a date more than 12 months after the date as of which the amount is being
determined) and (2) all intangible assets other than patents, patent
applications pending and licenses, all as set forth on or included in the
most recent balance sheet of the Company and its consolidated Subsidiaries
and determined in accordance with generally accepted accounting principles.
"Corporate Trust Office" means the principal office of
the Trustee in New York, New York at which at any particular time its
corporate trust business shall be administered.
"Corporation" means a corporation, association, company,
joint-stock company or business trust.
"Coupon" means any interest coupon appertaining to a
Bearer Security.
"Defaulted Interest" has the meaning specified in Section
3.7.
"Depositary" means, with respect to the Securities of any
series issuable or issued in whole or in part in the form of one or more
Book-Entry Securities, the clearing agency registered under the Securities
Exchange Act of 1934, as amended specified for that purpose as contemplated
by Section 3.1.
"Dollar" or "$" means a dollar or other equivalent unit
in such coin or currency of the United States of America as at the time shall
be legal tender for the payment of public and private debts.
"Euro-clear" means the operator of the Euro-clear System.
"Event of Default" has the meaning specified in Section
5.1.
"Exchange Date" has the meaning specified in Section 3.4.
3
<PAGE>
"Funded Debt" means indebtedness of the Company or a
Subsidiary owning Restricted Property maturing by its terms more than one
year after its creation and indebtedness classified as long-term debt under
generally accepted accounting principles and in each case ranking at least
pari passu with the outstanding Securities of all series. The foregoing
notwithstanding, "Funded Debt" shall also include indebtedness incurred
pursuant to that certain Credit Agreement dated as of January 30, 1998 among
the Company, the lenders party thereto, Bank of America National Trust and
Savings Association, as Syndication Agent, the Bank of New York, as
Administrative Agent, and Morgan Guaranty Trust Company of New York, as
Documentation Agent.
"Hedging Obligation" of any Person means an obligation of
such Person pursuant to any rate swap transaction, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency
option or any other similar transaction (including any option with respect to
any of the foregoing transactions) or any combination of the foregoing
transactions.
"Holder", when used with respect to any Security, means
in the case of a Registered Security, the Person in whose name the Security
is registered in the Security Register and in the case of a Bearer Security
the bearer thereof and, when used with respect to any coupon, means the
bearer thereof.
"Indenture" means this instrument as originally executed
or as it may from time to time be supplemented or amended by one or more
indentures supplemental hereto entered into pursuant to the applicable
provisions hereof and shall include the terms of particular series of
Securities established as contemplated by Section 3.1.
"Interest", when used with respect to an Original Issue
Discount Security which by its terms bears interest only after Maturity,
means interest payable after Maturity.
"Interest Payment Date", when used with respect to any
Security, means the Stated Maturity of an installment of interest on such
Security.
"Lien" means any mortgage, pledge, lien, encumbrance,
charge or security interest.
"Maturity", when used with respect to any Security, means
the date on which the principal of such Security or an installment of
principal becomes due and payable as therein or herein provided, whether at
the Stated Maturity or by declaration of acceleration, call for redemption or
otherwise.
"Officers' Certificate" means a certificate signed by the
Company's Chairman of the Board, its President, its Chief Financial Officer,
its Treasurer or any Vice President, and delivered to the Trustee.
4
<PAGE>
"Opinion of Counsel" means a written opinion of counsel,
who may be counsel for the Company, and who shall be reasonably acceptable to
the Trustee.
"Original Issue Discount Security" means any Security
which provides for an amount less than the principal amount thereof to be due
and payable upon a declaration of acceleration of the Maturity thereof
pursuant to Section 5.2.
"Outstanding", when used with respect to Securities,
means, as of the date of determination, all Securities theretofore
authenticated and delivered under this Indenture, except:
(i) Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(ii) 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 Securities and any coupons appertaining thereto; provided
that, if such Securities are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or
provision therefor satisfactory to the Trustee has been made;
(iii) Securities which have been paid pursuant to
Section 3.6 or in exchange for or in lieu of which other
Securities have been authenticated and delivered pursuant to
this Indenture, other than any such Securities in respect of
which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona
fide purchaser in whose hands such Securities are valid
obligations of the Company; provided, however, that in
determining whether the Holders of the requisite principal
amount of the Outstanding Securities have given any request,
demand, authorization, direction, notice, consent or waiver
hereunder or whether a quorum is present at a meeting of
Holders of Securities (i) the principal amount of an Original
Issue Discount Security that shall be deemed to be Outstanding
shall be the amount of the principal thereof that would be due
and payable as of the date of such determination upon
acceleration of the Maturity thereof pursuant to Section 5.2,
(ii) the principal amount of a Security denominated in a
foreign currency or currencies shall be the U.S. dollar
equivalent, determined on the date of original issuance of
such Security, of the principal amount (or, in the case of an
Original Issue Discount Security, the U.S. dollar equivalent
on the date of original issuance of such Security of the
amount determined as provided in (i) above) of such Security,
and (iii) Securities owned by the Company or any other obligor
upon the Securities or any Affiliate 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, or upon
any such determination as to the presence of a quorum, only
Securities which the Trustee
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knows to be so owned shall be so disregarded. Securities so
owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of
the Trustee the pledgee's right so to act with respect to such
Securities and that the pledgee is not the Company or any
other obligor upon the Securities or any Affiliate of the
Company or of such other obligor; and
(iv) Securities as to which Defeasance has been effected
pursuant to Section 4.4.
"Paying Agent" means any Person authorized by the Company
to pay the principal of and any premium and interest on any Securities or any
Coupons appertaining thereto on behalf of the Company.
"Person" means any individual, corporation, limited
liability company, partnership, joint venture, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Place of Payment", when used with respect to the
Securities of any series, means the place or places where, subject to the
provisions of Section 10.2, the principal of and any premium and interest on
the Securities of that series are payable as specified as contemplated by
Section 3.1.
"Predecessor Security" of any particular Security means
every previous Security evidencing all or a portion of the same debt as that
evidenced by such particular Security; and, for the purposes of this
definition, any Security authenticated and delivered under Section 3.6 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Security or
a Security to which a mutilated, destroyed, lost or stolen coupon appertains
shall be deemed to evidence the same debt as the mutilated, destroyed, lost
or stolen Security or the Security to which the mutilated, destroyed, lost or
stolen coupon appertains, as the case may be.
"Redemption Date", when used with respect to any Security
to be redeemed, means the date fixed for such redemption by or pursuant to
this Indenture.
"Redemption Price", when used with respect to any
Security to be redeemed, means the price at which it is to be redeemed
pursuant to this Indenture.
"Registered Security" means any Security in the form
established pursuant to Section 2.1 which is registered in the Security
Register.
"Regular Record Date" for the interest payable on any
Interest Payment Date on the Registered Securities of any series means the
date specified for that purpose as contemplated by Section 3.1, whether or
not such day is a Business Day.
"Responsible Officer", when used with respect to the
Trustee, means the Chairman of the board of directors, the executive
committee of the board of directors, the chairman of the trust committee, the
president, any vice president, the secretary, any
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assistant secretary, the treasurer, any assistant treasurer, the cashier, any
assistant cashier, any trust officer or assistant trust officer, the
controller or any assistant controller or any other officer of the Trustee
customarily performing functions similar to those performed by any of the
above designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the particular subject.
"Restricted Property" means (1) any manufacturing
facility, or portion thereof, owned or leased by the Company or any
Subsidiary which, in the opinion of the Board of Directors, is of material
importance to the business of the Company and its Subsidiaries taken as
whole, but no such manufacturing facility, or portion thereof, shall be
deemed of material importance if its gross book value (before deducting
accumulated depreciation) is less than 5% of Consolidated Net Tangible
Assets, or (2) any shares of capital stock or indebtedness of any Subsidiary
owning any such manufacturing facility. As used in this definition,
"manufacturing facility" means any real property (or portion thereof) used
for actual commercial scale manufacturing and excludes, without limitation,
sales offices, research facilities, pilot production facilities, and any
facility (or portion thereof) used primarily for warehousing or general
administration.
"Sale and Leaseback Transaction" means any arrangement
with any Person pursuant to which the Company or any Subsidiary leases any
Restricted Property that has been or is to be sold or transferred by the
Company or the Subsidiary to such Person, other than (1) temporary leases for
a term, including renewals at the option of the lessee, of not more than five
years, (2) leases between the Company and a Subsidiary or between
Subsidiaries, and (3) leases of a Restricted Property executed by the time
of, or within 12 months after the latest of, the acquisition, the completion
of construction or improvement, or the commencement of commercial operation
of the Restricted Property.
"Securities" has the meaning stated in the first recital
of this Indenture and more particularly means any Securities authenticated
and delivered under this Indenture.
"Security Register" and "Security Registrar" have the
respective meanings specified in Section 3.5.
"Special Record Date" for the payment of any Defaulted
Interest on the Registered Securities of any series means a date fixed by the
Trustee pursuant to Section 3.7.
"Stated Maturity", when used with respect to any Security
or any installment of principal thereof or interest thereon, means the date
specified in such Security or a Coupon representing such installment of
interest as the fixed date on which the principal of such Security or such
installment of principal or interest is due and payable.
"Subsidiary" of any Person means (i) any Person of which
more than 50% of the total voting power of shares of capital stock entitled
(without regard to the occurrence of any contingency) to vote in the election
of directors, managers or trustees
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thereof is at the time owned or controlled, directly or indirectly, by any
Person or one or more of the Subsidiaries of that Person or a combination
thereof, and (ii) any partnership, joint venture or other Person in which
such Person or one or more of the Subsidiaries of that Person or a
combination thereof has the power to control by contract or otherwise the
board of directors or equivalent governing body or otherwise controls such
entity.
"Trustee" means the Person named as the "Trustee" in the
first paragraph of this instrument until a successor Trustee shall have
become such pursuant to the applicable provisions of this Indenture, and
thereafter "Trustee" shall mean or include each Person who is then a Trustee
hereunder, and if at any time there is more than one such Person, "Trustee"
as used with respect to the Securities of any series shall mean the Trustee
with respect to Securities of that series.
"Trust Indenture Act" means the Trust Indenture Act of
1939 as in force at the date as of which this instrument was executed,
provided, however, that in the event the Trust Indenture Act of 1939 is
amended after such date, "Trust Indenture Act" means, to the extent required
by any such amendment, the Trust Indenture Act of 1939 as so amended.
"United States" means the United States of America
(including the States and the District of Columbia), its territories, its
possessions and other areas subject to its jurisdiction.
"United States Alien" means any Person who, for United
States Federal income tax purposes, is a foreign corporation, a nonresident
alien individual, a non-resident alien fiduciary of a foreign estate or
trust, or a foreign partnership one or more of the members of which is, for
United States Federal income tax purposes, a foreign corporation, a
nonresident alien individual or a nonresident alien fiduciary of a foreign
estate or trust.
"U.S. Government Obligations" means direct obligations of
the United States for the payment of which its full faith and credit is
pledged, or obligations of a person controlled or supervised by and acting as
an agency or instrumentality of the United States and the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the
United States which, in either case, are not callable or redeemable at the
option of the issuer thereof, and shall also include a depository receipt
issued by a bank (as defined in Section 3(a)(2) of the Securities Act of
1933, as amended) as custodian with respect to any such U.S. Government
Obligations or a specific payment of principal of or interest on any such
U.S. Government Obligations held by such custodian for the account of the
holder of such depository receipt, 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 depository receipt from any amount received by
the custodian in respect of the U.S. Government Obligations or the specific
payment of principal of or interest on the U.S. Government Obligations
evidenced by such depository receipt.
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"Value" means, with respect to a Sale and Leaseback
Transaction, an amount equal to the present value of the lease payments with
respect to the term of the lease remaining on the date as of which the amount
is being determined, without regard to any renewal or extension options
contained in the lease, discounted at the weighted average interest rate on
the Securities of all series (including the effective interest rate on any
Original Issue Discount Securities) which are outstanding on the effective
date of such Sale and Leaseback Transaction and which have the benefit of
Section 10.8 of this Indenture.
SECTION 1.2. Compliance Certificates and Opinions.
Except as otherwise expressly provided by this Indenture, upon
any application or request by the Company to the Trustee to take any action
under any provision of this Indenture, the Company shall furnish to the
Trustee an Officers' Certificate stating that all conditions precedent, if
any, provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with,
except that in the case of any such application or request as to which the
furnishing of such documents is specifically required by any provision of
this Indenture relating to such particular application or request, no
additional certificate or opinion need be furnished.
Every certificate or opinion by or on behalf of the Company
with respect to compliance with a condition or covenant provided for in this
Indenture, except for certificates provided for in Section 10.10, shall
include:
(1) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained
in such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual,
he has made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 1.3. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary
that all such matters be certified by, or covered by the opinion of, only one
such Person, or that they be so certified or covered by only one document,
but one such Person may certify or give an opinion with respect to some
matters and one or more other such Persons as to other matters, and any such
Person may certify or give an opinion as to such matters in one or several
documents.
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Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or Opinion of Counsel
may be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Company
stating that the information with respect to such factual matters is in the
possession of the Company, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be
consolidated and form one instrument.
SECTION 1.4. Acts of Holders.
(a) Any request, demand, authorization, direction,
notice, consent, waiver or other action provided or permitted by this
Indenture to be given or taken by Holders may be embodied in and evidenced by
one or more instruments of substantially similar tenor signed by such Holders
in person or by agent duly appointed in writing. If Securities of a series
are issuable as Bearer Securities, any request, demand, authorization,
direction, notice, consent, waiver or other action provided or permitted by
this Indenture to be given or taken by Holders of such series may,
alternatively, be embodied in and evidenced by the record of Holders of
Securities of such series voting in favor thereof, either in person or by
proxies duly appointed in writing, at any meeting of Holders of Securities of
such series duly called and held in accordance with the provisions of Article
XIII, or a combination of such instruments and any such record. Except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments or record or both are delivered to the Trustee
and, where it is hereby expressly required, to the Company. Such instrument
or instruments and any such record (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the
Holders signing such instrument or instruments and so voting at any such
meeting. Proof of execution of any such instrument or of a writing appointing
any such agent or proxy, or of the holding by any Person of a Security, shall
be sufficient for any purpose of this Indenture and (subject to Section 6.1)
conclusive in favor of the Trustee and the Company, if made in the manner
provided in this Section. The record of any meeting of Holders of Securities
shall be proved in the manner provided in Section 13.6.
(b) The fact and date of the execution by any Person of
any such instrument or writing may be proved by the affidavit of a witness of
such execution or by a certificate of a notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the
execution thereof. Where such execution is by a signer acting in a capacity
other than his individual capacity, such certificate or affidavit shall also
constitute sufficient proof of his authority. The fact and date of the
execution of any
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such instrument or writing, or the authority of the Person executing the
same, may also be proved in any other manner which the Trustee deems
sufficient.
(c) The principal amount and serial numbers of
Registered Securities held by any Person, and the date of holding the same,
shall be proved by the Security Register.
(d) The principal amount and serial numbers of Bearer
Securities held by any Person, and the date of holding the same, may be
proved by the production of such Bearer Securities or by a certificate
executed, as depositary, by any trust company, bank, banker or other
depositary, wherever situated, if such certificate shall be deemed by the
Trustee to be satisfactory, showing that at the date therein mentioned such
Person had on deposit with such depositary, or exhibited to it, the Bearer
Securities therein described; or such facts may be proved by the certificate
or affidavit of the Person holding such Bearer Securities, if such
certificate or affidavit is deemed by the Trustee to be satisfactory. The
Trustee and the Company may assume that such ownership of any Bearer Security
continues until (1) another certificate or affidavit bearing a later date
issued in respect of the same Bearer Security is produced, or (2) such Bearer
Security is produced to the Trustee by some other Person, or (3) such Bearer
Security is surrendered in exchange for a Registered Security, or (4) such
Bearer Security is no longer Outstanding. The principal amount and serial
numbers of Bearer Securities held by any Person, and the date of holding the
same, may also be proved in any other manner which the Trustee deems
sufficient.
(e) Any request, demand, authorization, direction,
notice, consent, waiver or other Act of the Holder of any Security shall bind
every future Holder of the same Security and the Holder of every Security
issued upon the registration of transfer thereof or in exchange therefor or
in lieu thereof in respect of anything done, omitted or suffered to be done
by the Trustee or the Company in reliance thereon, whether or not notation of
such action is made upon such Security.
(f) With respect to the Securities of any Series, upon
receipt by the Trustee of (i) any written notice directing the time, method
or place of conducting any proceeding or exercising any trust or power
pursuant to Section 5.12 with respect to Securities of such series or (ii)
any written demand, request or notice with respect to any matter on which the
Holders of Securities of such series are entitled to act under this
Indenture, in each case from Holders of less than, or proxies representing
less than, the requisite principal amount of Outstanding Securities or such
series entitled to give such demand, request or notice, the Trustee shall
establish a record date for determining Holders of Outstanding Securities of
such series entitled to join in such demand, request or notice, which record
date shall be the close of business on the day the Trustee received such
demand, request or notice. The Holders on such record date, or their duly
designated proxies, and only such Persons, shall be entitled to join in such
demand, request or notice whether or not such Holders remain Holders after
such record date; provided, however, that unless the Holders of the requisite
principal amount of Outstanding Securities of such series shall have joined
in such demand, request or notice prior to the day which is the ninetieth day
after such record date, such demand, request or notice shall
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automatically and without further action by any Holder be canceled and of no
further effect. Nothing in this paragraph shall prevent a Holder, or a proxy
of a Holder, from giving, (i) after the expiration of such 90-day period, a
new demand, request or notice identical to a demand, request or notice which
has been canceled pursuant to the proviso to the preceding sentence or (ii)
during any such 90-day period, a new demand, request or notice which has been
canceled pursuant to the proviso to the preceding sentence or (iii) during
any such 90-day period, a new demand, request or notice contrary to or
different from such demand, request or notice, in either of which events a
new record date shall be established pursuant to the provisions of this
clause.
(g) The Company may set any day as the record date for
the purpose of determining the Holders of Outstanding Securities of any
series entitled to give or take any request, demand, authorization,
direction, notice, consent, waiver or other action provided or permitted by
this Indenture to be given or taken by Holders of Securities of such series.
With regard to any record date set pursuant to this paragraph, the Holders of
Outstanding Securities of the relevant series on such record date (or their
duly appointed agents), and only such Persons, shall be entitled to give or
take the relevant action, whether or not such Holders remain Holders after
such record date. With regard to any action that may be given or taken
hereunder only by Holders of a requisite principal amount of Outstanding
Securities of any series (or their duly appointed agents) and for which a
record date is set pursuant to this paragraph, the Company may, at its
option, set an expiration date after which no such action purported to be
given or taken by any Holder shall be effective hereunder unless given or
taken on or prior to such expiration date by Holders of the requisite
principal amount of Outstanding Securities of such series on such record date
(or their duly appointed agents). On or prior to any expiration date set
pursuant to this paragraph, the Company may, on one or more occasions at its
option, extend such date to any later date. Nothing in this paragraph shall
prevent any Holder (or any duly appointed agent thereof) from giving or
taking, after any expiration date, any action identical to, or, at any time,
contrary to or different from, any action given or taken, or purported to
have been given or taken, hereunder by a Holder on or prior to such date, in
which event the Company may set a record date in respect thereof pursuant to
this paragraph. Notwithstanding the foregoing or the Trust Indenture Act, the
Company shall not set a record date for, and the provisions of this paragraph
shall not apply with respect to, any action to be given or taken by Holders
pursuant to Section 5.1, 5.2 or 5.12.
SECTION 1.5. Notices, etc., to Trustee and Company.
Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other document provided or permitted by
this Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing to or with the Trustee at its Corporate Trust Office, Attention:
____________, or
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(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to the
Company addressed to it at the address of its principal office specified in
the first paragraph of this instrument, to the attention of its Treasurer, or
at any other address previously furnished in writing to the Trustee by the
Company.
SECTION 1.6. Notice to Holders of Securities; Waiver.
Except as otherwise expressly provided herein, where this
Indenture provides for notice to Holders of Securities of any event:
(1) such notice shall be sufficiently given to Holders of
Registered Securities if in writing and mailed, first-class postage prepaid,
to each Holder of a Registered Security affected by such event, at the
address of such Holder as it appears in the Security Register, not earlier
than the earliest date, and not later than the latest date, prescribed for
the giving of such notice; and
(2) such notice shall be sufficiently given to Holders of
Bearer Securities if published in an Authorized Newspaper in The City of New
York and in such other city or cities as may be specified
in such Securities on a Business Day at least twice, the first such
publication to be not earlier than the earliest date, and not later than the
latest date, prescribed for the giving of such notice.
In case by reason of the suspension of regular mail service or
by reason of any other cause it shall be impracticable to give such notice to
Holders of Registered Securities by mail, then such notification as shall be
made with the approval of the Trustee shall constitute sufficient notice to
such Holders for every purpose hereunder. In any case where notice to Holders
of Registered Securities is given by mail, neither the failure to mail such
notice, nor any defect in any notice mailed to any particular Holder of a
Registered Security shall affect the sufficiency of such notice with respect
to other Holders of Registered Securities or the sufficiency of any notice to
Holders of Bearer Securities given as provided herein.
In case by reason of the suspension of publication of any
Authorized Newspaper or Authorized Newspapers or by reason of any other cause
it shall be impracticable to publish any notice to Holders of Bearer
Securities as provided above, then such notification as shall be given with
the approval of the Trustee shall constitute sufficient notice to such
Holders for every purpose hereunder. Neither the failure to give notice by
publication to Holders of Bearer Securities as provided above, nor any defect
in any notice so published, shall affect the sufficiency of any notice to
Holders of Registered Securities given as provided herein.
Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such
notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders of Securities shall
be filed with the Trustee, but such filing shall not be a condition precedent
to the validity of any action taken in reliance upon such waiver.
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SECTION 1.7. Language of Notices, etc.
Any request, demand, authorization, direction, notice, consent
or waiver required or permitted under this Indenture shall be in the English
language, except that any published notice may be in an official language of
the country of publication.
SECTION 1.8. Conflict with Trust Indenture Act.
If and to the extent that any provision of this Indenture
limits, qualifies or conflicts with the duties imposed by, or with another
provision (an "incorporated provision") included in this Indenture by
operation of Sections 310 to 318, inclusive, of the Trust Indenture Act, such
imposed duties or incorporated provision shall control.
SECTION 1.9. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the construction
hereof.
SECTION 1.10. Successors and Assigns.
All covenants and agreements in this Indenture by the Company
shall bind its successors and assigns, whether so expressed or not.
SECTION 1.11. Separability Clause.
In case any provision in this Indenture or the Securities or
coupons shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 1.12. Benefits of Indenture.
Nothing in this Indenture or the Securities or coupons,
express or implied, shall give to any Person, other than the parties hereto,
their successors hereunder and the Holders of Securities and coupons, any
benefit or any legal or equitable right, remedy or claim under this Indenture.
SECTION 1.13. Governing Law.
This Indenture and the Securities and coupons shall be
governed by and construed in accordance with the laws of the State of New
York without regard to conflicts of laws.
SECTION 1.14. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date
or Stated Maturity of any Security shall not be a Business Day at any Place
of Payment, then (notwithstanding any other provision of this Indenture or of
the Securities or coupons other than a provision in the Securities of any
series which specifically states that such provision shall apply in lieu of
this Section) payment of interest or principal (and
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premium, if any) need not be made at such Place of Payment on such date, but
may be made on the next succeeding Business Day at such Place of Payment with
the same force and effect as if made on the Interest Payment Date or
Redemption Date, or at the Stated Maturity, provided that no interest shall
accrue on the amount so payable for the period from and after such Interest
Payment Date, Redemption Date or Stated Maturity, as the case may be, to such
succeeding Business Day.
SECTION 1.15. Judgment Currency.
The Company agrees, to the fullest extent that it may
effectively do so under applicable law, that (a) if for the purpose of
obtaining judgment in any court it is necessary to convert the sum due on the
Securities of any series from the currency in which such sum is payable in
accordance with the terms of such Securities (the "Required Currency") into a
currency in which a judgment will be rendered (the "Judgment Currency"), the
rate of exchange used shall be the rate at which in accordance with normal
banking procedures the Trustee could purchase in The City of New York the
Required Currency with the Judgment Currency on the New York Banking Day
preceding that on which a final unappealable judgment is rendered and (b) its
obligations under this Indenture to make payments in the Required Currency
(i) shall not be discharged or satisfied by any tender, or any recovery
pursuant to any judgment (whether or not entered in accordance with
subsection (a)), in any currency other than the Required Currency, except to
the extent that such tender or recovery shall result in the actual receipt,
by the payee, of the full amount of the Required Currency expressed to be
payable in respect of such payments, (ii) shall be enforceable as an
alternative or additional cause of action for the purpose of recovering in
the Required Currency the amount, if any, by which such actual receipt shall
fall short of the full amount of the Required Currency so expressed to be
payable and (iii) shall not be affected by judgment being obtained for any
other sum due under this Indenture. For purposes of the foregoing, "New York
Banking Day" means any day except a Saturday, Sunday or a legal holiday in
The City of New York or a day on which banking institutions in The City of
New York are authorized or required by law or executive order to close.
ARTICLE II
Security Forms
SECTION 2.1. Forms Generally.
The Registered Securities, if any, of each series and the
Bearer Securities, if any, of each series and related coupons shall be in
such form (including temporary or permanent global form) as shall be
established by or pursuant to a Board Resolution or in one or more indentures
supplemental hereto, in each case with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Indenture, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such
Securities or coupons, as evidenced by their execution of the Securities or
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coupons. If temporary Securities of any series are issued in global form as
permitted by Section 3.4, the form thereof shall be established as provided
in the preceding sentence. If the forms of Securities or coupons of any
series (or any such temporary global Security) are established by action
taken pursuant to a Board Resolution, a copy of an appropriate record of such
action shall be certified by the Secretary of the Company and delivered to
the Trustee at or prior to the delivery of the Company Order contemplated by
Section 3.3 for the authentication and delivery of such Securities (or any
such temporary global Security) or coupons.
Unless otherwise specified as contemplated by Section 3.1,
Securities in bearer form shall have interest coupons attached.
The definitive Securities and coupons, if any, shall be
printed, lithographed or engraved on steel engraved borders or may be
produced in any other manner, all as determined by the officers executing
such Securities or coupons, as evidenced by their execution of such
Securities or coupons.
SECTION 2.2. Form of Trustee's Certificate of Authentication.
The Trustee's certificates of authentication shall be in
substantially the following form:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
The Bank of New York, As Trustee
By Authorized Signatory
SECTION 2.3. Securities in Global Form.
If Securities of a series are issuable in global form, as
contemplated by Section 3.1, then, notwithstanding clause (12) of Section 3.1
and the provisions of Section 3.2, any such Security shall represent such of
the Outstanding Securities of such series as shall be specified therein and
may provide that it shall represent the aggregate amount of Outstanding
Securities from time to time endorsed thereon and that the aggregate amount
of Outstanding Securities represented thereby may from time to time be
reduced to reflect exchanges. Any endorsement of a Security in global form to
reflect the amount, or any increase or decrease in the amount, of Outstanding
Securities represented thereby shall be made by the Trustee in such manner
and upon instructions given by such Person or Persons as shall be specified
therein or in the Company Order to be delivered to the Trustee pursuant to
Section 3.3 or Section 3.4. Subject to the provisions of Section 3.3 and, if
applicable, Section 3.4, the Trustee shall deliver and redeliver any Security
in permanent global form in the manner and upon instructions given by the
Person or Persons specified therein or in the applicable Company Order. If a
Company Order pursuant to Section 3.3 or 3.4 has been, or simultaneously is,
delivered, any instructions by the Company with respect to endorsement or
delivery or redelivery of a Security in
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global form shall be in writing but need not comply with Section 1.2 and need
not be accompanied by an Opinion of Counsel.
The provisions of the last sentence of Section 3.3 shall apply
to any Security represented by a Security in global form if such Security was
never issued and sold by the Company and the Company delivers to the Trustee
the Security in global form together with written instructions (which need
not comply with Section 1.2 and need not be accompanied by an Opinion of
Counsel) with regard to the reduction in the principal amount of Securities
represented thereby, together with the written statement contemplated by the
last sentence of Section 3.3.
Notwithstanding the provisions of Sections 2.1 and 3.7, unless
otherwise specified as contemplated by Section 3.1, payment of principal of
and any premium and interest on any Security in permanent global form shall
be made to the Person or Persons specified therein.
Notwithstanding the provisions of Section 3.8 and except as
provided in the preceding paragraph, the Company, the Trustee and any agent
of the Company and the Trustee shall treat a Person as the Holder of such
principal amount of Outstanding Securities represented by a permanent global
Security as shall be specified in a written statement of the Holder of such
permanent global Security or, in the case of a permanent global Security in
bearer form, of Euro-clear or CEDEL S.A. which is provided to the Trustee by
such Person.
SECTION 2.4. Form of Legend for Book-Entry Securities.
Any Book-Entry Security authenticated and delivered hereunder
shall bear a legend in substantially the following form:
"This Security is a Book-Entry Security within the meaning of
the Indenture hereinafter referred to and is registered in the name of a
Depositary or a nominee of a Depositary. This Security is exchangeable for
Securities registered in the name of a Person other than the Depositary or
its nominee only in the limited circumstances described in the Indenture, and
no transfer of this Security (other than a transfer of this Security as a
whole by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary) may be
registered except in such limited circumstances."
SECTION 2.5. Form of Conversion Notice.
The Form of conversion notice for the conversion of Securities
into shares of Common Stock or other securities of the Company shall be in
substantially the form included with the applicable form of Securities as
shall be established pursuant to Section 2.1 hereinabove.
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ARTICLE III
The Securities
SECTION 3.1 Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be authenticated
and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution and, subject to Section 3.3,
set forth, or determined in the manner provided, in an Officers' Certificate,
or established in one or more indentures supplemental hereto, prior to the
issuance of Securities of any series:
(1) the title of the Securities of the series (which shall distinguish
the Securities of the series from all other Securities);
(2) any limit upon the aggregate principal amount of the Securities of
the series which may be authenticated and delivered under this Indenture
(except for Securities authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Securities of the
series pursuant to Section 3.4, 3.5, 3.6, 9.6 or 11.7 and except for any
Securities which, pursuant to Section 3.3, are deemed never to have been
authenticated and delivered hereunder);
(3) whether Securities of the series are to be issuable as Registered
Securities, Bearer Securities or both, whether any Securities of the series
are to be issuable initially in temporary global form and whether any
Securities of the series are to be issuable in permanent global form with or
without coupons and, if so, whether beneficial owners of interests in any
such permanent global Security may exchange such interests for Securities of
such series and of like tenor of any authorized form and denomination and the
circumstances under which any such exchanges may occur, if other than in the
manner provided in Section 3.5;
(4) the Person to whom any interest on any Registered Security of the
series shall be payable, if other than the Person in whose name that Security
(or one or more Predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest, the manner in which,
or the Person to whom, any interest on any Bearer Security of the series
shall be payable, if otherwise than upon presentation and surrender of the
coupons appertaining thereto as they severally mature, and the extent to
which, or the manner in which, any interest payable on a temporary global
Security on an Interest Payment Date will be paid if other than in the manner
provided in Section 3.4;
(5) the date or dates on which the principal of the Securities of the
series is payable;
(6) the rate or rates at which the Securities of the series shall bear
interest, if any, or the formula pursuant to which such rate or rates shall
be determined, the date or dates from which any such interest shall accrue,
the Interest Payment Dates on
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which any such interest shall be payable, and the Regular Record Date for any
interest payable on any Registered Securities on any Interest Payment Date
and the basis upon which interest shall be calculated if other than that of a
360-day year consisting of twelve 30-day months;
(7) the place or places where, subject to the provisions of Sections
11.4 and 10.2, the principal of and any premium and interest on Securities of
the series shall be payable, any Registered Securities of the series may be
surrendered for registration of transfer, Securities of the series may be
surrendered for conversion or exchange, notices and demands to or upon the
Company in respect of the Securities of the series and this Indenture may be
served and where notices to Holders of Bearer Securities pursuant to Section
1.6 will be published;
(8) the period or periods within which, the price or prices at which
and the terms and conditions upon which Securities of the series may be
redeemed, in whole or in part, at the option of the Company;
(9) the period or periods within which, the price or prices at which
and the terms and conditions upon which Securities of the series may be
redeemed, in whole or in part, at the option of the Holders on such terms and
conditions as may be set forth in an Officers' Certificate or supplemental
indenture;
(10) the obligation, if any, of the Company to redeem or purchase
Securities of the series, or particular Securities within the Series,
pursuant to any sinking fund or analogous provisions or at the option of a
Holder thereof, and the period or periods within which, the price or prices
at which and the terms and conditions upon such Securities shall be redeemed
or purchased, in whole or in part, pursuant to such obligation;
(11) the terms of any right to convert or exchange Securities of the
series, either at the option of the Holder thereof or the Company, into or
for shares of Common Stock of the Company or other securities or property,
including without limitation the period or periods within which and the price
or prices (including adjustments thereto) at which any Securities of the
series shall be converted or exchanged, in whole or in part;
(12) the denominations in which any Registered Securities of the series
shall be issuable, if other than denominations of $1,000 and any integral
multiple thereof, and the denomination or denominations in which any Bearer
Securities of the series shall be issuable, if other than the denomination of
$5,000;
(13) the currency or currencies, including composite currencies, in
which payment of the principal of and any premium and interest on the
Securities of the series shall be payable if other than the currency of the
United States of America;
(14) if the principal of and any premium or interest on the Securities
of the series are to be payable, at the election of the Company or a Holder
thereof, in a currency or currencies, including composite currencies, other
than that or those in which
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the Securities are stated to be payable, the currency or currencies in which
payment of the principal of and any premium and interest on Securities of
such series as to which such election is made shall be payable, and the
periods within which and the terms and conditions upon which such election is
to be made;
(15) if the amount of payments of principal of and any premium or
interest on the Securities of the series may be determined with reference to
an index, the manner in which such amounts shall be determined;
(16) if other than the principal amount thereof, the portion of the
principal amount of any Securities of the series which shall be payable upon
declaration of acceleration of the Maturity thereof pursuant to Section 5.2;
(17) the Person who shall be the Security Registrar, if other than the
Trustee;
(18) whether the Securities of the series shall be issued upon original
issuance in whole or in part in the form of one or more Book-Entry Securities
and, in such case, (a) the Depositary with respect to such Book-Entry
Security or Securities; and (b) the circumstances under which any such
Book-Entry Security may be exchanged for Securities registered in the name
of, and any transfer of such Book-Entry Security may be registered to, a
Person other than such Depositary or its nominee, if other than as set forth
in Section 3.5;
(19) if the provisions of Section 4.4 or 4.5 are applicable to the
Securities of such series;
(20) whether and under what conditions additional amounts will be
payable to Holders of Securities of the series pursuant to Section 10.4; and
(21) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture).
All Securities of any one series and the coupons appertaining to any
Bearer Securities of such series shall be substantially identical except, in
the case of Registered Securities, as to denomination and except as may
otherwise be provided in or pursuant to the Board Resolution referred to
above and (subject to Section 3.3) set forth in, or determined in the manner
provided in, the Officers' Certificate referred to above or in any such
indenture supplemental hereto.
If any of the terms of the series are established by action taken pursuant
to a Board Resolution, a copy of an appropriate record of such action shall
be certified by the Secretary of the Company and delivered to the Trustee at
or prior to the delivery of the Officers' Certificate setting forth the
terms, or the manner of determining the terms, of the series.
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SECTION 3.2 Denominations.
Unless otherwise provided as contemplated by Section 3.1 with respect to
any series of Securities, any Registered Securities of a series shall be
issuable in denominations of $1,000 and any integral multiple thereof and any
Bearer Securities of a series shall be issuable in the denomination of $5,000.
SECTION 3.3 Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its Chairman
of the Board, its President, its Chief Financial Officer, its Treasurer, any
Assistant Treasurer or any Vice President under its corporate seal reproduced
thereon attested by its Secretary. The signature of any of these officers on
the Securities may be manual or facsimile. Coupons shall bear the facsimile
signature of the Chief Financial Officer, the Treasurer or any Assistant
Treasurer of the Company.
Securities and Coupons bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall
bind the Company, notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the authentication and delivery of such
Securities or did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities of any series, together with
any Coupons appertaining thereto executed by the Company to the Trustee for
authentication, together with a Company Order for the authentication and
delivery of such Securities, and the Trustee in accordance with the Company
Order shall authenticate and deliver such Securities; provided, however,
that, in connection with its original issuance, no Bearer Security shall be
mailed or otherwise delivered to any location in the United States; and
provided, further, that a Bearer Security may be delivered in connection with
its original issuance only if the Person entitled to receive such Bearer
Security shall have furnished a certificate in the form specified in such
Security as to certain tax matters in respect of United States citizens,
dated no earlier than 15 days prior to the earlier of the date on which such
Bearer Security is delivered and the date on which any temporary global
Security first becomes exchangeable for such Bearer Security in accordance
with the terms of such temporary global Security and this Indenture. If any
Security shall be represented by a permanent global Bearer Security, then,
for purposes of this Section and Section 3.4, the notation of a beneficial
owner's interest therein upon original issuance of such Security or upon
exchange of a portion of a temporary global Security shall be deemed to be
delivery in connection with its original issuance of such beneficial owner's
interest in such permanent global Security. Except as permitted by Section
3.6, the Trustee shall not authenticate and deliver any Bearer Security
unless all appurtenant Coupons for interest then matured have been detached
and cancelled.
If all the Securities of any series are not to be issued at one time and
if the Board Resolution and indenture supplement establishing such series
shall so permit, such Company Order may set forth procedures acceptable to
the Trustee for the issuance of
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such Securities and determining the terms of particular Securities of such
series, such as interest rate, maturity date, date of issuance and date from
which interest shall accrue.
If the forms or terms of the Securities of the series and any related
Coupons have been established in or pursuant to one or more Board Resolutions
as permitted by Sections 2.1 and 3.1, in authenticating such Securities, and
accepting the additional responsibilities under this Indenture in relation to
such Securities, the Trustee shall be entitled to receive, and (subject to
Section 6.1) shall be fully protected in relying upon, an Opinion of Counsel
stating:
(a) that such forms have been established in conformity with the
provisions of this Indenture;
(b) that such terms, or the manner of determining such terms, have
been established in conformity with the provisions of this Indenture; and
(c) that such Securities, together with any Coupons appertaining
thereto, when authenticated and delivered by the Trustee and issued by the
Company in the manner and subject to any conditions specified in such Opinion
of Counsel, will constitute valid and legally binding obligations of the
Company, enforceable in accordance with their terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting the enforcement of creditors'
rights and to general equity principles.
If such forms or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue or such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 3.1 and of the two preceding
paragraphs, if all Securities of a series are not to be originally issued at
one time, it shall not be necessary to deliver the Officers' Certificate
otherwise required pursuant to Section 3.1 or the Company Order and Opinion
of Counsel otherwise required pursuant to such preceding paragraphs at or
prior to the time of authentication of each Security of such series if such
documents are delivered at or prior to the authentication upon original
issuance of the first Security of such series to be issued.
Each Registered Security shall be dated the date of its authentication;
and each Bearer Security shall be dated as of the date of original issuance
of the first Security of such series to be issued.
No Security or coupon shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on
such Security, or the Security to which such coupon appertains, a certificate
of authentication substantially in the form provided for herein executed by
the Trustee by manual signature, and such certificate upon any Security shall
be conclusive evidence, and the only evidence, that such Security has been
duly authenticated and delivered hereunder. Notwithstanding the foregoing, if
any Security shall have been authenticated and delivered hereunder but never
issued and
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sold by the Company, and the Company shall deliver such Security to the
Trustee for cancellation as provided in Section 3.9 together with a written
statement (which need not comply with Section 1.2 and need not be accompanied
by an Opinion of Counsel) stating that such Security has never been issued
and sold by the Company, for all purposes of this Indenture such Security
shall be deemed never to have been authenticated and delivered hereunder and
shall never be entitled to the benefits of this Indenture.
SECTION 3.4. Temporary Securities.
Pending the preparation of definitive Securities of any series, the
Company may execute, and upon Company Order the Trustee shall authenticate
and deliver, temporary Securities which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized
denomination, substantially of the tenor of the definitive Securities in lieu
of which they are issued, in registered form or, if authorized, in bearer
form with one or more coupons or without coupons, and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Securities or coupons may determine, as evidenced by their
execution of such Securities or coupons. In the case of any series issuable
as Bearer Securities, such temporary Securities may be in global form. A
temporary Bearer Security shall be delivered only in compliance with the
conditions set forth in Section 3.3.
Except in the case of temporary Securities in global form (which shall be
exchanged in accordance with the provisions of the following paragraphs), if
temporary Securities of any series are issued, the Company will cause
definitive Securities of that series to be prepared without unreasonable
delay. After the preparation of definitive Securities of such series, the
temporary Securities of such series shall be exchangeable for definitive
Securities of such series upon surrender of the temporary Securities of such
series at the office or agency of the Company maintained pursuant to Section
10.2 in a Place of Payment for such series for the purpose of exchanges of
Securities of such series, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Securities of any series
(accompanied by any unmatured coupons appertaining thereto) the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
like aggregate principal amount of definitive Securities of the same series
and of like tenor of authorized denominations; provided, however, that no
definitive Bearer Security shall be delivered in exchange for a temporary
Registered Security.
If temporary Securities of any series are issued in global form, any such
temporary global Security shall, unless otherwise provided therein, be
delivered to the London office of a depositary or common depositary (the
"Common Depositary"), for the benefit of Euro-clear and CEDEL S.A., for
credit to the respective accounts of the beneficial owners of such Securities
(or to such other accounts as they may direct).
Without unnecessary delay but in any event not later than the date
specified in, or determined pursuant to the terms of, any such temporary
global Security (the "Exchange Date"), the Company shall deliver to the
Trustee definitive Securities of that series, in aggregate principal amount
equal to the principal amount of such temporary global
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Security, executed by the Company. On or after the Exchange Date such
temporary global Security shall be surrendered by the Common Depositary to
the Trustee, as the Company's agent for such purpose, to be exchanged, in
whole or from time to time in part, for definitive Securities of such series
without charge and the Trustee shall authenticate and deliver, in exchange
for each portion of such temporary global Security, a like aggregate
principal amount of definitive Securities of the same series of authorized
denominations and of like tenor as the portion of such temporary global
Security to be exchanged; provided, however, that, unless otherwise specified
in such temporary global Security, upon such presentation by the Common
Depositary, such temporary global Security is accompanied by a certificate
dated the Exchange Date or a subsequent date and signed by Euro-clear as to
the portion of such temporary global Security held for its account then to be
exchanged and a certificate dated the Exchange Date or a subsequent date and
signed by CEDEL S.A. as to the portion of such temporary global Security held
for its account then to be exchanged, each in such form as shall be specified
in such Security. The definitive Securities to be delivered in exchange for
any such temporary global Security shall be in bearer form, registered form,
permanent global bearer form or permanent global registered form, or any
combination thereof, as specified as contemplated by Section 3.1, and, if any
combination thereof is so specified, as requested by the beneficial owner
thereof; provided, however, that definitive Bearer Securities shall be
delivered in exchange for a portion of a temporary global Security only in
compliance with the requirements of Section 3.3.
Unless otherwise specified in such temporary global Security, the interest
of a beneficial owner of Securities of a series in a temporary global
Security shall be exchanged for definitive Securities of the same series and
of like tenor following the Exchange Date when the account holder instructs
Euro-clear or CEDEL S.A., as the case may be, to request such exchange on his
behalf and delivers to Euro-clear or CEDEL S.A., as the case may be, a
certificate in such form as shall be specified in such Security, dated no
earlier than 15 days prior to the Exchange Date, copies of which certificate
shall be available from the offices of Euro-clear and CEDEL S.A., the
Trustee, any Authenticating Agent appointed for such series of Securities and
each Paying Agent. Unless otherwise specified in such temporary global
Security, any such exchange shall be made free of charge to the beneficial
owners of such temporary global Security, except that a Person receiving
definitive Securities must bear the cost of insurance, postage,
transportation and the like in the event that such Person does not take
delivery of such definitive Securities in person at the offices of Euro-clear
or CEDEL S.A. Definitive Securities in bearer form to be delivered in
exchange for any portion of a temporary global Security shall be delivered
only outside the United States.
Until exchanged in full as hereinabove provided, the temporary Securities
of any series shall in all respects be entitled to the same benefits under
this Indenture as definitive Securities of the same series and of like tenor
authenticated and delivered hereunder, except that, unless otherwise
specified as contemplated by Section 3.1, interest payable on a temporary
global Security on an Interest Payment Date for Securities of such series
occurring prior to the applicable Exchange Date shall be payable to Euroclear
and CEDEL S.A. on such Interest Payment Date upon delivery by Euro-clear and
CEDEL S.A. to the Trustee of a certificate or certificates in such form as
shall
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be specified in such Security, for credit without further interest on or
after such Interest Payment Date to the respective accounts of the Persons
who are the beneficial owners of such temporary global Security on such
Interest Payment Date and who have each delivered to Euro-clear or CEDEL
S.A., as the case may be, a certificate in such form as shall be specified in
such Security. Any interest so received by Euro-clear and CEDEL S.A. and not
paid as herein provided shall be returned to the Trustee immediately prior to
the expiration of two years after such Interest Payment Date in order to be
repaid to the Company in accordance with Section 10.3.
SECTION 3.5. Registration, Registration of Transfer and Exchange.
The Company shall cause to be kept at an office or agency to be maintained
by the Company in accordance with Section 10.2 a register (the "Security
Register") in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of Registered
Securities and the registration of transfers of Registered Securities. The
Trustee is hereby appointed "Security Registrar" for the purpose of
registering Registered Securities and transfers of Registered Securities as
herein provided.
Upon due surrender for registration of transfer of any Registered Security
of any series at the office or agency of the Company maintained pursuant to
Section 10.2 for such purpose in a Place of Payment for such series, the
Company shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Registered
Securities of the same series of any authorized denominations and of a like
aggregate principal amount and tenor.
At the option of the Holder, Registered Securities of any series may be
exchanged for other Registered Securities of the same series of any
authorized denominations and of a like aggregate principal amount and tenor,
upon surrender of the Securities to be exchanged at any such office or
agency. Whenever any Securities are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Securities
which the Holder making the exchange is entitled to receive. Registered
Securities may not be exchanged for Bearer Securities.
At the option of the Holder, Bearer Securities of any series may be
exchanged for Registered Securities of the same series of any authorized
denominations and of a like aggregate principal amount and tenor, upon
surrender of the Bearer Securities to be exchanged at any such office or
agency, with all unmatured coupons, and all matured coupons in default
appertaining thereto. If the Holder of a Bearer Security is unable to produce
any such unmatured coupon or coupons or matured coupon or coupons in default,
such exchange may be effected if the Bearer Securities are accompanied by
payment in funds acceptable to the Company in an amount equal to the face
amount of such missing coupon or coupons, or the surrender of such missing
coupon or coupons may be waived by the Company and the Trustee if there is
furnished to them such security or indemnity as they may require to save each
of them and any Paying Agent harmless. If thereafter the Holder of such
Securities shall surrender to any Paying Agent any such missing coupon in
respect of which such a payment shall have been made, such
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Holder shall be entitled to receive the amount of such payment; provided,
however, that, except as otherwise provided in Section 10.2, interest
represented by coupons shall be payable only upon presentation and surrender
of those coupons at an office or agency located outside the United States.
Notwithstanding the foregoing, in case a Bearer Security of any series is
surrendered at any such office or agency in exchange for a Registered
Security of the same series and like tenor after the close of business at
such office or agency on (i) any Regular Record Date and before the opening
of business at such office or agency on the relevant Interest Payment Date,
or (ii) any Special Record Date and before the opening of business at such
office or agency on the related proposed date for payment of Defaulted
Interest, such Bearer Security shall be surrendered without the coupon
relating to such Interest Payment Date or proposed date for payment, as the
case may be, and interest or Defaulted Interest, as the case may be, will not
be payable on such Interest Payment Date or proposed date for payment, as the
case may be, in respect of the Registered Security issued in exchange for
such Bearer Security, but will be payable only to the Holder of such coupon
when due in accordance with the provisions of this Indenture.
Whenever any Securities are so surrendered for exchange, the Company shall
execute, and the Trustee shall authenticate and deliver, the Securities which
the Holder making the exchange is entitled to receive.
Notwithstanding the foregoing, except as otherwise specified as
contemplated by Section 3.1, any permanent global Security shall be
exchangeable only as provided in this paragraph. If the beneficial owners of
interests in a permanent global Security are entitled to exchange such
interests for Securities of such series and of like tenor and principal
amount of another authorized form and denomination, as specified as
contemplated by Section 3.1, then without unnecessary delay but in any event
not later than the earliest date on which such interests may be so exchanged,
the Company shall deliver to the Trustee definitive Securities of that series
in aggregate principal amount equal to the principal amount of such permanent
global Security, executed by the Company. On or after the earliest date on
which such interests may be so exchanged, such permanent global Security
shall be surrendered by the Common Depositary or such other depositary or
Common Depositary as shall be specified in the Company Order with respect
thereto to the Trustee, as the Company's agent for such purpose, to be
exchanged, in whole or from time to time in part, for definitive Securities
of such series without charge and the Trustee shall authenticate and deliver,
in exchange for each portion of such permanent global Security, a like
aggregate principal amount of definitive Securities of the same series of
authorized denominations and of like tenor as the portion of such permanent
global Security to be exchanged which, unless the Securities of the series
are not issuable both as Bearer Securities and as Registered Securities, as
specified as contemplated by Section 3.1, shall be in the form of Bearer
Securities or Registered Securities, or any combination thereof, as shall be
specified by the beneficial owner thereof; provided, however, that no Bearer
Security delivered in exchange for a portion of a permanent global Security
shall be mailed or otherwise delivered to any location in the United States.
If a Registered Security is issued in exchange for any portion of a permanent
global Security after the close of business at the office or agency where
such exchange occurs on (i) any Regular Record Date and before the opening of
business at such office
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or agency on the relevant Interest Payment Date, or (ii) any Special Record
Date and before the opening of business at such office or agency on the
related proposed date for payment of Defaulted Interest, interest or
Defaulted Interest, as the case may be, will not be payable on such Interest
Payment Date or proposed date for payment, as the case may be, in respect of
such Registered Security, but will be payable on such Interest Payment Date
or proposed date for payment, as the case may be, only to the Person to whom
interest in respect of such portion of such permanent global Security is
payable in accordance with the provisions of this Indenture.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
Every Registered Security presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company or the Trustee
or any transfer agent) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar or any transfer agent duly executed, by the Holder thereof or his
attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange of Securities,
other than exchanges pursuant to Section 3.4, 9.6 or 11.7 not involving any
transfer.
The Company shall not be required (i) to issue, register the transfer of
or exchange Securities of any series during a period beginning at the opening
of business 15 days before any selection of Securities of that series to be
redeemed and ending at the close of business on (A) if Securities of the
series are issuable only as Registered Securities, the day of the mailing of
the relevant notice of redemption and (B) if Securities of the series are
issuable as Bearer Securities, the day of the first publication of the
relevant notice of redemption or, if Securities of the series are also
issuable as Registered Securities and there is no publication, the mailing of
the relevant notice of redemption, (ii) to register the transfer of or
exchange any Registered Security so selected for redemption, in whole or in
part, except the unredeemed portion of any Security being redeemed in part,
or (iii) to exchange any Bearer Security so selected for redemption except
that such a Bearer Security may be exchanged for a Registered Security of
that series and like tenor, provided that such Registered Security shall be
simultaneously surrendered for redemption.
Notwithstanding the foregoing and except as otherwise specified or
contemplated by Section 3.1, any Book-Entry Security shall be exchangeable
pursuant to this Section 3.5 or Sections 3.4, 9.6 and 11.7 for Securities
registered in the name of, and a transfer of a Book-Entry Security or any
series may be registered to, any Person other than the Depositary for such
Security or its nominee only if (i) such Depositary notifies the Company that
it is unwilling or unable to continue as Depositary for such Book-Entry
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Security or if at any time such Depositary ceases to be a clearing agency
registered under the Securities Exchange Act of 1934, as amended, (ii) the
Company executes and delivers to the Trustee a Company Order that such
Book-Entry Security shall be so exchangeable and the transfer thereof so
registerable or (iii) there shall have occurred and be continuing an Event of
Default, or an event which after notice or lapse of time would be an Event of
Default, with respect to the Securities of such series. Upon the occurrence
in respect of any Book-Entry Security of any series of any one or more of the
conditions specified in clause (i), (ii) or (iii) or the preceding sentence
or such other conditions as may be specified as contemplated by Section 3.1
for such series, such Book-Entry Security may be exchanged for Securities
registered in the names of, and the transfer of such Book-Entry Security may
be registered to, such Persons (including Persons other than the Depositary
with respect to such series and its nominees) as such Depositary shall
direct. Notwithstanding any other provision of this Indenture, any Security
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, any Book-Entry Security shall also be a Book-Entry
Security and shall bear the legend specified in Section 2.4 except for any
Security authenticated and delivered in exchange for, or upon registration of
transfer of, Book-Entry Security pursuant to the preceding sentence.
SECTION 3.6. Mutilated, Destroyed, Lost and Stolen Securities and Coupons.
If any mutilated Security or a Security with a mutilated coupon
appertaining thereto is surrendered to the Trustee, the Company shall execute
and the Trustee shall authenticate and deliver in exchange therefor a new
Security of the same series and of like tenor and principal amount and
bearing a number not contemporaneously outstanding, with coupons
corresponding to the coupons, if any, appertaining to the surrendered
Security and such mutilated Security or a Security with a mutilated coupon,
if any, shall be cancelled by the Trustee in accordance with the Indenture.
If there shall be delivered to the Company and the Trustee (i) evidence to
their satisfaction of the destruction, loss or theft of any Security or
coupon and (ii) such security or indemnity as may be required by them, then,
in the absence of notice to the Company or the Trustee that such Security or
coupon has been acquired by a bona fide purchaser, the Company shall, subject
to the following paragraph, execute, and the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Security or in
exchange for the Security to which a destroyed, lost or stolen coupon
appertains (with all appurtenant coupons not destroyed, lost or stolen), a
new Security of the same series and of like tenor and principal amount and
bearing a number not contemporaneously outstanding, with coupons
corresponding to the coupons, if any, appertaining to such destroyed, lost or
stolen Security or to the Security to which such destroyed, lost or stolen
coupon appertains.
In case any such mutilated, destroyed, lost or stolen Security or coupon
has become or is about to become due and payable, the Company in its
discretion may, instead of issuing a new Security, pay such Security or
coupon; provided, however, that principal of and any premium and interest on
Bearer Securities shall, except as otherwise provided in Section 10.2, be
payable only at an office or agency located outside the United States.
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Upon the issuance of any new Security under this Section, the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Trustee) connected therewith.
Every new Security of any series, with any coupons appertaining thereto,
issued pursuant to this Section in lieu of any destroyed, lost or stolen
Security or in exchange for a Security to which a destroyed, lost or stolen
coupon appertains, shall constitute an original additional contractual
obligation of the Company, whether or not the destroyed, lost or stolen
Security and any coupons appertaining thereto, or the destroyed, lost or
stolen coupon shall be at any time enforceable by anyone, and any such new
Security and coupons, if any, shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Securities of
that series and their coupons, if any, duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities or coupons.
SECTION 3.7. Payment of Interest; Interest Rights Preserved.
Unless otherwise provided as contemplated by Section 3.1 with respect to
any series of Securities, interest on any Registered Security which is
payable, and is punctually paid or duly provided for, on any Interest Payment
Date shall be paid to the Person in whose name that Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest.
Any interest on any Registered Security of any series which is payable,
but is not punctually paid or duly provided for, on any Interest Payment Date
(herein called "Defaulted Interest") shall forthwith cease to be payable to
the Holder on the relevant Regular Record Date by virtue of having been such
Holder, and such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in clauses (1) and (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Registered Securities of such series (or their
respective Predecessor Securities) are registered at the close of business on
a Special Record Date for the payment of such Defaulted Interest, which shall
be fixed in the following manner. The Company shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each
Registered Security of such series and the date of the proposed payment, and
at the same time the Company shall deposit with the Trustee an amount of
money equal to the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the Trustee for
such deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to such
Defaulted Interest as in this clause provided. Thereupon the Trustee shall
fix a Special Record Date for the payment of such Defaulted Interest which
shall be not more than 15 days and not less than 10 days prior to the date
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of the proposed payment and not less than 10 days after the receipt by the
Trustee of the notice of the proposed payment. The Trustee shall promptly
notify the Company of such Special Record Date and, in the name and at the
expense of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid, to each Holder of Registered Securities of such
series at the address of such Holder as it appears in the Security Register,
not less than 10 days prior to such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the Special Record Date
therefor having been so mailed, such Defaulted Interest shall be paid to the
Persons in whose names the Registered Securities of such series (or their
respective Predecessor Securities) are registered at the close of business on
such Special Record Date and shall no longer be payable pursuant to the
following clause (2); and
(2) The Company may make payment of any Defaulted Interest on the
Registered Securities of any series in any other lawful manner not
inconsistent with the requirements of any securities exchange on which such
Securities may be listed, and upon such notice as may be required by such
exchange, if, after notice given by the Company to the Trustee of the
proposed payment pursuant to this clause, such manner of payment shall be
deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section and Section 3.5, each
Security delivered under this Indenture upon registration of, transfer of or
in exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.
SECTION 3.8. Persons Deemed Owners.
Prior to due presentment of a Registered Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name such Registered Security is
registered as the owner of such Registered Security for the purpose of
receiving payment of principal of (and premium, if any) and (subject to
Sections 3.5 and 3.7) any interest on such Security and for all other
purposes whatsoever, whether or not such Security shall be overdue, and
neither the Company, the Trustee nor any agent of the Company or the Trustee
shall be affected by notice to the contrary.
Title to any Bearer Security and any coupons appertaining thereto shall
pass by delivery. The Company, the Trustee and any agent of the Company or
the Trustee may treat the bearer of any Bearer Security and the Bearer of any
coupon as the absolute owner of such Security or coupon for the purpose of
receiving payment thereof or on account thereof and for all other purposes
whatsoever, whether or not such Security or coupon shall be overdue, and
neither the Company, the Trustee nor any agent of the Company or the Trustee
shall be affected by notice to the contrary.
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SECTION 3.9. Cancellation.
All Securities and coupons surrendered for payment, redemption,
registration of transfer or exchange or for credit against any sinking fund
payment shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee. All Registered Securities and matured coupons so
delivered shall be promptly cancelled by the Trustee. All Bearer Securities
and unmatured coupons so delivered shall be cancelled. All Bearer Securities
and unmatured coupons held by the Trustee pending such cancellation or
reissuance shall be deemed to be delivered for cancellation for all purposes
of this Indenture and the Securities. The Company may at any time deliver to
the Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and may deliver to the Trustee (or to any other Person for
delivery to the Trustee) for cancellation any Securities previously
authenticated hereunder which the Company has not issued and sold, and all
Securities so delivered shall be promptly cancelled by the Trustee. No
Securities shall be authenticated in lieu of or in exchange for any
Securities cancelled as provided in this Section, except as expressly
permitted by this Indenture. All cancelled Securities and coupons held by the
Trustee shall be disposed of as directed by a Company Order, or in the
absence of a Company Order, may be destroyed by the Trustee.
Notwithstanding the foregoing, with respect to any Book-Entry Security,
nothing herein shall prevent the Company, the Trustee or any agent of the
Company or the Trustee, from giving effect to any written certification,
proxy or other authorization furnished by a Depositary or impair, as between
a Depositary and holders of beneficial interests in any Book-Entry Security,
the operation of customary practices governing the exercise of the rights of
the Depositary (or its nominee) as Holder of such Book-Entry Security.
SECTION 3.10. Computation of Interest.
Except as otherwise specified as contemplated by Section 3.1 for
Securities of any series, interest on the Securities of each series shall be
computed on the basis of a 360-day year of twelve 30-day months.
SECTION 3.11. Electronic Security Issuance.
The Securities may, pursuant to a Board Resolution and Officers'
Certificate complying with Section 3.1 hereof, be issued by means of an
electronic issuance system. Any such Security issuance instructions may
specify the name, address and taxpayer identification number of the Holder,
the principal amount and Maturity of the Security, the interest rate to be
borne by the Security and any other terms not inconsistent with such Board
Resolution and Officers' Certificate. Nothing in this Section 3.11 shall be
construed as prohibiting the Company from issuing Securities by any means not
inconsistent with the provisions of this Indenture.
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ARTICLE IV
Satisfaction and Discharge
SECTION 4.1. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further effect
(except as to any surviving rights of registration of transfer or exchange of
Securities herein expressly provided for, and any right to receive additional
amounts, as provided in Section 10.4), and the Trustee, at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when:
(1) either
(A) all Securities theretofore authenticated and
delivered and all coupons, if any, appertaining thereto (other
than (i) coupons appertaining to Bearer Securities surrendered
for exchange for Registered Securities and maturing after such
exchange, whose surrender is not required or has been waived
as provided in Section 3.5, (ii) Securities and coupons which
have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 3.6, (iii) coupons
appertaining to Securities called for redemption and maturing
after the relevant Redemption Date, whose surrender has been
waived as provided in Section 11.6, and (iv) Securities and
coupons for whose payment money has theretofore been deposited
in trust or segregated and held in trust by the Company and
thereafter repaid to the Company or discharged from such
trust, as provided in Section 10.3) have been delivered to the
Trustee for cancellation; or
(B) all such Securities and, in the case of (i) or (ii) below, any
coupons appertaining thereto not theretofore delivered to the Trustee for
cancellation,
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity within one
year, or
(iii) are to be called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of redemption by the
Trustee in the name, and at the expense, of the Company, and the Company, in
the case of (i), (ii) or (iii) above, has deposited or caused to be deposited
with the Trustee as trust funds in trust for the purpose, an amount
sufficient to pay and discharge the entire indebtedness on such Securities
and coupons not theretofore delivered to the Trustee for cancellation, for
principal (and premium, if any) and any interest to the date of such deposit
(in the case of Securities which have become due and payable) or to the
Stated Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
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(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture have been
complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.5, the obligations
of the Trustee to any Authenticating Agent under Section 6.12 and, if money
shall have been deposited with the Trustee pursuant to clause (1)(B) of this
Section, the obligations of the Trustee under Section 4.2 and the last
paragraph of Section 10.3 shall survive.
SECTION 4.2. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 10.3, all money
and U.S. Government Obligations deposited with the Trustee pursuant to
Section 4.1 or 4.3 and all money received by the Trustee in respect of such
U.S. Government Obligations shall be held in trust and applied by it, in
accordance with the provisions of the Securities, the coupons and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and any interest for whose payment such money and U.S. Government
Obligations has been deposited with or received by the Trustee.
SECTION 4.3. Company's Option to Effect Defeasance or Covenant Defeasance.
If applicable to a particular series of Securities, the Company may elect,
at its option at any time, to have Section 4.4 or Section 4.5 applied to any
such series of Securities or any Securities of such series, as the case may
be, designated pursuant to Section 3.1 as being defeasible pursuant to such
Section 4.4 or 4.5, in accordance with any applicable requirements provided
pursuant to Section 3.1 and upon compliance with the conditions set forth
below in this Article. Any such election shall be evidenced by a Board
Resolution or in another manner specified as contemplated by Section 3.1 for
such Securities.
SECTION 4.4. Discharge and Defeasance.
If this Section 4.4 is specified, as contemplated by Section 3.1, to be
applicable to Securities of any series, then notwithstanding Section 4.1 and
upon compliance with the applicable conditions set forth in Section 4.6 (i)
the Company shall be deemed to have paid and discharged the entire
indebtedness on all the Outstanding Securities of any such series
("Defeasance"); and (ii) the provisions of this Indenture as it relates to
such Outstanding Securities shall no longer be in effect (except as to the
rights of Holders of Securities to receive, solely from the trust fund
described in Section 4.6, payment of (x) the principal of (and premium, if
any) and any installment of principal of (and premium, if any) or interest on
such Securities on the Stated Maturity of such principal (and premium, if
any) or installment of principal (and premium, if any) or interest or upon
optional redemption and/or (y) any mandatory sinking fund payments or
analogous payments applicable to the Securities of that series on that day on
which such payments
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are due and payable in accordance with the terms of the Indenture and of such
Securities, the Company's obligations with respect to such Securities under
Sections 3.4, 3.5, 3.6, 10.2, 10.3 and 10.4 and the rights, powers, trusts,
duties and immunities of the Trustee hereunder, including those under Section
6.5 hereof).
SECTION 4.5. Covenant Defeasance.
If this Section 4.5 is specified, as contemplated by Section 3.1, to be
applicable to any series of Securities or any Securities of such series, as
the case may be, (1) the Company shall be released from its obligations under
Section 8.1(3) and Sections 10.5 through 10.9, inclusive, and any covenants
provided pursuant to Section 3.1(21), 9.1(2) or 9.1(7) for the benefit of the
Holders of such Securities that pursuant to the terms of such Securities are
defeasible pursuant to this Section 4.5 and (2) the occurrence of any event
specified in Sections 5.1(4) (with respect to any of Section 8.1(3), Sections
10.5 through 10.9, inclusive, and any such covenants provided pursuant to
Section 3.1(21), 9.1(2), or 9.1(7) and 5.1(7) (if pursuant to the terms of
such Securities this Section 4.5 is applicable to any such event specified in
Section 5.1(7)) shall be deemed not to be or result in an Event of Default,
in each case with respect to such Securities as provided in this Section on
and after the date the conditions set forth in Section 4.6 are satisfied
(hereinafter called "Covenant Defeasance"). For this purpose, such Covenant
Defeasance means that, with respect to such Securities, the Company may omit
to comply with and shall have no liability in respect of any term, condition
or limitation set forth in any such specified Section (to the extent so
specified in the case of Sections 5.1(4) and 5.1(7)), whether directly or
indirectly by reason of any reference elsewhere herein to any such Section or
by reason of any reference in any such Section to any other provision herein
or in any other document, but the remainder of this Indenture and such
Securities shall be unaffected thereby.
SECTION 4.6. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to the application of Section 4.4 or
Section 4.5 to any applicable series of Securities or any Securities of such
series, as the case may be:
(1) either
(A) with respect to all Outstanding Securities of such series or such
Securities of such Series, as the case may be, with reference to this Section
4.6, the Company has deposited or caused to be deposited with the Trustee
irrevocably (but subject to the provisions of Section 4.2 and the last
paragraph of Section 10.3), as trust funds in trust, specifically pledged as
security for, and dedicated solely to, the benefit of the Holders of such
Securities, (X) lawful money of the United States in an amount, or (Y) U.S.
Government Obligations which through the payment of interest and principal in
respect thereof in accordance with their terms will provide not later than
the opening of business on the due dates of any payment referred to in clause
(i) or (ii) of this subparagraph (1)(A) lawful money of the United States in
an amount, or (z) a combination thereof, sufficient, in the opinion of a
nationally recognized firm of
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independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay and discharge (i) the principal of (and
premium, if any) and each installment of principal (and premium, if any) and
interest on such Securities the Stated Maturity of such principal or
installment of principal or interest or upon optional redemption and (ii) any
mandatory sinking fund payments or analogous payments applicable to such
Securities on the day on which such payments are due and payable in
accordance with the terms of this Indenture and of such Securities; or
(B) the Company has properly fulfilled such other means of
satisfaction and discharge as is specified, as contemplated by Section 3.1,
to be applicable to the Securities of such series;
(2) the Company has paid or caused to be paid all other sums payable
with respect to such Securities;
(3) such deposit will not result in a breach or violation of, or
constitute a default under, this Indenture or any other agreement or
instrument to which the Company is a party or by which it is bound;
(4) no Event of Default or event which with the giving of notice or
lapse of time, or both, would become an Event of Default with respect to such
Securities shall have occurred and be continuing on the date of such deposit
and no Event of Default under Section 5.1(5) or Section 5.1(6) or event which
with the giving of notice or lapse of time, or both, would become an Event of
Default under Section 5.1(5) or Section 5.1(6) shall have occurred and be
continuing on the 91st day after such date;
(5) in the event of an election to have Section 4.4 apply to any
series of Securities, the Company has delivered to the Trustee an Opinion of
Counsel to the effect that (a) the Company has received from, or there has
been published by, the Internal Revenue Service a ruling, or (b) since the
date of this Indenture there has been a change in applicable federal income
tax law, in either case to the effect that, and based thereon such Opinion of
Counsel shall confirm that, the Holders of Securities of such series will not
recognize income, gain or loss for federal income tax purposes as a result of
such deposit, defeasance and discharge and will be subject to federal income
tax on the same amount and in the same manner and at the same times as would
have been the case if such deposit, defeasance and discharge had not occurred;
(6) in the event of an election to have Section 4.5 apply to any series
of Securities, the Company shall have delivered to the Trustee an Opinion of
Counsel, to the effect that the Holders of such Securities will not recognize
gain or loss for federal income tax purposes as a result of the deposit and
Covenant Defeasance to be effected with respect to such Securities and will
be subject to federal income tax on the same amount, in the same manner and
at the same times as would be the case if such deposit and Covenant
Defeasance were not to occur.
(7) if the Securities of that series are then listed on any domestic
or foreign securities exchange, the Company shall have delivered to the
Trustee an Opinion
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of Counsel to the effect that such deposit, defeasance and discharge will not
cause such Securities to be delisted; and
(8) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the Defeasance or Covenant Defeasance with respect
to such Securities of any such series have been complied with and an Opinion
of Counsel to the effect that either (i) as a result of such deposit and the
related exercise of the Company's option under this Article, registration is
not required under the Investment Company Act of 1940, as amended, by the
Company, the trust funds representing such deposit or the Trustee or (ii) all
necessary registrations under said Act have been effected.
Any deposits with the Trustee referred to in Section 4.6(1)(A) above shall
be irrevocable and shall be made under the terms of an escrow/trust agreement
in form and substance satisfactory to the Trustee. If any Outstanding
Securities of such series are to be redeemed prior to their Stated Maturity,
whether pursuant to any optional redemption provisions or in accordance with
any mandatory sinking fund requirement, the applicable escrow trust agreement
shall provide therefor and the Company shall make such arrangements as are
satisfactory to the Trustee for the giving of notice of redemption by the
Trustee in the name, and at the expense, of the Company.
Upon Defeasance with respect to all the Securities of a series, the terms
and conditions of such securities, including the terms and conditions with
respect thereto set forth in this Indenture, shall no longer be binding upon,
or applicable to, the Company; provided that the Company shall not be
discharged from any payment obligations in respect of Securities which are
deemed not to be Outstanding under clause (iii) of the definition thereof if
such obligations continue to be valid obligations of the Company under
applicable law.
Notwithstanding the cessation, termination and discharge of all
obligations, covenants and agreements (except as provided above in this
Section 4.6) of the Company under this Indenture with respect to any series
of Securities, the obligations of the Company to the Trustee under Section
6.5, and the obligations of the Trustee under Section 4.2 and the last
paragraph of Section 10.3 shall survive with respect to such series of
Securities.
Anything in this Article to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon Company Request
any money or U.S. Government Obligations held by it as provided in this
Section 4.6 with respect to any Securities which, in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, are in excess of the
amount thereof which would then be required to be deposited to effect the
Defeasance or Covenant Defeasance, as the case may be, with respect to such
Securities.
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ARTICLE V
Remedies
SECTION 5.1. Events of Default.
"Event of Default", wherever used herein with respect to Securities of
any series, means any one of the following events (whatever the reason for
such Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body):
(1) default in the payment of any interest upon any Security of
that series when it becomes due and payable, and continuance of such default
for a period of 30 days; or
(2) default in the payment of the principal of (or premium, if
any, on) any Security of that series at its Maturity; or
(3) default in the deposit of any sinking fund payment, when and
as due by the terms of a Security of that series; or
(4) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or warranty
a default in whose performance or whose breach is elsewhere in this Section
specifically dealt with or which has expressly been included in this
Indenture solely for the benefit of series of Securities other than that
series), and continuance of such default or breach for a period of 60 days
after there has been given, by registered or certified mail, to the Company
by the Trustee or to the Company and the Trustee by the Holders of at least
25% in principal amount of the Outstanding Securities of that series, a
written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default," hereunder; or
(5) the entry by a court having jurisdiction in the premises of
(A) a decree or order for relief in respect of the Company in an involuntary
case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or (B) a decree or order
adjudging the Company a bankrupt or insolvent, or approving as properly filed
a petition seeking reorganization, arrangement, adjustment or composition of
or in respect of the Company under any applicable Federal or State law, or
appointing a custodian, receiver, liquidation, assignee, trustee,
sequestrator or other similar official of the Company or of any substantial
part of its property, or ordering the winding up or liquidation of its
affairs, and the continuance of any such decree or order for relief or any
such other decree or order unstayed and in effect for a period of 60
consecutive days; or
(6) the commencement by the Company of a voluntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to be
adjudicated a bankrupt or
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insolvent, or the consent by it to the entry of a decree or order for relief
in respect of the Company in an involuntary case or proceeding under any
applicable Federal or State bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or insolvency case or
proceeding against it, or the filing by it of a petition or answer or consent
seeking reorganization or relief under any applicable Federal or State law,
or the consent by it to the filing of such petition or to the appointment of
or taking possession by a custodian, receiver, liquidation, assignee,
trustee, sequestrator or similar official of the Company or of any
substantial part of its property, or the making by it of an assignment for
the benefit of creditors, or the admission by it in writing of its inability
to pay its debts generally as they become due, or the taking of corporate
action by the Company in furtherance of any such action; or
(7) any other Event of Default provided with respect to Securities
of that series.
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default with respect to Securities of any series at the
time Outstanding occurs and is continuing, then in every such case the
Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series may declare the principal amount (or,
if any of the Securities of that series are Original Issue Discount
Securities, such portion of the principal amount of such Securities as may be
specified in the terms thereof) of all of the Securities of that series to be
due and payable immediately, by a notice in writing to the Company (and to
the Trustee if given by Holders), and upon any such declaration such
principal amount (or specified amount) shall become immediately due and
payable.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in
this Article provided, the Holders of a majority in principal amount of the
Outstanding Securities of that series, by written notice to the Company and
the Trustee, may rescind and annul such declaration and its consequences if:
(1) the Company has paid or deposited with the Trustee a sum sufficient
to pay,
(A) all overdue interest on all Securities of that series,
(B) the principal of (and premium, if any, on) any Securities of that
series which have become due otherwise than by such declaration of
acceleration and any interest thereon at the rate or rates prescribed
therefor in such Securities,
(C) to the extent that payment of such interest is lawful, interest
upon overdue interest at the rate or rates prescribed therefor in such
Securities, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel;
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and
(2) all Events of Default with respect to Securities of that series,
other than the nonpayment of the principal of Securities of that series which
have become due solely by such declaration of acceleration, have been cured
or waived as provided in Section 5.13.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if,
(1) default is made in the payment of any interest on any Security of
any series when such interest becomes due and payable and such default
continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or premium, if
any, on) any Security of any series at the Maturity thereof, the Company
will, upon demand of the Trustee, pay to it, for the benefit of the Holders
of such Securities of that series and any coupons appertaining thereto, to
margin the whole amount then due and payable on such Securities of that
series and coupons for principal and any premium and interest and, to the
extent that payment of such interest shall be legally enforceable, interest
on any overdue principal and on the premium, if any, and overdue interest, at
the rate or rates prescribed therefor in such Securities of that series and,
in addition thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the
same against the Company or any other obligor upon such Securities and
collect the moneys adjudged or decreed to be payable in the manner provided
by law out of the property of the Company or any other obligor upon such
Securities, wherever situated.
If an Event of Default with respect to Securities of any series occurs
and is continuing, the Trustee may in its discretion proceed to protect and
enforce its rights and the rights of the Holders of Securities of such series
and any coupons appertaining thereto by such appropriate judicial proceedings
as the Trustee shall deem most effectual to protect and enforce any such
rights, whether for the specific enforcement of any covenant or agreement in
this Indenture or in aid of the exercise of any power granted herein, or to
enforce any other proper remedy.
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SECTION 5.4. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the
Securities shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have
made any demand on the Company for the payment of overdue principal or
interest) shall be entitled and empowered, by intervention in such proceeding
or otherwise,
(i) to file and prove a claim for the whole amount of
principal and any premium and interest owing and unpaid in
respect of the Securities and to file such other papers or
documents as may be necessary or advisable in order to have
the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel) and of the
Holders of Securities and coupons allowed in such judicial
proceeding, and
(ii) to collect and receive any moneys or other
property payable or deliverable on any such claims and to
distribute the same, and any custodian, receiver, assignee,
trustee, liquidation, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each
Holder of Securities and coupons to make such payments to
the Trustee and, in the event that the Trustee shall consent
to the making of such payments directly to the Holders of
Securities and coupons, to pay to the Trustee any amount due
it for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 6.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of a
Security or coupon any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or coupons or the rights of any Holder
thereof or to authorize the Trustee to vote in respect of the claim of any
Holder of a Security or coupon in any such proceeding.
SECTION 5.5. Trustee May Enforce Claims Without Possession of
Securities or Coupons.
All rights of action and claims under this Indenture or the Securities
or coupons may be prosecuted and enforced by the Trustee without the
possession of any of the Securities or coupons or the production thereof in
any proceeding relating thereto, and any such proceeding instituted by the
Trustee shall be brought in its own name as trustee of an express trust, and
any recovery of judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, be for the ratable benefit of the Holders of the
Securities and coupons in respect of which such judgment has been recovered.
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SECTION 5.6. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee
and, in case of the distribution of such money on account of principal or any
premium or interest, upon presentation of the Securities or coupons, or both,
as the case may be, and the notation thereon of the payment if only partially
paid and upon surrender thereof if fully paid:
First: To the payment of all amounts due the Trustee under Section 6.7;
and
Second: To the payment of the amounts then due and unpaid for principal
of and any premium and interest on the Securities and coupons in respect of
which or for the benefit of which such money has been collected, ratably,
without preference or priority of any kind, according to the amounts due and
payable on such Securities and coupons for principal and any premium and
interest, respectively.
SECTION 5.7. Limitation on Suits.
No Holder of any Security of any series or any related coupons shall
have any right to institute any proceeding, judicial or otherwise, with
respect to this Indenture, or for the appointment of a receiver or trustee,
or for any other remedy hereunder, unless:
(1) such Holder has previously given written notice to the Trustee
of a continuing Event of Default with respect to the Securities of that
series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default in its
own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such proceeding;
and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority
in principal amount of the Outstanding Securities of that series; it being
understood and intended that no one or more of such Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over
any other of such Holders or to enforce any right under this Indenture,
except in the manner herein provided and for the equal and ratable benefit of
all of such Holders.
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SECTION 5.8. Unconditional Right of Holders to Receive
Principal, Premium and Interest.
Notwithstanding any other provision in this Indenture, the Holder of any
Security or coupon shall have the right, which is absolute and unconditional,
to receive payment of the principal of and any premium and (subject to
Section 3.7) interest on such Security, and any additional amounts
contemplated by Section 10.4 in respect of such Security or payment of such
coupon on the Stated Maturity or Maturities expressed in such Security or
coupon (or, in the case of redemption, on the Redemption Date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.
SECTION 5.9. Restoration of Rights and Remedies.
If the Trustee or any Holder of a Security or coupon has instituted any
proceeding to enforce any right or remedy under this Indenture and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee or to such Holder, then and in every such
case, subject to any determination in such proceeding, the Company, the
Trustee and the Holders of Securities and coupons shall be restored severally
and respectively to their former positions hereunder and thereafter all
rights and remedies of the Trustee and the Holders shall continue as though
no such proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Securities or coupons in the last
paragraph of Section 3.6, no right or remedy herein conferred upon or
reserved to the Trustee or to the Holders of Securities or coupons is
intended to be exclusive or any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition
to every other right and remedy given hereunder or now or hereafter existing
at law or in equity or otherwise. The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 5.11. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Security or
coupon to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such
Event of Default or an acquiescence therein. Every right and remedy given by
this Article or by law to the Trustee or to the Holders of Securities or
coupons may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders of Securities or coupons, as the
case may be.
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SECTION 5.12. Control by Holders of Securities.
The Holders of a majority in principal amount of the Outstanding
Securities of any series shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred on the Trustee, with respect to
the Securities of such series, provided that,
(1) such direction shall not be in conflict with any rule of law
or with this Indenture, and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
SECTION 5.13. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all the
Securities of such series and any coupons appertaining thereto waive any past
default hereunder with respect to the Securities of such series and its
consequences, except a default
(1) in the payment of the principal of (or premium, if any) or any
interest on any Security of such series, or
(2) in respect of a covenant or provision hereof which under
Article IX cannot be modified or amended without the consent of the Holder of
each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent
or other default or impair any right consequent thereon.
SECTION 5.14. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security or
coupon by his acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the Trustee for
any action taken, suffered or omitted by it as Trustee, the filing by any
party litigant in such suit of an undertaking to pay the costs of such suit,
and that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in such suit, having
due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section shall not apply to
any suit instituted by the Company, to any suit instituted by the Trustee, to
any suit instituted by any Holder, or group of Holders, holding in the
aggregate more than 10% in principal amount of the Outstanding Securities of
any series, or to any suit instituted by any Holder of any Security or coupon
for the enforcement of the payment of the principal of or any premium or
interest on any Security or the payment of any coupon on or after the Stated
Maturity or Maturities
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expressed in such Security or coupon (or, in the case of redemption, on or
after the Redemption Date).
SECTION 5.15. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and the Company (to the
extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will
suffer and permit the execution of every such power as though no such law had
been enacted.
ARTICLE VI
The Trustee
SECTION 6.1. Certain Rights of Trustee.
Subject to the provisions of the Trust Indenture Act:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, coupon, other evidence of indebtedness or other paper
or document believed by it to be genuine and to have been signed or presented
by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Request or Company Order or as
otherwise expressly provided herein and any resolution of the Board of
Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith
on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the advice of such
counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders of Securities of any series or any related
coupons pursuant to this Indenture, unless such Holders shall have offered to
the Trustee reasonable security or indemnity against the
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costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction;
(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, coupon, other evidence of indebtedness or other paper
or document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit, and,
if the Trustee shall determine to make such further inquiry or investigation,
it shall be entitled to examine the books, records and premises of the
Company, personally or by agent or attorney; and
(g) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
SECTION 6.2. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities (except the
Trustee's certificates of authentication) and in any coupons shall be taken
as the statements of the Company, and the Trustee or any Authenticating Agent
assumes no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Securities or coupons. The Trustee or any Authenticating Agent shall not be
accountable for the use or application by the Company of Securities or the
proceeds thereof.
SECTION 6.3. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and coupons and,
subject to Sections 6.8 and 6.10, may otherwise deal with the Company with
the same rights it would have if it were not Trustee, Authenticating Agent,
Paying Agent, Security Registrar or such other agent.
SECTION 6.4. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under
no liability for interest on any money received by it hereunder except as
otherwise agreed with the Company.
SECTION 6.5. Compensation and Reimbursement.
The Company agrees:
(1) to pay to the Trustee or any predecessor Trustee from time to
time reasonable compensation for all services rendered by it hereunder (which
compensation
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shall not be limited by any provision of law in regard to the compensation of
a trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse
the Trustee or any predecessor Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the compensation
and the expenses and disbursements of its agents and counsel), except any
such expense, disbursement or advance as may be attributable to its
negligence or bad faith; and
(3) to indemnify the Trustee and any predecessor Trustee for, and
to hold it harmless against, any loss, liability or expense incurred without
negligence or bad faith on its part, arising out of or in connection with the
acceptance or administration of the trust or trusts hereunder, including the
costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder.
SECTION 6.6. Resignation and Removal; Appointment of Successor.
(a) The Trustee may resign at any time with respect to the
Securities of one or more series by giving written notice thereof to the
Company. If the instrument of acceptance by a successor Trustee required by
Section 6.7 shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition
any court of competent jurisdiction for the appointment of a successor
Trustee with respect to the Securities of such series.
(b) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal
amount of the Outstanding Securities of such series delivered to the Trustee
and to the Company.
(c) If at any time:
(1) the Trustee shall fail to comply with Section 310(b) of the
Trust Indenture Act after written request therefor by the Company or by any
Holder of a Security who has been a bona fide Holder of a Security for at
least six months, or
(2) the Trustee shall cease to be eligible under Section 6.9 and
Section 310(a) of the Trust Indenture Act and shall fail to resign after
written request therefor by the Company or by any such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove
the Trustee with respect to all Securities, or (ii) subject to Section 5.14
any Holder of a Security who has been a bona fide Holder of a Security for at
least six months may, on
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behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee with respect to all
Securities and the appointment of a successor Trustee or Trustees.
(d) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause,
with respect to the Securities of one or more series, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee or Trustees with
respect to the Securities of that or those series (it being understood that
any such successor Trustee may be appointed with respect to the Securities of
one or more or all of such series and that at any time there shall be only
one Trustee with respect to the Securities of any particular series) and
shall comply with the applicable requirements of Section 6.7. If, within one
year after such resignation, removal or incapability, or the occurrence of
such vacancy, a successor Trustee with respect to the Securities of any
series shall be appointed by Act of the Holders of a majority in principal
amount of Outstanding Securities of such series delivered to the Company and
the retiring Trustee, the successor Trustee so appointed shall, forthwith
upon its acceptance of such appointment in accordance with the applicable
requirements of Section 6.7, become the successor Trustee with respect to the
Securities of such series and to that extent supersede the successor Trustee
appointed by the Company. If no successor Trustee with respect to the
Securities of any series shall have been so appointed by the Company or the
Holders of Securities of that series and accepted appointment in the manner
required by Section 6.7, any Holder of a Security who has been a bona fide
Holder of a Security of such series for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Securities of such series.
(e) The Company shall give notice of each resignation and each
removal of the Trustee with respect to the Securities of any series and each
appointment of a successor Trustee with respect to the Securities of any
series in the manner provided in Section 1.6. Each notice shall include the
name of the successor Trustee with respect to the Securities of such series
and the address of its Corporate Trust Office.
SECTION 6.7. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Trustee
with respect to all Securities every such successor Trustee so appointed
shall execute, acknowledge and deliver to the Company and to the retiring
Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee shall become effective and
such successor Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of the retiring
Trustee; but on the request of the Company or the successor Trustee, such
retiring Trustee shall, upon payment of its charges, execute and deliver an
instrument transferring to such successor Trustee all the rights, powers and
trusts of the retiring Trustee and shall duly assign, transfer and deliver to
such successor Trustee all property and money held by such retiring Trustee
hereunder.
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(b) In case of the appointment hereunder of a successor Trustee
with respect to the Securities of one or more (but not all) series, the
Company, the retiring Trustee and each successor Trustee with respect to the
Securities of one or more series shall execute and deliver an indenture
supplemental hereto wherein each successor Trustee shall accept such
appointment and which (l) shall contain such provisions as shall be necessary
or desirable to transfer and confirm to, and to vest in, each successor
Trustee all the rights, powers, trusts and duties of the retiring Trustee
with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates, (2) if the retiring Trustee is
not retiring with respect to all Securities, shall contain such provisions as
shall be deemed necessary or desirable to confirm that all the rights,
powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series as to which the retiring Trustee is not
retiring shall continue to be vested in the retiring Trustee, and (3) shall
add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, it being understood that nothing herein
or in such supplemental indenture shall constitute such Trustees as
co-trustees of the same trust and that each such Trustee shall be trustee of
a trust or trusts hereunder separate and apart from any trust or trusts
hereunder administered by any other such Trustee; and upon the execution and
delivery of such supplemental indenture the resignation or removal of the
retiring Trustee shall become effective to the extent provided therein and
each such successor Trustee, without any further act, deed or conveyance,
shall become vested with all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those series to
which the appointment of such successor Trustee relates; but, on request of
the Company or any successor Trustee, such retiring Trustee shall duly
assign, transfer and deliver to such successor Trustee all property and money
held by such retiring Trustee hereunder with respect to the Securities of
that or those series to which the appointment of such successor Trustee
relates.
(c) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts
referred to in paragraph (a) or (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless at
the time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
SECTION 6.8. Disqualification; Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject
to the provisions of, the Trust Indenture Act and this Indenture.
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SECTION 6.9. Corporate Trustee Required; Eligibility.
There shall be at all times a Trustee hereunder which shall be a Person
that is eligible pursuant to the Trust Indenture Act to act as such and has a
combined capital and surplus of at least $50,000,000. If such Person
publishes reports of condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such Person
shall be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section,
it shall resign immediately in the manner and with the effect hereunder
specified in this Article.
SECTION 6.10. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company (or
any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor).
SECTION 6.11. Merger, Conversion Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all the corporate trust
business of the Trustee shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under
this Article, without the execution or filing of any paper or any further act
on the part of any of the parties hereto. In case any Securities shall have
been authenticated, but not delivered, by the Trustee then in office, any
successor by merger, conversion or consolidation to such authenticating
Trustee may adopt such authentication and deliver the Securities so
authenticated with the same effect as if such successor Trustee had itself
authenticated such Securities.
SECTION 6.12. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents with respect
to one or more series of Securities which shall be authorized to act on
behalf of the Trustee to authenticate Securities of such series issued upon
original issue or upon exchange, registration of transfer or partial
redemption thereof or pursuant to Section 3.6, and Securities so
authenticated shall be entitled to the benefits of this Indenture and shall
be valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. Wherever reference is made in this Indenture to the authentication
and delivery of Securities by the Trustee or the Trustee's certificate of
authentication such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent and a
certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company. If such Authenticating Agent publishes reports of condition at least
annually,
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pursuant to law or to the requirements of said supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such Authenticating Agent shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time an Authenticating Agent shall cease to be eligible
in accordance with the provisions of this Section, such Authenticating Agent
shall resign immediately in the manner and with the effect specified in this
Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating
Agent shall be a party, or any corporation succeeding to the corporate agency
or corporate trust business of such Authenticating Agent, shall continue to
be an Authenticating Agent provided such corporation shall be otherwise
eligible under this Section, without the execution or filing of any paper or
any further act on the part of the Trustee or such Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Company. Upon receiving such
a notice of resignation or upon such a termination, or in case at any time
such Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor
Authenticating Agent which shall be acceptable to the Company and shall
promptly give notice of such appointment to all Holders of Securities
pursuant to Section 1.6. Any successor Authenticating Agent upon acceptance
of its appointment hereunder shall become vested with all the rights, powers
and duties of its predecessor hereunder with like effect as if originally
named as an Authenticating Agent. No successor Authenticating Agent shall be
appointed unless eligible under the provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section, and the Trustee
shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 6.5.
If an appointment with respect to one or more series is made pursuant to
this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternative
certificate of authentication in the following form:
This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
The Bank of New York, As Trustee
By Authenticating Agent
By Authorized Signatory
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If all of the Securities of a series may not be originally issued at one
time, and if the Company has an Affiliate eligible to be appointed as an
Authenticating Agent hereunder or the Trustee does not have an office capable
of authenticating Securities upon original issuance located in a Place of
Payment where the Company wishes to have Securities of such series
authenticated upon original issuance, the Trustee, if so requested by the
Company in writing (which writing need not comply with Section 1.2 and need
not be accompanied by an Opinion of Counsel), shall appoint in accordance
with this Section an Authenticating Agent (which if so requested by the
Company, shall be such Affiliate of the Company) having an office in a Place
of Payment designated by the Company with respect to such series of
Securities.
SECTION 6.13. Notice of Defaults.
If a default occurs hereunder with respect to Securities of any series,
the Trustee shall give the Holders of Securities of such series notice of
such default as and to the extent provided by the Trust Indenture Act;
provided, however, that in the case of any default of the character specified
in Section 5.1(4) with respect to Securities of such series, no such notice
to Holders shall be given until at least 30 days after the occurrence
thereof. For the purpose of this Section, the term "default" means any event
which is, or after notice of lapse or time or both would become, an Event of
Default with respect to Securities of such series.
ARTICLE VII
Holders' Lists and Reports by Trustee and Company
SECTION 7.1. Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders of Securities (i)
contained in the most recent list furnished to the Trustee as provided in
Section 312(a) of the Trust Indenture Act, (ii) received by the Trustee in
its capacity as Security Registrar and (iii) filed with it within the two
preceding years pursuant to Section 313(c)(2) of the Trust Indenture Act. The
Trustee may (i) destroy any list furnished to it as provided in Section
312(a) of the Trust Indenture Act upon receipt of a new list so furnished,
(ii) destroy any information received by it as Paying Agent (if so acting)
hereunder upon delivering to itself as Trustee, not earlier than
or of each year, a list containing the names and addresses of
the Holders of Securities obtained from such information since the delivery
of the next previous list, if any, (iii) destroy any list delivered to itself
as Trustee which was compiled from information received by it as Paying Agent
(if so acting) hereunder upon the receipt of a new list so delivered and (iv)
destroy not earlier than two years after filing, any information filed with
it pursuant to Section 313(c)(2) or the Trust Indenture Act. For purposes of
Section 312(a) of the Trust Indenture Act, the term "stated intervals" shall
mean and .
(b) If three or more Holders of Securities (herein referred to as
"applicants") apply in writing to the Trustee, and furnish to the Trustee
reasonable proof
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that each such applicant has owned a Security for a period of at least six
months preceding the date of such application, and such application states
that the applicants desire to communicate with other Holders of Securities
with respect to their rights under this Indenture or under the Securities and
is accompanied by a copy of the form of proxy or other communication which
such applicants propose to transmit, then the Trustee shall, within five
business days after the receipt of such application, at its election, either
(i) afford such applicants access to the
information preserved at the time by the Trustee in
accordance with Section 7.1(a), or
(ii) inform such applicants as to the approximate
number of Holders of Securities whose names and
addresses appear in the information preserved at the
time by the Trustee in accordance with Section 7.1(a),
and as to the approximate cost of mailing to such
Holders the form of proxy or other communication, if
any, specified in such application.
If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall, upon the written request of such applicants,
mail to each Holder of Securities whose name and address appears in the
information preserved at the time by the Trustee in accordance with Section
7.1(a) a copy of the form of proxy or other communication which is specified
in such request, with reasonable promptness after a tender to the Trustee of
the material to be mailed and of payment, or provision for the payment of the
reasonable expenses of mailing, unless within five days after such tender the
Trustee shall mail to such applicants and file with the Commission, together
with a copy of the material to be mailed, a written statement to the effect
that, in the opinion of the Trustee, such mailing would be contrary to the
best interest of the Holders of Securities or would be in violation of
applicable law. Such written statement shall specify the basis of such
opinion. If the Commission, after opportunity for a hearing upon the
objections specified in the written statement so filed, shall enter an order
refusing to sustain any of such objections or if after the entry of an order
sustaining one or more of such objections, the Commission shall find, after
notice and opportunity for hearing that all the objections so sustained have
been met and shall enter an order so declaring, the Trustee shall mail copies
of such material to all such Holders of Securities with reasonable promptness
after the entry of such order and the renewal of such tender; otherwise the
Trustee shall be relieved of any obligation or duty to such applicants
respecting their application.
(c) Every Holder of Securities or coupons, by receiving and
holding the same, agrees with the Company and the Trustee that neither the
Company nor the Trustee nor any agent of either of them shall be held
accountable by reason of the disclosure of any such information as to the
names and addresses of the Holders of Securities in accordance with Section
7.1(b), regardless of the source from which such information was derived and
that the Trustee shall not be held accountable by reason of mailing any
material pursuant to a request made under Section 7.1(b).
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SECTION 7.2. Reports by Trustee.
The Trustee shall in each year transmit to Holders such reports
concerning the Trustee and its actions under this Indenture as may be
required pursuant to the Trust Indenture Act in the manner provided pursuant
thereto and as of a date at least one year after the date of original
issuance of the Securities hereunder, and each anniversary thereafter, such
report, if so required, to be transmitted within 60 days of each such
anniversary date.
A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange upon which any
Securities are listed, with the Commission and with the Company. The Company
will notify the Trustee when any Securities are listed on any stock exchange
or market center.
SECTION 7.3. Reports by Company.
The Company shall file with the Trustee and the Commission, and transmit
to Holders, such information, documents and other reports, and such summaries
thereof, as may be required pursuant to the Trust Indenture Act at the times
and in the manner provided pursuant to such Act; provided that any such
information, documents or reports required to be filed with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the
Trustee within 15 days after the same is so required to be filed with the
Commission.
ARTICLE VIII
Consolidation, Merger, Sale, Lease, Transfer or Other Disposition
SECTION 8.1. Company May Consolidate, etc. Only on Certain Terms.
The Company shall not consolidate with or merge with or into any other
Person or sell, lease, transfer or otherwise dispose of its assets
substantially as an entirety to any Person, and the Company shall not permit
any Person to consolidate with or merge with or into the Company or to sell,
lease, transfer or otherwise dispose of its assets substantially as an
entirety to the Company, unless:
(1) in case the Company shall consolidate with or merge with or
into another Person or sell, lease, transfer or otherwise dispose of its
assets substantially as an entirety to any Person, the Person formed by such
consolidation or into which the Company is merged or the Person which
acquires by sale, lease, transfer or otherwise, the assets of the Company
substantially as an entirety shall be a corporation, partnership or trust,
shall be organized and validly existing under the laws of the United States
of America, any State thereof or the District of Columbia and shall expressly
assume, by an indenture supplemental hereto, executed and delivered to the
Trustee, in form satisfactory to the Trustee, the due and punctual payment of
the principal of and any premium and interest (including all additional
amounts, if any, payable pursuant to Section 10.4) on all the Securities and
the performance of every covenant of this Indenture on the part of the
Company to be performed or observed;
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(2) immediately after giving effect to such transaction and
treating any indebtedness which becomes an obligation of the Company or a
Subsidiary as a result of such transaction as having been incurred by the
Company or such Subsidiary at the time of such transaction, no Event of
Default, and no event which, after notice or lapse of time or both, would
become an Event of Default, shall have happened and be continuing;
(3) if as a result of any such consolidation or merger or such
sale, lease, transfer or other disposition of the assets of the Company would
become subject to a mortgage, pledge, lien, security interest or other
encumbrance which would not be permitted by this Indenture, the Company or
such successor Person, as the case may be shall take such steps as shall be
necessary effectively to secure the Securities equally and ratably with (or
prior to) all indebtedness secured thereby; and
(4) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger, conveyance, sale, lease, transfer or other disposition and, if a
supplemental indenture is required in connection with such transaction, such
supplemental indenture comply with this Article and that all conditions
precedent herein provided for relating to such transaction have been complied
with.
SECTION 8.2. Successor Substituted.
Upon any consolidation or merger of the Company with or into any other
Person or any sale, lease, transfer or other disposition of the assets of the
Company substantially as an entirety in accordance with Section 8.1, the
successor Person formed by such consolidation or into which the Company is
merged or to which sale, lease, transfer or other disposition is made shall
assume the obligations of the Company on the Securities and under this
Indenture with the same effect as if such successor Person had been named as
the Company herein, and thereafter, except in the case of a lease, the
predecessor Person shall be relieved of all obligations and covenants under
this Indenture and the Securities and coupons.
ARTICLE IX
Supplemental Indentures
SECTION 9.1. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders of Securities or coupons, the
Company, when authorized by a Board Resolution, and the Trustee, at any time
and from time to time, may enter into one or more indentures supplemental
hereto, in form satisfactory to the Trustee, for any of the following
purposes:
(1) to evidence the succession of another Person to the Company
and the assumption by any such successor of the covenants of the Company
herein and in the Securities; or
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(2) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities (and if such covenants are to be
for the benefit of less than all series of Securities, stating that such
covenants are expressly being included solely for the benefit of such series)
or to surrender any right or power herein conferred upon the Company; or
(3) to add any additional Events of Default (and if such Events of
Default are to be for the benefit of less than all series of Securities,
stating that such Events of Default are expressly being included solely for
the benefit of such series); or
(4) to add to or change any of the provisions of this Indenture to
provide that Bearer Securities may be registerable as to principal, to change
or eliminate any restrictions on the payment of principal of or any premium
or interest on Bearer Securities, to permit Bearer Securities to be issued in
exchange for Registered Securities, to permit Bearer Securities to be issued
in exchange for Bearer Securities of other authorized denominations or to
permit or facilitate the issuance of Securities in uncertificated form,
provided that any such action shall not adversely affect the interests of the
Holders of Securities of any series or any related coupons in any material
respect; or
(5) to change or eliminate any of the provisions of this
Indenture, provided that any such change or elimination shall become
effective only when there is no Security Outstanding of any series created
prior to the execution of such supplemental indenture which is entitled to
the benefit of such provision; or
(6) to secure the Securities pursuant to the requirements of
Section 10.7 or otherwise; or
(7) to establish the form or terms of Securities of any series and
any related coupons as permitted by Sections 2.1 and 3.1; or
(8) to evidence and provide for the acceptance of appointment
thereunder by a successor Trustee with respect to the Securities of one or
more series and to add to or change any of the provisions of this Indenture
as shall be necessary to provide for or facilitate the administration of the
trusts hereunder by more than one Trustee, pursuant to the requirements of
Section 6.7(b); or
(9) to make provision with respect to the conversion rights of
Holders pursuant to the requirements of Article XIV, including providing for
the conversion of the Securities into any security or property (other than
the Common Stock of the Company); or
(10) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to make
any other provisions with respect to matters or questions arising under this
Indenture, provided that such action shall not adversely affect the interests
of the Holders of Securities of any series or any related coupons in any
material respect.
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SECTION 9.2. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in principal
amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and
the Trustee, the Company, when authorized by a Board Resolution, and the
Trustee may enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Indenture or of modifying in any manner the
rights of the Holders of Securities of such series and any related coupons
under this Indenture; provided, however, that no such supplemental indenture
shall, without the consent of the Holder of each Outstanding Security
affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any Security, or reduce the
principal amount thereof or the rate of interest thereon or any premium
payable upon the redemption thereof, or change any obligation of the Company
to pay additional amounts pursuant to Section 10.4 (except as contemplated by
Section 8.1(1) and permitted by Section 9.1(1)), or reduce the amount of the
principal of an Original Issue Discount Security that would be due and
payable upon a declaration of acceleration of the Maturity thereof pursuant
to Section 5.2 or change the coin or currency in which any Security or any
premium or interest thereon is payable, or impair the right to institute suit
for the enforcement of any such payment on or after the Stated Maturity
thereof (or, in the case of redemption, on or after the Redemption Date), or
(2) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for any
such supplemental indenture, or the consent of whose Holders is required for
any waiver of certain defaults hereunder and their consequences provided for
in this Indenture, or reduce the requirements of Section 13.4 for quorum or
voting, or
(3) change any obligation of the Company to maintain an office or
agency for the purposes specified in Section 10.2, or
(4) modify any of the provisions of this Section or Section 5.13,
except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the consent
of the Holder of each Outstanding Security affected thereby; provided,
however, that this clause shall not be deemed to require the consent of any
Holder of a Security or coupon with respect to changes in the references to
"the Trustee" and concomitant changes in this Section or the deletion of this
proviso, in accordance with the requirements of Sections 6.7(b) and 9.1(8), or
(5) make any change that adversely affects the right to convert
any Security as provided in Article XIV or pursuant to Section 3.1 (except as
permitted by Section 9.1) or decrease the conversion rate or increase the
conversion price of any such Security except as may otherwise be permitted by
Article XIV.
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A supplemental indenture which changes or eliminates any covenant or
other provision of this Indenture which has expressly been included solely
for the benefit of one or more particular series of Securities, or which
modifies the rights of the Holders of Securities of such series with respect
to such covenant or other provision, shall be deemed not to affect the rights
under this Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders of Securities under
this Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
SECTION 9.3. Execution of Supplemental Indentures.
In executing or accepting the additional trusts created by any
supplemental indenture permitted by this Article or the modifications thereby
of the trusts created by this Indenture, the Trustee shall be entitled to
receive, and (subject to Section 6.1) shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture. The Trustee may, but
shall not be obligated to, enter into any such supplemental indenture which
affects the Trustee's own rights, duties or immunities under this Indenture
or otherwise.
SECTION 9.4. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes;
and every Holder of Securities theretofore or thereafter authenticated and
delivered hereunder and of any coupons appertaining thereto shall be bound
thereby.
SECTION 9.5. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act of 1939, as amended,
in effect on such date.
SECTION 9.6. Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the execution
of any supplemental indenture pursuant to this Article may, and shall if
required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture. If the Company
shall so determine, new Securities of any series so modified as to conform,
in the opinion of the Trustee and the Company, to any such supplemental
indenture may be prepared and executed by the Company and authenticated and
delivered by the Trustee in exchange for Outstanding Securities of such
series.
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ARTICLE X
Covenants
SECTION 10.1. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of and any
premium and interest on the Securities of that series in accordance with the
terms of the Securities, any coupons appertaining thereto and this Indenture.
Unless otherwise specified as contemplated by Section 3.1 with respect to any
series of Securities, any interest due on Bearer Securities on or before
Maturity shall be payable only upon presentation and surrender outside the
United States of the several coupons for such interest installments as are
evidenced thereby as they severally mature.
SECTION 10.2. Maintenance of Office or Agency.
If Securities of a series are issuable only as Registered Securities,
the Company will maintain in each Place of Payment for such series an office
or agency where Securities of that series may be presented or surrendered for
payment, where Securities of that series may be surrendered for registration
of transfer, exchange, or conversion and where notices and demands to or upon
the Company in respect of the Securities of that series and this Indenture
may be served. If Securities of a series are issuable as Bearer Securities,
the Company will maintain (A) in The City of New York, an office or agency
where any Registered Securities of that series may be presented or
surrendered for payment, where any Registered Securities of that series may
be surrendered for registration of transfer, where Securities of that series
may be surrendered for conversion or exchange, where notices and demands to
or upon the Company in respect of the Securities of that series and this
Indenture may be served and where Bearer Securities of that series and
related coupons may be presented or surrendered for payment in the
circumstances described in the following paragraph (and not otherwise), (B)
subject to any laws or regulations applicable thereto, in a Place of Payment
for that series which is located outside the United States, an office or
agency where Securities of that series and related coupons may be presented
and surrendered for payment (including payment of any additional amounts
payable on Securities of that series pursuant to Section 10.4); provided,
however, that if the Securities of that series are listed on The Stock
Exchange of the United Kingdom and the Republic of Ireland, the Luxembourg
Stock Exchange or any other stock exchange located outside the United States
and such stock exchange shall so require, the Company will maintain a Paying
Agent for the Securities of that series in London, Luxembourg or any other
required city located outside the United States, as the case may be, so long
as the Securities of that series ae listed on such exchange, and (C) subject
to any laws or regulations applicable thereto in a Place of Payment for that
series located outside the United States an office or agency where any
Registered Securities of that series may be surrendered for registration of
transfer, where Securities of that series may be surrendered for conversion
or exchange and where notices and demands to or upon the Company in respect
of the Securities of that series and this Indenture may be served. The
Company will give prompt notice to the Trustee and to the Holders as
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provided in Sections 1.5 and 1.6, respectively, of the location and any
change in the location, of any such office or agency. If at any time the
Company shall fail to maintain any such required office or agency in respect
of any series of Securities or shall fail to furnish the Trustee with the
address thereof, such presentations and surrenders of Securities of that
series may be made and notices and demands may be made or served at the
Corporate Trust Office of the Trustee, except that Bearer Securities of that
series and the related coupons may be presented and surrendered for payment
(including payment of any additional amounts payable on Bearer Securities of
that series pursuant to Section 10.4) at the office of the Trustee for such
series located outside the United States, and the Company hereby appoints the
same as its agent to receive such respective presentations, surrenders,
notices and demands.
No payment of principal, premium or interest on Bearer Securities shall
be made at any office or agency of the Company in the United States or by
check mailed to any address in the United States or by transfer to any
account maintained with a bank located in the United States; provided,
however, that if the Securities of a series are denominated and payable in
Dollars, payment of principal of and any premium and interest on any Bearer
Security (including any additional amounts payable on Securities of such
series pursuant to Section 10.4) shall be made at the office of the Company's
Paying Agent in The City of New York, if (but only if) payment in Dollars of
the full amount of such principal, premium, interest or additional amounts,
as the case may be, at all offices or agencies outside the United States
maintained for the purpose by the Company in accordance with this Indenture
is illegal or effectively precluded by exchange controls or other similar
restrictions.
The Company may also from time to time designate one or more other
offices or agencies where the Securities of one or more series may be
presented or surrendered for any or all such purposes and may from time to
time rescind such designations; provided, however, that no such designation
or rescission shall in any manner relieve the Company of its obligation to
maintain an office or agency in accordance with the requirements set forth
above for Securities of any series for such purposes. The Company will give
prompt written notice to the Trustee and the Holders of any such designation
or rescission and of any change in the location of any such other office or
agency.
SECTION 10.3. Money for Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent with
respect to any series of Securities, it will, on or before each due date of
the principal of and any premium or interest on any of the Securities of that
series, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal and any premium or interest so
becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and will promptly notify the Trustee of its
action or failure to act.
Whenever the Company shall have one or more Paying Agents for any series
of Securities it will, prior to each due date of the principal of and any
premium or interest on any Securities of that series, deposit with a Paying
Agent a sum sufficient to pay the
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principal and any premium or interest so becoming due, such sum to be held in
trust for the benefit of the Persons entitled to such principal, premium or
interest, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of its action or failure to act.
The Company will cause each Paying Agent for any series of Securities
other than the Trustee to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to the
provisions of this Section, that such Paying Agent will:
(1) hold all sums held by it for the payment of the principal of
and any premium or interest on Securities of that series in trust for the
benefit of the Persons entitled thereto until such sums shall be paid to such
Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities of that series) in the making of any
payment of principal of and any premium or interest on the Securities of that
series; and
(3) at any time during the continuance of any such default, upon
the written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay,
or by Company Order direct any Paying Agent to pay, to the Trustee all sums
held in trust by the Company or such Paying Agent, such sums to be held by
the Trustee upon the same trusts as those upon which such sums were held by
the Company or such Paying Agent; and, upon such payment by any Paying Agent
to the Trustee, such Paying Agent shall be released from all further
liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of and any premium
or interest on any Security of any series and remaining unclaimed for two
years after such principal and any premium or interest has become due and
payable shall be paid to the Company on Company Request, or (if then held by
the Company) shall be discharged from such trust; and the Holder of such
Security or any coupon appertaining thereto shall thereafter, as an unsecured
general creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust
money and all liability of the Company as trustee thereof shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause
to be published once, in an Authorized Newspaper in each Place of Payment,
notice that such money remains unclaimed and that after a date specified
therein, which shall not be less than 30 days from the date of such
publication, any unclaimed balance of such money then remaining will be
repaid to the Company.
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SECTION 10.4. Additional Amounts.
If the Securities of a series provide for the payment of additional
amounts, the Company will pay to the Holder of any Security of such series or
any coupon appertaining thereto additional amounts as provided therein.
Whenever in this Indenture there is mentioned, in any context, the payment of
the principal of or any premium or interest on, or in respect of any Security
of any series or payment of any related coupon or the net proceeds received
on the sale or exchange of any Security of any series, such mention shall be
deemed to include mention of the payment of additional amounts provided for
in this Section to the extent that, in such context additional amounts are,
were or would be payable in respect thereof pursuant to the provisions of
this Section and express mention of the payment of additional amounts (if
applicable) in any provisions hereof shall not be construed as excluding
additional amounts in those provisions hereof where such express mention is
not made.
If the Securities of a series provide for the payment of additional
amounts, at least 10 days prior to the first Interest Payment Date with
respect to that series of Securities (or if the Securities of that series
will not bear interest prior to Maturity, the first day on which a payment of
principal and any premium is made), and at least 10 days prior to each date
of payment of principal and any premium or interest if there has been any
change with respect to the matters set forth in the below-mentioned Officers'
Certificate, the Company will furnish the Trustee and the Company's principal
Paying Agent or Paying Agents, if other than the Trustee, with an Officers'
Certificate instructing the Trustee and such Paying Agent or Paying Agents
whether such payment of principal of and any premium or interest on the
Securities of that series shall be made to Holders of Securities of that
series or any related coupons who are United States Aliens without
withholding for or on account of any tax assessment or other governmental
charge described in the Securities of that series. If any such withholding
shall be required, then such Officers' Certificate shall specify by country
the amount, if any, required to be withheld on such payments to such Holders
of Securities or coupons and the Company will pay to the Trustee or such
Paying Agent the additional amounts required by this Section. The Company
covenants to indemnify the Trustee and any Paying Agent for, and to hold them
harmless against, any loss, liability or expense reasonably incurred without
negligence or willful misconduct on their part arising out of or in
connection with actions taken or omitted by any of them in reliance on any
Officers' Certificate furnished pursuant to this Section.
SECTION 10.5. Existence.
Subject to Article VIII, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights (charter and statutory) and franchises; provided, however, that the
Company shall not be required to preserve any such right or franchise if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and that the loss
thereof is not disadvantageous in any material respect to the Holders.
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SECTION 10.6. Purchase of Securities by Company or Subsidiary.
If and so long as the Securities of a series are listed on The Stock
Exchange of the United Kingdom and the Republic of Ireland and such stock
exchange shall so require, the Company will not, and will not permit any of
its Subsidiaries to, purchase any Securities of that series by private treaty
at a price (exclusive of expenses and accrued interest) which exceeds 120% of
the mean of the nominal quotations of the Securities of that series as shown
in The Stock Exchange Daily Official List for the last trading day preceding
the date of purchase.
SECTION 10.7. Limitation on Liens.
The Company shall not create, assume or suffer to exist any Lien on any
Restricted Property to secure any indebtedness for money borrowed of the
Company, any Subsidiary or any other Person, or permit any Subsidiary so to
do, without making effective provision whereby the Securities then
outstanding and having the benefit of this Section shall be secured by such
Lien equally and ratably with such indebtedness for so long as such
indebtedness shall be so secured, except that the foregoing shall not prevent
the Company or any Subsidiary from creating, assuming or suffering to exist
Liens of the following character:
(1) with respect to any series of Securities, any Lien existing on
the date of issuance of such series;
(2) any Lien existing on property owned or leased by a corporation
at the time it becomes a Subsidiary;
(3) any Lien existing on property at the time of the acquisition
thereof by the Company or any Subsidiary;
(4) any Lien to secure any indebtedness incurred prior to, at the
time of, or within 12 months after the acquisition of Restricted Property for
the purpose of financing all or any part of the purchase price thereof and
any Lien to the extent that it secures indebtedness which is in excess of the
purchase price and for the payment of which recourse may be had only against
such Restricted Property;
(5) any Lien to secure any indebtedness incurred prior to, at the
time of, or within 12 months after the completion of the construction,
alteration, repair or improvement of Restricted Property for the purpose of
financing all or any part of the cost thereof and any Lien to the extent that
it secures indebtedness which is in excess of such cost and for the payment
of which recourse may be had only against such Restricted Property;
(6) any Lien securing indebtedness of a Subsidiary owing to the
Company or to another Subsidiary;
(7) any Liens securing industrial development, pollution control,
or similar revenue bonds or indebtedness issued by or guaranteed by the
United States of
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America, any State thereof or any other country or any department, agency or
instrumentality thereof;
(8) Liens resulting from the deposit of funds or evidences of
indebtedness in trust for the purpose of defeasing indebtedness of the
Company or any of its Subsidiaries;
(9) Liens securing Hedging Obligations;
(10) any extension, renewal or replacement (or successive
extensions, renewals or replacements) in whole or in part of any Lien
referred to in clauses (1) through (9) above, so long as the Lien as so
extended, renewed or replaced is limited to the same property or properties
subject to the Lien so extended, renewed or replaced (plus improvements and
additions on such property or properties); and
(11) any Lien not permitted by the foregoing clauses (1) through
(10) securing indebtedness, if the outstanding principal amount of such
indebtedness, together with the aggregate outstanding principal amount of all
other indebtedness of the Company and its Subsidiaries owning Restricted
Property which would otherwise be subject to the foregoing restrictions and
the aggregate Value of existing Sale and Leaseback Transactions which would
be subject to the restrictions of Section 10.8 but for this clause (11), does
not exceed 10.0% of Consolidated Net Tangible Assets at the time such Lien is
incurred. (Section 10.7)
SECTION 10.8. Limitation on Sale and Leaseback Transactions.
The Company shall not, and shall not permit any Subsidiary to, enter
into any Sale and Leaseback Transaction covering any Restricted Property,
unless:
(1) the Company or such Subsidiary would be entitled under the
provision of Section 10.7 hereof to incur indebtedness, in a principal amount
at least equal to the Value of such Sale and Leaseback Transaction, secured
by Liens on the property to be leased (without equally and ratably securing
the Debt Securities), or
(2) the Company, during the six months following the effective
date of such Sale and Leaseback Transaction applies an amount equal to the
Value of such Sale and Leaseback Transaction to the acquisition of Restricted
Property or the voluntary retirement of Funded Debt (whether by redemption,
defeasance, repurchase, or otherwise).
SECTION 10.9. Limitation on Subsidiary Indebtedness.
The Company shall not permit any Subsidiary to incur any indebtedness
for borrowed money, other than indebtedness to the Company or another
Subsidiary, if after giving effect to the incurrence of such indebtedness and
the application of the proceeds thereof, the Subsidiaries would have
outstanding indebtedness for borrowed money, other than indebtedness to the
Company or another Subsidiary, in an aggregate amount in excess of 10% of the
total amount of assets (less applicable reserves and other properly
deductible items), as set forth on or included in the most recent balance
sheet of the Company and its consolidated Subsidiaries and determined in
accordance with generally accepted accounting principles: PROVIDED, HOWEVER,
that if and for so long as the Notes are assigned a rating of Baa1 (or the
equivalent) or higher by Moody's Investors Service, Inc. or its successors
("Moody's") and a rating of BBB+ (or the equivalent) or higher by Standard &
Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. or its
successors ("S&P"), such limitation shall cease to be applicable; PROVIDED,
FURTHER, that in the event Moody's or S&P is no longer in existence or
issuing ratings, for purposes of determining whether such limitation shall be
applicable, such organization may be replaced by a nationally recognized
statistical rating organization (as defined in Rule 436 under the Securities
Act) designated by the Company with notice to the Trustee and the provisions
of such limitation shall apply to the rating issued by such replacement
rating agency.
SECTION 10.10. Statement by Officers as to Default.
The Company will deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company ending after the date hereof, an Officers'
Certificate signed by its principal executive officer, principal financial
officer or principal accounting officer stating whether or not to the best
knowledge of the signer thereof the Company is in default in the performance
and observance of any of the terms, provisions and conditions
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of this Indenture, and if the Company shall be in default, specifying all
such defaults and the nature and status thereof of which they may have
knowledge.
ARTICLE XI
Redemption of Securities
SECTION 11.1. Applicability of Article.
Securities of any series which are redeemable before their Stated
Maturity shall be redeemable in accordance with their terms and (except as
otherwise specified as contemplated by Section 3.1 for Securities of any
series) in accordance with this Article.
SECTION 11.2. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be evidenced
by an Officers' Certificate. In the case of any redemption, at the election
of the Company of less than all the Securities of any series, the Company
shall, at least 60 days prior to the Redemption Date fixed by the Company
(unless a shorter notice shall be satisfactory to the Trustee), notify the
Trustee of such Redemption Date and of the principal amount of Securities of
such series to be redeemed. In the case of any redemption of Securities (i)
prior to the expiration of any restriction on such redemption provided in the
terms of such Securities or elsewhere in this Indenture, or (ii) pursuant to
an election of the Company which is subject to a condition specified in the
terms of such Securities, the Company shall furnish the Trustee with an
Officers' Certificate evidencing compliance with such restriction or
condition.
SECTION 11.3. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities of any series and of like tenor are to
be redeemed, the particular Securities to be redeemed shall be selected not
more than 60 days prior to the Redemption Date by the Trustee, from the
Outstanding Securities of such series and of like tenor not previously called
for redemption, by such method as the Trustee shall deem fair and appropriate
and which may provide for the selection, for redemption of portions (equal to
the minimum authorized denomination for Securities of that series or any
integral multiple thereof) of the principal amount of Registered Securities
of such series of a denomination larger than the minimum authorized
denomination for Securities of that series. If so specified in the Securities
of a series, partial redemptions must be in an amount not less than
$1,000,000 principal amount of Securities.
If any Security selected for partial redemption is converted in part
before termination of the conversion right with respect to the portion of the
Security so selected, the converted portion of such Security shall be deemed
(so far as may be) to be the portion selected for redemption. Securities (or
portions thereof) which have been converted during a selection of Securities
to be redeemed shall be treated by the Trustee as Outstanding for the purpose
of such selection. In any case where more than one Security is registered in
the same name, the Trustee in its discretion may treat the aggregate
principal amount so registered as if it were represented by one Security.
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The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Securities
selected for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall
relate, in the case of any Securities redeemed or to be redeemed only in
part, to the portion of the principal amount of such Securities which has
been or is to be redeemed.
SECTION 11.4. Notice of Redemption.
Notice of redemption shall be given in the manner provided in Section
1.6 to the Holders of Securities to be redeemed not less than 30 nor more
than 60 days prior to the Redemption Date.
All notices of redemption shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) if less than all the Outstanding Securities of any series are
to be redeemed, the identification (and, in the case of partial redemption,
the principal amounts) of the particular Securities to be redeemed, and a
statement to the effect that on or after the Redemption Date upon surrender
of such Security a new Security in the principal amount equal to the
unredeemed portion will be issued;
(4) that on the Redemption Date the Redemption Price will become
due and payable upon each such Security to be redeemed and, if applicable,
that interest thereon will cease to accrue on and after said date;
(5) the place or places where such Securities, together in the
case of Bearer Securities with all coupons appertaining thereto, if any
maturing after the Redemption Date, are to be surrendered for payment of the
Redemption Price;
(6) that the redemption is for a sinking fund, if such is the
case; and
(7) if applicable, the conversion rate or price, the date on which
the right to convert the Securities to be redeemed will terminate and the
place or places where such Securities may be surrendered for conversion.
A notice of redemption published as contemplated by Section 1.6 need not
identify particular Registered Securities to be redeemed.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
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SECTION 11.5. Deposit of Redemption Price.
Prior to any Redemption Date, the Company shall deposit with the Trustee
or with a Paying Agent (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust as provided in Section 10.3) an amount of money
sufficient to pay the Redemption Price of, and (except if the Redemption Date
shall be an Interest Payment Date) accrued interest on, all the Securities
which are to be redeemed on that date.
SECTION 11.6. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall on the Redemption Date become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest and the coupons for
such interest appertaining to any Bearer Securities so to be redeemed except
to the extent provided below, shall be void. Upon surrender of any such
Security for redemption in accordance with said notice together with all
coupons, if any, appertaining thereto maturing after the Redemption Date,
such Security shall be paid by the Company at the Redemption Price together
with accrued interest to the Redemption Date; provided, however, that
installments of interest on Bearer Securities whose Stated Maturity is on or
prior to the Redemption Date shall be payable only at an office or agency
located outside the United States (except as otherwise provided in Section
10.2) and, unless otherwise specified as contemplated by Section 3.1, only
upon presentation and surrender of coupons for such interest; and provided,
further, that, unless otherwise specified as contemplated by Section 3.1,
installments of interest on Registered Securities whose Stated Maturity is on
or prior to the Redemption Date shall be payable to the Holders of such
Securities or one or more Predecessor Securities, registered as such at the
close of business on the relevant Record Dates according to their terms and
the provisions of Section 3.7.
If any Bearer Security surrendered for redemption shall not be
accompanied by all appurtenant coupons maturing after the Redemption Date,
such Security may be paid after deducting from the Redemption Price an amount
equal to the face amount of all such missing coupons, or the surrender of
such missing coupon or coupons may be waived by the Company and the Trustee
if there be furnished to them such security or indemnity as they may require
to save each of them and any Paying Agent harmless. If thereafter the Holder
of such Security shall surrender to the Trustee or any Paying Agent any such
missing coupon in respect of which a deduction shall have been made from the
Redemption Price, such Holder shall be entitled to receive the amount so
deducted; provided, however, that interest represented by coupons shall be
payable only at an office or agency located outside the United States (except
as otherwise provided in Section 10.2) and unless otherwise specified as
contemplated by Section 3.1 only upon presentation and surrender of those
coupons.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and any premium shall, until
paid, bear interest from the Redemption Date at the rate prescribed therefor
in the Security.
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SECTION 11.7. Securities Redeemed in Part.
Any Registered Security which is to be redeemed only in part shall be
surrendered at a Place of Payment therefor (with, if the Company or the
Trustee so requires, due endorsement by, or a written instrument of transfer
in form satisfactory to the Company and the Trustee duly executed by, the
Holder thereof or his attorney duly authorized in writing), and the Company
shall execute, and the Trustee shall authenticate and deliver to the Holder
of such Security without service charge, a new Registered Security or
Securities of the same series and of like tenor of any authorized
denomination as requested by such Holder, in aggregate principal amount equal
to and in exchange for the unredeemed portion of the principal of the
Security so surrendered.
ARTICLE XII
Sinking Funds
SECTION 12.1. Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund
for the retirement of Securities of a series except as otherwise specified as
contemplated by Section 3.1 for Securities of such series.
The minimum amount of any sinking fund payment provided for by the terms
of Securities of any series is herein referred to as a "mandatory sinking
fund payment", and any payment in excess of such minimum amount provided for
by the terms of Securities of any series is herein referred to as an
"optional sinking fund payment". If provided for by the terms of Securities
of any series, the cash amount of any sinking fund payment may be subject to
reduction as provided in Section 12.2. Each sinking fund payment shall be
applied to the redemption of Securities of any series as provided for by the
terms of Securities of such series.
SECTION 12.2. Satisfaction of Sinking Fund Payments with Securities.
The Company (1) may deliver Outstanding Securities of a series (other
than any previously called for redemption), together in the case of any
Bearer Securities of such series with all unmatured coupons appertaining
thereto, and (2) may apply as a credit Securities of a series which have been
redeemed either at the election of the Company pursuant to the terms of such
Securities or through the application of permitted optional sinking fund
payments pursuant to the terms of such Securities, in each case in
satisfaction of all or any part of any sinking fund payment with respect to
the Securities of such series required to be made pursuant to the terms of
such Securities, as provided for by the terms of such series; provided that
such Securities have not been previously so credited. Such Securities shall
be received and credited for such purpose by the Trustee at the Redemption
Price specified in such Securities for redemption through operation of the
sinking fund and the amount of such sinking fund payment shall be reduced
accordingly.
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SECTION 12.3. Redemption of Securities for Sinking Fund.
Not less than 60 days prior to each sinking fund payment date for any
series of Securities, the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund payment
for that series pursuant to the terms of that series, the portion thereof, if
any, which is to be satisfied by payment of cash and the portion thereof, if
any, which is to be satisfied by delivering and crediting Securities of that
series pursuant to Section 12.2 and will also deliver to the Trustee any
Securities to be so delivered. Not less than 45 days before each such sinking
fund payment date the Trustee shall select the Securities to be redeemed upon
such sinking fund payment date in the manner specified in Section 11.3 and
cause notice of the redemption thereof to be given in the name of and at the
expense of the Company in the manner provided in Section 11.4. Such notice
having been duly given, the redemption of such Securities shall be made upon
the terms and in the manner stated in Sections 11.6 and 11.7.
ARTICLE XIII
Meetings of Holders of Securities
SECTION 13.1. Purposes for Which Meetings May Be Called.
If Securities of a series are issuable as Bearer Securities, a meeting
of Holders of Securities of such series may be called at any time and from
time to time pursuant to this Article to make, give or take any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be made, given or taken by Holders of
Securities of such series.
SECTION 13.2. Call, Notice and Place of Meetings.
(a) The Trustee may at any time call a meeting of Holders of
Securities of any series for any purpose specified in Section 13.1, to be
held at such time and at such place in the Borough of Manhattan, The City of
New York, or in London as the Trustee shall determine. Notice of every
meeting of Holders of Securities of any series, setting forth the time and
the place of such meeting and in general terms the action proposed to be
taken at such meeting, shall be given, in the manner provided in Section 1.6,
not less than 21 nor more than 180 days prior to the date fixed for the
meeting (or, in the case of a meeting of Holders with respect to Securities
of a series all or part of which are represented by a Book-Entry Security,
not less than 20 nor more than 40 days).
(b) In case at any time the Company, pursuant to a Board
Resolution, or the Holders of at least 25% in principal amount of the
Outstanding Securities of any series shall have requested the Trustee to call
a meeting of the Holders of Securities of such series for any purpose
specified in Section 13.1, by written request setting forth in reasonable
detail the action proposed to be taken at the meeting, and the Trustee shall
not have made the first publication of the notice of such meeting within 21
days after receipt of such request or shall not thereafter proceed to cause
the meeting to be held as provided herein, then the Company or the Holders of
Securities of such series in the amount above
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specified, as the case may be, may determine the time and the place in the
Borough of Manhattan, The City of New York or in London for such meeting and
may call such meeting for such purposes by giving notice thereof as provided
in subsection (a) of this Section.
SECTION 13.3. Persons Entitled to Vote at Meetings.
Upon the calling of a meeting of Holders with respect to the Securities
of a series all or part of which are represented by a Book-Entry Security, a
record date shall be established for determining Holders of Outstanding
Securities of such series entitled to vote at such meeting, which record date
shall be the close of business on the day the notice of the meeting of
Holders is given in accordance with Section 13.2. The Holders on such record
date, and their designated proxies, and only such Persons, shall be entitled
to vote at any meeting of Holders. To be entitled to vote at any meeting of
Holders a Person shall (a) be a Holder of one or more Securities or (b) be a
Person appointed by an instrument in writing as proxy by a Holder of one or
more Securities; provided, however, that in the case of any meeting of
Holders with respect to the Securities of a series all or part of which are
represented by a Book-Entry Security, only Holders, or their designated
proxies, of record on the record date established pursuant to Section 13.3
hereof shall be entitled to vote at such meeting. The only Persons who shall
be entitled to be present or to speak at any meeting of Holders shall be the
Persons entitled to vote at such meeting and their counsel and any
representatives of the Trustee and its counsel and any representatives of the
Company and its counsel.
SECTION 13.4. Quorum; Action.
The Persons entitled to vote a majority in principal amount of the
Outstanding Securities of a series constitute a quorum for a meeting
of Holders of Securities of such series; provided, however, that if any
action is to be taken at such meeting with respect to a consent or waiver
which this Indenture expressly provides may be given by the Holders of a
specified percentage in aggregate principal amount of Outstanding Securities
of a series that is less or greater than a majority in principal amount of
the Outstanding Securities of a series, then, with respect to such action
(and only such action) the Persons entitled to vote such lesser or greater
percentage in principal amount of the Outstanding Securities of such series
shall constitute a quorum. In the absence of a quorum within 30 minutes of
the time appointed for any such meeting, the meeting shall, if convened at
the request of Holders of Securities of such series, be dissolved. In any
other case the meeting may be adjourned for a period of not less than 10 days
as determined by the chairman of the meeting prior to the adjournment of such
meeting. In the absence of a quorum at any such adjourned meeting, such
adjourned meeting may be further adjourned for a period of not less than 10
days as determined by the chairman of the meeting prior to the adjournment of
such adjourned meeting. Notice of the reconvening of any adjourned meeting
shall be given as provided in Section 13.2(a), except that such notice need
be given only once not less than five days prior to the date on which the
meeting is scheduled to be reconvened. Notice of the reconvening of an
adjourned meeting shall state expressly the percentage, as provided above, of
the principal amount of the outstanding Securities of such series which shall
constitute a
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quorum. Notwithstanding the foregoing, no meeting of Holders with respect to
Securities of any Series which is represented in whole or in part by a
Book-Entry Security, shall be adjourned to a date more than 90 days after the
record date for such meeting unless the Trustee shall send out a new notice
of meeting and establish, in accordance with Section 13.3, a new record date
for Holders entitled to vote at such meeting.
Except as limited by the proviso to Section 9.2, any resolution
presented to a meeting or adjourned meeting duly reconvened at which a quorum
is present as aforesaid may be adopted by the affirmative vote of the Holders
of a majority in principal amount of the Outstanding Securities of that
series; provided, however, that, except as limited by the proviso to Section
9.2 any resolution with respect to any consent or waiver which this Indenture
expressly provides may be given by the Holders of a specified percentage in
aggregate principal amount of Outstanding Securities of a series that is less
or greater than a majority in principal amount of the Outstanding Securities
of a series may be adopted at a meeting or an adjourned meeting duly convened
and at which a quorum is present as aforesaid only by the affirmative vote of
the Holders of such specified percentage in principal amount of the
Outstanding Securities of that series.
Any resolution passed or decision taken at any meeting of Holders of
Securities of any series duly held in accordance with this Section shall be
binding on all the Holders of Securities of such series and the related
coupons, whether or not present or represented at the meeting.
SECTION 13.5. Determination of Voting Rights; Conduct and Adjournment of
Meetings.
(a) Notwithstanding any other provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Holders of Securities of a series in regard to proof of the
holding of Securities of such series and of the appointment of proxies and in
regard to the appointment and duties of inspectors of votes, the submission
and examination of proxies, certificates and other evidence of the right to
vote, and such other matters concerning the conduct of the meeting as it
shall deem appropriate. Except as otherwise permitted or required by any such
regulations, the holding of Securities shall be proved in the manner
specified in Section 1.4 and the appointment of any proxy shall be proved in
the manner specified in Section 1.4 or by having the signature of the person
executing the proxy witnessed or guaranteed by any trust company, bank or
banker authorized by Section 1.4 to certify to the holding of Bearer
Securities. Such regulations may provide that written instruments appointing
proxies, regular on their face, may be presumed valid and genuine without the
proof specified in Section 1.4 or other proof.
(b) The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been called
by the Company or by Holders of Securities as provided in Section 13.2(b), in
which case the Company or the Holders of Securities of the series calling the
meeting, as the case may be, shall in like manner appoint a temporary
chairman. A permanent chairman and a permanent secretary
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of the meeting shall be elected by vote of the Persons entitled to vote a
majority in principal amount of the Outstanding Securities of such series
represented at the meeting.
(c) At any meeting each Holder of a Security of such series or
proxy shall be entitled to one vote for each $1,000 principal amount of the
Outstanding Securities of such series held or represented by him; provided,
however, that no vote shall be cast or counted at any meeting in respect of
any Security challenged as not Outstanding and ruled by the chairman of the
meeting to be not Outstanding. The chairman of the meeting shall have no
right to vote, except as a Holder of a Security of such series or proxy.
(d) Any meeting of Holders of Securities of any series duly called
pursuant to Section 13.2 at which a quorum is present may be adjourned from
time to time by Persons entitled to vote a majority in principal amount of
the Outstanding Securities of such series represented at the meeting; and the
meeting may be held as so adjourned without further notice.
SECTION 13.6. Counting Votes and Recording Action of Meetings.
The vote upon any resolution submitted to any meeting of Holders of
Securities of any series shall be by written ballots on which shall be
subscribed the signatures of the Holders of Securities of such series or of
their representatives by proxy and the principal amounts and serial numbers
of the Outstanding Securities of such series held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and
who shall make and file with the secretary of the meeting their verified
written reports in duplicate of all votes cast at the meeting. A record, at
least in duplicate, of the proceedings of each meeting of Holders of
Securities of any series shall be prepared by the secretary of the meeting
and there shall be attached to said record the original reports of the
inspectors of votes on any vote by ballot taken thereat and affidavits by one
or more persons having knowledge of the facts setting forth a copy of the
notice of the meeting and showing that said notice was given as provided in
Section 13.2 and, if applicable, Section 13.4. Each copy shall be signed and
verified by the affidavits of the permanent chairman and secretary of the
meeting and one such copy shall be delivered to the Company, and another to
the Trustee to be preserved by the Trustee, the latter to have attached
thereto the ballots voted at the meeting. Any record so signed and verified
shall be conclusive evidence of the matters therein stated.
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ARTICLE XIV
Conversion of Securities
SECTION 14.1. Applicability of Article.
The provisions of this Article shall be applicable to the Securities of
any series which are convertible into shares of Common Stock of the Company,
and the issuance of such shares of Common Stock upon the conversion of such
Securities, except as otherwise specified as contemplated by Section 3.1 for
the Securities of such series. The terms and provisions applicable to the
conversion of Securities of any series into securities of the Company (other
than Common Stock) shall, if applicable, be set forth in an Officers'
Certificate or established in one or more indentures supplemental hereto,
prior to the issuance of Securities of such series in accordance with Section
3.1.
SECTION 14.2. Exercise of Conversion Privilege.
In order to exercise a conversion privilege, the Holder of a Security of
a series with such a privilege shall surrender such Security to the Company
at the office or agency maintained for that purpose pursuant to Section 10.2,
accompanied by written notice to the Company that the Holder elects to
convert such Security or a specified portion thereof. Such notice shall also
state, if different from the name and address of such Holder, the name or
names (with address) in which the certificate or certificates for shares of
Common Stock which shall be issuable on such conversion shall be issued.
Securities surrendered for conversion shall (if so required by the Company or
the Trustee) be duly endorsed by or accompanied by instruments of transfer in
forms satisfactory to the Company and the Trustee duly executed by the
registered Holder or its attorney duly authorized in writing; and Securities
so surrendered for conversion during the period from the close of business on
any Regular Record Date to the opening of business on the next succeeding
Interest Payment Date (excluding Securities or portions thereof called for
redemption during such period) shall also be accompanied by payment in funds
acceptable to the Company of an amount equal to the interest payable on such
Interest Payment Date on the principal amount of such Security then being
converted, and such interest shall be payable to such registered Holder
notwithstanding the conversion of such Security, subject to the provisions of
Section 3.7 relating to the payment of Defaulted Interest by the Company. As
promptly as practicable after the receipt of such notice and of any payment
required pursuant to a Board Resolution and, subject to Section 3.1, set
forth, or determined in the manner provided, in an Officers' Certificate, or
established in one or more indentures supplemental hereto setting forth the
terms of such series of Security, and the surrender of such Security in
accordance with such reasonable regulations as the Company may prescribe, the
Company shal issue and shall deliver, at the office or agency at which such
Security is surrendered, to such Holder or on its written order, a
certificate or certificates for the number of full shares of Common Stock
issuable upon the conversion of such Security (or specified portion thereof),
in accordance with the provisions of such Board Resolution, Officers'
Certificate or supplemental indenture, and cash as provided therein in
respect of any fractional share of such Common Stock otherwise issuable upon
such conversion. Such conversion shall be deemed to have been effected
immediately prior to the close of business on the date on which such notice
and such payment, if required, shall have been received in proper order for
conversion by the Company and such Security shall have been surrendered as
aforesaid (unless such Holder shall have so surrendered such Security and
shall have instructed the Company to effect the conversion on a particular
date following such surrender and such Holder shall be entitled to convert
such Security on such date, in which case such conversion shall be
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deemed to be effected immediately prior to the close of business on such
date) and at such time the rights of the Holder of such Security as such
Security Holder shall cease and the person or persons in whose name or names
any certificate or certificates for shares of Common Stock of the Company
shall be issuable upon such conversion shall be deemed to have become the
holder or holders of record of the shares represented thereby. Except as set
forth above and subject to the final paragraph of Section 3.7, no payment or
adjustment shall be made upon any conversion on account of any interest
accrued on the Securities surrendered for conversion or on account of any
dividends on the Common Stock of the Company issued upon such conversion.
In the case of any Security which is converted in part only, upon such
conversion the Company shall execute and the Trustee shall authenticate and
deliver to or on the order of the Holder thereof, at the expense of the
Company, a new Security or Securities of the same series, of authorized
denominations, in aggregate principal amount equal to the unconverted portion
of such Security.
SECTION 14.3. No Fractional Shares.
No fractional share of Common Stock of the Company shall be issued upon
conversions of Securities of any series. If more than one Security shall be
surrendered for conversion at one time by the same Holder, the number of full
shares which shall be issuable upon conversion shall be computed on the basis
of the aggregate principal amount of the Securities (or specified portions
thereof to the extent permitted hereby) so surrendered. If, except for the
provisions of this Section 14.3, any Holder of a Security or Securities would
be entitled to a fractional share of Common Stock of the Company upon the
conversion of such Security or Securities, or specified portions thereof, the
Company shall pay to such Holder an amount in cash equal to the current
market value of such fractional share computed, (i) if such Common Stock is
listed or admitted to unlisted trading privileges on a national securities
exchange, on the basis of the last reported sale price regular way on such
exchange on the last trading day prior to the date of conversion upon which
such a sale shall have been effected, or (ii) if such Common Stock is not at
the time so listed or admitted to unlisted trading privileges on a national
securities exchange, on the basis of the average of the bid and asked prices
of such Common Stock in the over-the-counter market, on the last trading day
prior to the date of conversion, as reported by the National Quotation
Bureau, Incorporated or similar organization if the National Quotation
Bureau, Incorporated is no longer reporting such information, or if not so
available, the fair market price as determined by the Board of Directors. For
purposes of this Section, "trading day" shall mean each Monday, Tuesday,
Wednesday, Thursday and Friday other than any day on which the Common Stock
is not traded on the New York Stock Exchange, or if the Common Stock is not
traded on the New York Stock
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Exchange, on the principal exchange or market on which the Common Stock is
traded or quoted.
SECTION 14.4. Adjustment of Conversion Price.
The conversion price of Securities of any series that is convertible
into Common Stock of the Company shall be adjusted for any stock dividends,
stock splits, reclassification, combinations or similar transactions in
accordance with the terms of the supplemental indenture or Board Resolutions
setting forth the terms of the Securities of such series.
Whenever the conversion price is adjusted, the Company shall compute the
adjusted conversion price in accordance with terms of the applicable Board
Resolution or supplemental indenture and shall prepare an Officers'
Certificate setting forth the adjusted conversion price and showing in
reasonable detail the facts upon which such adjustment is based, and such
certificate shall forthwith be filed at each office or agency maintained for
the purpose of conversion of Securities pursuant to Section 10.2 and, if
different, with the Trustee. The Company shall forthwith cause a notice
setting forth the adjusted conversion price to be mailed, first class postage
prepaid, to each Holder of Securities of such series at its address appearing
on the Security Register and to any conversion agent other than the Trustee.
SECTION 14.5. Notice of Certain Corporate Actions.
In case:
(a) the Company shall declare a dividend (or any other
distribution) on its Common Stock payable otherwise than in cash out of its
retained earnings (other than a dividend for which approval of any
shareholders of the Company is required); or
(b) the Company shall authorize the granting to the holders of its
Common Stock of rights, options or warrants to subscribe for or purchase any
shares of capital stock of any class or of any other rights (other than any
such grant for which approval of any shareholders of the Company is
required); or
(c) of any reclassification of the Common Stock of the Company
(other than a subdivision or combination of its outstanding shares of Common
Stock) or of any consolidation, merger or share exchange to which the Company
is a party and for which approval of any shareholders of the Company is
required, or of the sale of all or substantially all of the assets of the
Company; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; then the Company shall cause to be filed with the
Trustee, and shall cause to be mailed to all Holders at their last addresses
as they shall appear in the Security Register, at least 20 days (or 10 days
in any case specified in clause (a) or (b) above) prior to the applicable
record date hereinafter specified, a notice stating (i) the date on which a
record is to be taken for the purpose of such dividend, distribution, rights,
options or warrants, or, if a record is not to be taken, the date as of which
the
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holders of Common Stock of record to be entitled to such dividend,
distribution, rights, options or warrants are to be determined, or (ii) the
date on which such reclassification, consolidation, merger, share exchange,
sale, dissolution, liquidation or winding up is expected to become effective,
and the date as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, share exchange, sale, dissolution, liquidation or
winding up. If at any time the Trustee shall not be the conversion agent, a
copy of such notice shall also forthwith be filed by the Company with the
Trustee.
SECTION 14.6. Reservation of Shares of Common Stock.
The Company shall at all times reserve and keep available, free from
preemptive rights, out of its authorized but unissued Common Stock or
treasury shares, for the purpose of effecting the conversion of Securities,
the full number of shares of Common Stock of the Company then issuable upon
the conversion of all outstanding Securities of any series that has
conversion rights.
SECTION 14.7. Payment of Certain Taxes upon Conversion.
The Company will pay any and all taxes that may be payable in respect of
the issue or delivery of shares of its Common Stock on conversion of
Securities pursuant hereto. The Company shall not, however, be required to
pay any tax which may be payable in respect of any transfer involved in the
issue and delivery of shares of its Common Stock in a name other than that of
the Holder of the Security or Securities to be converted, and no such issue
or delivery shall be made unless and until the person requesting such issue
has paid to the Company the amount of any such tax, or has established, to
the satisfaction of the Company, that such tax has been paid.
SECTION 14.8. Nonassessability.
The Company covenants that all shares of its Common Stock which may be
issued upon conversion of Securities will upon issue in accordance with the
terms hereof be duly and validly issued and fully paid and nonassessable.
SECTION 14.9. Effect of Consolidation or Merger on Conversion Privilege.
In case of any consolidation of the Company with, or merger of the
Company into or with any other Person, or in case of any sale of all or
substantially all of the assets of the Company, the Company or the Person
formed by such consolidation or the Person into which the Company shall have
been merged or the Person which shall have acquired such assets, as the case
may be, shall execute and deliver to the Trustee a supplemental indenture
providing that the Holder of each Security then outstanding of any series
that is convertible into Common Stock of the Company shall have the right,
which right shall be the exclusive conversion right thereafter available to
said Holder (until the expiration of the conversion right of such Security),
to convert such Security into the kind and amount of shares of stock or other
securities or property (including cash) receivable upon such consolidation,
merger or sale by a holder of the number of shares of Common Stock of
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the Company into which such Security might have been converted immediately
prior to such consolidation, merger or sale, subject to compliance with the
other provisions of this Indenture, such Security and such supplemental
indenture. Such supplemental indenture shall provide for adjustments which
shall be as nearly equivalent as may be practicable to the adjustments
provided for in such Security.
The above provisions of this Section shall similarly apply to successive
consolidations, mergers or sales. It is expressly agreed and understood that
anything in this Indenture to the contrary notwithstanding, if, pursuant to
such merger, consolidation or sale, holders of outstanding shares of Common
Stock of the Company do not receive shares of common stock of the surviving
corporation but receive other securities, cash or other property or any
combination thereof, Holders of Securities shall not have the right to
thereafter convert their Securities into common stock of the surviving
corporation or the corporation which shall have acquired such assets, but
rather, shall have the right upon such conversion to receive the other
securities, cash or other property receivable by a holder of the number of
shares of Common Stock of the Company into which the Securities held by such
holder might have been converted immediately prior to such consolidation,
merger or sale, all as more fully provided in the first sentence of this
Section 14.9. Anything in this Section 14.9 to the contrary notwithstanding,
the provisions of this Section 14.9 shall not apply to a merger or
consolidation of another corporation with or into the Company pursuant to
which both of the following conditions are applicable: (i) the Company is the
surviving corporation and (ii) the outstanding shares of Common Stock of the
Company are not changed or converted into any other securities or property
(including cash) or changed in number or character or reclassified pursuant
to the terms of such merger or consolidation.
As evidence of the kind and amount of shares of stock or other
securities or property (including cash) into which Securities may properly be
convertible after any such consolidation, merger or sale, or as to the
appropriate adjustments of the conversion prices applicable with respect
thereto, the Trustee shall be furnished with and may accept the certificate
or opinion of an independent certified public accountant with respect
thereto; and, in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely thereon, and shall not be responsible or
accountable to any Holder of Securities for any provision in conformity
therewith or approved by such independent certified accountant which may be
contained in said supplemental indenture.
SECTION 14.10. Duties of Trustee Regarding Conversion.
Neither the Trustee nor any conversion agent shall at any time be under
any duty or responsibility to any Holder of Securities of any series that is
convertible into Common Stock of the Company to determine whether any facts
exist which may require any adjustment of the conversion price, or with
respect to the nature or extent of any such adjustment when made, or with
respect to the method employed, whether herein or in any supplemental
indenture, any resolutions of the Board of Directors or written instrument
executed by one or more officers of the Company provided to be employed in
making the same. Neither the Trustee nor any conversion agent shall be
accountable with respect to the validity or value (or the kind or amount) of
any shares of Common Stock of the
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Company, or of any securities or property, which may at any time be issued or
delivered upon the conversion of any Securities and neither the Trustee nor
any conversion agent makes any representation with respect thereto. Neither
the Trustee nor any conversion agent shall be responsible for any failure of
the Company to issue, transfer or deliver any shares of its Common Stock or
stock certificates or other securities or property upon the surrender of any
Security for the purpose of conversion or to comply with any of the covenants
of the Company contained in this Article XIV or in the applicable
supplemental indenture, resolutions of the Board of Directors or written
instrument executed by one or more duly authorized officers of the Company.
SECTION 14.11. Repayment of Certain Funds upon Conversion.
Any funds which at any time shall have been deposited by the Company or
on its behalf with the Trustee or any other paying agent for the purpose of
paying the principal of, and premium, if any, and interest, if any, on any of
the Securities (including funds deposited for the sinking fund referred to in
Article III hereof) and which shall not be required for such purposes because
of the conversion of such Securities as provided in this Article XIV shall
after such conversion be repaid to the Company by the Trustee upon the
Company's written request.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
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In Witness Whereof, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
UNITED STATES SURGICAL CORPORATION
By
-------------------------------
Name:
Title:
Attest:
-------------------------------
Name:
Title:
THE BANK OF NEW YORK
By
-------------------------------
Name:
Title:
Attest:
-------------------------------
Name:
Title:
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EXHIBIT 23(A)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 2 to
Registration Statement
No. 333-46239 of United States Surgical Corporation on Form S-3 of our report
dated January 20, 1998, appearing in the Annual Report on Form 10-K of United
States Surgical Corporation and subsidiaries for the year ended December 31,
1997, and to the reference to us under the heading "Experts" in the Prospectus,
which is part of this Registration Statement.
Deloitte & Touche LLP
Stamford, Connecticut
March 6, 1998
<PAGE>
EXHIBIT 23(B)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Pfizer Inc.:
We consent to the incorporation by reference in the Amendment No. 2 to
registration statement
(No. 333-46239) on Form S-3 of United States Surgical Corporation of our report
dated February 26, 1998, with respect to the combined balance sheet of
Valleylab, a Business of Pfizer Inc., as of December 31, 1997, and the related
combined statements of income and cash flows for the year then ended, which
report appears in the Form 8-K/A of United States Surgical Corporation filed
March 5, 1998 and to the reference to our firm under the heading "Experts".
/s/ KPMG Peat Marwick LLP
New York, New York
March 6, 1998
