<PAGE>
REGISTRATION NO. 333-
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 13, 1998
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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>
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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>
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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. / /
------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
AMOUNT TO PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF BE OFFERING PRICE PER AGGREGATE OFFERING
SECURITIES TO BE REGISTERED REGISTERED(1) UNIT(2) PRICE(2)(4)
<S> <C> <C> <C>
Debt Securities
Common Stock, par value $.10 per share(3)
Preferred Stock, $5.00 par value(3)
Depositary Shares(3)
Warrants
Total $447,275,000 100% $447,275,000
<CAPTION>
TITLE OF EACH CLASS OF AMOUNT OF
SECURITIES TO BE REGISTERED REGISTRATION FEE
<S> <C>
Debt Securities
Common Stock, par value $.10 per share(3)
Preferred Stock, $5.00 par value(3)
Depositary Shares(3)
Warrants
Total $131,947(5)
</TABLE>
(1) In United States dollars or the equivalent thereof in any other currency,
currency unit or units, or composite currency or currencies. Such amount
represents the aggregate offering price of the Debt Securities, Preferred
Stock, Depositary Shares, Common Stock, Warrants to Purchase Debt Securities
and Warrants to Purchase Equity Securities and the exercise price of any
Securities issuable upon exercise of the Warrants.
(2) Estimated for the sole purpose of computing the registration fee pursuant to
Rule 457(o) under the Securities Act of 1933. The proposed maximum offering
price per unit will be determined from time to time by the Registrant in
connection with the issuance by the Registrant of the securities registered
hereunder.
(3) Also includes such indeterminate number of shares of Preferred Stock,
Depositary Shares and Common Stock as may be issued upon conversion of or
exchange for any Debt Securities, Preferred Stock or Depositary Shares that
provide for conversion or exchange into other securities.
(4) No separate consideration will be received for the Debt Securities,
Preferred Stock, Common Stock or Depositary Shares issuable upon conversion
of or in exchange for Debt Securities or Preferred Stock.
(5) $52,725,000 of Securities was previously registered pursuant to Registration
Statement No. 33-59729 and in accordance with Rule 429 is being carried
forward hereto. A registration fee of $18,181 (which was calculated using
1/29th of 1% of the proposed maximum aggregate offering price) was paid
therewith. Remitted herewith is $131,947, representing the registration fee
for the additional $447,275,000 of Securities being registered on this
Registration Statement.
------------------------------
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.
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<PAGE>
SUBJECT TO COMPLETION, DATED February 13, 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 2 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
--------------------------
The date of this Prospectus is , 1998
<PAGE>
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; 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.
------------------------
Trademarks of the Company appear herein in italicized capital letters.
1
<PAGE>
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
(currently a unit of American Home Products Corporation being sold to 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 Medical)
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.
2
<PAGE>
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
3
<PAGE>
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
4
<PAGE>
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.
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.
5
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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 N.M.(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 , as trustee. The
Subordinated Debt Securities will be issued under a separate Indenture (the
"Subordinated Indenture"), to be entered into between the Company and , 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 trustees under the Senior Indenture and under the
Subordinated Indenture are referred to herein as the "Trustees."
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 16.1 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, a redemption option of Holders upon certain conditions, as defined in
the applicable Indenture; (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. (Section 5.2) 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 will not be
issued in exchange 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 which
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 any
selection of Debt Securities of that series to be redeemed and ending at the
close of
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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
which 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) which 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
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Securities 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 which 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 Debt 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 16.1 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 16.2 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 16.3 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 16.4 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 16.15 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 XV)
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 15% 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)
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 principals.
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"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 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.
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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 covenants and
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 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 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. 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
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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 Trustees 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 applicable 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 10.9)
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 (Section 4.6 of the Senior
Indenture; Section 4.3 of the Subordinated Indenture). Such a trust may only be
established if, among other things, (a) the Company has delivered to the
applicable 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 of the Senior Indenture;
Section 4.3 of the Subordinated Indenture)
DEFEASANCE OF CERTAIN OBLIGATIONS
The Senior Indenture will provide that, if so specified with respect to the
Senior Debt Securities of any series, the Company may omit to comply with the
restrictive covenants described under "Covenants" above
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and any other covenants applicable to such Senior Debt Securities 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 Senior 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 Senior Debt
Securities of such series on the day on which such payments are due and payable
in accordance with the terms of the Senior Indenture and the Senior Debt
Securities of such series. (Sections 4.5 and 4.6 of the Senior Indenture) The
obligations of the Company under the Senior Indenture and the Senior Debt
Securities of such series other than with respect to such covenants shall remain
in full force and effect. (Section 4.5 of the Senior Indenture) 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 Senior
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
Senior 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 of the Senior Indenture)
In the event the Company exercises its option to omit compliance with the
covenants described under "Covenants" above with respect to the Senior Debt
Securities of any series as described above and the Senior 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 Senior Debt
Securities of such series at the time of their Stated Maturity but may not be
sufficient to pay amounts due on the Senior 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 Senior
Indenture.
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 (if applicable), (h) in the case of the Subordinated Indenture, modify
the subordination provisions in a manner adverse to the Holders of
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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 in the places and 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.
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
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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 of 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 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 a 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.
32
<PAGE>
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
33
<PAGE>
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.
34
<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.
35
<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.
36
<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............... $
Trustees and Depositary's Fees and Expenses.......................
Printing and Engraving Fees and Expenses..........................
Accounting Fees and Expenses......................................
Blue Sky Fees and Expenses........................................
Legal Fees........................................................
Rating Agency Fees................................................
Miscellaneous (including Listing Fees, if applicable).............
---------
TOTAL....................................................... $
</TABLE>
- ---------
* To be filed by Amendment.
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 , as
trustee.*
4(b) Form of Indenture for Subordinated Debt Securities between United States Surgical Corporation and
, 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 Statements re: Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed
Charges and Preferred Stock Dividends.
23 Consent of Deloitte & Touche LLP, Independent Auditors.
24 Power of Attorney.
25(a) Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act of 1939 of the
Trustee for the Senior Indenture.*
25(b) Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act of 1939 of the
Trustee for the Subordinated Indenture.*
</TABLE>
- ------------------------
* To be filed by Amendment.
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 registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934
that are
II-2
<PAGE>
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>
EXHIBIT 12
UNITED STATES SURGICAL CORPORATION
STATEMENT OF COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
IN THOUSANDS, EXCEPT RATIOS
Determination of earnings:
Income (loss) before provision for income taxes... $ 121,000 $ 141,700 $ 89,800 $ 32,700 $ (137,400)
Fixed charges....................................... 22,300 27,100 33,600 31,200 30,800
---------- ---------- ---------- ---------- -----------
Total earnings as defined..................... 143,300 168,800 123,400 63,900 (106,600)
Fixed charges and other:
Interest expense.................................. 8,900 13,700 22,600 21,000 19,400
Interest portion of rent expense.................. 13,400 13,400 11,000 10,200 11,400
---------- ---------- ---------- ---------- -----------
Fixed charges................................. 22,300 27,100 33,600 31,200 30,800
Capitalized interest.............................. 0 100 200 300 9,500
Total fixed charges and capitalized interest...... $ 22,300 27,200 33,800 31,500 $ 40,300
Preferred stock dividends(1)...................... 7,200 30,000 30,000 22,900
---------- ---------- ---------- ----------
Combined fixed charges, capitalized interest and
preferred stock dividends......................... $ 29,500 $ 57,200 $ 63,800 $ 54,400
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Ratio of Earnings to Fixed Charges and Capitalized
Interest.......................................... 6.4 6.2 3.7 2.0 N.M.(2)
---------- ---------- ---------- ---------- -----------
---------- ---------- ---------- ---------- -----------
Ratio of Earnings to Combined Fixed Charges,
Capitalized Interest and Preferred Stock
Dividends......................................... 4.9 3.0 1.9 1.2
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
- ------------------------
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.
(1) 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 is $147 million. If the
restructuring charges of $138 million were excluded from the calculation,
the dollar amount of the deficiency would have been $9 million.
<PAGE>
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
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
February 13, 1998
<PAGE>
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned officers and
directors of UNITED STATES SURGICAL CORPORATION, a Delaware corporation (the
"Company"), in connection with the filing with the Securities and Exchange
Commission, Washington, D.C., under the provisions of the Securities Act of
1933, as amended (the "Act"), of a Registration Statement on Form S-3 with
respect to the registration under the Act of up to $500,000,000 in aggregate
offering amount of the Company's common stock, par value $.10 per share, the
Company's preferred stock, par value $5.00 per share, depositary shares
representing interests in preferred stock, debt securities and/or warrants to
purchase such common stock, preferred stock, depositary shares, and debt
securities, hereby constitutes and appoints Thomas R. Bremer and Richard A.
Douville such undersigned's true and lawful attorneys-in-fact and agents, and
vests each of them with full power to act without the other as such
undersigned's true and lawful attorney-in-fact and agent, for and in the name,
place and stead of such undersigned, in any and all capacities, to sign said
Registration Statement and any and all future amendments thereto and any
additional registration statements relating to such securities filed pursuant to
Rule 462(b) of the Act and to file said Registration Statement and each such
future amendment and additional registration statement, with all exhibits
thereto, and any and all other documents in connection therewith, including
prospectuses and supplements thereto, with the Securities and Exchange
Commission, hereby granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform any and all acts and things
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as such undersigned might or could do in person, hereby
ratifying and confirming all the said attorneys-in-fact and agents, or either or
them, may lawfully do or cause to be done by virtue hereof.
<PAGE>
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and seals
this 3rd day of February, 1998.
By: /s/ LEON C. HIRSCH
------------------------------------------
Leon C. Hirsch
Chairman of the Board and
Chief Executive Office and Director
(Principal Executive Officer)
By: /s/ JAMES R. MELLOR
------------------------------------------
James R. Mellor
Director
By: /s/ JULIE K. BLAKE
------------------------------------------
Julie K. Blake
Director
By: /s/ HOWARD M. ROSENKRANTZ
------------------------------------------
Howard M. Rosenkrantz
Director
By: /s/ JOHN A. BOGARDUS
------------------------------------------
John A. Bogardus
Director
By: /s/ MARIANNE SCIPIONE
------------------------------------------
Marianne Scipione
Director
By: /s/ THOMAS R. BREMER
------------------------------------------
Thomas R. Bremer
Director
By: /s/ BARRY D. ROMERIL
------------------------------------------
Barry D. Romeril
Director
By: /s/ TURI JOSEFSEN
------------------------------------------
Turi Josefsen
Director
<PAGE>
<TABLE>
<S> <C> <C>
By: /s/ JOHN R. SILBER
------------------------------------------
John R. Silber
Director
By: /s/ DOUGLAS L. KING
------------------------------------------
Douglas L. King
Director
By: /s/ RICHARD A. DOUVILLE
------------------------------------------
Richard A. Douville
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer
By: /s/ WILLIAM F. MAY
------------------------------------------
William F. May
Director
By: /s/ JOSEPH C. SCHERPF
------------------------------------------
Joseph C. Scherpf
Vice President and Controller
(Principal Accounting Officer)
</TABLE>
