<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 15, 1998
REGISTRATION NO. 333-42839
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
UNOVA, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 95-4647021
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION
INCORPORATION OR ORGANIZATION) NUMBER)
---------------
360 NORTH CRESCENT DRIVE
BEVERLY HILLS, CALIFORNIA 90210
(310) 888-2500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
NORMAN L. ROBERTS, ESQ.,
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
UNOVA, INC.
360 NORTH CRESCENT DRIVE
BEVERLY HILLS, CALIFORNIA 90210
(310) 888-2500
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
---------------
WITH A COPY TO:
JOHN L. SAVVA
SULLIVAN & CROMWELL
444 SOUTH FLOWER STREET, SUITE 1200
LOS ANGELES, CALIFORNIA 90071
(213) 955-8000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: From time to time after the effective date of this 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(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
BECOMES EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+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. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED JANUARY 15, 1998
$600,000,000
UNOVA, INC.
COMMON STOCK, PREFERRED STOCK,
DEPOSITARY SHARES, DEBT SECURITIES AND WARRANTS
UNOVA, Inc. (the "Company") may offer from time to time (i) common stock, par
value $.01 per share ("Common Stock"), (ii) one or more series of Preferred
Stock, par value $.01 per share ("Preferred Stock"), which may be evidenced by
Depository Shares (as defined herein), (iii) one or more series of debt
securities ("Debt Securities"), consisting of debentures, notes and/or other
unsecured evidences of indebtedness, which may be unsubordinated ("Senior Debt
Securities") or subordinated ("Subordinated Debt Securities") to certain other
obligations of the Company, and (iv) warrants to purchase Debt Securities,
Preferred Stock, Common Stock or Depositary Shares ("Warrants," and together
with the Common Stock, Preferred Stock, Depositary Shares and Debt Securities,
"Securities"), at an aggregate initial offering price not to exceed
$600,000,000 (or its equivalent in another currency or currency unit based on
the exchange rate at the time of sale) in amounts, at prices and on terms to be
determined at the time of offering. Securities may be offered, separately or
together, in separate series, in amounts, at prices and on terms to be set
forth in one or more supplements to this Prospectus (each a "Prospectus
Supplement").
The specific terms of the Securities in respect to which this Prospectus is
being delivered will be set forth in the applicable Prospectus Supplement and
will include, where applicable (i) in the case of Common Stock, the number of
shares; (ii) in the case of Preferred Stock, the specific serial designation,
the number of shares, any dividend, redemption, liquidation, conversion,
exchange, sinking fund, voting and other rights, if any, and whether interests
in such Preferred Stock will be evidenced by Depositary Shares and, if so, the
identity of the Depositary; (iii) in the case of Debt Securities, whether they
are Senior or Subordinated Debt Securities and subordination terms, if any, the
specific designation, aggregate principal amount, the currency or currency unit
in which payments are to be made, denominations, maturity, premium, if any,
rate (which may be fixed or variable) and time of payment of interest, if any,
terms for redemption at the option of the Company or the holder, if any, terms
for sinking fund payments, if any, and, in the case of Subordinated Debt
Securities, conversion or exchange rights, if any; and (iv) in the case of
Warrants, the duration, offering price, exercise price and detachability of
such Warrants, as well as a description of the Common Stock, Preferred Stock,
Depositary Shares or Debt Securities issuable upon such exercise. Unless
otherwise specified in the applicable Prospectus Supplement, Securities other
than Common Stock will be issued in permanent global form and Common Stock will
be issued through the Company's direct registration system.
The Common Stock is listed on the New York Stock Exchange (the "NYSE") under
the symbol "UNA". Any Common Stock offered will be listed, subject to notice of
issuance, on such exchange. The applicable Prospectus Supplement will also
contain information, where applicable, as to any other listing on a securities
exchange of Securities covered by such Prospectus Supplement.
The Company may sell Securities to or through one or more underwriters, and
also may sell Securities directly to other purchasers or through agents. The
accompanying Prospectus Supplement sets forth the names of any underwriters or
agents involved in the sale of the Securities in respect of which this
Prospectus is being delivered, the number or principal amounts, if any, to be
purchased by underwriters and the compensation, if any, of such underwriters or
agents. See "Plan of Distribution". No Securities may be sold without delivery
of the applicable Prospectus Supplement describing the method and terms of the
offering of such series of Securities.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. 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 (together with the rules and regulations
thereunder, the "Exchange Act"), and in accordance therewith, files reports,
proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed by the Company can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the Commission's Regional Offices in New York (7 World Trade
Center, 13th Floor, New York, New York 10048) and Chicago (Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661) and copies of
such materials can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. Such material is also available from the Commission through the
Internet at http://www.sec.gov. The Common Stock is listed on the NYSE.
Reports, proxy statements and other information relating to the Company can
also be inspected at the offices of the NYSE, 20 Broad Street, New York, New
York 10005.
The Company has filed with the Commission a registration statement on Form
S-3 (the "Registration Statement") (of which this Prospectus is a part) under
the Securities Act of 1933, as amended (the "Securities Act") with respect to
the Securities. This Prospectus does not contain all of the information set
forth in the Registration Statement, certain portions of which have been
omitted as permitted by the rules and regulations of the Commission.
Statements contained in this Prospectus as to the contents of any contract or
other documents are not necessarily complete, and in each instance reference
is made to the copy of such contract or other document filed as an exhibit to
the Registration Statement, each such statement being qualified in all
respects by such reference and the exhibits and schedules thereto. For further
information regarding the Company and the Securities, reference is hereby made
to the Registration Statement and such exhibits and schedules which may be
obtained from the Commission at its principal office in Washington, D.C. upon
payment of the fees prescribed by the Commission.
2
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission (File No.
001-13279) under Section 13(a) or 15(d) of the Exchange Act are hereby
incorporated by reference in this Prospectus:
a. The Company's Registration Statement on Form 10, filed on August 18,
1997, as amended by Amendment No. 1 thereto filed on October 1, 1997 and
Amendment No. 2 thereto filed on October 22, 1997 (as so amended, the
"Form 10").
b. The Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997, as originally filed on November 26, 1997, as amended
by the Company's Report on Form 10-Q/A filed on January 15, 1998.
c. The Company's Current Report on Form 8-K filed on December 24, 1997.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date hereof and prior to the
termination of the offering of any Securities are hereby incorporated by
reference into this Prospectus and shall be deemed a part hereof from the date
of filing of such documents.
Any statement contained herein, in any supplement hereto or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of the Registration Statement and
this Prospectus to the extent that a statement contained herein, in any
supplement hereto 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 the Registration
Statement, this Prospectus or any supplement hereto.
Copies of all documents which are incorporated herein by reference (not
including the exhibits to such documents, unless such exhibits are
specifically incorporated by reference in such documents) will be provided
without charge to each person, including any beneficial owner, to whom this
Prospectus is delivered upon written or oral request. Requests should be
directed by mail, addressed to UNOVA, Inc., 360 North Crescent Drive, Beverly
Hills, California 90210, Attention: Investor Relations Office, by telephone to
(310) 888-2583, or by electronic mail to [email protected]. This information
may also be requested through the Company's website on the Internet at
http://www.unova.com.
3
<PAGE>
THE COMPANY
The Company is a leading industrial technologies company providing customers
with innovative solutions for improving their efficiency and productivity
through its two business segments--Automated Data Systems ("ADS") and
Industrial Automation Systems ("IAS"). Automated Data Systems principally
serves the industrial market, providing automated data collection and mobile
computing products and services. Customers include distribution and
transportation companies, food and beverage operations, manufacturing
industries, health care providers and government agencies. Industrial
Automation Systems primarily serves the worldwide automotive, off-road and
diesel engine manufacturing industries, providing integrated machining
systems, body welding and assembly systems and precision grinding and abrasive
systems.
Prior to October 31, 1997, the Company was a wholly-owned subsidiary of
Western Atlas Inc. ("Western Atlas"). The Company became an independent public
company on October 31, 1997 (the "Distribution Date") upon the distribution,
in the form of a dividend, of all outstanding Common Stock to shareholders of
Western Atlas.
The Company's principal executive offices are located at 360 North Crescent
Drive, Beverly Hills, California 90210, and its telephone number at such
address is (310) 888-2500.
USE OF PROCEEDS
Unless otherwise indicated in an accompanying Prospectus Supplement, the
Company intends to use the net proceeds from the sale of the Securities for
general corporate purposes, including, without limitation, capital
expenditures, possible future acquisitions, repurchases of capital stock,
refinancing of outstanding indebtedness and working capital requirements.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges of the Company for each of the two
years ended July 31, 1993, the five months ended December 31, 1993, each of
the three years ended December 31, 1996 and the nine months ended September
30, 1997 were as follows:
<TABLE>
<CAPTION>
YEAR ENDED FIVE MONTHS YEAR ENDED NINE MONTHS
JULY 31, ENDED DECEMBER 31, ENDED
---------- DECEMBER 31, -------------- SEPTEMBER 30,
1992 1993 1993 1994 1995 1996 1997
----- ----- ------------ ---- ---- ---- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to
Fixed Charges........... 4.5 6.4 0.2 2.8 3.9 5.7 4.2
</TABLE>
For the purpose of computing this ratio, earnings consist of earnings before
income taxes, cumulative effect of a change in accounting principle and the
charge for acquired in-process research and development, plus fixed charges.
Fixed charges consist of interest expense on all indebtedness (including
allocated charges from Western Atlas) and the portion of operating lease
rental expense that is representative of the interest factor. For the five
months ended December 31, 1993, fixed charges exceeded earnings, as so
defined, by $5.1 million. For the nine months ended September 30, 1997, fixed
charges exceeded earnings, as so defined, by $140.8 million when including the
$203.3 million acquired in-process research and development charge.
4
<PAGE>
DESCRIPTION OF COMMON STOCK
The following summaries of certain provisions of the Certificate of
Incorporation (the "Certificate"), and By-laws of the Company (the "By-laws")
(and the Rights Agreement (as defined below)) do not purport to be complete
and are qualified in their entirety by reference to such instruments, each of
which is incorporated by reference as an exhibit to the Registration Statement
of which this Prospectus is a part.
AUTHORIZED CAPITAL
The Company's authorized capital stock consists of 250,000,000 shares of
Common Stock and 50,000,000 shares of Preferred Stock. Each outstanding share
of Common Stock currently has attached to it one preferred share purchase
right (a "Right") issued pursuant to a Share Purchase Rights Plan (the "Rights
Plan"). Each Right entitles its registered holder to purchase from the Company
one one-hundredth of a share of Series A Junior Participating Preferred Stock,
par value $.01 per share ("Series A Preferred Stock") as described under "--
Rights Plan" below.
As of October 31, 1997, there were 54,510,193 shares of Common Stock and no
shares of Preferred Stock issued and outstanding. As of October 31, 1997,
there were 11,000,000 shares of Common Stock reserved for issuance under
various benefit plans.
GENERAL
The holders of Common Stock will be entitled to one vote for each share on
all matters voted on by shareholders, including elections of directors, and,
except as otherwise required by law or provided in any resolution adopted by
the Board of Directors of the Company (the "Board") with respect to any series
of Preferred Stock, the holders of such shares exclusively will possess all
voting power. The Certificate does not provide for cumulative voting in the
election of directors. Subject to any preferential rights of any outstanding
series of Preferred Stock created by the Board from time to time, the holders
of Common Stock will be entitled to such dividends as may be declared from
time to time by the Board from funds available therefor, and upon liquidation
will be entitled to receive pro rata all assets of the Company available for
distribution to such holders.
The Company maintains a direct registration system ("DRS") for the Common
Stock. The DRS permits each shareholder to maintain the registration of his or
her shares of Common Stock in his or her own name without the need for the
Company to issue, or for the shareholder to maintain or store, a physical
stock certificate. Under the DRS, a shareholder receives an account statement
at least annually from the Transfer Agent for the Common Stock, ChaseMellon
Shareholder Services, LLC (the "Transfer Agent"), indicating the number of
shares in the shareholder's account. Any shareholder who elects to receive a
physical certificate evidencing his or her shares of Common Stock may obtain a
certificate at no charge by contacting the Transfer Agent. The shareholder may
also request that the shares be electronically transferred to the
shareholder's brokerage account.
RIGHTS PLAN
The Board has adopted the Rights Plan under which the Board declared a
dividend of one Right for each outstanding share of Common Stock. Each share
of Common Stock has attached to it (as described below) an associated Right.
Rights are issuable in respect of all shares of Common Stock issued prior to
the earliest of (i) the Rights Distribution Date (as defined below), (ii) the
date on which the Rights are redeemed or exchanged as discussed below or (iii)
September 24, 2007. Each Right entitles the registered holder to purchase from
the Company one one-hundredth of a share of Series A Preferred Stock, at a
price of $70 (the "Purchase Price"), subject to adjustment. The terms of the
Rights are set forth in a Rights Agreement (the "Rights Agreement") between
the Company and The Chase Manhattan Bank, as Rights Agent (the "Rights
Agent").
The Rights Agreement provides that, until the Rights Distribution Date (or
earlier redemption or expiration of the Rights), the Rights will be
transferred with and only with the shares of Common Stock. The "Rights
Distribution Date" is the earlier to occur of (i) ten days following a public
announcement that a person or group
5
<PAGE>
of affiliated or associated persons (an "Acquiring Person") has acquired
beneficial ownership of 15 percent or more of the outstanding shares of Common
Stock or (ii) ten business days (or such later date as may be determined by
action of the Board prior to such time as any person or group of affiliated
persons becomes an Acquiring Person) following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer, the
consummation of which would result in the beneficial ownership by a person or
group of 15 percent or more of the outstanding shares of Common Stock. As soon
as practicable following the Rights Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of
record of the shares of Common Stock as of the close of business on the Rights
Distribution Date and such separate Rights Certificates alone will evidence
the Rights.
In the event that any person or group of affiliated or associated persons
becomes an Acquiring Person, each holder of a Right, other than Rights
beneficially owned by the Acquiring Person (which will thereafter be void),
will thereafter have the right to receive upon exercise that number of shares
of Common Stock having a market value of two times the exercise price of the
Right. At any time prior to the time a person or group of affiliated or
associated persons becomes an Acquiring Person, the Board may redeem the
Rights in whole, but not in part, at a price of $.01 per Right (the
"Redemption Price"). The redemption of the Rights may be made effective at
such time on such basis with such conditions as the Board in its sole
discretion may establish.
If the Rights are not redeemed as provided above and in the event that the
Company is acquired in a merger or other business combination transaction or
50 percent or more of its consolidated assets or earning power are sold after
a person or group has become an Acquiring Person, each holder of a Right will
thereafter have the right to receive, upon the exercise thereof at the then
current exercise price of the Right, that number of shares of common stock of
the acquiring company which at the time of such transaction will have a market
value of two times the exercise price of the Right.
At any time after any person or group becomes an Acquiring Person and prior
to the acquisition by such person or group of 50 percent or more of the
outstanding shares of Common Stock, the Board may exchange the Rights (other
than Rights owned by such person or group which will have become void), in
whole or in part, at an exchange ratio of one share of Common Stock, or one-
hundredth of a share of Series A Preferred Stock, per Right (subject to
adjustment).
Shares of Series A Preferred Stock which are purchasable under the Rights
Plan will not be redeemable. Each Share of Series A Preferred Stock will be
entitled to an aggregate dividend of 100 times the dividend declared per share
of Common Stock, but in no event shall such minimum preferential quarterly
payment be less than $1 per share. In the event of liquidation, the holders of
the shares of Series A Preferred Stock will be entitled to an aggregate
payment of 100 times the payment made per share of Common Stock, but in no
event shall they receive less than $100 per share. Each share of Series A
Preferred Stock will have 100 votes, voting together with the shares of Common
Stock. Finally, in the event of any merger, consolidation, or other
transaction in which shares of Common Stock are exchanged, each share of
Series A Preferred Stock will be entitled to receive 100 times the amount
received per share of Common Stock. These rights are protected by customary
antidilution provisions.
Until a Right is exercised, the holder thereof, as such, will have no rights
as a shareholder of the Company, including, without limitation, the right to
vote or to receive dividends. While the distribution of the Rights is not
taxable, shareholders may recognize taxable income upon the occurrence of
subsequent events--for example, upon the redemption, sale, or other
disposition of the Rights, or upon the Rights becoming exercisable with
respect to an acquiror's stock whether or not exercised. The Rights will
expire on September 24, 2007 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company.
As of the Distribution Date, two subsidiaries of Unitrin, Inc. ("Unitrin")
owned 23.6 percent of the outstanding shares of Common Stock. The Rights Plan
does not affect the Unitrin companies so long as they do not purchase
additional shares of Common Stock or their shares are not transferred to a
third party or group which would thereby beneficially own 15 percent or more
of the outstanding shares of Common Stock.
6
<PAGE>
The terms of the Rights may be amended by the Board without the consent of
the holders of the Rights, including an amendment to lower the 15 percent
thresholds described above to not less than the greater of (i) the sum of .001
percent and the largest percentage of the outstanding Common Stock then known
to the Company to be beneficially owned by any person or group or affiliated
or associated persons (other than Unitrin, Inc. and its subsidiaries) and (ii)
10 percent, except that from and after such time as any person or group of
affiliated or associated persons becomes an Acquiring Person no such amendment
may adversely affect the interest of the holders of the Rights.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
without conditioning the offer on the Rights being redeemed or a substantial
number of Rights being acquired.
This summary description of the Rights does not purport to be complete and
is qualified in its entirety by reference to the Rights Agreement, which is
incorporated by reference as an exhibit to the Registration Statement of which
this Prospectus is a part.
OTHER PROVISIONS
The Certificate, the By-laws and Delaware law contain certain provisions
that could make more difficult the acquisition of the Company by means of a
tender offer, a proxy contest or otherwise. The description set forth below is
intended as a summary only and is qualified in its entirety by reference to
the Certificate and the By-laws, which are incorporated by reference as
exhibits to the Registration Statement of which this Prospectus is a part.
Classified Board
The Certificate and By-laws provide that the Board will be divided into
three classes of directors, with the classes to be as nearly equal in number
as possible. The Certificate and the By-laws provide that, of the initial
directors of the Company, approximately one-third will continue to serve until
the 1999 Annual Meeting of Shareholders, approximately one-third will continue
to serve until the 2000 Annual Meeting of Shareholders, and approximately one-
third will continue to serve until the 2001 Annual Meeting of Shareholders.
The classification of directors will have the effect of making it more
difficult for shareholders to change the composition of the Board. At least
two annual meetings of shareholders, instead of one, will generally be
required to effect a change in a majority of the Board. Such a delay may help
ensure that the Company's directors, if confronted by a holder attempting to
force a proxy contest, a tender or exchange offer, or an extraordinary
corporate transaction, would have sufficient time to review the proposal as
well as any available alternatives to the proposal and to act in what they
believe to be the best interest of the shareholders. The classification
provisions will apply to every election of directors, however, regardless of
whether a change in the composition of the Board would be beneficial to the
Company and its shareholders and whether or not a majority of the Company's
shareholders believe that such a change would be desirable.
The classification provisions could also have the effect of discouraging a
third party from initiating a proxy contest, making a tender offer or
otherwise attempting to obtain control of the Company, even though such an
attempt might be beneficial to the Company and its shareholders. The
classification of the Board could thus increase the likelihood that incumbent
directors will retain their positions. In addition, because the classification
provisions may discourage accumulations of large blocks of the Company's stock
by purchasers whose objective is to take control of the Company and remove a
majority of the Board, the classification of the Board could tend to reduce
the likelihood of fluctuations in the market price of the Common Stock that
might result from accumulations of large blocks for such a purpose.
Accordingly, shareholders could be deprived of certain opportunities to sell
their shares of Common Stock at a higher market price than might otherwise be
the case.
7
<PAGE>
Number of Directors; Removal; Filling Vacancies
The Certificate provides that, subject to any rights of holders of Preferred
Stock to elect additional directors under specified circumstances, the number
of directors will be fixed from time to time exclusively pursuant to a
resolution adopted by the Board. In addition, the By-laws provide that,
subject to any rights of holders of Preferred Stock, and unless the Board
otherwise determines, any vacancies will be filled only by the affirmative
vote of a majority of the remaining directors, though less than a quorum.
Accordingly, the Board could prevent any shareholder from enlarging the Board
and filling the new directorships with such shareholder's own nominees.
Under Delaware law, unless otherwise provided in the Certificate, directors
serving on a classified board may only be removed by the shareholders for
cause. In addition, the Certificate and the By-laws provide that directors may
be removed only for cause and only upon the affirmative vote of holders of at
least 80 percent of the voting power of all the then outstanding shares of
stock entitled to vote generally in the election of directors ("Voting
Stock"), voting together as a single class.
No Shareholder Action by Written Consent; Special Meetings
The Certificate and the By-laws provide that, subject to the rights of any
holders of Preferred Stock to elect additional directors under specified
circumstances, shareholder action can be taken only at an annual or special
meeting of shareholders and prohibit shareholder action by written consent in
lieu of a meeting. The By-laws provide that special meetings of shareholders
can be called only upon a written request stating the purpose of such meeting
delivered to the Chairman of the Board, the President (if any) or the
Secretary, signed by a majority of the Board or by resolution of the Board or
the Executive Committee (if any). Shareholders are not permitted to call a
special meeting or to require that the Board call a special meeting of
shareholders. Moreover, the business permitted to be conducted at any special
meeting of shareholders is limited to the business brought before the meeting
pursuant to the notice of meeting given by the Company.
The provisions of the Certificate and the By-laws prohibiting shareholder
action by written consent may have the effect of delaying consideration of a
shareholder proposal until the next annual meeting unless a special meeting is
called at the request of a majority of the Board or by resolution of the Board
or the Executive Committee thereof. These provisions would also prevent the
holders of a majority of the voting power of the Voting Stock from
unilaterally using the written consent procedure to take shareholder action
and from taking action by consent. Moreover, a shareholder could not force
shareholder consideration of a proposal over the opposition of the Chairman
and the Board by calling a special meeting of shareholders prior to the time
the Chairman or a majority of the Board believes such consideration to be
appropriate.
Fair Price Provision
Article IX of the Certificate ("Article IX") places certain limitations on
the Company's ability to effect a Business Combination with an Interested
Shareholder (as each such term is defined therein).
Definitions. Article IX confers upon a majority of the Whole Board, or, if a
majority of the Whole Board does not consist of Continuing Directors (as
hereinafter defined), a majority of the then Continuing Directors, the power
and duty to determine, on the basis of information known after reasonable
inquiry, the applicability of certain defined terms used in Article IX as well
as all other facts necessary to determine compliance with Article IX. A
summary of the definitions of certain of these terms follows.
An "Interested Shareholder" is any person (other than the Company or a
subsidiary) who or which is (a) the beneficial owner (as defined below) of ten
percent or more of the voting power of the outstanding Voting Stock, or (b) an
"Affiliate" or an "Associate" (as defined in Article IX) of the Company or at
any time within the two-year period immediately prior to the date in question
was the beneficial owner of 10 percent or more of
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the voting power of the then outstanding Voting Stock, or (c) an assignee of
or has otherwise succeeded to any shares of Voting Stock which were at any
time within the two-year period immediately prior to the date in question
Beneficially Owned (as defined below) by a person described in (a) or (b)
above (other than shares acquired through a public offering). Notwithstanding
the foregoing, neither Unitrin nor any of its subsidiaries will be an
Interested Shareholder as long as such entities in the aggregate beneficially
own less than 12,658,000 shares of Common Stock.
A person is the "beneficial owner" of, or "Beneficially Owns," any shares of
Voting Stock which such person or any of its Affiliates or Associates (as
defined in Article IX) directly or indirectly owns or has the right to acquire
or vote or which are beneficially owned by any member of any group of such
persons having any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any shares of Voting Stock.
A "Business Combination" includes the following transactions: (a) a merger
or consolidation of the Company or any of its subsidiaries with an Interested
Shareholder or any corporation (whether or not itself an Interested
Shareholder) which is, or after such merger or consolidation would be, an
Affiliate of such Interested Shareholder; (b) the sale or other disposition
(in one transaction or a series of transactions) by the Company or any of its
subsidiaries of assets having an aggregate "Fair Market Value" (as defined in
Article IX) of $10 million or more if an Interested Shareholder or any
Affiliate or Associate of an Interested Shareholder is a party to the
transaction; (c) the issuance or transfer (in one transaction or a series of
transactions) of any securities of the Company or of any of its subsidiaries
to an Interested Shareholder or any Affiliate or Associate of an Interested
Shareholder in exchange for cash or property (including stock or other
securities) having an aggregate Fair Market Value of $10 million or more; (d)
the adoption of any plan or proposal for the liquidation or dissolution of the
Company proposed by or on behalf of an Interested Shareholder or any Affiliate
or Associate of an Interested Shareholder; (e) any reclassification of
securities, recapitalization, merger with a subsidiary or other transaction
which has the effect, directly or indirectly, of increasing the proportionate
share of the outstanding stock of any class of the Company or any of its
subsidiaries Beneficially Owned by an Interested Shareholder or any Affiliate
or Associate of an Interested Shareholder.
A "Continuing Director" is any member of the Company's Board, who is not
affiliated with the Interested Shareholder in question and was a director of
the Company prior to the time such Interested Shareholder became an Interested
Shareholder, and any director who is thereafter appointed to fill any vacancy
on the Company's Board or who is elected and who, in either event, is not
affiliated with an Interested Shareholder and in connection with his or her
initial assumption of office was recommended by a majority of the Continuing
Directors then on the Company's Board.
Shareholder Vote Required for Certain Business Combinations. Article IX
requires the approval of the holders of 80 percent of the voting power of all
of the then outstanding shares of the Voting Stock, voting together as a
single class, as a condition to Business Combinations, except in cases in
which one of the two alternatives described under "-- Exceptions to Higher
Vote Requirement" were applicable and were satisfied. In the event that either
of such alternatives were applicable and satisfied with respect to the
particular Business Combination, the affirmative vote otherwise required by
Delaware law and the other provisions of the Certificate and by the terms of
any class or series of stock of the Company which might be outstanding at the
time of the Business Combination would apply. Thus, depending upon the
circumstances, Article IX may require an 80 percent shareholder vote for a
Business Combination in cases in which either a majority vote or no vote would
presently be required under Delaware law.
Even if an Interested Shareholder could obtain an 80 percent affirmative
shareholder vote in favor of a Business Combination under Delaware law, such
Business Combination may nevertheless (depending upon its nature) require
approval by the Company's Board prior to its submission to a shareholder vote
(such would be the case, for instance, with respect to a merger or
consolidation involving the Company). In that case, the Interested Shareholder
could not effect such Business Combination, regardless of its ability to
assure an 80 percent shareholder vote, without Board action. Further, even
were an Interested Shareholder able to obtain votes
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sufficient to effect a repeal of such provisions, it could not, under the
Certificate, exercise its power by written consent or compel the Board to call
a special meeting of shareholders for the purpose of voting on such repeal. As
discussed above, as a result of the classified board provisions in the
Certificate, an interested shareholder could not be assured of gaining control
of the Board until at least two shareholder meetings had been held. In
addition, Section 203 of the Delaware General Corporation Law ("Section 203"),
which restricts second-step mergers with "Interested Shareholders" (and is
described more fully below), might also operate to prevent an Interested
Shareholder from effecting a Business Combination.
Exceptions to Higher Vote Requirement. In the case of a Business Combination
that involved the receipt of cash or other consideration by the Company's
shareholders, solely in their capacity as shareholders, the 80 percent
affirmative shareholder vote requirement would not apply if either (a) the
Business Combination were approved by a majority of the Continuing Directors
of the Company (in order for this condition to be satisfied there must be at
least three Continuing Directors), or (b) all of the requirements described in
paragraphs (1), (2) and (3) below were satisfied.
If the Business Combination did not involve the receipt of consideration by
the Company's shareholders solely as shareholders (e.g., because it took the
form of a sale of assets or an original issuance of the Company's securities
to an Interested Shareholder), only approval by a majority of the Continuing
Directors would avoid the requirement for such 80 percent shareholder vote,
although, as noted above, such Business Combination might, depending upon the
circumstances, otherwise require a lesser or no shareholder vote. If there
were fewer than three Continuing Directors, such Business Combination would
necessarily require such 80 percent shareholder vote. On the other hand,
approval by a majority of the Continuing Directors would, with respect to any
Business Combination, avoid both the 80 percent shareholder vote requirement
and the need to satisfy all of the requirements described below.
As noted above, under Delaware law a particular Business Combination may,
depending upon its nature, require approval of the Board and/or less-than-80-
percent shareholder approval. Neither the approval of such Business
Combination by a majority of the Continuing Directors nor the satisfaction of
the form of consideration, minimum price and procedural requirements of
Article IX with respect to such Business Combination would supersede such
other approval requirements of Delaware law or any class voting requirements
with respect to any series or class of stock of the Company then outstanding.
It also would not supersede the requirements of Section 203, discussed below.
Rather, such approval or satisfaction of such form of consideration, minimum
price and procedural requirements would eliminate only the requirement for the
80 percent shareholder vote otherwise required by Article IX.
In order to avoid the requirement of an 80 percent shareholder vote or
approval by a majority of the Continuing Directors in the case of a Business
Combination that involved the receipt of cash or other consideration by the
Company's shareholders, the following conditions must be met:
(1) Form of Consideration Requirement. The consideration to be received
by holders of a particular class (or series) of capital stock in the
Business Combination would be required to be either cash or the same type
of consideration used by the Interested Shareholder and its Affiliates in
acquiring the largest portion of their interest in such class (or series)
of capital stock. If the Interested Shareholder and its Affiliates have not
previously purchased any shares of such class (or series) of capital stock,
the consideration paid to holders of shares of that class (or series) in
the Business Combination would be required to be cash.
(2) Minimum Price Requirements. The aggregate of (x) the cash and (y) the
Fair Market Value, as of the date of consummation of the Business
Combination (the "Consummation Date"), of any consideration other than cash
to be received per share by holders of Common Stock, in the Business
Combination would have to be at least equal to the higher of (i) the
highest per share price paid by the Interested Shareholder or any of its
Affiliates in acquiring any shares of Common Stock during the two years
immediately prior to the date of the first public announcement of the
proposal of the Business
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Combination (the "Announcement Date") or in any transaction in which the
Interested Shareholder became an Interested Shareholder (whichever is
higher), plus interest compounded annually from the first date on which the
Interested Shareholder became an Interested Shareholder (the "Determination
Date") through the Consummation Date at the publicly announced base rate of
interest of Morgan Guaranty Trust Company of New York, or such other major
bank headquartered in New York, New York, as may be selected by the
Continuing Directors, from time to time in effect in New York, New York,
less the aggregate dividends paid on each share of Common Stock from the
Determination Date through the Consummation Date up to but not exceeding
the amount of interest so payable per share of Common Stock, and (ii) the
Fair Market Value per share of Common Stock on the Announcement Date or the
Determination Date, as the case may be, whichever is higher.
The higher of (i) and (ii) above would have to be paid in respect of all
outstanding shares of Common Stock, whether or not the Interested Shareholder
or any of its Affiliates had previously acquired any shares of Common Stock.
If the Interested Shareholder and its Affiliates did not purchase any shares
of Common Stock, as the case may be, during the two-year period prior to the
Announcement Date or in the transaction in which the Interested Shareholder
became an Interested Shareholder (e.g., if the Interested Shareholder became
an Interested Shareholder by purchasing shares of any then-outstanding class
of voting Preferred Stock), the minimum price would be as determined under
(ii). Under (i), interest and dividends would be computed from the
Determination Date whether the highest price during the two-year period prior
to the Announcement Date were higher than the price paid in the transaction on
the Determination Date or vice versa and whether the Determination Date
occurred before or after the beginning of such two-year period. Thus, for
instance, if the highest price per share paid by the Interested Shareholder
and its Affiliates during such two-year period was higher than the price paid
in the transaction on the Determination Date and the Determination Date
occurred before the beginning of such two-year period, interest and dividends
would nevertheless be required to be computed on such highest price from the
Determination Date. Since (ii) does not include an interest factor, if (ii)
exceeded (i) no interest would be included in computing the per share amount
required to be paid in the Business Combination.
The following example illustrates the application of the form of
consideration and minimum price requirements to a Business Combination with an
Interested Shareholder acting alone which (x) acquired in the open market,
during the two-year period prior to the Announcement Date, 4.9 percent of the
outstanding Common Stock (the only then outstanding class of Voting Stock),
for which its highest per share price was $40, (y) became an Interested
Shareholder by purchasing 45 percent of the outstanding Common Stock in a cash
tender offer at $50 per share, and (z) then announced a proposed Business
Combination with the Company at a time when the Common Stock was trading at
$55 per share:
(i) highest price paid by the Interested Shareholder per share of Common
Stock during the two-year period prior to the Announcement Date ($40) or on
the Determination Date in the transaction in which the Interested
Shareholder became such ($50), whichever is higher (i.e., $50), plus the
net amount (assumed herein to be $2) representing interest (on $50), less
dividends paid or declared (if ultimately paid) per share of Common Stock,
from the Determination Date through the Consummation Date: $52.
(ii) Fair Market Value per share of Common Stock on the Announcement
Date: $55.
Accordingly, in the above example, in order to comply with Article IX's
minimum price requirements, the Interested Shareholder would be required to
pay at least $55 per share (the higher of the two alternatives above) and, in
order to comply with Article IX's form of consideration requirement, such
price would have to be paid in cash.
The per share prices and interest assumptions used in the foregoing example
were selected for illustrative purposes only and are not intended, and should
not be treated, as estimates of future prices of Common Stock or future
interest rates. Such prices and interest rates will be determined in the
marketplace and cannot be predicted.
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As indicated above, no shares of Preferred Stock are outstanding and the
Board has no present plans to issue any such shares, other than the shares
reserved for issuance in connection with the Rights Plan. If shares of any
series of Preferred Stock were in the future issued with voting rights and
were outstanding at the time of consummation of the Business Combination, then
unless such series were excluded from the provisions of Article IX by the
terms of the resolution authorizing such series, the payments to holders of
shares of such series of Preferred Stock would have to be at least equal to
the higher of (x) the highest per share price determined with respect to such
series in the same manner as described above with respect to Common Stock, and
(y) the highest preferential amount per share to which the holders of such
class or series of Preferred Stock would be entitled in the event of a
voluntary or involuntary liquidation, dissolution or winding up of the
Company. The minimum price requirement would have to be met with respect to
each class or series of outstanding Voting Stock whether or not the Interested
Shareholder was a beneficial owner of shares of that class or series prior to
the Business Combination.
Under the minimum price requirements, the Fair Market Value of non-cash
consideration to be received by holders of shares of any class of Voting Stock
in a Business Combination is to be determined as of the Consummation Date.
Where the definitive terms of such non-cash consideration were established in
advance of the Consummation Date, intervening adverse developments, either in
the economy or the market generally or in the financial condition or business
of the Interested Shareholder, could result in a decline in the originally
anticipated Fair Market Value of such consideration, so that, on the date
scheduled for its consummation, the Business Combination, which had
theretofore been considered as not requiring an 80 percent shareholder vote or
approval by a majority of the Continuing Directors (i.e., because it was
expected to satisfy the minimum price requirements and it satisfied the form
of consideration and procedural requirements), could not be consummated
because it had not received such vote or approval (even if it had received any
less-than-80-percent shareholder vote required by Delaware law, and any
separate class vote required by the terms of any class or series of then-
outstanding stock of the Company) and did not, in fact, meet the minimum price
requirements on such date. However, an Interested Shareholder could avoid such
a situation by establishing, in advance, terms for the Business Combination
whereby the non-cash consideration was to be finalized by reference to its
Fair Market Value on the Consummation Date. Such an approach, which has in
fact been used in connection with mergers and similar second-step transactions
in the past, would ensure that the Interested Shareholder would bear the risk
of a decline in the Fair Market Value of the offered consideration prior to
the consummation of the Business Combination. Article IX uses the Consummation
Date as the determination date of the Fair Market Value of non-cash
consideration to be paid in a Business Combination in order to ensure that the
Interested Shareholder uses this approach so that the Interested Shareholder,
and not the other shareholders, would bear this risk. In addition, since the
minimum price requirements call for a determination to be made with respect to
interest at the base rate compounded, and dividends per share paid, through
the Consummation Date, in a particular case it might not be possible to
determine with certainty whether, at the time a Business Combination was
submitted for shareholder approval, it would ultimately satisfy the minimum
price requirements on the Consummation Date. Accordingly, it might not be
possible to determine with certainty whether the Business Combination would
require an 80 percent shareholder vote or the lesser vote otherwise applicable
under Delaware law and, until the Consummation Date, there might be
uncertainty as to whether the Business Combination, if it in fact received
less than an 80 percent affirmative shareholder vote, could be consummated
under Article IX. This uncertainty could deter an Interested Shareholder who
did not own (and was not assured of obtaining the affirmative votes of) 80
percent of the voting power of the Voting Stock from going forward with a
Business Combination that had not been approved by a majority of the
Continuing Directors. However, the Company considers that it is appropriate,
for the reasons indicated above, to use the Consummation Date as the
determination date with respect to the minimum price requirements of Article
IX and that this will benefit shareholders by encouraging the Interested
Shareholder to negotiate with the Continuing Directors (and to refrain from
taking action which would result in there being fewer than three Continuing
Directors) and obtain their approval of the Business Combination, since such
approval would avoid the applicability of both the 80 percent shareholder
approval requirement and the minimum price requirement.
(3) Procedural Requirements. In order to avoid the requirement of an 80
percent affirmative shareholder vote or approval by a majority of the
Continuing Directors, after an Interested Shareholder
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became an Interested Shareholder and prior to the Consummation Date, all of
the following procedural requirements, as well as the form of consideration
and minimum price requirements, must be complied with.
The first procedural requirement would be that the Company, after the
Determination Date, not have failed to pay full quarterly dividends on any
then-outstanding Preferred Stock and not have reduced the rate of dividends
paid on Common Stock, unless such failure or reduction was approved by a
majority of the Continuing Directors. This provision is designed to prevent an
Interested Shareholder from attempting to depress the market price of the
Voting Stock prior to proposing a Business Combination by reducing dividends
thereon, and thereby reducing the consideration required to be paid pursuant
to the minimum price requirements of Article IX.
The second procedural requirement would be that the Interested Shareholder
and its Affiliates not have acquired any additional shares of the Voting
Stock, directly from Company, or otherwise, in any transaction subsequent to
the transaction pursuant to which the Interested Shareholder became an
Interested Shareholder (other than any such acquisition pursuant to a stock
split or similar transaction that does not increase the Interested
Shareholder's proportionate share of any class or series of stock of the
Company). This provision is intended to prevent an Interested Shareholder from
purchasing additional shares of Voting Stock at prices which are lower than
those set by the minimum price requirements of Article IX. Since all of the
forms of consideration, minimum price and procedural requirements must be
satisfied in order for the Interested Shareholder to avoid the need for either
an 80 percent affirmative shareholder vote or the approval of a majority of
any Continuing Directors, an effect of this provision, where the Interested
Shareholder or any of its Affiliates acquired additional shares of Voting
Stock after the Interested Shareholder became an Interested Shareholder, is
that the Interested Shareholder could only acquire all of the Voting Stock by
means of a Business Combination if such Business Combination either satisfied
the 80 percent shareholder approval requirements or were approved by a
majority of the Continuing Directors.
The third procedural requirement would be that the Interested Shareholder
and its Affiliates not have received, at any time after the Interested
Shareholder became an Interested Shareholder, whether in connection with the
Business Combination or otherwise, the benefit of any loans or other financial
assistance or tax advantages provided by the Company (other than
proportionately, solely in its capacity as a shareholder). This provision is
intended to deter an Interested Shareholder from self-dealing or otherwise
taking advantage of its equity position in the Company by using the Company's
resources to finance the Business Combination or otherwise for its own
purposes in a manner not proportionately available to all shareholders.
The fourth procedural requirement would be that a proxy or information
statement disclosing the terms and conditions of the Business Combination and
complying with the requirements of the proxy rules promulgated under the
Exchange Act or any replacement legislation be mailed to all shareholders of
the Company at least 30 days prior to the consummation of the Business
Combination, whether or not such proxy or information statement is required to
be mailed pursuant to the Exchange Act or any such replacement legislation.
This provision is intended to ensure that shareholders will be fully informed
of the terms and conditions of the Business Combinations even if the
Interested Shareholder were not otherwise required by law to disclose such
information to shareholders.
The final procedural requirements would be that the Interested Shareholder
have supplied the Company with all information requested by the Continuing
Directors pursuant to Article IX. Under Article IX, the Continuing Directors
have the right to request information as to the beneficial ownership of stock
by the Interested Shareholder and other factual matters relating to the
applicability and effect of Article IX.
Advance Notice Provisions for Shareholder Nominations and Shareholder
Proposals
The By-laws establish an advance notice procedure for shareholders to make
nominations of candidates for election as directors, or bring other business
before an annual meeting of shareholders of the Company (the "Shareholder
Notice Procedure").
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The Shareholder Notice Procedure provides that only persons who are
nominated by, or at the direction of, the Board, or by a shareholder who has
given timely written notice to the Secretary of the Company prior to the
meeting at which directors are to be elected, will be eligible for election as
directors of the Company. The Shareholder Notice Procedure provides that at an
annual meeting only such business may be conducted as has been brought before
the meeting by, or at the direction of, the Chairman or the Board or by a
shareholder who has given timely written notice to the Secretary of the
Company of such shareholder's intention to bring such business before such
meeting. Under the Shareholder Notice Procedure, for notice of shareholder
nominations to be made at an annual meeting to be timely, such notice must be
received by the Company not less than 70 days nor more than 90 days prior to
the first anniversary of the previous year's annual meeting (or if the date of
the annual meeting is advanced by more than 20 days, or delayed by more than
70 days, from such anniversary date, not earlier than the 90th day prior to
such meeting and not later than the later of (x) the 70th day prior to such
meeting and (y) the 10th day after public announcement of the date of such
meeting is first made). Notwithstanding the foregoing, in the event that the
number of directors to be elected is increased and there is no public
announcement naming all of the nominees for director or specifying the size of
the increased Board made by the Company at least 80 days prior to the first
anniversary of the preceding year's annual meeting, a shareholder's notice
will be timely, but only with respect to nominees for any new positions
created by such increase, if it is received by the Company not later than the
10th day after such public announcement is first made by the Company. Under
the Shareholder Notice Procedure, for notice of a shareholder nomination to be
made at a special meeting at which directors are to be elected to be timely,
such notice must be received by the Company not earlier than the 90th day
before such meeting and not later than the later of (x) the 70th day prior to
such meeting and (y) the 10th day after public announcement of the date of
such meeting is first made.
Under the Shareholder Notice Procedure, a shareholder's notice to the
Company proposing to nominate a person for election as a director must contain
certain information, including, without limitation, the identity and address
of the nominating shareholder, the class and number of shares of stock of the
Company which are owned by such shareholder, and all information regarding the
proposed nominee that would be required to be included in a proxy statement
soliciting proxies for the proposed nominee. Under the Shareholder Notice
Procedure, a shareholder's notice relating to the conduct of business other
than the nomination of directors must contain certain information about such
business and about the principal shareholders, including, without limitation,
a brief description of the business the shareholder proposes to bring before
the meeting, the reasons for conducting such business at such meeting, the
name and address of such shareholder, the class and number of shares of stock
of the Company beneficially owned by such shareholder, and any material
interest of such shareholder in the business so proposed. If the Chairman of
the Board or other officer presiding at a meeting determines that a person was
not nominated, or other business was not brought before the meeting, in
accordance with the Shareholder Notice Procedure, such person will not be
eligible for election as a director, or such business will not be conducted at
such as the case may be.
By requiring advance notice of nominations by shareholders, the Shareholder
Notice Procedure will afford the Board an opportunity to consider the
qualifications of the proposed nominees and, to the extent deemed necessary or
desirable by the Board, to inform shareholders about such qualifications. By
requiring advance notice of other proposed business, the Shareholder Notice
Procedure will also provide a more orderly procedure for conducting annual
meetings of shareholders and, to the extent deemed necessary or desirable by
the Board, will provide the Board with an opportunity to inform shareholders,
prior to such meetings, of any business proposed to be conducted at such
meetings, together with any recommendations as to the Board's position
regarding action to be taken with respect to such business, so that
shareholders can better decide whether to attend such a meeting or to grant a
proxy regarding the disposition of any such business.
Although the By-laws do not give the Board any power to approve or
disapprove shareholder nominations for the election of directors or proposals
for action, they may have the effect of precluding a contest for the election
of directors or the consideration of shareholder proposals if the proper
procedures are not followed, and of discouraging or deterring a third party
from conducting a solicitation of proxies to elect its own slate of directors
or to approve its own proposal, without regard to whether consideration of
such nominees or proposals might be harmful or beneficial to the Company and
its shareholders.
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AMENDMENT OF CERTAIN PROVISIONS OF THE CERTIFICATE AND BY-LAWS
Under Delaware law, the shareholders have the right to adopt, amend or
repeal the by-laws and, with the approval of the board of directors, the
certificate of incorporation of a corporation. In addition, if the certificate
of incorporation so provides, the by-laws may be adopted, amended or repealed
by the board of directors. The Certificate provides that the affirmative vote
of the holders of at least 80 percent of the voting power of the outstanding
shares of voting stock, voting together as a single class, is required to
amend provisions of the Certificate relating to the prohibition of shareholder
action without a meeting; the number, election and term of the Company's
directors; or the removal of directors. The vote of the holders of a majority
of the voting power of the outstanding shares of voting stock is required to
amend all other provisions of the Certificate. The Certificate further
provides that the By-laws may be amended by the Board or by the affirmative
vote of the holders of at least 80 percent of the voting power of the
outstanding shares of voting stock, voting together as a single class. These
80 percent voting requirements will have the effect of making more difficult
any amendment by shareholders of the By-laws or of any of the provisions of
the Certificate described above, even if a majority of the Company's
shareholders believe that such amendment would be in their best interests.
ANTITAKEOVER LEGISLATION
Section 203 provides that, subject to certain exceptions specified therein,
a corporation shall not engage in any business combination with any
"interested shareholder" for a three-year period following the date that such
shareholder becomes an interested shareholder unless (i) prior to such date,
the board of directors of the corporation approved either the business
combination or the transaction which resulted in the shareholder becoming an
interested shareholder, (ii) upon consummation of the transaction which
resulted in the shareholder becoming an interested shareholder, the interested
shareholder owned at least 85 percent of the voting stock of the corporation
outstanding at the time the transaction commenced (excluding certain shares),
or (iii) on or subsequent to such date, the business combination is approved
by the board of directors of the corporation and by the affirmative vote of at
least 66 2/3 percent of the outstanding voting stock which is not owned by the
interested shareholder. Except as specified in Section 203, an interested
shareholder is defined to include (x) any person that is the owner of 15
percent or more of the outstanding voting stock of the corporation, or is an
affiliate or associate of the corporation and was the owner of 15 percent or
more of the outstanding voting stock of the corporation, at any time within
three years immediately prior to the relevant date and (y) the affiliates and
associates of any such person.
Under certain circumstances, Section 203 makes it more difficult for a
person who would be an "interested shareholder" to effect various business
combinations with a corporation for a three-year period, although the
shareholders may elect to exclude a corporation from the restrictions imposed
thereunder. The Certificate does not exclude the Company from the restrictions
imposed under Section 203 of the Delaware Law. It is anticipated that the
provisions of Section 203 may encourage companies interested in acquiring the
Company to negotiate in advance with the Board, since the shareholder approval
requirement would be avoided if a majority of the directors then in office
approve, prior to the time the shareholder becomes an interested shareholder,
either the business combination or the transaction which results in the
shareholder becoming an interested shareholder.
RELATIONSHIP OF ARTICLE IX TO SECTION 203
Each of Article IX and Section 203 should encourage persons interested in
acquiring the Company to negotiate in advance with the Board since the higher
shareholder voting requirements imposed would not be invoked if, (i) in the
case of Article IX, such person obtains the approval of a majority of the
Continuing Directors for the proposed business combination transaction, and
(ii) in the case of Section 203, such person, prior to acquiring 15 percent of
the Company's voting stock, obtains the approval of the Board for such stock
acquisition or for the proposed business combination transaction (unless such
person acquires 85 percent or more of the Company's voting stock in such
transaction excluding certain shares as described above). As stated above, in
the event of a proposed acquisition of the Company, the Board believes that
the interests of the Company's shareholders will best be served by a
transaction that results from negotiations based upon careful consideration of
the proposed terms, such as the price to be paid to minority shareholders, the
form of consideration paid and tax effects of the transaction.
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The protection afforded the remaining shareholders by Section 203 is
stronger in some respects than the protection that would be afforded by
Article IX in situations in which the provisions of both apply. This is
because, unless the requisite Board or shareholder approval is obtained or the
acquiror succeeds in obtaining at least 85% of the target corporation's voting
stock in the initial transaction, Section 203 would prevent any of the
specified business combination transactions which could be used by an acquiror
to eliminate such remaining shareholders, use the assets of the company to
finance its acquisition or otherwise abuse its equity position from occurring
for a period of three years thereafter, whereas Article IX would merely
require that the specified minimum price and procedural conditions be
satisfied. Nonetheless, Article IX has been included in the Certificate for
several reasons.
First, the term "Business Combination" is defined differently in Article IX
than it is in Section 203 and, as a result, Article IX may afford protection
to the Company's shareholders in certain situations in which Section 203 would
not apply. In addition, Article IX would apply to transactions with or for the
benefit of any person (together with such person's affiliates and associates)
beneficially owning 10 percent of the Company's voting stock while Section 203
would only apply to transactions involving persons (together with their
affiliates and associates) beneficially owning 15 percent or more of the
Company's voting stock.
Second, although the constitutionality of Section 203 has so far been upheld
in the courts, it is possible that a higher court might yet find Section 203
to be unconstitutional. If Section 203 were to be challenged and struck down
as unconstitutional prior to or in connection with any acquisition of the
Company, Article IX would continue to afford its protections to shareholders.
Neither Article IX nor Section 203 will prevent a hostile takeover of the
Company. They may, however, make more difficult or discourage a takeover of
the Company or the acquisition of control of the Company by a significant
shareholder and thus the removal of incumbent management. Such effect will be
enhanced by the fact that the Company will have a Rights Plan. Some
shareholders may find this disadvantageous in that they may not be afforded
the opportunity to participate in takeovers which are not approved by the
Continuing Directors but in which they might receive, for at least some of
their shares, a substantial premium above the market price at the time of a
tender offer or other acquisition transaction. Article IX should not prevent
or discourage transactions in which the acquiring person is willing to
negotiate in good faith with the Board and is prepared to pay the same price
to all shareholders of each class of the Company's voting stock.
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DESCRIPTION OF PREFERRED STOCK
The following summary of the Preferred Stock does not purport to be complete
and is qualified in its entirety by reference to the Certificate or the
applicable Certificate of Designations of Preferred Stock (each a "Preferred
Stock Designation"), the form of which is filed as, or will be incorporated by
reference as, an exhibit to the Registration Statement of which this
Prospectus is a part in connection with the issuance of such series of
Preferred Stock.
The following summary of the Preferred Stock relates to certain terms and
conditions applicable to the Preferred Stock as a class. The particular terms
of any series of Preferred Stock will be described in the applicable
Prospectus Supplement. If so indicated in such Prospectus Supplement, the
terms of any such series may differ from the terms set forth below.
GENERAL
The Certificate authorizes the Board to establish one or more series of
Preferred Stock and to determine, with respect to any series of Preferred
Stock, the terms and rights of such series, including (i) the designation of
the series, (ii) the number of shares of the series, which number the Board
may thereafter (except where otherwise provided in the Preferred Stock
Designation) increase or decrease (but not below the number of shares thereof
then outstanding), (iii) whether dividends, if any, will be cumulative or
noncumulative and the dividend rate of the series, (iv) the dates at which
dividends, if any, will be payable, (v) the redemption rights and price or
prices, if any, for shares of the series, (vi) the terms and amounts of any
sinking fund provided for the purchase or redemption of shares of the series,
(vii) the amounts payable on shares of the series in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the Company, (viii) whether the shares of the series will be convertible
into shares of any other class or series, or any other security, of the
Company or any other corporation, and, if so, the specification of such other
class or series or such other security, the conversion price or prices or rate
or rates, any adjustments thereof, the date or dates as of which such shares
shall be convertible and all other terms and conditions upon which such
conversion may be made, (ix) restrictions on the issuance of shares of the
same series or of any other class or series, and (x) the voting rights, if
any, of the holders of such series.
The authorized shares of Preferred Stock, as well as shares of Common Stock,
will be available for issuance without further action by the Company's
shareholders, unless such action is required by applicable law or the rules of
any stock exchange or automated quotation system on which the Company's
securities may be listed or traded. The NYSE currently requires shareholder
approval as a prerequisite to listing shares in several instances, including
where the present or potential issuance of shares could result in an increase
in the number of shares of common stock, or in the amount of voting securities
outstanding, of at least 20 percent. If the approval of the Company's
shareholders is not required for the issuance of shares of Preferred Stock or
Common Stock, the Board may determine not to seek shareholder approval.
Each series of Preferred Stock will have the dividend, liquidation,
redemption and voting rights set forth below unless otherwise described in an
applicable Prospectus Supplement relating to such series of Preferred Stock.
The applicable Prospectus Supplement will describe the following terms of the
series of Preferred Stock in respect of which this Prospectus is being
delivered: (1) the designation of such series and the number of shares
offered; (2) the amount of the liquidation preference per share (or the method
of calculation of such amount); (3) the initial public offering price at which
shares of such series will be issued; (4) the dividend rate (or the method of
calculation of such rate) applicable to such series, the dates on which
dividends will be payable and the dates from which dividends will commence to
cumulate, if any; (5) any redemption or sinking fund provisions; (6) any
conversion or exchange rights; (7) any additional voting and other rights,
preferences, privileges, qualifications, limitations and restrictions, if any;
(8) any listing of such series on any securities exchange; (9) the relative
ranking and preferences of such series as to dividend rights and rights upon
any liquidation, dissolution or winding up of the affairs of the Company; and
(10) any other terms of such series.
No shares of Preferred Stock are currently outstanding. Shares of Preferred
Stock, upon issuance against full payment of the purchase price therefor, will
be fully paid and nonassessable. The liquidation preference of
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any series of Preferred Stock is not indicative of the price at which shares
of such series of Preferred Stock will actually trade on or after the date of
issuance.
Although the Board has no intention at the present time of doing so, it
could issue a series of Preferred Stock that could, depending on the terms of
such series, impede the completion of a merger, tender offer or other takeover
attempt. The Board will make any determination to issue such shares based on
its judgment as to the best interests of the Company and its shareholders. The
Board, in so acting, could issue Preferred Stock having terms that could
discourage an acquisition attempt through which an acquirer may be able to
change the composition of the Board, including a tender offer or other
transaction that some, or a majority, of the Company's shareholders might
believe to be in their best interests or in which shareholders might receive a
premium for their stock over the then current market price of such stock.
RANK
Each series of Preferred Stock will, with respect to dividend rights and
rights upon liquidation, dissolution or winding up of the Company, rank prior
or superior to the Common Stock. All shares of each series of Preferred Stock
will be of equal rank with each other. Subject to the foregoing and the terms
of any particular series of Preferred Stock, series of Preferred Stock may
vary as to priority within that class.
DIVIDENDS
Holders of each series of Preferred Stock will be entitled to receive, when,
as and if declared by the Board out of funds of the Company legally available
for payment, cash dividends, payable at such date or dates and at such rate or
rates per share as described in the applicable Prospectus Supplement. Such
rate or rates may be fixed or variable or both.
Unless otherwise specified in the applicable Prospectus Supplement,
dividends shall be cumulative and the dividends on such shares will accrue
from and after the date set forth in the applicable Prospectus Supplement. If
dividends on a series of Preferred Stock are noncumulative and if the Board
fails to declare a dividend in respect of a dividend period with respect to
such series, then holders of such Preferred Stock will have no right to
receive a dividend in respect of such dividend period, and the Company will
have no obligation to pay the dividend for such period, whether or not
dividends are declared with respect to any future dividend payment dates.
No full dividends may be declared or paid or set apart for payment on
Preferred Stock of the Company of any series ranking, as to dividends, on a
parity with or junior to the series of Preferred Stock offered by the
applicable Prospectus Supplement for any period unless full dividends for the
immediately preceding dividend period on such series of Preferred Stock
(including any accumulation in respect of unpaid dividends for prior dividend
periods, unless otherwise specified in the applicable Prospectus Supplement)
have been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof is set apart for such payment. When
dividends are not so paid in full (or a sum sufficient for such full payment
is not so set apart) upon such series of Preferred Stock and any other series
of Preferred Stock of the Company ranking on a parity, as to dividends, with
such series of Preferred Stock, dividends upon such series of Preferred Stock
and dividends on such other series of Preferred Stock ranking on a parity with
such series of Preferred Stock will be declared pro rata so that the amount of
dividends declared per share on such series of Preferred Stock and such other
series of Preferred Stock ranking on a parity with such series of Preferred
Stock will in all cases bear to each other the same ratio that accrued
dividends for the then-current dividend period per share on such series of
Preferred Stock (including any accumulation in respect of unpaid dividends for
prior dividend periods, unless otherwise specified in the applicable
Prospectus Supplement) and accrued dividends, including required or permitted
accumulations, if any, on shares of such other series of Preferred Stock, bear
to each other. No interest, or sum of money in lieu of interest, will be
payable in respect of any dividend payment on such series Preferred Stock that
may be in arrears. Unless full dividends on the series of series of Preferred
Stock offered by the applicable Prospectus Supplement have been declared and
paid or set apart for payment for the immediately
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preceding dividend period (including any accumulation in respect of unpaid
dividends for prior dividend periods, unless otherwise specified in the
applicable Prospectus Supplement), (a) no cash dividend or distribution (other
than in shares of stock ranking junior to such series of Preferred Stock) may
be declared, set aside for payment or paid on junior stock (including Common
Stock), (b) the Company may not, directly or indirectly, repurchase, redeem or
otherwise acquire any shares of junior stock (or pay any monies into a sinking
fund for the redemption of any such shares) except by conversion into or
exchange for junior stock, and (c) the Company may not, directly or
indirectly, repurchase, redeem or otherwise acquire any series of Preferred
Stock ranking on parity as to dividends (or pay any monies into a sinking fund
for the redemption of any shares of any such stock) otherwise than pursuant to
pro rata offers to purchase or a concurrent redemption of all, or a pro rata
portion, of the outstanding Preferred Stock and any other series of Preferred
Stock of the Company ranking on parity as to dividends (except by conversion
into or exchange for junior stock).
Any dividend payment made on a series of Preferred Stock will first be
credited against the earliest accrued but unpaid dividend due with respect to
shares of such series that remains payable.
REDEMPTION
The terms, if any, on which Preferred Stock of any series may be redeemed
will be set forth in the applicable Prospectus Supplement. All shares of
Preferred Stock redeemed, purchased or otherwise acquired by the Company
(including shares surrendered for conversion or exchange) shall be canceled
and thereupon restored to the status of authorized but unissued shares of
Preferred Stock, undesignated as to series.
LIQUIDATION
In the event of a liquidation, dissolution or winding up of the affairs of
the Company, voluntary or involuntary, the holders of a series of Preferred
Stock will be entitled, subject to the rights of creditors, but before any
distribution or payment to the holders of Common Stock or any other junior
stock, to receive a liquidating distribution in the amount of the liquidation
preference per share as set forth in the applicable Prospectus Supplement,
plus accrued and unpaid dividends for the then-current dividend period
(including any accumulation in respect of unpaid dividends for prior dividend
periods, if dividends on such series are cumulative, unless otherwise
specified in the applicable Prospectus Supplement). If the amounts available
for distribution upon liquidation, dissolution or winding up of the affairs of
the Company are not sufficient to satisfy the full liquidation rights of all
the outstanding Preferred Stock and all stock ranking on a parity with such
Preferred Stock, then the holders of each series of such stock will share
ratably in any such distribution of assets in proportion to the full
respective preferential amount (which in the case of Preferred Stock may
include accumulated dividends) to which they are entitled. After payment of
the full amount of the liquidation preference, the holders of Preferred Stock
will not be entitled to any further participation in any distribution of
assets by the Company.
VOTING
Unless otherwise specified in the applicable Prospectus Supplement, each
series of Preferred Stock shall have no voting rights except in the event that
an amount equal to six quarterly dividend payments on such series of Preferred
Stock shall have accrued and be unpaid. In such event, the holders of each
series of Preferred Stock shall have the right to one vote per share, voting
separately as a class together with holders of shares of any series of
Preferred Stock upon which like voting rights have been conferred and are
exercisable ("Voting Parity Stock"), to elect two members of the Board of
Directors, each member to be in addition to the then authorized number of
directors, at the next annual meeting of stockholders and thereafter until
dividends on such series of Preferred Stock have been paid in full for four
consecutive dividend periods, including the last preceding period. Such
directors shall hold office for a term expiring (subject to the earlier
payment, or declaration and setting aside for payment, of dividends on such
series of Preferred Stock for four consecutive dividend periods) at the next
annual meeting of stockholders. Additionally, unless specified in the
applicable prospectus supplement, without the affirmative vote of the holders
of two-thirds of the shares of a series of Preferred Stock issued by the
Company then outstanding (voting separately as a class together with any
Voting Parity Stock), the Company
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may not, either directly or indirectly or through merger or consolidation with
any other corporation, (i) authorize, create or issue, or increase the
authorized or issued amount, of any class or series of stock ranking prior to
the shares of Preferred Stock in rights or preferences or (ii) approve any
amendment of (or otherwise alter or repeal), the Certificate or the applicable
Preferred Stock Designation which would materially and adversely change the
specific terms of such series of Preferred Stock. An amendment which increases
the number of authorized shares of or authorizes the creation or issuance of
other classes or series of Preferred Stock ranking junior to or on a parity
with a series of Preferred Stock with respect to the payment of dividends or
distribution of assets upon liquidation, dissolution or winding up, or
substitutes the surviving entity in a merger, consolidation, reorganization or
other business combination for the Company, shall not be considered to be such
an adverse change.
As more fully described under "Description of Depositary Shares" below, if
the Company elects to issue Depositary Shares, each representing a fraction of
a share of a series of the Preferred Stock, each such Depositary Share will,
in effect, be entitled to such fraction of a vote per Depositary Share.
CONVERSION OR EXCHANGE
The terms, if any, on which Preferred Stock of any series may be converted
into or exchanged for another class or series of Securities will be set forth
in the applicable Prospectus Supplement.
OTHER RIGHTS
The shares of a series of Preferred Stock may have such preferences, voting
powers or relative, participating, optional or other special rights as may be
set forth in the applicable Prospectus Supplement, the Certificate (including
the applicable Preferred Stock Designation) or as otherwise required by law.
The holders of Preferred Stock will not have any preemptive rights to
subscribe to any securities of the Company.
TITLE
The Company, the transfer agent and registrar for a series of Preferred
Stock, and any agent of the Company or the transfer agent and registrar may
treat the registered owner of such Preferred Stock as the absolute owner
thereof (whether or not any payment in respect of such Preferred Stock shall
be overdue and notwithstanding any notice to the contrary) for the purpose of
making payment and for all other purposes. See "Book-Entry Securities" below.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for each series of Preferred Stock will be
named in the applicable Prospectus Supplement.
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DESCRIPTION OF DEPOSITARY SHARES
The following summary of each Deposit Agreement, the Depositary Shares and
the Depositary Receipts (each as defined below) does not purport to be
complete and is qualified in its entirety by reference to the Deposit
Agreement and Depositary Receipts with respect to the Depositary Shares
relating to any particular series of Preferred Stock, the forms of which are
filed as, or will be incorporated by reference as, exhibits to the
Registration Statement of which this Prospectus is a part in connection with
the issuance of such Depositary Shares.
The following summary of the Deposit Agreement, the Depositary Shares and
the Depositary Receipts relates to certain terms and conditions applicable to
such Securities generally. The particular terms of any series of Depositary
Shares will be described in the applicable Prospectus Supplement. If so
indicated in such Prospectus Supplement, the terms of any such series may
differ from the terms set forth below.
GENERAL
The Company may, at its option, elect to offer fractional interests in
shares of Preferred Stock, rather than shares of Preferred Stock. If the
Company elects to do so, it will provide for the issuance by a Depositary (as
described below) to the public of receipts for Depositary Shares, each of
which will represent a fractional interest (to be set forth in the applicable
Prospectus Supplement) of a share of Preferred Stock.
The shares of any series of the Preferred Stock underlying any Depositary
Shares will be deposited under a separate Deposit Agreement (each, a "Deposit
Agreement") between the Company and a bank or trust company selected by the
Company with respect to such series, having its principal office in the United
States and having a combined capital and surplus of at least $50,000,000 (with
respect to such series, the "Depositary"). The applicable Prospectus
Supplement relating to a series of Depositary Shares will set forth the name
and address of the Depositary. Subject to the terms of the applicable Deposit
Agreement, each owner of a Depositary Share will be entitled, in proportion to
the applicable fractional interest in a share of the Preferred Stock
underlying such Depositary Share, to all the rights and preferences of such
Preferred Stock (including dividend, voting, redemption, conversion, exchange
and liquidation rights).
Depositary Shares will be evidenced by depositary receipts issued pursuant
to the applicable Deposit Agreement (the "Depositary Receipts").
Pending the preparation of definitive engraved Depositary Receipts, a
Depositary may, upon the Company's written order, issue temporary Depositary
Receipts substantially identical to (and entitling the holders thereof to all
the rights pertaining to) the definitive Depositary Receipts but not in
definitive form. Definitive Depositary Receipts will be prepared without
unreasonable delay, and the temporary Depositary Receipts will be exchangeable
for definitive Depositary Receipts at the Company's expense and without charge
thereof.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other cash
distributions received by the Depositary in respect of the Preferred Stock to
the record holders of Depositary Shares relating to such Preferred Stock pro
rata in proportion to the numbers of such Depositary Shares owned by such
holders on the relevant record date; provided, however, that in the case the
Company or Depositary shall be required to withhold any cash dividend or other
cash distribution on account of taxes, the amount made available for
distribution shall be reduced accordingly. The Depositary will distribute only
such amount, however, as can be distributed without attributing to any holder
of Depositary Shares a fraction of one cent, and any balance not so
distributed will be added to and treated as part of the next succeeding
distribution to record holders of such Depositary Shares.
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, unless the Depositary determines that it is not feasible to
make such distribution, in which case the Depositary may, with the Company's
approval, adopt such method as
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it deems equitable and practicable for the purpose of effecting such
distribution, including the sale of such property and the distribution of the
net proceeds from such sale to such holders.
Each Deposit Agreement will also contain provisions relating to the manner
in which any subscription or similar rights offered by the Company to holders
of the Preferred Stock of the applicable series will be made available to
holders of Depositary Shares.
WITHDRAWAL OF PREFERRED STOCK
Upon surrender of Depositary Receipts at the office of the Depositary
(unless the related Depositary Shares have previously been called for
redemption), the holder of the Depositary Shares evidenced thereby will be
entitled to delivery at such office, to or upon such holder's order, of the
number of whole shares of the related series of Preferred Stock and any money
and other property, if any, represented by such Depositary Shares. Holders of
Depositary Shares will be entitled to receive whole shares of the related
series of Preferred Stock on the basis set forth in the applicable Prospectus
Supplement, but holders of such whole shares of such Preferred Stock will not
thereafter be entitled to receive Depositary Shares in exchange therefor. If
the Depositary Receipts delivered by the holder evidence a number of
Depositary Shares in excess of the number of Depositary Shares representing
the number of whole shares of the related series of Preferred Stock or Series
A Junior 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.
REDEMPTION OF DEPOSITARY SHARES
The terms, if any, on which the Depositary Shares relating to the Preferred
Stock of any series may be redeemed will be set forth in the applicable
Prospectus Supplement.
VOTING THE UNDERLYING SECURITIES
Upon receipt of notice of any meeting at which the holders of the Preferred
Stock of any series are entitled to vote, the applicable 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 Preferred Stock) will be entitled to instruct
the Depositary as to the exercise of the voting rights pertaining to the
number of shares of Preferred Stock underlying such holder's Depositary
Shares. The Depositary will endeavor, insofar as practicable, to vote the
number of whole shares of Preferred Stock underlying such Depositary Shares in
accordance with such instructions, and the Company will agree to take all
action that may be deemed necessary by the Depositary in order to enable the
Depositary to do so. To the extent the Depositary does not receive specific
instructions from the holders of Depositary Shares relating to such Preferred
Stock, it will abstain from voting such shares of Preferred Stock, unless
otherwise indicated by the holders of such Depositary Shares.
AMENDMENT AND TERMINATION OF DEPOSITARY AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the applicable Deposit Agreement may at any time be amended by
agreement between the Company and the Depositary. However, any amendment that
materially and adversely alters the rights of the existing holders of
Depositary Shares will not be effective unless such amendment has been
approved by the record holders of at least a majority of the Depositary Shares
then outstanding. A Deposit Agreement may be terminated by the Company or the
Depositary only if (i) all outstanding Depositary Shares relating thereto have
been redeemed or otherwise reacquired by the Company, (ii) all Preferred Stock
has been withdrawn or (iii) there has been a final distribution in respect of
the Preferred Stock of the applicable series in connection with any
liquidation, dissolution or winding up of the Company and such distribution
has been distributed to the holders of the related 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 any depositary arrangements. The Company
will pay all charges of each Depositary in connection with the initial deposit
of the Preferred Stock of any series and any redemption of such Preferred
Stock. Holders of Depositary Shares will be required to pay any other transfer
and other taxes and governmental charges and such other charges as are
expressly provided in the Deposit Agreement to be for their accounts.
MISCELLANEOUS
Each Depositary will forward to the holders of the applicable Depositary
Shares all reports and communications from the Company that are delivered to
such Depositary and that the Company is required to furnish the holders of the
Preferred Stock of the applicable series.
Neither any Depositary nor the Company will be liable if it is prevented or
delayed by law or any circumstance beyond its control in performing its
obligations under any Deposit Agreement. The obligations of the Company and
each Depositary under any 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
or Preferred Stock unless indemnity satisfactory to them is furnished. They
may rely upon written advice of counsel or accountants, or information
provided by persons presenting Preferred Stock for deposit, holders of
Depositary Shares or other persons believed by it to be competent and on
documents believed by them to be genuine.
RESIGNATION AND REMOVAL OF DEPOSITARY
A Depositary may resign at any time by delivering to the Company notice of
its election to do so, and the Company may at any time remove a Depositary,
and such resignation or removal will 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.
TITLE
The Company, each Depositary and any agent of the Company or the applicable
Depositary may treat the registered owner of any Depositary Share as the
absolute owner thereof (whether or not any payment in respect of such
Depositary Share shall be overdue and notwithstanding any notice to the
contrary) for the purpose of making payment and for all other purposes. See
"Book-Entry Securities" below.
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DESCRIPTION OF DEBT SECURITIES
GENERAL
The following summary of the Indentures (as defined below) and the Debt
Securities (as defined below) does not purport to be complete and is qualified
in its entirety by reference to the applicable Indenture pursuant to which
such Debt Securities are issued, which Indentures are filed as exhibits to the
Registration Statement of which this Prospectus is a part.
The following summary of the Indentures and the Debt Securities relates to
certain terms and conditions applicable to the Debt Securities generally. The
particular terms of any series of Debt Securities will be described in the
applicable Prospectus Supplement. If so indicated in such Prospectus
Supplement, the terms of any such series may differ from the terms set forth
below.
Senior Debt Securities (the "Senior Debt Securities") are to be issued under
an Indenture (the "Senior Indenture"), to be entered into by the Company and
The First National Bank of Chicago, as Trustee (the "Senior Trustee").
Subordinated Debt Securities (the "Subordinated Debt Securities" and, together
with the Senior Debt Securities, "Debt Securities") are to be issued under an
Indenture (the "Subordinated Indenture" and, together with the Senior
Indenture, the "Indentures") to be entered into by the Company and The Bank of
New York, as Trustee (the "Subordinated Trustee," and together with the Senior
Trustee, the "Trustees"). The following summaries of certain provisions of the
Senior Debt Securities, the Subordinated Debt Securities, the Senior Indenture
and the Subordinated Indenture, as modified or superseded by the applicable
Prospectus Supplement, are brief summaries of certain provisions thereof, do
not purport to be complete and are subject to, and are qualified in their
entirety by reference to, all the provisions of the Indenture applicable to a
particular series of Debt Securities (the "Applicable Indenture"), including
the definitions therein of certain terms. Whenever particular provisions or
defined terms in one or both of the Indentures are referred to, such
provisions or defined terms are incorporated herein by reference. Section
references used herein are references to the Applicable Indenture. Capitalized
terms not otherwise defined herein shall have the meaning given to them in the
Applicable Indenture.
The Indentures do not limit the amount of Debt Securities that may be issued
thereunder and Debt Securities may be issued thereunder from time to time in
one or more series. (Section 310) The Senior Debt Securities will be unsecured
and unsubordinated obligations of the Company. Because the Company is a
holding company, the right of the Company to participate in any distribution
of assets of any subsidiary upon such subsidiary's liquidation or
reorganization or otherwise is subject to the prior claims of the creditors of
such subsidiary, except to the extent the Company may itself be recognized as
a creditor of such subsidiary. Accordingly the Debt Securities will be
effectively subordinated to all existing and future liabilities of the
Company's subsidiaries. In addition to such amount, the principal subsidiaries
of the Company have guaranteed the Company's obligations under its $400
million committed credit facility. The Indentures also do not preclude the
Company's subsidiaries from incurring additional indebtedness.
Unless otherwise indicated in the applicable Prospectus Supplement,
principal of, premium, if any, and interest on the Debt Securities will be
payable, and the transfer of Debt Securities will be registrable, at the
office or agency to be maintained by the Company in The City of New York and
at any other office or agency maintained by the Company for such purpose.
(Sections 301, 305 and 1002) The Debt Securities will be issued only in fully
registered form without coupons and, unless otherwise indicated in the
applicable Prospectus Supplement, in denominations of $1,000 or integral
multiples thereof. (Section 302) As described under "Book-Entry Securities"
below, the Debt Securities of a series may be issued in the form of one or
more Book-Entry Securities ("Book-Entry Securities") that will be deposited
with or on behalf of a Depositary, which will be a clearing agent registered
under the Exchange Act. No service charge will be made for any registration of
transfer or exchange of the Debt Securities, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
imposed in connection therewith. (Section 305)
Reference is made to the applicable Prospectus Supplement for the following
terms of the Debt Securities offered thereby (the "Offered Debt Securities"):
(1) the title of the Offered Debt Securities; (2) any limit on the
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aggregate principal amount of the Offered Debt Securities; (3) the person or
entity to whom any interest on the Offered Debt Securities shall be payable,
if other than the person in whose name that Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest; (4) the date or dates on which the principal of
and premium, if any, on the Offered Debt Securities is payable or the method
of determination thereof; (5) the rate or rates at which the Offered Debt
Securities shall bear interest, if any, or the method of calculating such rate
or rates of interest, the date or dates from which any such interest shall
accrue or the method by which such date or dates shall be determined, the
Interest Payment Dates on which any such interest shall be payable and the
Regular Record Date for interest payable on any Interest Payment Date; (6) the
place or places where the principal of, premium, if any, and interest on the
Offered Debt Securities shall be payable; (7) the period or periods within
which, the price or prices at which, the currency or currencies (including
currency units) in which and the other terms and conditions upon which the
Offered Debt Securities may be redeemed, in whole or in part, at the option of
the Company; (8) the obligation, if any, of the Company to redeem or purchase
the Offered Debt Securities pursuant to any sinking fund or analogous
provisions or at the option of a holder thereof and the period or periods
within which, the price or prices at which and the other terms and conditions
upon which the Offered Debt Securities shall be redeemed or purchased, in
whole or in part, pursuant to such obligation; (9) if other than denominations
of $1,000 and any integral multiple thereof, the denominations in which the
Offered Debt Securities shall be issuable; (10) the currency, currencies or
currency units in which payment of the principal of and any premium and
interest on any Offered Debt Securities shall be payable if other than the
currency of the United States of America and the manner of determining the
equivalent thereof in the currency of the United States of America; (11) if
the amount of payments of principal of or any premium or interest on any
Offered Debt Securities may be determined with reference to an index, formula
or other method, the index, formula or other method by which such amounts
shall be determined; (12) if the principal of or any premium or interest on
any Offered Debt Securities is to be payable, at the election of the Company
or a holder thereof, in one or more currencies or currency units other than
that or those in which the Debt Securities are stated to be payable, the
currency, currencies or currency units in which payment of the principal of
and any premium and interest on the Offered Debt Securities as to which such
election is made shall be payable, and the periods within which and the other
terms and conditions upon which such election is to be made; (13) if other
than the principal amount thereof, the portion of the principal amount of the
Offered Debt Securities which shall be payable upon declaration of
acceleration of the maturity thereof or the method by which such portion may
be determined; (14) the applicability of the provisions described under "--
Defeasance of Offered Debt Securities or Certain Covenants in Certain
Circumstances"; (15) if the Offered Debt Securities will be issuable only in
the form of a Book-Entry Security as described under "--Book-Entry Debt
Securities", the Depositary or its nominee with respect to the Offered Debt
Securities and the circumstances under which the Book-Entry Security may be
registered for transfer or exchange or authenticated and delivered in the name
of a person or entity other than the Depositary or its nominee; (16) any
additional, modified or different covenants applicable to the Offered Debt
Securities; (17) in the case of the Subordinated Indenture, the applicability
of the provisions described in "Conversion or Exchange"; and (18) any other
terms of the Offered Debt Securities. (Section 301)
The Debt Securities may be issued under the Indentures as Original Issue
Discount Debt Securities to be offered and sold at a substantial discount
below their stated principal amount. Special Federal income tax, accounting
and other considerations applicable thereto will be described in the
Prospectus Supplement relating thereto. "Original Issue Discount Debt
Security" means any Debt Security which provides for an amount less than the
principal amount thereof to be due and payable upon a declaration of
acceleration of the maturity thereof upon the occurrence and continuance of an
Event of Default. (Section 101)
If the purchase price of any of the Debt Securities is payable in one or
more foreign currencies or currency units, if any Debt Securities are
denominated in one or more foreign currencies or currency units or if the
principal of, premium, if any, or interest, if any, on any Debt Securities is
payable in one or more foreign currencies or currency units, the restrictions,
elections, material U.S. Federal income tax considerations and other
information with respect to such issue of Debt Securities and such foreign
currency or currency units will be set forth in the applicable Prospectus
Supplement.
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If any index is used to determine the amount of payments of principal of,
premium, if any, or interest, if any, on any series of Debt Securities,
material U.S. Federal income tax, accounting and other considerations
applicable thereto will be described in the applicable Prospectus Supplement.
SUBORDINATION OF THE SUBORDINATED DEBT SECURITIES
The payment of the principal of and premium, if any, and interest on, and
any payments on the repurchase of, Subordinated Debt Securities will, to the
extent set forth in the Subordinated Indenture, be subordinated in right of
payment to the prior payment in full of all Senior Debt (as defined below).
Upon any payment or distribution of assets to creditors upon any liquidation,
dissolution, winding up, reorganization, assignment for the benefit of
creditors, marshalling of assets or any bankruptcy, insolvency or similar
proceedings of the Company, the holders of all Senior Debt will first be
entitled to receive payment in full of all amounts due or to become due
thereon before the holders of Subordinated Debt Securities will be entitled to
receive any payment in respect of the principal of or premium, if any, or
interest on, or repurchase 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 will first be entitled to receive payment in full
of all amounts due or to become due thereon before the holders of the
Subordinated Debt Securities will be entitled to receive any payment upon the
principal of or premium, if any, or interest on, or repurchase of, the
Subordinated Debt Securities. No payments on account of principal, premium, if
any, interest, or any repurchase in respect of 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 permitting the holders thereof to accelerate the maturity
thereof. (Article Thirteen of the Subordinated Indenture)
By reason of such subordination, in the event of insolvency, creditors of
the Company who are not holders of Senior Debt or of Subordinated Debt
Securities may recover less, ratably, than holders of Senior Debt and may
recover more, ratably, than the holders of Subordinated Debt Securities.
"Senior Debt" is defined to mean without duplication, the principal, premium
(if any) and unpaid interest on all present and future (i) indebtedness of the
Company for borrowed money, (ii) obligations of the Company evidenced by
bonds, debentures, notes or similar instruments, (iii) indebtedness incurred,
assumed or guaranteed by the Company in connection with the acquisition by it
or a Subsidiary of any business, properties or assets (except purchase-money
indebtedness classified as accounts payable under generally accepted
accounting principles), (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, (v) reimbursement obligations of the Company
in respect of letters of credit relating to indebtedness or other obligations
of the Company that qualify as indebtedness or obligations of the kind
referred to in clauses (i) through (iv) above, and (vi) obligations of the
Company under direct or indirect guaranties in respect of, and obligations
(contingent or otherwise) to purchase or otherwise acquire, or otherwise to
assure a creditor against loss in respect of, indebtedness or obligations of
others of the kinds referred to in clauses (i) through (v) above, in each case
unless in the instrument creating or evidencing the indebtedness or obligation
or pursuant to which the same is outstanding it is provided that such
indebtedness or obligation is not superior in right of payment to Senior Debt
Securities. (Section 101 of the Subordinated Indenture)
The applicable 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
To the extent indicated in the applicable Prospectus Supplement, the
Subordinated Debt Securities of any series may be convertible or exchangeable
into other Debt Securities or Common Stock, Preferred Stock or Depositary
Shares. The specific terms on which Subordinated Debt Securities of any series
may be so converted or exchanged will be set forth in the applicable
Prospectus Supplement. Such terms may include provisions for
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conversion or exchange, either mandatory, at the option of the holder, or at
the option of the Company, in which case the amount or number of Securities to
be received by the holders of Subordinated Debt Securities would be calculated
as of a time and in the manner stated in the applicable Prospectus Supplement.
CERTAIN COVENANTS OF THE COMPANY APPLICABLE TO SENIOR DEBT SECURITIES
Limitation on Liens
Unless otherwise indicated in the applicable Prospectus Supplement, the
holders of Senior Debt Securities (but not Subordinated Debt Securities) will
have the benefit of the "Limitation on Liens" covenant described below. The
"Limitation on Liens" covenant provides that the Company will not, and will
not permit any Restricted Subsidiary (as defined below) to, create, incur,
issue, assume or guarantee any indebtedness for money borrowed ("Debt")
secured by a Mortgage (as defined below) upon any Operating Property (as
defined below), or upon shares of capital stock or Debt issued by any
Restricted Subsidiary and owned by the Company or any Restricted Subsidiary,
whether owned at the date of the Senior Indenture or thereafter acquired,
without effectively providing concurrently that the Senior Debt Securities of
each series then outstanding are secured equally and ratably with or, at the
option of the Company, prior to such Debt so long as such Debt shall be so
secured.
The foregoing restriction shall not apply to, and there shall be excluded
from Debt in any computation under such restriction, Debt secured by (i)
Mortgages on any property existing at the time of the acquisition thereof;
(ii) Mortgages on property of a corporation existing at the time such
corporation is merged into or consolidated with the Company or a Restricted
Subsidiary or at the time of a sale, lease or other disposition of the
properties of such corporation (or a division thereof) as an entirety or
substantially as an entirety to the Company or a Restricted Subsidiary,
provided that any such Mortgage does not extend to any property owned by the
Company or any Restricted Subsidiary immediately prior to such merger,
consolidation, sale, lease or disposition; (iii) Mortgages on property of a
corporation existing at the time such corporation becomes a Restricted
Subsidiary; (iv) Mortgages in favor of the Company or a Restricted Subsidiary;
(v) Mortgages to secure all or part of the cost of acquisition, construction,
development or improvement of the underlying property, or to secure Debt
incurred to provide funds for any such purpose, provided that the commitment
of the creditor to extend the credit secured by any such Mortgage shall have
been obtained not later than 365 days after the later of (a) the completion of
the acquisition, construction, development or improvement of such property or
(b) the placing in operation of such property; (vi) Mortgages in favor of the
United States of America or any State thereof, or any department, agency or
instrumentality or political subdivision thereof, to secure partial, progress,
advance or other payments; and (vii) Mortgages existing on the date of the
Senior Indenture or any extension, renewal, replacement or refunding of any
Debt secured by a Mortgage existing on the date of the Senior Indenture or
referred to in clauses (i) to (iii) or (v), provided that the principal amount
of Debt secured thereby and not otherwise authorized by clauses (i) to (iii)
or (v) shall not exceed the principal amount of Debt, plus any premium or fee
payable in connection with any such extension, renewal, replacement or
refunding, so secured at the time of such extension, renewal, replacement or
refunding. (Section 1008 of the Senior Indenture)
Notwithstanding the restrictions described above, the Company and its
Restricted Subsidiaries may create, incur, issue, assume or guarantee Debt
secured by Mortgages without equally and ratably securing the Senior Debt
Securities of each series then outstanding if, at the time of such creation,
incurrence, issuance, assumption or guarantee, after giving effect thereto and
to the retirement of any Debt which is concurrently being retired, the
aggregate amount of all outstanding Debt secured by Mortgages which would
otherwise be subject to such restrictions (other than any Debt secured by
Mortgages permitted as described in clauses (i) through (vii) of the
immediately preceding paragraph) plus all Attributable Debt in respect of Sale
and Leaseback Transactions (as defined below) with respect to Operating
Properties (with the exception of such transactions which are permitted under
clauses (i) through (iv) of the second sentence under "--Limitation on Sale
and Leaseback Transactions" below) does not exceed the greater of (i) 10% of
Consolidated Net Assets (as defined below) and (ii) $150 million.
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Limitation on Sale and Leaseback Transactions
Unless otherwise indicated in the applicable Prospectus Supplement, the
holders of Senior Debt Securities (but not Subordinated Debt Securities) will
have the benefit of the "Limitation on Sale and Leaseback Transactions"
covenant described below. The "Limitation on Sale and Leaseback Transactions"
covenant provides that the Company will not, and will not permit any
Restricted Subsidiary to, enter into any Sale and Leaseback Transaction with
respect to any Operating Property unless: (i) the Sale and Leaseback
Transaction is solely with the Company or another Restricted Subsidiary; (ii)
the lease is for a period not in excess of twenty- four months, including
renewals; (iii) the Company or such Restricted Subsidiary would (at the time
of entering into such arrangement) be entitled as described in clauses (i)
through (vii) of the second preceding paragraph, without equally and ratably
securing the Senior Debt Securities of each series then outstanding, to
create, incur, issue, assume or guarantee Debt secured by a Mortgage on such
Operating Property in the amount of the Attributable Debt arising from such
Sale and Leaseback Transaction; (iv) the Company or such Restricted
Subsidiary, within 365 days after the sale of such Operating Property in
connection with such Sale and Leaseback Transaction is completed, applies an
amount equal to the greater of (A) the net proceeds of the sale of such
Operating Property or (B) the fair market value of such Operating Property to
(1) the retirement of Debt Securities, other Funded Debt (as defined below) of
the Company ranking on a parity with the Senior Debt Securities or Funded Debt
of a Restricted Subsidiary or (2) the purchase of Operating Property; or (v)
the Attributable Debt of the Company and its Restricted Subsidiaries in
respect of such Sale and Leaseback Transaction and all other Sale and
Leaseback Transactions entered into after the date of the Senior Indenture
(other than any such Sale and Leaseback Transactions as would be permitted as
described in clauses (i) through (iv) of this sentence), plus the aggregate
principal amount of Debt secured by Mortgages on Operating Properties then
outstanding (not including any such Debt secured by Mortgages described in
clauses (i) through (vii) of the second preceding paragraph) which do not
equally and ratably secure such outstanding Senior Debt Securities (or secure
such outstanding Senior Debt Securities on a basis that is prior to other Debt
secured thereby), would not exceed the greater of (i) 10% of Consolidated Net
Assets and (ii) $150 million.
Certain Definitions
"Attributable Debt," in respect of any Sale and Leaseback Transaction,
means, as of the time of determination, the total obligation (discounted to
present value at the rate per annum equal to the discount rate which would be
applicable to a capital lease obligation with like term in accordance with
generally accepted accounting principles) of the lessee for rental payments
(other than amounts required to be paid on account of property taxes,
maintenance, repairs, insurance, water rates and other items which do not
constitute payments for property rights) during the remaining portion of the
initial term of the lease included in such Sale and Leaseback Transaction.
"Consolidated Net Assets" means the aggregate amount of assets (less
applicable reserves and other properly deductible items) after deducting
therefrom (i) all current liabilities (excluding any indebtedness for money
borrowed having a maturity of less than 12 months from the date of the most
recent consolidated balance sheet of the Company but which by its terms is
renewable or extendable beyond 12 months from such date at the option of the
borrower), and (ii) all Investments in Unrestricted Subsidiaries, all as set
forth on the most recent consolidated balance sheet of the Company and
computed in accordance with generally accepted accounting principles.
"Funded Debt" means all Debt having a maturity of more than 12 months from
the date as of which the determination is made or having a maturity of 12
months or less but by its terms being renewable or extendable beyond 12 months
from such date at the option of the borrower, but excluding any such Debt owed
to the Company or a Restricted Subsidiary.
"Mortgage" means, with respect to any property or assets, any mortgage or
deed of trust, pledge, hypothecation, assignment, security interest, lien,
encumbrance, or other security arrangement of any kind or
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nature whatsoever on or with respect to such property or assets (including any
conditional sale or other title retention agreement having substantially the
same economic effect as any of the foregoing).
"Operating Property" means any real property or equipment located within the
United States and owned by, or leased to, the Company or any of its
Subsidiaries that has a net book value (after deduction of accumulated
depreciation) in excess of 1.0% of Consolidated Net Assets.
"Restricted Subsidiary" means any Subsidiary of the Company that owns any
Operating Property.
"Sale and Leaseback Transaction" means any arrangement with any person
providing for the leasing to the Company or any Subsidiary of any Operating
Property, which Operating Property has been or is to be sold or transferred by
the Company or such Subsidiary to such person.
"Subsidiary" means any corporation of which at least a majority of the
outstanding stock having by the terms thereof ordinary voting power for the
election of directors of such corporation (irrespective of whether or not at
the time stock of any other class or classes of such corporation shall have or
might have voting power by reason of the happening of any contingency) is at
the time directly or indirectly owned by the Company, or by one or more other
Subsidiaries, or by the Company and one or more other Subsidiaries.
"Unrestricted Subsidiary" means any Subsidiary of the Company that is not a
Restricted Subsidiary.
Unless otherwise indicated in the applicable Prospectus Supplement, the
Indentures do not limit the amount of Debt that may be incurred by the Company
or its Subsidiaries or contain covenants specifically designed to protect
holders of Debt Securities in the event of a highly leveraged transaction,
restructuring, change in control, merger or similar transaction involving the
Company that may adversely affect holders of Debt Securities.
EVENTS OF DEFAULT
Any one of the following events will constitute an Event of Default under
the Indentures 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; (b) failure to pay principal of or any premium on any Debt Security
of that series when due; (c) failure to deposit any sinking fund payment, when
due, in respect of any Debt Security of that series; (d) failure to perform,
or breach of, any covenant or warranty of the Company in the Indenture with
respect to Debt Securities of that series continued for 90 days after written
notice as provided in the Indenture; (e) a default under any indebtedness for
money borrowed by the Company or any Subsidiary if (A) such default either (1)
results from the failure to pay the principal of any such indebtedness at its
stated maturity or (2) relates to an obligation other than the obligation to
pay the principal of such indebtedness at its stated maturity and results in
such indebtedness becoming or being declared due and payable prior to the date
on which it would otherwise become due and payable, (B) the principal amount
of such indebtedness, together with the principal amount of any other such
indebtedness in default for failure to pay principal at stated maturity or the
maturity of which has been so accelerated, aggregates $50 million or more at
any one time outstanding and (C) such indebtedness is not discharged, or such
acceleration is not rescinded or annulled, within 30 days after written notice
as provided in the Indenture; (f) certain events of bankruptcy, insolvency or
reorganization of the Company; or (g) any other Event of Default provided with
respect to Debt Securities of that series. (Section 501)
If an Event of Default (other than an Event of Default described in clause
(f) of the preceding paragraph) with respect to the Debt Securities of any
series at the time Outstanding shall occur and be continuing, either the
Trustee or the Holders of at least 25% in aggregate principal amount of the
Outstanding Debt Securities of that series may accelerate the maturity of all
Debt Securities of that series; provided, however, that after such
acceleration, but before a judgment or decree based on acceleration, the
Holders of a majority in aggregate principal amount of the Outstanding Debt
Securities of that series may, under certain circumstances, rescind and annul
such acceleration if all Events of Default, other than the non-payment of
accelerated principal, have been
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cured or waived as provided in the Applicable Indenture. If an Event of
Default described in clause (f) of the immediately preceding paragraph occurs,
the Outstanding Debt Securities will ipso facto become immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder. (Section 502)
Reference is made to the applicable Prospectus Supplement relating to any
series of Offered Debt Securities that are Original Issue Discount Debt
Securities for the particular provisions relating to acceleration of the
Stated Maturity of a portion of the principal amount of such series of
Original Issue Discount Debt Securities upon the occurrence of an Event of
Default and the continuation thereof.
Each Indenture provides that, subject to the duty of the Trustee under such
Indenture during default to act with the required standard of care, such
Trustee will be under no obligation to exercise any of its rights or powers
under such Indenture at the request or direction of any of the holders of Debt
Securities, unless such holders shall have offered to the Trustee reasonable
indemnity. (Section 603) Subject to such provisions for the indemnification of
the Trustee and to certain other conditions, the holders of a majority in
aggregate principal amount of the Outstanding Debt Securities of any series
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee under the Applicable
Indenture, or exercising any trust or power conferred on such Trustee, with
respect to the Debt Securities of that series. (Section 512)
No holder of Debt Securities of any series will have any right to institute
any proceeding with respect to the Applicable Indenture or for any remedy
thereunder, unless such holder shall have previously given to the Trustee
under such Indenture written notice of a continuing Event of Default and
unless the holders of at least 25% in principal amount of the Outstanding Debt
Securities of that series shall have made written request, and offered
reasonable indemnity, to such Trustee to institute such proceeding as trustee,
and such Trustee shall not have received from the holders of a majority in
aggregate principal amount of the Outstanding Debt Securities of that series a
direction inconsistent with such request and shall have failed to institute
such proceeding within 60 days. (Section 507) However, such limitations do not
apply to a suit instituted by a holder of Debt Securities for enforcement of
payment of the principal of and premium, if any, or interest on such Debt
Securities on or after the respective due dates expressed in such Debt
Securities. (Section 508)
The Company is required to furnish to the Trustee under each Indenture
annually a statement as to the performance by the Company of certain of its
obligations under such Indenture and as to any default in such performance.
(Section 1004)
MODIFICATION AND WAIVER
Modifications and amendments of the Indentures may be made by the Company
and the respective Trustees without the consent of the holders of any of the
Debt Securities in order (i) to evidence the succession of another entity to
the Company and the assumption of the covenants and obligations of the Company
under the Debt Securities and the Indentures by such successor to the Company;
(ii) to add to the covenants of the Company for the benefit of the holders of
all or any series of Debt Securities or to surrender any right or power
conferred on the Company by the Indentures; (iii) to add additional Events of
Default with respect to any series of Debt Securities; (iv) to add to or
change any provisions to such extent as may be necessary to permit or
facilitate the issuance of Debt Securities in bearer form or to facilitate the
issuance of Book-Entry Securities; (v) to add to, change or eliminate any
provision affecting only Debt Securities not yet issued; (vi) to secure the
Debt Securities; (vii) to establish the form or terms of Debt Securities of
any series; (viii) to evidence and provide for successor Trustees or to add or
change any provisions to such extent as may be necessary to provide for or
facilitate the appointment of a separate Trustee or Trustees for specific
series of Debt Securities; (ix) to permit payment in respect of Debt
Securities in bearer form or coupons in the United States to the extent
allowed by law; (x) to cure any ambiguity, to correct or supplement any
mistaken or inconsistent provisions or to make any other provisions with
respect to matters or questions arising under the Indentures, provided that
any such action does not adversely affect in any material respect the
interests of any holder of Debt Securities of any series then outstanding
under the Applicable Indenture. (Section 901)
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Modifications and amendments of each Indenture also may be made by the
Company and the Trustee under such Indenture with the consent of the holders
of not less than a majority in principal amount of the Outstanding Debt
Securities of each series issued under such Indenture and adversely affected
by the modification or amendments; provided, however, that no such
modification or amendment may, without the consent of the holders of all Debt
Securities under such Indenture affected thereby, (i) change the Stated
Maturity of the principal amount of, or any installment of principal of or
interest on, any Debt Security; (ii) reduce the principal amount of, or the
premium, if any, or (except as otherwise provided in the applicable Prospectus
Supplement) interest on any Debt Security (including in the case of an
Original Issue Discount Debt Security the amount payable upon acceleration of
the maturity thereof); (iii) change the place or currency of payment of
principal of, premium, if any, or interest on any Debt Security; (iv) impair
the right to institute suit for the enforcement of any payment on any Debt
Security on or after the Stated Maturity thereof (or in the case of
redemption, on or after the Redemption Date); (v) adversely affect any right
of the holders to require the Company to repurchase Debt Securities; (vi) in
the case of Subordinated Debt Securities, adversely affect any right to
convert such Debt Securities or modify the subordination provisions in a
manner adverse to the holders of the Debt Securities in any material respect;
or (vii) 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. (Section 902)
The holders of at least a majority in principal amount of the Outstanding
Debt Securities of any series may, on behalf of all holders of Debt Securities
of that series, waive compliance by the Company with certain restrictive
provisions of the Applicable Indenture. (Section 1010) The holders of not less
than a majority in aggregate principal amount of the Outstanding Debt
Securities of any series may, on behalf of all holders of Debt Securities of
that series, waive any past default under the Applicable Indenture, except a
default in the payment of principal, premium, if any, or interest or in
respect of a covenant or provision of the Applicable Indenture that cannot be
modified or amended without the consent of the holder of each Outstanding Debt
Security of such series affected thereby. (Section 513)
CONSOLIDATION, MERGER AND SALE OF ASSETS
Each Indenture provides that the Company may not consolidate with or merge
with or into any other entity or transfer or lease its assets substantially as
an entirety to any entity, unless (i) either the Company is the continuing
corporation, or any successor or purchaser is a corporation, partnership or
trust validly organized under the laws of the United States of America, any
State thereof or the District of Columbia, and any such successor or purchaser
expressly assumes the Company's obligations on the Debt Securities under a
supplemental indenture, (ii) immediately after giving effect to the
transaction, no Event of Default thereunder, and no event which, after notice
or lapse of time or both, would become an Event of Default thereunder, shall
have occurred and be continuing, (iii) in the case of the Senior Indenture, if
properties or assets of the Company become subject to a Mortgage not permitted
by the Senior Indenture, the Company or such successor entity, as the case may
be, takes such steps as shall be necessary effectively to secure the Senior
Debt Securities equally and ratably with (or prior to) all Debt secured
thereby, and (iv) if a supplemental indenture is to be executed in connection
with such consolidation, merger, transfer or lease, the Company has delivered
to the Trustee under such Indenture an officers' certificate and an opinion of
counsel stating compliance with these provisions. (Section 801)
DEFEASANCE OF OFFERED DEBT SECURITIES OR CERTAIN COVENANTS IN CERTAIN
CIRCUMSTANCES
Defeasance and Discharge
The Indentures provide that the terms of any series of Debt Securities may
provide that the Company, at the Company's option, will be discharged from any
and all obligations in respect of the Debt Securities of such series (except
for certain obligations to register the transfer or exchange of Debt
Securities of such series, to replace stolen, destroyed, lost or mutilated
Debt Securities of such series, to maintain paying agencies and to hold moneys
for payment in trust) upon the deposit with the applicable Trustee, in trust,
of money and/or U.S.
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Government Obligations which, through the payment of interest and principal
thereof in accordance with their terms, will provide money in an amount
sufficient to pay any installment of principal, premium, if any, and interest
on, and any mandatory sinking fund payments in respect of, the Debt Securities
of such series on the Stated Maturity of such payments in accordance with the
terms of the Applicable Indenture and such Debt Securities. Such discharge may
only occur if, among other things, the Company has delivered to the Trustee an
opinion of counsel to the effect that the Company has received from, or there
has been published by, the United States Internal Revenue Service a ruling, or
there has been a change in tax law, in either case to the effect that such
discharge will not be deemed, or result in, a taxable event with respect to
holders of the Debt Securities of such series. (Sections 1302 and 1304 of the
Senior Indenture and Sections 1502 and 1504 of the Subordinated Indenture)
Defeasance of Certain Covenants Applicable to the Senior Debt Securities
The Senior Indenture provides that the terms of any series of Senior Debt
Securities may provide the Company with the option to be released from certain
restrictive covenants described in this Prospectus under "--Certain Covenants
of the Company Applicable to Senior Debt Securities--Limitations on Liens",
"--Certain Covenants of the Company Applicable to Senior Debt Securities--
Limitation on Sale and Leaseback Transactions" and the Indentures provide that
the terms of any series of Debt Securities may provide the Company with the
option to be released from the restrictive covenant described in the
Prospectus under "--Consolidation, Merger and Sale of Assets". The Company, in
order to exercise such option, will be required to deposit with the Trustee
money and/or U.S. Government Obligations which, through the payment of
interest and principal thereof in accordance with their terms, will provide
money in an amount sufficient to pay principal, premium, if any, and interest
on, and any mandatory sinking fund payments in respect of, the Debt Securities
of such series on the Stated Maturity of such payments in accordance with the
terms of the Applicable Indenture and such Debt Securities. The Company will
also be required to deliver to the applicable Trustee an opinion of counsel to
the effect that the deposit and related covenant defeasance will not cause the
holders of the Debt Securities of such series to recognize income, gain or
loss for federal income tax purposes. (Sections 1303 and 1304 of the Senior
Indenture and Sections 1503 and 1504 of the Subordinated Indenture)
In the event the Company exercises this option and the Debt Securities of
such series are declared due and payable because of the occurrence of any
Event of Default, the amount of money and U.S. Government Obligations on
deposit with the applicable Trustee will be sufficient to pay amounts due on
the Debt Securities of such series at the time of their Stated Maturity but
may not be sufficient to pay amounts due on the Debt Securities of such series
at the time of the acceleration resulting from such Event of Default. However,
the Company shall remain liable for such payments.
The applicable Prospectus Supplement will state if any defeasance provisions
will apply to the Offered Debt Securities.
TRUSTEES
The First National Bank of Chicago is the Trustee under the Senior Indenture
and The Bank of New York is the Trustee under the Subordinated Indenture. Each
Trustee may resign or be removed with respect to one or more series of Debt
Securities under the Applicable Indenture and a successor Trustee may be
appointed to act with respect to such series. (Section 610). In the event that
two or more persons are acting as Trustee with respect to different series of
Debt Securities, each such Trustee shall be a Trustee of a trust under the
related Indenture separate and apart from the trust administered by any other
such Trustee (Section 611), and any action described herein to be taken by the
"Trustee" may then be taken by each such Trustee with respect to, and only
with respect to, the one or more series of Securities for which it is Trustee.
32
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DESCRIPTION OF WARRANTS
The following summary of each Warrant Agreement, the Warrants and the
Warrant Certificates (as defined below) does not purport to be complete and is
qualified in its entirety by reference to the Warrant Agreement with respect
to the Warrants of any particular series, which are or will be incorporated by
reference as exhibits to the Registration Statement of which this Prospectus
is a part in connection with the issuance of such Warrants.
The following summary of the Warrant Agreements, the Warrants and the
Warrant Certificates relates to certain terms and conditions applicable to the
Warrants generally. The particular terms of any series of Warrants will be
described in the applicable Prospectus Supplement. If so indicated in such
Prospectus Supplement, the terms of any such series may differ from the terms
set forth below.
GENERAL
The Company may issue Warrants for the purchase of Debt Securities,
Preferred Stock, Depositary Shares or Common Stock. Warrants may be issued
independently or together with Debt Securities, Preferred Stock, Depositary
Shares or Common Stock, and may be attached to or separate from such
Securities.
Each series of Warrants will be evidenced by certificates (the "Warrant
Certificates") issued pursuant to a separate Warrant Agreement to be entered
into between the Company and a bank selected by the Company with respect to
such series, having its principal office in the United States and having
combined capital and surplus of at least $50,000,000 (with respect to such
series, the "Warrant Agreement"). The applicable Prospectus Supplement
relating to a series of Warrants will set forth the name and address of the
Warrant Agent.
The applicable Prospectus Supplement will describe the terms of the series
of Warrants in respect of which this Prospectus is being delivered, including:
(1) the offering price; (2) the currency for which such Warrants may be
purchased; (3) if applicable, the designation and terms of the Securities with
which the Warrants are issued and the number of Warrants issued with each such
Security or each principal amount of such Security; (4) if applicable, the
date on and after which the Warrants and the related Securities will be
separately transferable; (5) in the case of Warrants to purchase Debt
Securities, the principal amount of Debt Securities purchasable upon exercise
of one Warrant and the price at and currency in which such principal amount of
Debt Securities may be purchased upon such exercise and, in the case of
Warrants to purchase Preferred Stock, Depositary Shares or Common Stock, the
number of Depositary Shares or shares of Preferred Stock or Common Stock, as
the case may be, purchasable upon the exercise of one Warrant and the price at
which such shares may be purchased upon such exercise; (6) the date on which
the right to exercise the Warrants will commence and the date on which such
right or rights will expire (the "Expiration Date"); (7) certain federal
income tax consequences of holding or exercising such Warrants; (8) the terms
of the Securities issuable upon exercise of such Warrants; and (9) any other
terms of the Warrants.
Warrant Certificates may be exchanged for new Warrant Certificates of
different denominations, may be presented for registration of transfer, and
may be exercised at the corporate trust office of the Warrant Agent or any
other office indicated in the applicable Prospectus Supplement. If the
Warrants are not separately transferrable from the Securities with which they
were issued, such exchange may take place only in connection with an exchange
of the certificates representing such related Securities. Prior to the
exercise of their Warrants, holders of Warrants will not have any of the
rights of holders of the Securities purchasable upon such exercise, including,
in the case of Warrants to purchase Debt Securities, the right to receive
payments of principal of, premium, if any, or interest, if any, on the Debt
Securities purchasable upon such exercise or to enforce covenants in the
applicable Indenture or, in the case of Warrants to purchase Preferred Stock,
Depositary Shares or Common Stock, the right to receive dividends, if any, or
payments upon the liquidation, dissolution or winding up of the Company or to
exercise voting rights, if any.
EXERCISE OF WARRANTS
Each Warrant will entitle the holder to purchase the Securities specified in
the applicable Prospectus Supplement at the exercise price set forth in, or
calculated as described in, the applicable Prospectus Supplement.
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Unless otherwise specified in the applicable Prospectus Supplement, Warrants
may be exercised at any time up to 5:00 P.M. New York time on the Expiration
Date set forth in such Prospectus Supplement. After the close of business on
the Expiration Date, unexercised Warrants will become void.
Warrants may be exercised by delivery of the Warrant Certificate
representing the Warrants to be exercised together with certain information,
and payment to the Warrant Agent in immediately available funds, as provided
in the applicable Prospectus Supplement of the amount required to purchase the
Securities purchasable upon such exercise. The information required to be
delivered will be set forth on the reverse side of the Warrant Certificate and
in the applicable Prospectus Supplement. Upon receipt of such payment and the
Warrant Certificate properly completed and duly executed at the corporate
trust office of the Warrant Agent or any other office indicated in the
applicable Prospectus Supplement, the Company will, in the time period
provided by the applicable Warrant Agreement, issue and deliver the Securities
purchasable upon such exercise. If fewer than all of the Warrants represented
by such Warrant Certificate are exercised, a new Warrant Certificate will be
issued for the remaining amount of Warrants.
If so indicated in the applicable Prospectus Supplement, Securities may be
surrendered as all or part of the exercise price for Warrants.
ANTIDILUTION PROVISIONS
In the case of Warrants to purchase Common Stock, the exercise price payable
and the number of shares of Common Stock purchasable upon the exercise of each
Warrant will be subject to adjustment in certain events. No fractional shares
will be issued upon exercise of Warrants, but the Company will pay cash value
of any fractional shares otherwise issuable.
MODIFICATION
Any Warrant Agreement and the terms of the related Warrants may be amended
by the Company and the applicable Warrant Agent by executing a supplemental
warrant agreement (a "Supplemental Agreement"), without the consent of the
holders of any such Warrants, for the purpose of (i) curing any ambiguity, or
curing, correcting or supplementing any defective or inconsistent provision
contained therein, or making any other provisions with respect to matters or
questions arising under the Warrant Agreement that is not inconsistent with
the provisions of the Warrant Agreement or the Warrant Certificates, (ii)
evidencing the succession of another corporation to the Company and the
assumption by any such successor of the covenants of the Company contained in
such Warrant Agreement and the Warrants, (iii) appointing a successor Warrant
Agent, (iv) evidencing and providing for the acceptance of appointment by a
successor Warrant Agent with respect to the Warrants, (v) adding to the
covenants of the Company for the benefit of the holders of such Warrants or
surrendering any right or power conferred upon the Company under the Warrant
Agreement, (vi) issuing Warrants in definitive form, if such Warrants are
initially issued in the form of Global Securities, or (vii) amending the
Warrant Agreement and the Warrants in any manner that the Company may deem to
be necessary or desirable and that will not adversely affect the interests of
the holders of such Warrants in any material respect.
The Company and the Warrant Agent may also amend any Warrant Agreement and
the terms of the related Warrants by executing a Supplemental Agreement with
the consent of the holders of not less than a majority in number of the
unexercised Warrants affected by such amendment, for the purpose of adding any
provisions to or modifying in any manner or eliminating any of the provisions
of such Warrant Agreement or of modifying in any manner the rights of the
holders of such Warrants, except that no such amendment that (i) changes the
number or amount of Securities purchasable upon exercise of such Warrants so
as to reduce the number or amount of Securities receivable upon such exercise,
(ii) shortens the period of time during which the Warrants may be exercised,
(iii) otherwise adversely affects the exercise rights of the holders of such
Warrants in any material respect, or (iv) reduces the number of unexercised
Warrants the consent of holders of which is required for amendment of the
Warrant Agreement or the related Warrants, may be made without the consent of
each holder affected thereby.
34
<PAGE>
CONSOLIDATION, MERGER AND SALE OF ASSETS
Each Warrant Agreement will provide that the Company may consolidate or
merge with or into any other Company or sell, lease, transfer or convey all or
substantially all of its assets to any other Company, provided that (i) either
the Company must be the continuing corporation, or the corporation (if other
than the Company) that is formed by or results from any such consolidation or
merger or that receives such assets must be a corporation organized and
existing under the laws of the United States of America or a state thereof and
must assume the obligations of the Company with respect to all the unexercised
Warrants and the performance and observance of all of the covenants and
conditions of the applicable Warrant Agreement to be performed or observed by
the Company and (ii) the Company or such successor corporation, as the case
may be, must not immediately be in default under such Warrant Agreement.
ENFORCEABILITY OF RIGHTS BY HOLDERS OF WARRANTS
Each Warrant Agent will act solely as the agent of the Company under the
applicable Warrant Agreement and will not assume any obligation or
relationship of agency or trust for or with any holder of any Warrant. A
single bank or trust company may act as Warrant Agent for more than one issue
of Warrants. A Warrant Agent will have no duty or responsibility in case of
any default by the Company in the performance of its obligations under the
applicable Warrant Agreement or Warrant including, without limitation, any
duty or responsibility to initiate any proceedings at law or otherwise or to
make any demand upon the Company. Any holder of a Warrant may, without the
consent of the related Warrant Agent or the holder of any other Warrant,
enforce by appropriate legal action, in and for its own behalf, its right to
exercise, and receive the Securities purchasable upon exercise of, its
Warrants.
RESIGNATION AND APPOINTMENT OF WARRANT AGENT
A Warrant Agent shall be provided by the Company until all the Warrants
issued have been exercised or expired in accordance with their terms. The
Warrant Agent may resign at any time by giving the Company notice of its
election and the Company may at any time remove a Warrant Agent, and such
resignation or removal shall take effect upon the appointment of a successor
Warrant Agent and its acceptance of such appointment. The Warrant Agent and
any successor Warrant Agent shall be a bank or trust company having its office
or agent's office in the United States and having a combined capital and
surplus of at least $50,000,000.
TITLE
The Company, the Warrant Agents and any agent of the Company or the
applicable Warrant Agent may treat the registered holder of any Warrant
Certificate as the absolute owner of the Warrants evidenced thereby
(notwithstanding any notice to the contrary) for any purpose and as the person
entitled to exercise the rights attaching to the Warrants requested thereby,
any notice to the contrary notwithstanding. See "Book-Entry Securities" below.
35
<PAGE>
BOOK-ENTRY SECURITIES
Unless otherwise specified in the applicable Prospectus Supplement,
Securities other than Common Stock will be issued in the form of one or more
book-entry certificates (collectively, with respect to each series or issue of
Securities, the "Book-Entry Security") registered in the name of a depositary
or a nominee of a depositary. Unless otherwise specified in the applicable
Prospectus Supplement, the depositary will be The Depository Trust Company
("DTC"). The Company has been informed by DTC that its nominee will be Cede &
Co. ("Cede"). Accordingly, Cede is expected to be the initial registered
holder of all Securities that are issued in book-entry form. No person that
acquires a beneficial interest in such Securities will be entitled to receive
a certificate representing such person's interest in the Securities except as
set forth herein or in the applicable Prospectus Supplement. Unless and until
definitive Securities are issued under the limited circumstances described
below, all references to actions by holders of Securities issued in book-entry
form shall refer to actions taken by DTC upon instructions from its
Participants (as defined below), and all references herein to payments and
notices to holders shall refer to payments and notices to DTC or Cede, as the
registered holder of such Securities.
DTC has informed the Company that it is a limited purpose trust company
organized under the New York Banking Law, a "banking organization" within the
meaning of the New York Banking Law, a member of the Federal Reserve System, a
"clearing company" within the meaning of the New York Uniform Commercial Code
and a "clearing agency" registered pursuant to Section 17A of the Exchange
Act, and that it was created to hold securities for its participating
organizations ("Participants") and to facilitate the clearance and settlement
of securities transactions among Participants through electronic book-entry,
thereby eliminating the need for physical movement of certificates.
Participants include securities brokers and dealers, banks, trust companies
and clearing corporations, and may include certain other organizations.
Indirect access to the DTC system also is available to others such as banks,
brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Participant, either directly or indirectly
("Indirect Participants").
Persons that are not Participants or Indirect Participants but desire to
purchase, sell or otherwise transfer ownership of, or other interests in,
Securities may do so only through Participants and Indirect Participants.
Under a book-entry format, Holders may experience some delay in their receipt
of payments, as such payments will be forwarded by the agent designated by the
Company to Cede, as nominee for DTC. DTC will forward such payments to its
Participants, which thereafter will forward them to Indirect Participants or
Holders. Holders will not be recognized by the applicable registrar, transfer
agent, Trustee, Depositary or Warrant Agent as registered holders of the
Securities entitled to the benefits of the Certificate or the applicable
Indenture, Deposit Agreement or Warrant Agreement. Beneficial owners that are
not Participants will be permitted to exercise their rights as such only
indirectly through and subject to the procedures of Participants and, if
applicable, Indirect Participants.
Under the rules, regulations and procedures creating and affecting DTC and
its operations as currently in effect (the "Rules"), DTC will be required to
make book-entry transfers of Securities among Participants and to receive and
transmit payments to Participants. Participants and Indirect Participants with
which beneficial owners of Securities have accounts with respect to the
Securities similarly are required by the Rules to make book-entry transfers
and receive and transmit such payments on behalf of their respective account
holders.
Because DTC can act only on behalf of Participants, who in turn act only on
behalf of Participants or Indirect Participants, and on behalf of certain
banks, trust companies and other persons approved by it, the ability of a
beneficial owner of Securities issued in book-entry form to pledge such
Securities to persons or entities that do not participate in the DTC system,
or to otherwise act with respect to such Securities, may be limited due to the
unavailability of physical certificates for such Securities.
DTC has advised the Company that DTC will take any action permitted to be
taken by a registered holder of any Securities under the Certificate or the
applicable Indenture, Deposit Agreement or Warrant Agreement only at the
direction of one or more Participants to whose accounts with DTC such
Securities are credited.
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<PAGE>
Unless otherwise specified in the applicable Prospectus Supplement, a Book-
Entry Security will be exchangeable for the relevant definitive Securities
registered in the names of persons other than DTC or its nominee only if (i)
DTC notifies the Company that it is unwilling or unable to continue as
depository for such Book-Entry Security or if at any time DTC ceases to be a
clearing agency registered under the Exchange Act at a time when DTC is
required to be so registered in order to act as such depository, (ii) the
Company executes and delivers to the applicable registrar, transfer agent,
Trustee, Depositary and/or Warrant Agent an order complying with the
requirements of the Certificate or the applicable Indenture, Deposit Agreement
and/or Warrant Agreement that such Book-Entry Security shall be so
exchangeable or (iii) there has occurred and is continuing a default in the
payment of any amount due in respect of the Securities or, in the case of Debt
Securities, an Event of Default or an event that, with the giving of notice or
lapse of time, or both, would constitute an Event of Default with respect to
such Debt Securities. Any Book-Entry Security that is exchangeable pursuant to
the preceding sentence will be exchangeable for Securities registered in such
names as DTC directs.
Upon the occurrence of any event described in the immediately preceding
paragraph, DTC is generally required to notify all Participants of the
availability through DTC of definitive Securities. Upon surrender by DTC of
the Book-Entry Security representing the Securities and delivery of
instructions for re-registration, the registrar, transfer agent, Trustee,
Depositary or Warrant Agent, as the case may be, will reissue the Securities
as definitive Securities, and thereafter such persons will recognize the
holders of such definitive Securities as registered holders of Securities
entitled to the benefits of the Certificate or the applicable Indenture,
Deposit Agreement and/or Warrant Agreement.
Except as described above a Book-Entry Security may not be transferred
except as a whole by DTC to a nominee of DTC or by a nominee of DTC to DTC or
another nominee of DTC or to a successor depositary appointed by the Company.
Except as described above, DTC may not sell, assign, transfer or otherwise
convey any beneficial interest in a Book-Entry Security evidencing all or part
of any Securities unless such beneficial interest is in an amount equal to an
authorized denomination for such Securities.
None of the Company, the Trustees, any registrar and transfer agent, any
Warrant Agent or any Depositary, or any agent of any of them, will have any
responsibility or liability for any aspect of DTC's or any Participant's
records relating to, or for payments made on account of, beneficial interests
in a Book-Entry Security, or for maintaining, supervising or reviewing any
records relating to such beneficial interests.
37
<PAGE>
PLAN OF DISTRIBUTION
The Company may sell the Securities to one or more underwriters for public
offering and sale by them or may sell the Securities to investors directly or
through agents, which agents may be affiliated with the Company. Any such
underwriter or agent involved in the offer and sale of the Securities will be
named in the applicable Prospectus Supplement.
Sales of Securities offered pursuant to any applicable Prospectus Supplement
may be effected from time to time in one or more transactions at a fixed price
or prices which may be changed, at prices related to the prevailing market
prices at the time of sale or at negotiated prices. The Company also may, from
time to time, authorize underwriters acting as the Company's agents to offer
and sell the Securities upon the terms and conditions set forth in the
applicable Prospectus Supplement. In connection with the sale of Securities,
underwriters may be deemed to have received compensation from the Company in
the form of underwriting discounts or commissions and may also receive
commissions from purchasers of Securities for whom they may act as agent.
Underwriters may sell Securities to or though dealers, and such dealers may
receive compensation in the form of discounts, concessions or commissions from
the underwriters and/or commissions from purchasers of Securities for whom
they may act as agent.
Any underwriting compensation paid by the Company to underwriters or agents
in connection with the offering of Securities, and any discounts, concessions
or commissions allowed by underwriters to participating dealers, will be set
forth in the applicable Prospectus Supplement. Underwriters, dealers and
agents participating in the distribution of the Securities may be deemed to be
underwriters, and any discounts, concessions or commissions received by them
and any profit realized by them on resale of the Securities may be deemed to
be underwriting discounts and commissions under the Securities Act.
Underwriters, dealers and agents may be entitled, under agreements entered
into with the Company, to indemnification against and contribution toward
certain civil liabilities, including liabilities under the Securities Act. Any
such indemnification arrangements will be described in the applicable
Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, each
class or series of Securities will be a new issue with no established trading
market. The Company may elect to list any class or series of Securities on any
exchange, but is not obligated to do so. It is possible that one or more
underwriters may make a market in a class or series of Securities, but 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 the Securities.
Certain of the underwriters, agents and their affiliates may be customers
of, engage in transactions with and perform services from the Company in the
ordinary course of business.
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VALIDITY OF SECURITIES
The validity of any Securities will be passed upon for the Company by Norman
L. Roberts, Esq., Senior Vice President and General Counsel of the Company,
and for any underwriters or agents by Sullivan & Cromwell, Los Angeles,
California. Mr. Roberts beneficially owns 8,715 shares of Common Stock and
holds options to purchase 100,000 additional shares of Common Stock.
EXPERTS
The combined financial statements incorporated in this Prospectus by
reference from the Company's Registration Statement on Form 10 filed on August
18, 1997, as amended by Amendment No. 1 thereto filed on October 1, 1997 and
Amendment No. 2 thereto filed on October 22, 1997 have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report, which
is incorporated herein by reference, and have been so incorporated in reliance
upon the report of such firm given upon their authority as experts in
accounting and auditing. The August 31, 1996 consolidated financial statements
of Norand Corporation incorporated in this Prospectus by reference from the
Company's Registration Statement on Form 10 filed on August 18, 1997, as
amended by Amendment No. 1 thereto filed on October 1, 1997 and Amendment No.
2 thereto filed on October 22, 1997 have been audited by Arthur Andersen LLP,
independent public accountants, 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.
39
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PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Registration Statement filing fee............................... $177,000
Trustees' fees and expenses..................................... 25,000*
Registrar and Transfer Agents' fees and expenses................ 25,000*
Depositaries' fees and expenses................................. 25,000*
Warrant Agents' fees and expenses............................... 25,000*
Legal fees and expenses......................................... 50,000*
Blue Sky fees and expenses...................................... 15,000*
Accounting fees and expenses.................................... 50,000*
Listing fees and expenses....................................... 25,000*
Rating agency fees.............................................. 260,000*
Printing and engraving costs.................................... 100,000*
Miscellaneous................................................... 25,000*
--------
Total......................................................... $802,000*
========
</TABLE>
- --------
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Elimination of Liability of Directors
The Certificate of Incorporation of the Company (the "Certificate") provides
that a director of the Company will not be personally liable to the Company or
its shareholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Company or its shareholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware General Corporation Law, which
concerns unlawful payments of dividends, stock purchases or redemptions, or
(iv) for any transaction from which the director derived an improper personal
benefit. If Delaware law is amended after the approval by the shareholders of
the Certificate to authorize corporate action further eliminating or limiting
the personal liability of directors, then the liability of a director of the
Company shall be eliminated or limited to the fullest extent permitted by
Delaware law, as so amended from time to time. While the Certificate provides
directors with protection from awards for monetary damages for breaches of
their duty of care, it does not eliminate such duty. Accordingly, the
Certificate will have no effect on the availability of equitable remedies such
as an injunction or rescission based on a director's breach of his or her duty
of care. The provisions of the Certificate described above apply to an officer
of the Company only if he or she is a director of the Company and is acting in
his or her capacity as director, and do not apply to officers of the Company
who are not directors.
Indemnification of Directors and Officers
The Certificate provides that each person who is or was a director or
officer of the Company or who is or was serving or who had agreed to serve at
the request of the Board or an officer of the Company as a director, officer
or employee of another corporation, partnership, joint venture, trust or other
enterprise, will be indemnified by the Company, in accordance with the By-
laws, to the full extent permitted from time to time by Delaware law, as the
same exists or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the Company to
provide broader indemnification rights than said law permitted the Company to
provide prior to such amendment) or any other applicable laws as presently or
hereafter in effect. In addition, the Certificate provides that the Company
may provide indemnification to other persons as provided in the By-laws and
may enter into one or more agreements with any person which provide for
indemnification greater as different than that provided in the Certificate.
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The By-laws of the Company provide that each person who was or is made a
party or is threatened to be made a party or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative (a
"Proceeding"), by reason of the fact that he or she or a person of whom he or
she is the legal representative is or was a director or officer of the Company
or is or was serving at the request of the Company, as a director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to employee benefit
plans maintained or sponsored by the Company, whether the basis of such
Proceeding is alleged action in an official capacity as a director, officer,
employee or agent or in any other capacity while serving as a director,
officer, employee or agent, will be indemnified and held harmless by the
Company to the fullest extent authorized by Delaware law as the same exists or
may in the future be amended (but, in the case of any such amendment, only to
the extent that such amendment permits the Company to provide broader
indemnification rights than said law permitted the Company to provide prior to
such amendment), against all expense, liability and loss (including attorneys'
fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to
be paid in settlement) reasonably incurred or suffered by such person in
connection therewith and such indemnification will continue as to a person who
has ceased to be a director, officer, employee or agent and will inure to the
benefit of his or her heirs, executors and administrators; however, except as
described in the following paragraph with respect to Proceedings to enforce
rights to indemnification, the Company will indemnify any such person seeking
indemnification in connection with a Proceeding (or part thereof) initiated by
such person only if such Proceeding (or part thereof) was authorized by the
Board.
Pursuant to the By-laws, if a claim described in the preceding paragraph is
not paid in full by the Company within thirty days after a written claim has
been received by the Company, the claimant may at any time thereafter bring
suit against the Company to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant will be entitled to be paid also
the expense of prosecuting such claim. The By-laws provide that it will be a
defense to any such action (other than an action brought to enforce a claim
for expenses incurred in defending any Proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the Company) that the claimant has not met the standards of
conduct which make it permissible under Delaware law for the Company to
indemnify the claimant for the amount claimed, but the burden of proving such
defense will be on the Company. Neither the failure of the Company (including
the Board, independent legal counsel or shareholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in Delaware law, nor an actual
determination by the Company (including the Board, independent legal counsel
or shareholders) that the claimant has not met such applicable standard of
conduct, will be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
The By-laws provide that the right to indemnification and the payment of
expenses incurred in defending a Proceeding in advance of its final
disposition conferred in the Certificate will not be exclusive of any other
right which any person may have or may in the future acquire under any
statute, provision of the Certificate, the By-laws, agreement, vote of
shareholders or disinterested directors or otherwise. The Certificate permits
the Company to maintain insurance, at its expense, to protect itself and any
director, officer, employee or agent of the Company or any person serving at
the request of the Company, as a director, officer, employee or agent of
another corporation, or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans
maintained or sponsored by the Company, against any such expense, liability or
loss, whether or not the Company would have the power to indemnify such person
against such expense, liability or loss under Delaware law. The Company has
obtained directors' and officers' liability insurance providing coverage to
its directors and officers.
The Certificate provides that the right to indemnification conferred therein
is a contract right and includes the right to be paid by the Company the
expenses incurred in defending any such Proceeding in advance of its final
disposition, except that if Delaware law requires, the payment of such
expenses incurred by a director or officer in his or her capacity as a
director or officer (and not in any other capacity in which service was or is
rendered by such person while a director or officer, including, without
limitation, service to an employee benefit plan) in advance of the final
disposition of a Proceeding, will be made only upon delivery to the Company of
an undertaking by or on behalf of such director or officer, to repay all
amounts so advanced if it is ultimately determined that such director or
officer is not entitled to be indemnified under the Certificate or otherwise.
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<PAGE>
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT
------- -------
<C> <S>
*1(a) Form of Underwriting Agreement for Common Stock, Preferred Stock and
Depositary Shares.
*1(b) Form of Underwriting Agreement for Debt Securities.
*1(c) Form of Distribution Agreement.
4(a) Certificate of Incorporation of the Company (incorporated by reference
to Exhibit 3A to the Company's Registration Statement on Form 10 (the
"Form 10")).
4(b) By-laws of the Company, as amended (incorporated by reference to
Exhibit 3B to the Company's Form 10).
4(c) Rights Agreement dated as of September 24, 1997 between the Company
and The Chase Manhattan Bank, as Rights Agent (incorporated by
reference to Exhibit 3C to the Company's Form 10).
*4(d) Form of Certificates of Designations of Preferred Stock.
*4(e) Specimen certificate representing Preferred Stock.
*4(f) Form of Deposit Agreement.
*4(g) Specimen Depositary Receipt (attached as Exhibit A to Exhibit 4(f)).
*4(h) Form of Senior Indenture.
*4(i) Form of Subordinated Indenture.
*4(j) Form of Warrant Agreement.
*4(k) Form of Warrant Certificate (attached as Exhibit A to Exhibit 4(j)).
4(l) Upon the request of the Securities and Exchange Commission, the
Registrant will furnish a copy of all other instruments defining the
rights of holders of long-term debt of the Registrant.
*5(a) Opinion of Norman L. Roberts, Esq. as to the validity of the
Securities.
*12(a) Computation of ratio of earnings to fixed charges.
*23(a) Consent of Norman L. Roberts, Esq. (included in Exhibit 5(a)).
23(b) Consent of Deloitte & Touche LLP.
*23(c) Consent of Arthur Andersen LLP.
*24 Powers of Attorney.
*25(a) Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939 of The First National Bank of Chicago, as Trustee under the
Senior Indenture.
*25(b) Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939 of The Bank of New York, as Trustee under the Subordinated
Indenture.
</TABLE>
- --------
*Previously filed.
ITEM 17. UNDERTAKINGS.
(a) 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 the 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 and 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 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
II-3
<PAGE>
(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 (a)(1)(i) and (a)(1)(ii) do not apply if
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 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.
(b) 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 therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
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 described under Item 15 above, 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 against the registrant 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-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Company certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Amendment
No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Beverly Hills, State of
California, on the 13th day of January, 1998.
UNOVA, INC.
By: *
__________________________________
Name: Alton J. Brann
Title: Chairman and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Chairman of the Board, Chief January 13, 1998
____________________________________ Executive Officer and
Alton J. Brann Director
* Senior Vice President and January 13, 1998
____________________________________ Chief Financial Officer
Michael E. Keane
* Vice President, Finance and January 13, 1998
____________________________________ Principal Accounting Officer
Charles A. Cusumano
* Director January 13, 1998
____________________________________
Stephen E. Frank
* Director January 13, 1998
____________________________________
Orion L. Hoch
* Director January 13, 1998
____________________________________
Steven B. Sample
* Director January 13, 1998
____________________________________
William D. Walsh
</TABLE>
By: /s/ Virginia S. Young
____________________________
Virginia S. Young
(Attorney-in-fact)
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<PAGE>
EXHIBIT 23(b)
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in Amendment No. 1 to Registration
Statement No. 333-42839 of UNOVA, Inc. (the "Company") on Form S-3 of our report
dated August 13, 1997, appearing in the Company's Registration Statement on Form
10, filed on August 18, 1997, as amended by Amendment No. 1 thereto filed
October 1, 1997 and Amendment No. 2 thereto filed October 22, 1997 and to the
reference to us under the heading "Experts" in the Prospectus, which is part of
such Registration Statement.
/s/ DELOITTE & TOUCHE LLP
Los Angeles, California
January 14, 1998
