As filed with the Securities and Exchange Commission on June 7, 1996
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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THE TJX COMPANIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 04-2207613
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
770 Cochituate Road
Framingham, Massachusetts 01701
(508) 390-1000
(Address, including zip code, and telephone number,
including area code, of registrant's principal
executive offices)
DONALD G. CAMPBELL
Executive Vice President - Finance
The TJX Companies, Inc.
770 Cochituate Road
Framingham, Massachusetts 01701
(508) 390-1000
(Name and address, including zip code, and telephone
number, including area code, of agent for service of process)
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Copies to:
Arthur G. Siler, Esq. Dennis S. Hersch, Esq.
Ropes & Gray Davis Polk & Wardwell
One International Place 450 Lexington Avenue
Boston, Massachusetts 02110 New York, New York 10017
(617) 951-7000 (212) 450-4890
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement as determined by
market conditions. 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 Registration Statement 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 number of the earlier effective registrati n statement for the same
offering: / / If this Registration Statement 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: / /
CALCULATION OF REGISTRATION FEE
Title of Amount Proposed Proposed Amount of
each class of to be maximum offering maximum aggregate registration
securities to be registered price per unit offering price fee
registered or share
Common Stock, ---(2)(3) ---(3)(4) $550,000,000(5) $189,655.17
Preferred Stock,
Debt Securities(1)
Common Stock(6) 1,349,528 $34.8125(7) 46,980,443(7) $16,200.15
Series E 1,500,000 $200(8) $300,000,000(8) $103,448.28
Cumulative Con-
vertible Preferred
Stock, par value
$1.00 per share
Common Stock, (9) None None None
par value $1.00
per share
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(1) This Registration Statement also covers such indeterminate amount of
securities as may be issued in exchange for, or upon conversion of, as the case
may be, the securities registered hereunder. In addition, any other securities
registered hereunder may be sold separately or in units with other securities
registered hereunder. (2) If any Debt Securities are issued at an original issue
discount, then such greater principal amount as shall result in an aggregate
initial offering price of $550,000,000. In no event will the aggregate initial
offering price of Common Stock, Preferred Stock, and Debt Securities issued by
the Registrant hereunder and not previously registered under the Securities Act
of 1933, as amended (the "Securities Act"), exceed $550,000,000 or the
equivalent thereof in one or more foreign currencies or composite currencies,
including European Currency Units. (3) Not specified as to each class of
securities to be registered pursuant to General Instruction II.D of Form S-3
under the Securities Act. (4) The proposed maximum offering price per unit will
be determined from time to time by the Registrant in connection with, and at the
time of, the issuance by the Registrant of the securities registered hereunder.
(5) Determined pursuant to Rule 457(o). An additional filing fee of $17,241.38
was previously paid for $50,000,000 aggregate principal amount of unsold
securities registered under Registration Statement No. 33-60059. (6) Shares
issuable upon conversion of outstanding shares of Series D Preferred Stock. (7)
Determined pursuant to Rule 457(c) solely for the purpose of calculating the
registration fee on the basis of the average of the high and low prices of the
Common Stock reported on the New York Stock Exchange on May 31, 1996. (8)
Determined pursuant to Rule 457(a) solely for the purpose of calculating the
registration fee. (9) Represents such indeterminate number of shares of Common
Stock as shall be issuable upon conversion of the Series E Preferred Stock.
----------------------
Pursuant to Rule 429 under the Securities Act of 1933, the Prospectus
included herein contains a combined Prospectus that also relates to a total of
$50,000,000 of debt securities of the Registrant previously registered under
Registration Statement on Form S-3 No. 33-60059 (which was declared effective on
June 13, 1995) and not issued. This Registration Statement constitutes
Post-Effective Amendment No. 1 to Registration Statement on Form S-3 No.
33-60059 pursuant to which the total amount of unsold debt securities previously
registered under Registration Statement on Form S-3 No. 33-60059 may be offered
and sold as Common Stock, Preferred Stock or Debt Securities, without limitation
as to class of securities, together with the securities registered hereunder,
through the use of the combined Prospectus included herein relating to Common
Stock, Preferred Stock and Debt Securities. In the event any of such previously
registered Debt Securities are offered and sold prior to the effective date of
this Registration Statement, the amount of such Debt Securities will not be
included in any Prospectus hereunder.
----------------------
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
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[Prospectus for Common Stock, Preferred Stock, Debt Securities]
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.
PROSPECTUS (Subject to Completion,
Issued June 7, 1996)
[TJX LOGO]
COMMON STOCK, PREFERRED STOCK, DEBT SECURITIES
----------------------
The TJX Companies, Inc. ("TJX" or the "Company") intends to issue from
time to time in one or more series its (i) shares of common stock, par value
$1.00 per share (the "Common Stock"), (ii) shares of preferred stock, par value
$1.00 per share (the "Preferred Stock") and (iii) unsecured debt securities (the
"Debt Securities"). The holder (the "Selling Stockholder") of the Company's
Series D Preferred Stock, par value $1.00 per share ("Series D Preferred Stock")
may also offer and sell up to 1,349,528 shares of Common Stock (the "Selling
Stockholder Offered Securities") issued to such holder upon conversion of such
shares of Series D Preferred Stock. The Common Stock, Preferred Stock and Debt
Securities offered by the Company hereby (collectively, the "Company Offered
Securities") will have an aggregate initial public offering price not to exceed
$600,000,000 or the equivalent thereof in one or more foreign currencies or
composite currencies, on terms to be determined at the time of sale. The Company
Offered Securities may be offered, separately or as units with other Offered
Securities, in separate series in amounts, at prices and on terms to be
determined at the time of sale and to be set forth in a supplement to this
Prospectus (a "Prospectus Supplement"). The Selling Stockholder Offered
Securities may be offered in amounts, at prices and on terms to be determined at
the time of sale and to be set forth in a Prospectus Statement.
The Debt Securities will rank equally with all other unsubordinated and
unsecured indebtedness of the Company. See "Description of Debt Securities."
The specific terms of the Company Offered Securities and the Selling
Stockholder Offered Securities (collectively, the "Offered Securities") in
respect of which this Prospectus is being delivered, such as, where applicable,
(i) in the case of Common Stock, the public offering price; (ii) in the case of
Preferred Stock, the specific title and stated value, number of shares or
fractional interests therein, and the dividend, liquidation, redemption,
conversion, voting and other rights and the initial public offering price; (iii)
in the case of Debt Securities, the specific designation, aggregate principal
amount, currency, denomination, maturity, priority, interest rate (which may be
variable or fixed), time of payment of interest, terms for optional redemption
or repayment or for sinking fund payments, terms for conversion into or exchange
for other Offered Securities or other securities of the Company, the designation
of the Trustee acting under the applicable Indenture and the initial public
offering price; and (iv) in the case of all Company Offered Securities, whether
such Offered Security will be offered separately or as a unit with other Offered
Securities, will be set forth in the accompanying Prospectus Supplement. The
Prospectus Supplement will also contain information, where applicable, about
certain United States Federal income tax considerations relating to, and any
listing on a securities exchange of, the Offered Securities covered by the
Prospectus Supplement.
The Offered Securities may be sold for public offering to underwriters
or dealers, which may be a group of underwriters represented by one or more
managing underwriters. In addition, the Offered Securities may be sold directly
by the Company or the Selling Stockholder or through agents designated from time
to time. See "Plan of Distribution." The names of any such agents, dealers or
managing underwriters, and of any underwriters, involved in the sale of the
Offered Securities in respect of which this Prospectus is being delivered and
the applicable agent's commission, dealer's purchase price or underwriter's
discount will be set forth in the Prospectus Supplement. The net proceeds to the
Company from such sale will also be set forth in the Prospectus Supplement. Any
underwriters, dealers or agents participating in the offering of Offered
Securities may be deemed "underwriters" within the meaning of the Securities Act
of 1933, as amended (the "Securities Act"). The Company will not receive any of
the proceeds from any sale of Selling Stockholder Offered Securities by the
Selling Stockholder. See "Selling Stockholder."
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THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF
OFFERED SECURITIES UNLESS ACCOMPANIED BY A PROSPECTUS
SUPPLEMENT. THE DEBT SECURITIES WILL BE UNSECURED
OBLIGATIONS OF THE COMPANY, WILL NOT BE OBLIGATIONS OF A
DEPOSITORY INSTITUTION AND WILL NOT BE INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATES 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 ______________,
1996.
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3125699.10
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No person is authorized in connection with any offering made hereby to
give any information or to make any representation not contained or incorporated
by reference in this Prospectus, and any information or representation
not contained or incorporated herein must not be relied upon as having been
authorized by the Company or the Underwriters. This Prospectus does not consti-
tute an offer to sell or the solicitation of an offer to buy any security
other than the securities covered by this Prospectus, nor does it constitute an
offer or solicitation by any person in any jurisdiction in which it is unlawful
for such person to make such an offer or solicitation. Neither the delivery of
this Prospectus at any time nor any sale made hereunder shall under any circum-
stance imply that the information herein is correct as of any date subsequent
to the date hereof.
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TABLE OF CONTENTS
Page
Incorporation of Certain Documents by Reference..........................3
Available Information....................................................3
The Company..............................................................4
Use of Proceeds..........................................................4
Consolidated Ratio of Earnings to Fixed Charges
and of Earnings to Combined Fixed Charges
and Preferred Stock Dividends.......................................4
Selling Stockholder......................................................5
Description of Capital Stock.............................................6
Description of Debt Securities..........................................24
Plan of Distribution....................................................34
Legal Opinions..........................................................35
Experts.................................................................35
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IN CONNECTION WITH ANY OFFERING OF SECURITIES HEREUNDER AT FIXED
PRICES, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE
OR MAINTAIN THE MARKET PRICE OF THE SHARES OF COMMON STOCK, PREFERRED STOCK
AND/OR DEBT SECURITIES OF THE COMPANY AT LEVELS ABOVE THOSE WHICH MIGHT
OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE
NEW YORK STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously or simultaneously filed
with the Securities and Exchange Commission (the "Commission") (File No. 1-4908)
are incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended January
27, 1996;
(b) The Company's Current Report on Form 8-K dated May 24, 1996 (filed June 5,
1996);
(c) The Company's Amendment No. 4 on Form 8-A/A dated June 3, 1996 to the
Company's Registration Statement on Form 8-A in respect of the Common Stock,
including without limitation the description of the Common Stock set forth
therein; and
(d) The consolidated financial statements of Marshalls of Roseville, Minn., Inc.
and the unaudited pro forma condensed consolidated financial statements of the
Company set forth in the Company's Amendment No. 1 on Form 8-K/A dated November
17, 1995 (filed January 31, 1996).
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
after the date of this Prospectus and prior to the termination of the offering
made hereby shall be incorporated by reference into this Prospectus and shall be
deemed to be a part of this Prospectus from the date of filing of such
documents. See "Available Information." Any statement contained in a document
incorporated by reference herein shall be deemed to be modified or superseded to
the extent that a statement contained in this Prospectus or in the accompanying
Prospectus Supplement, or in any other subsequently filed incorporated document,
modifies or supersedes such statement. The Company will provide, upon written or
oral request, without charge, to each person to whom a copy of this Prospectus
has been delivered, a copy of any or all of the documents which have been or may
be incorporated in this Prospectus by reference, other than certain exhibits to
such documents. Requests for such copies should be directed to: The TJX
Companies, Inc., 770 Cochituate Road, Framingham, Massachusetts 01701 (telephone
(508) 390-1000), Attention: Sherry Lang, Manager of Investor Relations.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Exchange Act, and, in accordance therewith, files periodic reports, proxy
materials and other information with the Commission. Such reports, proxy
materials and other information filed by the Company can be inspected and copied
at the public reference facilities maintained by the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the
Commission's regional offices at 7 World Trade Center, 13th Floor, New York, New
York 10048, and 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Copies of such material can be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. In addition, similar information concerning the Company can be
inspected at the NYSE, 20 Broad Street, New York, New York 10005.
This Prospectus constitutes a part of a Registration Statement on Form
S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") filed by the Company with the Commission under the Securities Act of
1933, as amended (the "Securities Act"), with respect to the securities offered
hereby. This Prospectus does not contain all the information included in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. Reference is made to such
Registration Statement and to the exhibits thereto for further information with
respect to the Company and the Offered Securities.
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THE COMPANY
The TJX Companies, Inc. is the largest off-price family apparel
retailer in North America. The Company operates T.J. Maxx stores, the recently
acquired Marshalls chain, and Winners Apparel Ltd., a Canadian off-price family
apparel chain. The Company is also developing HomeGoods, a U.S. off-price home
fashion chain, and T.K. Maxx, an off-price family apparel concept in the United
Kingdom. The Company also has operated the Chadwick's of Boston off-price
women's fashion catalog. The Company's mission is to consistently deliver value
to its customers by providing rapidly changing assortments of brand-name
merchandise at prices substantially below department and specialty store regular
prices. Net sales of the Company for the fiscal year ended January 27, 1996 were
$4.4 billion, including Marshalls sales since its acquisition by TJX in November
1995. The Company's combined T.J. Maxx and Marshalls division represents the
substantial majority of the Company's sales volume.
On May 24, 1996, the Company's subsidiary Chadwick's of Boston, Ltd.
filed with the Commission a Registration Statement (File No. 333-4427) related
to the sale by the Company in an underwritten public offering of up to 9,260,000
shares (or approximately 61%), excluding 1,389,000 shares (or approximately 9%)
subject to an underwriters' over-allotment option, of the common stock of
Chadwick's, which operates the Chadwick's of Boston fashion catalog.
USE OF PROCEEDS
Unless otherwise indicated in the Prospectus Supplement relating
thereto, the net proceeds from the sale of the Company Offered Securities by the
Company will be added to the Company's general funds and used for the repayment
of debt, the redemption or repurchase of Preferred Stock, or other general
corporate purposes. None of the proceeds from the sale of Selling Stockholder
Offered Securities by the Selling Stockholder will be received by the Company.
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES AND OF
EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following are the consolidated ratio of earnings to fixed charges
and the consolidated ratio of earnings to combined fixed charges and preferred
stock dividends of the Company for each of the periods indicated. The following
ratios reflect the Company's Hit or Miss division, which was sold on September
30, 1995, as a discontinued operation. On November 17, 1995 the Company acquired
Marshalls. The Company has included the results of Marshalls in its consolidated
results commencing November 18, 1995. Accordingly, the following ratios include
the historical results of Marshalls only from and after November 18, 1995. These
ratios should be considered in conjunction with the consolidated financial
statements, related notes and other financial information incorporated by
reference herein.
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Fiscal Year Ended
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Jan. 25, Jan. 30, Jan. 29, Jan. 28, Jan. 27,
1992 1993 1994 1995 1996
-------- -------- ------- ------- -------
Ratio of earnings to fixed
charges(1)............... 3.79x 4.04x 4.42x 2.92x 1.94x
Ratio of earnings to com-
bined fixed charges and
preferred stock
dividends(1)............. 3.79x 3.65x 3.69x 2.52x 1.70x
(1) For purposes of computing the ratio of earnings to fixed charges and the
ratio of earnings to combined fixed charges and preferred stock dividends,
"earnings" represent income from continuing operations, provision for
taxes, interest expense and the interest portion of rentals. "Fixed
charges" represents interest expense, capitalized interest, and a portion
of rentals, which is considered representative of the interest factor.
"Preferred stock dividends" represent the preferred stock dividend
requirements increased to an amount representing the pre-tax earnings that
would be required to cover such dividend requirements.
SELLING STOCKHOLDER
All of the shares of Common Stock (if any) issued upon conversion of
the shares of Series D Preferred Stock (the "Conversion Shares") being offered
hereby are being sold by Nashua Hollis CVS, Inc. (the "Selling Stockholder"), a
wholly owned subsidiary of Melville Corporation ("Melville"). As of June 3, 1996
based on the market price of the Common Stock on that date, the shares of Series
D Preferred Stock could have been converted into 1,349,528 shares of Common
Stock (subject to adjustment in the event of stock splits, reverse stock splits
and similar events), which constituted 1.82% of the shares of Common Stock
outstanding as of such date (including such Conversion Shares).
In connection with the acquisition of Marshalls, the Company issued to
Melville the shares of Series D Preferred Stock. Melville subsequently
transferred the shares to the Selling Stockholder. In addition to the Series D
Preferred Stock, the Company also issued to Melville 1,500,000 shares of Series
E Preferred Stock (which also were subsequently transferred to the Selling
Stockholder). The shares of Series E Preferred Stock are convertible into shares
of Common Stock ranging in number from 8,097,165 to 9,716,599 (subject to
adjustment in the event of stock splits, reverse stock splits and similar
events). Neither Melville nor the Selling Stockholder owns any other equity
securities of the Company.
Because the Selling Stockholder may offer all or some of the Conversion
Shares pursuant to the offering contemplated by this Prospectus, and because
there are currently no agreements, arrangements or understandings with respect
to the sale of any Conversion Shares that will be held by the Selling
Stockholder after the completion of this offering (except for certain
restrictions on transfer contained in the Standstill and Registration Rights
Agreement referred to below), no estimate can be given as to the number of
shares of Common Stock that will be held by the Selling Stockholder after
completion of this offering. See "Plan of Distribution."
The Company and Melville entered into an agreement dated as of November
17, 1995 (the "Standstill and Registration Rights Agreement"), a copy of which
is incorporated by reference as an exhibit to the Registration Statement of
which this Prospectus is a part, pursuant to which the Company agreed to
register the offer and sale of
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the Conversion Shares held by the Selling Stockholder under the Securities Act,
and the Selling Stockholder and the Company agreed to indemnify each other
against certain liabilities, including liabilities under the Securities Act in
connection with the sale of the shares pursuant to a registered public offering
contemplated by the Standstill and Registration Rights Agreement. Pursuant to
the Standstill and Registration Rights Agreement, the Selling Stockholder is
required to pay the underwriting discounts and commissions and expenses of its
legal counsel and accountants associated with the offering, and the Company is
generally required to pay all of the other expenses directly associated with the
offering, including, without limitation, the cost of registering the shares
offered hereby, including applicable registration and filing fees, printing
expenses and applicable expenses for legal counsel and accountants incurred by
the Company.
DESCRIPTION OF CAPITAL STOCK
The following summary description of the Company's capital stock does
not purport to be complete and is subject to, and qualified in its entirety by
reference to, the Restated Certificate of Incorporation of the Company, as
amended (the "Certificate"), the respective Certificates of Designation (each, a
"Certificate of Designation") with respect to each series of Preferred Stock
described herein and the By-Laws of the Company (the "By-Laws"), copies of which
are incorporated by reference as exhibits to the Registration Statement relating
to the offering herein.
Authorized Capital Stock
The Company's authorized capital stock consists of 155 million shares
of capital stock, of which 150 million shares are Common Stock, $1.00 par value
per share, and 5 million shares are Preferred Stock, $1.00 par value per share.
The Certificate authorizes the issuance of shares of Preferred Stock from time
to time in one or more series not exceeding the aggregate number of shares of
Preferred Stock authorized by the Certificate, without stockholder approval,
with such voting powers, designations, preferences and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions thereof, as are set forth in resolutions adopted by the Company's
Board of Directors. Thus, without stockholder approval, the Company could
authorize the issuance of Preferred Stock with voting, conversion and other
rights that could dilute the voting power and other rights of holders of the
Common Stock and, subject to any limiting terms thereof, other series of
Preferred Stock. The Company may from time to time amend the Certificate to
increase the number of authorized shares of Common Stock or Preferred Stock in
the manner provided by the Certificate and the General Corporation Law of the
State of Delaware.
There were outstanding as of May 24, 1996 210,100 shares of New Series
A Cumulative Convertible Preferred Stock ("Series A Preferred Stock"), 1,650,000
shares of $3.125 Series C Cumulative Convertible Preferred Stock ("Series C
Preferred Stock"), 250,000 shares of Series D Cumulative Convertible Preferred
Stock ("Series D Preferred Stock") and 1,500,000 shares of Series E Cumulative
Convertible Preferred Stock ("Series E Preferred Stock") of the Company. The
Company has given notice to the holders of the Series A Preferred Stock that it
intends to redeem all outstanding shares of Series A Preferred Stock on June 24,
1996.
Common Stock
Subject to the rights of holders of Preferred Stock, holders of Common
Stock are entitled to receive such dividends as may from time to time be
declared by the Board of Directors of the Company out of such funds legally
available for declaration of dividends. Holders of Common Stock are entitled to
one vote per share on every question submitted to them at a meeting of
stockholders or otherwise. In the event of a liquidation, dissolution or winding
up and distribution of the assets of the Company, after paying or setting aside
for the holders of Preferred Stock the full preferential amounts to which they
are entitled, and subject to any rights of any series of Preferred Stock to
participate pro rata with the Common Stock with respect to distributions, the
holders of Common Stock will be entitled to receive pro rata all of the
remaining assets of the Company available for distribution to stockholders.
There are no pre-emptive rights for holders of Common Stock. The issued and
outstanding shares of Common Stock are fully paid and
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nonassessable. Shares of Common Stock are not convertible into shares of any
other class of capital stock of the
Company.
Preferred Stock
The following description of certain terms of the Preferred Stock sets
forth certain general terms and provisions of the Preferred Stock to which a
Prospectus Supplement may relate. Specific terms of any series of Preferred
Stock offered by a Prospectus Supplement will be described in the Prospectus
Supplement relating to such series of Preferred Stock. The description set forth
below does not purport to be complete and is subject to, and qualified in its
entirety by reference to, the Certificate and the Certificate of Designations
(the "Designation") establishing a particular series of Preferred Stock , which
will be in the form filed as an exhibit to, or incorporated by reference in, the
Registration Statement of which this Prospectus is a part at or prior to the
time of issuance of such series of Preferred Stock.
General
The Preferred Stock will have the dividend, liquidation, redemption,
conversion, and voting rights set forth below unless otherwise provided in the
Prospectus Supplement relating to a particular series of Preferred Stock.
Reference is made to the Prospectus Supplement relating to the particular series
of the Preferred Stock offered thereby for specific terms, including (i) the
title and liquidation preference per share of such Preferred Stock and the
number of shares offered; (ii) the price at which such Preferred Stock will be
issued; (iii) the dividend rate (or method of calculation), the dates on which
dividends shall be payable and the dates from which dividends shall commence to
accumulate; (iv) any redemption or sinking fund provisions of such Preferred
Stock; (v) any conversion or exchange provisions of such Preferred Stock; (vi)
the voting rights, if any, of such Preferred Stock; (vii) whether such Preferred
Stock will be listed on a national securities exchange; and (viii) any
additional dividend, liquidation, redemption, sinking fund and other rights,
preferences, privileges, limitations, and restrictions of such Preferred Stock.
The Preferred Stock will, when issued, be fully paid and nonassessable. Payment
of dividends on any series of Preferred Stock may be restricted by loan
agreements, indentures or other transactions entered into by the Company. The
accompanying Prospectus Supplement describes any material contractual
restrictions on dividend payments. The foregoing and following description is
not intended to be an exclusive list of the terms that may be applicable to any
Preferred Stock offered hereby and shall not limit in any respect the ability of
the Company to issue Preferred Stock with terms different from or in addition to
those described above or elsewhere in this Prospectus provided that such terms
are not inconsistent with this Prospectus.
Dividend Rights
The Preferred Stock will be preferred over the Common Stock as to
payment of dividends. Each series of Preferred Stock may rank junior to, senior
to, or on a parity with any other series of Preferred Stock with respect to the
payment of dividends. Holders of shares of each series of Preferred Stock are
entitled to receive, when and as declared by the Board of Directors of the
Company out of assets of the Company legally available for payment, dividends
(in cash, shares of Common Stock or Preferred Stock, or otherwise) at the rate
and on the date or dates set forth in the Prospectus Supplement. Each dividend
is payable to holders of record as they appear on the stock register of the
Company on a record date, not more than 60 nor less than 10 days before the
payment date, fixed by the Board of Directors of the Company. Dividends payable
for each full dividend period are computed by annualizing the dividend rate and
dividing by the number of dividend periods in a year. Dividends payable for any
period greater or less than a full dividend period are computed on the basis of
a 360-day year consisting of twelve 30-day months. Different series of Preferred
Stock may be entitled to dividends at different dividend rates or based on
different methods of determination. The Preferred Stock is not entitled to any
dividend, whether payable in cash, property or stock, in excess of full accrued
dividends. No interest is payable in respect of any accrued and unpaid
dividends.
Dividends on any series of Preferred Stock may be cumulative or
noncumulative, as provided in the Prospectus Supplement relating thereto. If the
Board of Directors fails to declare a dividend payable on a dividend
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payment date on any series of Preferred Stock for which dividends are
noncumulative, then the right to receive a dividend in respect of the dividend
period ending on such dividend payment date will be lost, and the Company shall
have no obligation to pay the dividend accrued for that period, whether or not
dividends are declared for any future period. With respect to each series of
Preferred Stock, the dividends on each share of such series with respect to
which dividends are cumulative shall be cumulative from the date of issue of
such share unless some other date is set forth in the Prospectus Supplement
relating to any such series.
Unless full dividends (including, in the case of cumulative Preferred
Stock, accumulations, if any, in respect of prior dividend payment periods) on
all outstanding shares of each series of Preferred Stock ranking senior to a
particular series of Preferred Stock have been paid or declared and set aside
for payment for all the then-current dividend payment period (and, if such other
Preferred Stock is cumulative, all other dividend payment periods terminating on
or before the date of payment of such dividend), no dividend may be declared on
shares of such series of Preferred Stock (other than a dividend paid in stock
ranking junior to any series of Preferred Stock ranking senior to such series of
Preferred Stock as to dividends), nor may shares of such series of Preferred
Stock be redeemed or purchased by the Company (other than a purchase or
redemption made by issue or delivery of stock ranking junior to any Series of
Preferred Stock ranking senior to such series of Preferred Stock as to
dividends, or upon liquidation, dissolution or winding up). Unless full
dividends (including, in the case of cumulative Preferred Stock, accumulations,
if any, in respect of prior dividend payment periods) on all outstanding shares
of such series of Preferred Stock have been paid or declared and set aside for
payment for the then-current dividend payment period (and, if such Preferred
Stock is cumulative, all previous dividend payment periods), no dividend (other
than a dividend paid in stock ranking junior to such series of Preferred Stock
as to dividends) may be declared on any stock ranking junior to such series of
Preferred Stock as to dividends, nor may any stock ranking junior to such series
of Preferred Stock as to dividends or upon liquidation, dissolution or winding
up be redeemed or purchased by the Company (other than a purchase or redemption
made by issue or delivery of stock ranking junior to such series of Preferred
Stock as to dividends or upon liquidation, dissolution or winding up); provided
that, unless prohibited by the terms of any other outstanding series of
Preferred Stock, any monies theretofore deposited in any sinking fund with
respect to any Preferred Stock in compliance with the terms thereof may
thereafter be applied in accordance with the terms thereof. If dividends on such
series of Preferred Stock and on any other series of Preferred Stock ranking on
a parity as to dividends with such series of Preferred Stock are in arrears, any
dividend payment on account of such arrearage must be made ratably upon all
outstanding shares of such series of Preferred Stock and such other series of
Preferred Stock in proportion to the respective amounts of accrued dividends.
Rights Upon Liquidation
In the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Company not including mergers, consolidations and sale of
all or substantially all assets, before any payment or distribution of assets
(whether from capital or surplus) is made to holders of any series of Preferred
Stock upon liquidation, dissolution or winding up, the holders of each class or
series of Preferred Stock ranking senior to such series of Preferred Stock upon
liquidation, dissolution or winding up shall be entitled to receive full payment
of their liquidation preferences. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company, before any payment or
distribution of assets (whether from capital or surplus) is made to holders of
Common Stock or any other stock of the Company ranking junior to the shares of
such series of Preferred Stock upon liquidation, dissolution or winding up, the
holders of such series of Preferred Stock shall receive a liquidation preference
per share in the amount set forth in the Prospectus Supplement and shall be
entitled to receive all accrued and unpaid dividends through the date of
distribution, and the holders of any class or series of Preferred Stock ranking
on a parity with such series of Preferred Stock as to liquidation, dissolution
or winding up shall be entitled to receive the full respective liquidation
preferences (including any premium) to which they are entitled and shall receive
all accrued and unpaid dividends with respect to their respective shares through
and including the date of distribution. If, upon such a voluntary or involuntary
liquidation, dissolution or winding up of the Company, the assets of the Company
are insufficient to pay in full the amounts described above as payable with
respect to such series of Preferred Stock and any class or series of Preferred
Stock of the Company ranking on a parity with such series of Preferred Stock as
to liquidation, dissolution or winding up, the holders of such series of
Preferred Stock and of such other class or series of Preferred
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Stock will share ratably in any such distribution of assets of the Company first
in proportion to their respective liquidation preferences until such preferences
are paid in full, and then in proportion to their respective amounts of accrued
but unpaid dividends. After payment of any such liquidating preference and
accrued dividends, the shares of such series of Preferred Stock will not be
entitled to any further participation in any distribution of assets by the
Company. Neither the sale of all or substantially all the assets of the Company,
nor the merger or consolidation of the Company into or with any other
corporation, will be deemed to be a liquidation, dissolution or winding up of
the Company.
Redemption
A series of the Preferred stock may be redeemable, in whole or in part,
at the option of the Company, and may be subject to mandatory redemption
pursuant to a sinking fund, in each case upon terms, at the times and at the
redemption prices set forth in the Prospectus Supplement relating to such
series.
The Prospectus Supplement relating to a series of Preferred Stock that
is subject to mandatory redemption will specify the number of shares of such
series of Preferred Stock that will be redeemed by the Company in each year
commencing after a date to be specified, at a redemption price per share to be
specified, together with an amount equal to any accrued and unpaid dividends
thereon to the date of redemption. The redemption price may be payable in cash,
capital stock or in cash received from the net proceeds of the issuance of
capital stock of the Company, as specified in the Prospectus Supplement relating
to such series of Preferred Stock. If the redemption price is payable only from
the net proceeds of the issuance of capital stock of the Company, the terms of
such series may provide that, if no such capital stock shall have been issued or
to the extent the net proceeds from any issuances are insufficient to pay in
full the aggregate redemption price then due, the applicable shares of such
series of Preferred Stock shall automatically and mandatorily be converted into
shares of the applicable capital stock of the Company pursuant to conversion
provisions specified in the Prospectus Supplement relating to such series of
Preferred Stock.
If fewer than all the outstanding shares of any series of the Preferred
Stock are to be redeemed, whether by mandatory or optional redemption, the
selection of the shares to be redeemed shall be determined by lot or pro rata as
may be determined by the Board of Directors or a duly authorized committee
thereof, or by any other method that may be determined by the Board of Directors
or such committee to be equitable. From and after the date of redemption (unless
default shall be made by the Company in providing for the payment of the
redemption price), dividends shall cease to accrue on the shares of Preferred
Stock called for redemption and all rights of the holders thereof (except the
right to receive the redemption price) shall cease.
In the event that full dividends, including accumulations in the case
of cumulative Preferred Stock, on any series of Preferred Stock have not been
paid, such series of Preferred Stock may not be redeemed in part and the Company
may not purchase or acquire any shares of such series of Preferred Stock
otherwise than pursuant to a purchase or exchange offer made on the same terms
to all holders of such series of Preferred Stock.
Conversion
The Prospectus Supplement for any series of Preferred Stock will state
the terms, if any, on which shares of that series are convertible into shares of
Common Stock or another series of Preferred Stock. As described under
"Redemption" above, under certain circumstances, the Preferred Stock may be
mandatorily converted into Common Stock or another series of Preferred Stock.
The Preferred Stock will have no preemptive rights.
Voting Rights
All shares of any series of Preferred Stock shall have the voting
rights (if any) set forth in the Prospectus Supplement relating to any such
series. Except as indicated below or as expressly required by applicable law,
holders of Preferred Stock have no voting rights.
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If the equivalent of six full quarterly dividends payable on any series
of Preferred Stock are in arrears, the maximum authorized number of directors of
the Company will be increased by two and the holders of such series of Preferred
Stock, voting separately as a class with the holders of shares of any other
series of Preferred Stock ranking on a parity with such series of Preferred
Stock and upon which like voting rights have been conferred and are exercisable,
will be entitled to elect two directors for successive one-year terms until all
dividends in arrears on such series of Preferred Stock have been paid or
declared and set apart for payment. Upon payment or declaration and setting
apart of funds for payment of all such dividends in arrears, the term of office
of each director elected will immediately terminate and the number of directors
constituting the entire Board of Directors of the Company will be reduced by the
number of directors elected by the holders of such series of Preferred Stock and
any other series of Preferred Stock ranking on a parity with such series of
Preferred Stock as discussed above.
The Company may not, without the affirmative vote or consent of
two-thirds of the votes of the holders of such series of Preferred Stock and
each other series of Preferred Stock ranking on a parity with such series of
Preferred Stock and upon which like voting rights have been conferred (voting
together as a single class), create, authorize or issue, or reclassify any
authorized stock of the Company into, or create, authorize or issue any
obligation or security convertible into or evidencing a right to purchase, any
shares of any class of stock of the Company ranking prior to such series of
Preferred Stock or any other series of Preferred Stock which ranks on a parity
with such series of Preferred Stock as to dividends or upon liquidation,
dissolution or winding up. The Company may not, without the affirmative vote or
consent of two-thirds of the votes of the holders of the outstanding shares of
such series of Preferred Stock and each other series of Preferred Stock of the
Company similarly affected, if any, voting together as a single class, amend,
alter or repeal any provision of the Certificate which would materially and
adversely affect the preferences, rights, powers or privileges, qualification,
limitations and restrictions of such series of Preferred Stock and any such
other series of Preferred Stock; provided, however, that the creation, issuance
or increase in the amount of authorized shares of any other series of Preferred
Stock ranking on a parity with or junior to such series of Preferred Stock with
respect to the payment of dividends or the distribution of assets upon
liquidation, dissolution or winding up of the affairs of the Company will not be
deemed to materially and adversely affect such rights and preferences,
privileges or voting powers.
No Other Rights
The shares of a series of Preferred Stock will not have any
preferences, voting powers or relative, participating, optional or other special
rights except as set forth above or in the applicable Prospectus Supplement, the
Certificate or the applicable Certificate of Designation or as otherwise
required by laws.
Transfer Agent and Registrar
The transfer agent and registrar for each series of Preferred Stock
will be designated in the applicable Prospectus Supplement.
Series A Preferred Stock
The Company has given notice to the holders of the Series A Preferred
Stock that it intends to redeem all outstanding shares of Series A Preferred
Stock on June 24, 1996.
Ranking
The Series A Preferred Stock ranks, with respect to dividends or upon
liquidation, dissolution or winding up, (i) on a parity with the Series C
Preferred Stock, and other Preferred Stock permitted pursuant to the terms of
the Series A Preferred Stock and ranking with respect to dividends or upon
liquidation, dissolution or winding up on a parity with the Series A Preferred
Stock, and (ii) prior to all other capital stock of the Company. Without the
consent of the holders of two-thirds of the outstanding shares of Series A
Preferred Stock, the Company may not authorize, create or increase the
authorized amount of any class or series of stock that ranks prior to or, except
for
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the Series C Preferred Stock and a limited amount of Preferred Stock ranking as
to dividends or upon liquidation, dissolution or winding up on a parity with the
Series C Preferred Stock, on a parity with the Series A Preferred Stock or,
except for non-participating Preferred Stock and participating Preferred Stock
issued pursuant to certain stockholder rights plans, junior to the Series C
Preferred Stock with respect to the payment of dividends or upon liquidation,
dissolution or winding up.
Dividends
Holders of shares of the Series A Preferred Stock are entitled to
cumulative dividends payable quarterly at an annual rate of $8.00 per share.
With limited exceptions, holders of Series A Preferred Stock are entitled to
Full Cumulative Dividends before dividends may be declared on junior stock
(including the Series E Preferred Stock) and before such junior stock may be
redeemed or purchased by the Company.
Liquidation Rights
In the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Company (not including certain mergers, consolidations or
sales of all or substantially all assets), the holders of Series A Preferred
Stock are entitled to receive a liquidation preference equal to the then
applicable redemption price, plus accrued and unpaid dividends to the redemption
date, prior to any distribution on junior stock, including the Series E
Preferred Stock.
Redemption
Commencing April 1, 1995, the Series A Preferred Stock may be redeemed
by the Company at any time at a redemption price of $104.80 per share, declining
by $0.80 per share on April 1 of each year thereafter to $100 per share on April
1, 2001, plus accrued and unpaid dividends to the redemption date. Upon a Change
of Control Event (generally defined as voluntary liquidations, certain mergers
into a subsidiary, a sale of all or substantially all the Company's assets, or
certain actions affecting the public market for the Company's stock or its
status as a public corporation), a holder of Series A Preferred Stock may at its
option require redemption of its shares at a cash per share price equal to the
greater of (i) the then redemption price or (ii) the product of the higher of
the then market price of Common Stock or the price per share of Common Stock
received by any other stockholder in the Change of Control Event or related
transactions times the number of shares of Common Stock then issuable upon
conversion of a share of Series A Preferred Stock.
Voting Rights
Holders of Series A Preferred Stock will be entitled as a separate
class to elect two directors in the event of defaults in the payment of
dividends aggregating $8.00 per share and are entitled to a separate class vote
on matters which would adversely affect the rights and preferences of the Series
A Preferred Stock. The Company may not, without the affirmative vote or consent
of the holders of at least two-thirds of the then outstanding Series A Preferred
Stock, voting as a separate class, (i) authorize, create or issue, or increase
the authorized or issued amount of, any class or series of stock ranking prior
to or on parity with the Series A Preferred Stock as to dividends or upon
liquidation, dissolution or winding up, except for Preferred Stock ranking on a
parity with the Series A Preferred Stock having an aggregate liquidation
preference of not more than $100 million; (ii) authorize, create or issue, or
increase the authorized amount of, any participating Preferred Stock; (iii)
create, authorize or issue any class or series of common stock other than the
Common Stock; (iv) amend the Certificate or By-laws if such amendment would
adversely affect the powers, rights, privileges or preferences of the Series A
Preferred Stock; (v) increase the number of shares of Series A Preferred Stock
authorized for issuance; (vi) create, authorize or issue any class or series of
capital stock or any security exercisable for or convertible into any capital
stock except as permitted under clauses (i), (ii) or (iii) above; (vii) amend
the Certificate of Designations relating to the Series A Preferred Stock or
(viii) issue any additional shares of Series A Preferred Stock.
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Conversion
Shares of the Series A Preferred Stock are convertible at any time at
the option of the holder thereof into shares of Common Stock of the Company at a
conversion price of $21.00 per share of Common Stock, subject to adjustment in
certain events including subdivisions, splits or combinations of Common Stock,
stock dividends, extraordinary dividends or distributions on the Common Stock
and issuances of Common Stock and related securities at less than their current
Market Price. Upon the occurrence of a Control Adjustment Event (generally
defined to be the acquisition by any person or group of beneficial ownership of
at least 51% of the Common Stock, incumbent directors ceasing during any year to
constitute a majority of the Board of Directors or involuntary liquidation of
the Company), the conversion price is subject to adjustment downward to the
greater of $3.50 and the then market price of the Common Stock. Holders of
shares of Series A Preferred Stock have a similar adjustment election in the
event of the Registrant's failure to make payment upon any mandatory redemption.
Any share of Series A Preferred Stock outstanding on April 15, 2007 is entitled
to a conversion price adjustment to the higher of $7.00 and the then market
price of the Common Stock.
Eligibility for Sale; Registration Rights, Etc.
The holders of the Series A Preferred Stock have agreed not to transfer
any shares of Series A Preferred Stock, or Common Stock issuable upon conversion
thereof, except (i) pursuant to an effective registration under the Securities
Act, (ii) in accordance with Rule 144 or Rule 144A under the Securities Act, or
(iii) in a transaction otherwise not requiring registration under the Securities
Act. In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned his or her shares for at
least two years, including an "affiliate," as that term is defined below, is
entitled to sell, within any three-month period, that number of shares that does
not exceed the greater of 1% of the then outstanding shares or the average
weekly trading volume of the then outstanding shares during the four calendar
weeks preceding each such sale. A person (or persons whose shares are
aggregated) who is not deemed an "affiliate" of the Company, and who has
beneficially owned shares for at least three years, is entitled to sell such
shares under Rule 144 (k) without regard to any volume or other restriction
limitations described above. As defined in Rule 144, an "affiliate" of an issuer
is a person that directly or indirectly through the use of one or more
intermediaries, controls, or is controlled by, or is under common control with,
such issuer. The holders of the Series A Preferred Stock may qualify for use of
Rule 144(k).
Under their respective share purchase agreements, holders of shares of
Series A Preferred Stock are entitled to certain rights regarding registration
of their shares under the Securities Act. Such holders are entitled to include,
at the Company's expense, their shares of Series A Preferred Stock, or any
shares of any Common Stock issued upon conversion thereof, in certain
registrations under the Securities Act by the Company prior to April 15, 1997 of
offerings of Convertible Preferred Stock or Common Stock or rights thereto,
provided that no such shares need be included in a registration by the Company
of an underwritten offering to the extent that the underwriters determine that
such inclusion would jeopardize the successful sale of the shares to be sold by
the underwriters. The holders of the Series A Preferred Stock have not exercised
any such rights with respect to the offering made hereby. At any time prior to
April 15, 1997 the holders of the Series A Preferred Stock may demand the
registration under the Securities Act, at the Company's expense, of the public
sale of a portion or all of such shares.
The share purchase agreements relating to the Series A Preferred Stock
also contain various undertakings by the Company, including limitations on
dividends and repurchases of the Company's stock, changes in the primary
business engaged in by the Company and its subsidiaries and certain restrictions
on dividends.
Definitions
Capitalized terms not otherwise defined have the meanings set forth in
"Definitions" following the description of Series E Preferred Stock.
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Series C Preferred Stock
Ranking
The Series C Preferred Stock ranks senior to the Common Stock, the
Series D Preferred Stock and the Series E Preferred Stock, and on a parity with
the Series A Preferred Stock, with respect to the payment of dividends and upon
liquidation, dissolution or winding up. The Series C Preferred Stock shall so
rank on a parity with the Series D Preferred Stock and the Series E Preferred
Stock at such times as there shall be no shares of Series A Preferred Stock
outstanding. The Company may not, without the consent of two-thirds of the votes
of the holders of the outstanding shares of Series C Preferred Stock and all
other outstanding shares of Preferred Stock ranking on a parity with the Series
C Preferred Stock either as to dividends or upon liquidation, dissolution or
winding up, voting together as a single class, create, authorize or issue, or
reclassify any authorized stock of the Company into, or create, authorize or
issue any obligation or security convertible into or evidencing a right to
purchase, any shares of any class of stock of the Company ranking prior to the
Series C Preferred Stock or ranking prior to any other series of Preferred Stock
which ranks on a parity with the Series C Preferred Stock. However, the Company
may create additional classes of stock or issue series of Preferred Stock
ranking on a parity with the Series C Preferred Stock with respect to the
payment of dividends or upon liquidation, dissolution and winding up without the
consent of any holder of Series C Preferred Stock.
Dividends
Holders of shares of the Series C Preferred Stock are entitled to
cumulative dividends payable quarterly at an annual rate of $3.125 per share.
With limited exceptions, holders of Series C Preferred Stock are entitled to
Full Cumulative Dividends before dividends may be declared on junior stock
(including Series E Preferred Stock so long as the Series A Preferred Stock is
outstanding) and before such junior stock may be redeemed or purchased by the
Company.
Liquidation Rights
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company (not including mergers, consolidations or sales of all
or substantially all assets), holders of Series C Preferred Stock are entitled
to receive a liquidation preference of $50 per share plus accrued dividends,
prior to any distribution on junior stock (including the Series E Preferred
Stock so long as the Series A Preferred Stock is outstanding).
Optional Redemption
Commencing September 1, 1995, the Series C Preferred Stock is redeemable
at the option of the Company at any time at a redemption price per share
(expressed as a percentage of the $50 liquidation preference thereof), of
104.375%, declining annually to 100% in 2002, plus accrued dividends.
Voting Rights
Except as indicated below or as expressly required by applicable law,
the holders of the Series C Preferred Stock have no voting rights.
If the equivalent of six full quarterly dividends payable on the Series
C Preferred Stock are in arrears, the holders of Series C Preferred Stock,
voting separately as a class with the holders of shares of any other series of
Preferred Stock which ranks on a parity with the Series C Preferred Stock and
has been granted like voting rights which are then exercisable (which does not
include the Series A Preferred Stock, which has separate voting rights), will be
entitled to elect two directors for successive one-year terms until all
dividends in arrears on the Series C Preferred Stock have been paid or declared
and set apart for payment.
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The consent of two-thirds of the votes of the holders of the Series C
Preferred Stock and each other series of Preferred Stock which ranks on a parity
with the Series C Preferred Stock and has been granted like voting rights
(voting together as a single class), is required for the Company to create,
authorize or issue, or reclassify any authorized stock of the Company into, or
create, authorize or issue any obligation or security convertible into or
evidencing a right to purchase, any shares of any class of stock of the Company
ranking prior to the Series C Preferred Stock or any other series of Preferred
Stock which ranks on a parity with the Series C Preferred Stock. The Company may
not, without the affirmative vote or consent of two-thirds of the votes of the
holders of the outstanding shares of the Series C Preferred Stock and each other
series of Preferred Stock of the Company similarly affected, voting together as
a single class, amend, alter or repeal any provision of the Certificate which
would materially and adversely affect the preferences, rights, powers or
privileges, qualification, limitations and restrictions of the Series C
Preferred Stock and any such other series of Preferred Stock. The creation,
issuance or increase in the amount of authorized shares of any other series of
Preferred Stock ranking on a parity with or junior to the Series C Preferred
Stock with respect to the payment of dividends or the distribution of assets
upon liquidation, dissolution or winding up of the affairs of the Company will
not be deemed to have such material and adverse effect.
Conversion
Shares of the Series C Preferred Stock are convertible at any time at
the option of the holder thereof into a number of shares of Common Stock equal
to the aggregate liquidation preference of the shares of Series C Stock
surrendered for conversion divided by the conversion price of $25.9375 per share
of Common Stock, subject to adjustment as described below.
The initial conversion price of $25.9375 is subject to adjustment (under
formulae set forth in the Certificate of Designations) in certain events,
including certain subdivisions and combinations of the Common Stock, the
issuance of Common Stock as a dividend or distribution on Common Stock,
extraordinary dividends or distributions on Common Stock and payment in respect
of a tender or exchange offer by the Company or any subsidiary of the Company
for the Common Stock to the extent that the cash and value of any other
consideration included in such payment per share of Common Stock exceeds the
Current Market Price per share of Common Stock on the Trading Day next
succeeding the date of payment.
If any transaction shall occur, including without limitation (i) any
recapitalization or reclassification of shares of Common Stock (other than a
change in par value, or from par value to no par value, or from no par value to
par value, or as a result of a subdivision or combination of the Common Stock),
(ii) any consolidation or merger of the Company with or into another person or
any merger of another person into the Company (other than a merger that does not
result in a reclassification, conversion, exchange or cancellation of Common
Stock), (iii) any sale or transfer of all or substantially all of the assets of
the Company, or (iv) any compulsory share exchange, pursuant to any of which
holders of Common Stock shall be entitled to receive other securities, cash or
other property, then appropriate provision shall be made so that the holder of
each share of Series C Preferred Stock then outstanding shall have the right
thereafter to convert such share only into (x) in the case of any such
transaction that does not constitute a Common Stock Fundamental Change (as
defined below) and subject to funds being legally available for such purpose
under applicable law at the time of such conversion, the kind and amount of the
securities, cash or other property that would have been receivable upon such
recapitalization, reclassification, consolidation, merger, sale, transfer or
share exchange by a holder of the number of shares of Common Stock issuable upon
conversion of such share of Series C Preferred Stock immediately prior to such
recapitalization, reclassification, consolidation, merger, sale, transfer or
share exchange, after giving effect, in the case of any Non-Stock Fundamental
Change (as defined below), to any adjustment in the conversion price in
accordance with clause (i) of the following paragraph, and (y) in the case of
any such transaction that constitutes a Common Stock Fundamental Change, common
stock of the kind received by holders of Common Stock as a result of such Common
Stock Fundamental Change in an amount determined in accordance with clause (ii)
of the following paragraph.
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Notwithstanding any other provision in the preceding paragraphs to the
contrary, if any Fundamental Change (as defined below) occurs, then the
conversion price in effect will be adjusted immediately after such Fundamental
Change as follows:
(i) in the case of a Non-Stock Fundamental Change, the
conversion price of the shares of Series C Preferred Stock immediately
following such Non-Stock Fundamental Change shall be the lower of (A)
the conversion price in effect immediately prior to such Non-Stock
Fundamental Change, but after giving effect to any other prior
adjustments effected pursuant to the preceding paragraphs, and (B) the
product of (1) the greater of the Applicable Price (as defined below)
and the then applicable Reference Market Price (as defined below) and
(2) a fraction, the numerator of which is $50 and the denominator of
which is (x) the amount of the redemption price for one share of Series
C Preferred Stock if the redemption date were the date of such Non-Stock
Fundamental Change, plus (y) any then accrued and then-accumulated and
unpaid dividends on Series C Preferred Stock; and
(ii) in the case of a Common Stock Fundamental Change, the
conversion price of the shares of Series C Preferred Stock immediately
following such Common Stock Fundamental Change shall be the conversion
price in effect immediately prior to such Common Stock Fundamental
Change, but after giving effect to any other prior adjustments effected
pursuant to the preceding paragraphs, multiplied by a fraction, the
numerator of which is the Purchaser Stock Price (as defined below) and
the denominator of which is the Applicable Price; provided, however,
that in the event of a Common Stock Fundamental Change in which (A) 100%
of the value of the consideration received by a holder of Common Stock
is common stock of the successor, acquiror, or other third party (and
cash, if any, paid with respect to any fractional interests in such
common stock resulting from such Common Stock Fundamental Change) and
(B) all of the Common Stock of the Company shall have been exchanged
for, converted into, or acquired for, common stock of the successor,
acquiror or other third party (and any cash with respect to fractional
interests), the conversion price of the shares of Series C Preferred
Stock immediately following such Common Stock Fundamental Change shall
be the conversion price in effect immediately prior to such Common Stock
Fundamental Change multiplied by a fraction, the numerator of which is
one (1) and the denominator of which is the number of shares of common
stock of the successor, acquiror, or other third party received by a
holder of one share of Common Stock as a result of such Common Stock
Fundamental Change.
Depending upon whether a Fundamental Change is a Non-Stock Fundamental
Change or a Common Stock Fundamental Change, a holder may receive significantly
different consideration upon conversion. In the event of a Non-Stock Fundamental
Change, the holder has the right to convert shares of Series C Preferred Stock
into the kind and amount of the shares of stock and other securities or property
or assets (including cash), except as otherwise provided above, as is determined
by the number of shares of Common Stock receivable upon conversion at the
conversion price as adjusted in accordance with clause (i) of the preceding
paragraph. However, in the event of a Common Stock Fundamental Change in which
less than 100% of the value of the consideration received by a holder of Common
Stock is common stock of the successor, acquiror or other third party, a holder
of a share of Series C Preferred Stock who converts such share following the
Common Stock Fundamental Change will receive consideration in the form of such
common stock only, whereas a holder who converted such share prior to the Common
Stock Fundamental Change would have received consideration in the form of such
common stock as well as any other securities or assets (which may include cash)
issuable upon conversion of such share of Series C Preferred Stock immediately
prior to such Common Stock Fundamental Change.
Definitions
Capitalized terms not otherwise defined have the meanings set forth in
"Definitions" following the description of Series E Preferred Stock.
The following terms shall have the meanings indicated in respect of the
Series C Preferred Stock:
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"Applicable Price" shall mean (i) in the event of a Non-Stock
Fundamental Change in which the holders of the Common Stock receive only cash,
the amount of cash received by a holder of one share of Common Stock and (ii) in
the event of any other Non-Stock Fundamental Change or any Common Stock
Fundamental Change, the average of the reported last sale price for one share of
the Common Stock (determined as provided in the Certificate of Designations)
during the 10 Trading Days immediately prior to the Record Date for the
determination of the holders of Common Stock entitled to receive cash,
securities, property or other assets in connection with such Non-Stock
Fundamental Change or Common Stock Fundamental Change or, if there is no such
Record Date, prior to the date upon which the holders of the Common Stock shall
have the right to receive such cash, securities, property or other assets.
"Common Stock Fundamental Change" shall mean any Fundamental Change in
which more than 50% of the value (as determined in good faith by the Board of
Directors of the Company) of the consideration received by holders of Common
Stock consists of common stock that, for the 10 Trading Days immediately prior
to such Fundamental Change, has been admitted for listing or admitted for
listing subject to notice of issuance on a national securities exchange or
quoted on the National Market System of the National Association of Securities
Dealers, Inc. Automated Quotations System; provided, however, that a Fundamental
Change shall not be a Common Stock Fundamental Change unless either (i) the
Company continues to exist after the occurrence of such Fundamental Change and
the outstanding shares of Series C Preferred Stock continue to exist as
outstanding shares of Series C Preferred Stock, or (ii) not later than the
occurrence of such Fundamental Change, the outstanding shares of Series C
Preferred Stock are converted into or exchanged for shares of convertible
preferred stock of a corporation succeeding to the business of the Company,
which convertible preferred stock has powers, preferences and relative,
participating, optional or other rights, and qualifications, limitations and
restrictions substantially similar to those of the Series C Preferred Stock.
"Fair Market Value" shall mean the amount which a willing buyer would
pay a willing seller in an arm's length transaction.
"Fundamental Change" shall mean the occurrence of any transaction or
event or series of transactions or events pursuant to which all or substantially
all of the Common Stock of the Company shall be exchanged for, converted into,
acquired for or shall constitute solely the right to receive cash, securities,
property or other assets (whether by means of an exchange offer, liquidation,
tender offer, consolidation, merger, combination, reclassification,
recapitalization or otherwise); provided, however, in the case of any such
series of transactions or events, for purposes of adjustment of the conversion
price, such Fundamental Change shall be deemed to have occurred when
substantially all of the Common Stock of the Company shall have been exchanged
for, converted into, or acquired for, or shall constitute solely the right to
receive, such cash, securities, property or other assets, but the adjustment
shall be based upon the consideration that the holders of Common Stock received
in the transaction or event as a result of which more than 50% of the Common
Stock of the Company shall have been exchanged for, converted into, or acquired
for, or shall constitute solely the right to receive, such cash, securities,
property or other assets; and provided, further, that such term does not include
(i) any such transaction or event in which the Company and/or any of its
subsidiaries are the issuers of all the cash, securities, property or other
assets exchanged, acquired or otherwise issued in such transaction or event, or
(ii) any such transaction or event in which the holders of Common Stock receive
securities of an issuer other than the Company if, immediately following such
transaction or event, such holders hold a majority of the securities having the
power to vote normally in the election of directors of such other issuer
outstanding immediately following such transaction or other event.
"Non-Stock Fundamental Change" shall mean any Fundamental Change other
than a Common Stock Fundamental Change.
"Purchaser Stock Price" shall mean, with respect to any Common Stock
Fundamental Change, the average of the reported last sale price for one share of
the common stock received by holders of Common Stock (determined as provided in
the Certificate of Designations) in such Common Stock Fundamental Change during
the 10 Trading Days immediately prior to the date fixed for the determination of
the holders of Common Stock entitled to receive
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such common stock or, if there is no such date, prior to the date upon which the
holders of the Common Stock shall have the right to receive such common stock.
"Reference Market Price" shall initially mean $13.8333 and, in the
event of any adjustment to the conversion price other than as a result of a
Fundamental Change, the Reference Market Price shall also be adjusted so that
the ratio of the Reference Market Price to the conversion price after giving
effect to any such adjustment shall always be the same as the ratio of the
initial Reference Market Price to the initial conversion price of $25.9375 per
share.
Series D Preferred Stock
Ranking
The Series D Preferred Stock ranks senior to the Common Stock, junior
to the Series A Preferred Stock and the Series C Preferred Stock, and on a
parity with the Series E Preferred Stock, with respect to the payment of
dividends and upon liquidation, dissolution or winding up, provided that the
Series D Preferred Stock shall so rank on a parity with the Series C Preferred
Stock at such times as there shall be no shares of Series A Preferred Stock
outstanding. The Company may not, without the consent of two-thirds of the votes
of the holders of the outstanding shares of Series D Preferred Stock and all
other outstanding shares of Preferred Stock ranking on a parity with the Series
D Preferred Stock either as to dividends or upon liquidation, dissolution or
winding up, voting together as a single class, create, authorize or issue, or
reclassify any authorized stock of the Company into, or create, authorize or
issue any obligation or security convertible into or evidencing a right to
purchase, any shares of any class of stock of the Company ranking prior to the
Series D Preferred Stock or ranking prior to any other series of Preferred Stock
which ranks on a parity with the Series D Preferred Stock. However, the Company
may create additional classes of stock or issue series of Preferred Stock
ranking on a parity with the Series D Preferred Stock with respect to the
payment of dividends or upon liquidation, dissolution and winding up without the
consent of any holder of Series D Preferred Stock.
Dividends
Holders of shares of the Series D Preferred Stock are entitled to
cumulative dividends payable quarterly at an annual rate of $1.8138 per share.
With limited exceptions, holders of Series D Preferred Stock are entitled to
Full Cumulative Dividends before dividends may be declared on junior stock and
before such junior stock may be redeemed or purchased by the Company.
Liquidation Rights
In the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Company (not including mergers, consolidations or sales of
all or substantially all assets), the holders of each class or series of
Preferred Stock ranking senior to the Series D Preferred Stock shall first
receive full payment of their liquidation preferences. Holders of Series D
Preferred Stock are then entitled to receive a liquidation preference of $100
per share plus accrued dividends prior to any distribution on stock ranking
junior to the Series D Preferred Stock.
Mandatory Redemption in Event of Sale
Shares of the Series D Preferred Stock are subject to mandatory
redemption in the following circumstances. If at any time not less than 10
Business Days before November 17, 1996 the Company shall consummate any Sale
(generally defined as a sale of all or substantially all of the assets or stock
of an operating division or subsidiary of the Company other than T.J. Maxx or
Marshalls at a value of not less than a $25 million premium over the book value
of such assets or stock), then the Company is required to apply as much of the
Sale Proceeds (generally defined as the net cash proceeds, if any (after
subtracting all fees and expenses related to such transaction), received by the
Company in respect of any Sale) received by the Company in respect of such Sale
as is necessary to redeem all then outstanding shares of Series D Preferred
Stock (or, if fewer, as many such shares as can be redeemed at the Call Price
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out of such Sale Proceeds). Upon any such redemption, the Company shall deliver
to the holders of shares of Series D Preferred Stock, in exchange for each share
so redeemed, cash in an amount equal to the sum of (i) $100 per share plus (ii)
Full Cumulative Dividends thereon to the date fixed for redemption.
Voting Rights
Except as indicated below or as expressly required by applicable law,
the holders of the Series D Preferred Stock have no voting rights.
If the equivalent of six full quarterly dividends payable on the Series
D Preferred Stock are in arrears, the maximum authorized number of directors of
the Company will be increased by two and the holders of Series D Preferred
Stock, voting separately as a class with the holders of shares of any other
series of Preferred Stock ranking on a parity with the Series D Preferred Stock
and upon which like voting rights have been conferred and are exercisable, will
be entitled to elect two directors for successive one-year terms until all
dividends in arrears on the Series D Preferred Stock have been paid or declared
and set apart for payment. Upon payment or declaration and setting apart of
funds for payment of all such dividends in arrears, the term of office of each
director elected will immediately terminate and the number of directors
constituting the entire Board of Directors of the Company will be reduced by the
number of directors elected by the holders of the Series D Preferred Stock and
any other series of Preferred Stock ranking on a parity with the Series D
Preferred Stock as discussed above.
The Company may not, without the consent of two-thirds of the votes of
the holders of the Series D Preferred Stock and each other series of Preferred
Stock ranking on a parity with the Series D Preferred Stock and upon which like
voting rights have been conferred (voting together as a single class), create,
authorize or issue, or reclassify any authorized stock of the Company into, or
create, authorize or issue any obligation or security convertible into or
evidencing a right to purchase, any shares of any class of stock of the Company
ranking prior to the Series D Preferred Stock or any other series of Preferred
Stock which ranks on a parity with the Series D Preferred Stock. The Company may
not, without the consent of two-thirds of the votes of the holders of the
outstanding shares of the Series D Preferred Stock and each other series of
Preferred Stock of the Company similarly affected, if any, voting together as a
single class, amend, alter or repeal any provision of the Certificate which
would materially and adversely affect the preferences, rights, powers or
privileges, qualification, limitations and restrictions of the Series D
Preferred Stock and any such other series of Preferred Stock. The creation,
issuance or increase in the amount of authorized shares of any other series of
Preferred Stock ranking on a parity with or junior to the Series D Preferred
Stock with respect to the payment of dividends or the distribution of assets
upon liquidation, dissolution or winding up of the affairs of the Company will
not be deemed to have such material and adverse effect.
Conversion
On November 17, 1996 (the "Automatic Conversion Date"), unless earlier
converted at the option of the holder, each outstanding share of the Series D
Preferred Stock shall convert automatically (the "Automatic Conversion") into
(i) shares of Common Stock at the Exchange Rate in effect on the Automatic
Conversion Date and (ii) the right to receive an amount in cash equal to Full
Cumulative Dividends on such share to the Automatic Conversion Date.
Shares of Series D Preferred Stock may be converted at the option of
the holder thereof ("Optional Conversion"), at any time through the close of
business on the Business Day prior to November 17, 1996, into (i) shares of
Common Stock at the Exchange Rate in effect on the Optional Conversion Date; and
(ii) the right to receive an amount in cash equal to Full Cumulative Dividends
on such shares to the Optional Conversion Date. Notwithstanding the foregoing,
the Company may, at its option, in lieu of delivering shares of Common Stock on
the Optional Conversion Date, deliver cash in an aggregate amount equal to the
aggregate Closing Price (on the Trading Day preceding the Optional Conversion
Date) of the number of shares of Common Stock otherwise so deliverable
(together, in any event, with Full Cumulative Dividends thereon to the Optional
Conversion Date).
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The Exchange Rate is subject to adjustment (under formulae set forth in
the Certificate of Designations) from time to time as appropriate in certain
circumstances, including certain subdivisions and combinations of the Common
Stock, dividends in Common Stock and non-cash dividends and distributions on
Common Stock.
In case of any consolidation or merger to which the Company is a party
(other than a merger or consolidation in which the Company is the continuing
corporation and in which the Common Stock outstanding immediately prior to the
merger or consolidation remains unchanged), or in case of any sale or transfer
to another corporation of the property of the Company as an entirety or
substantially as an entirety, or in case of any statutory exchange of securities
with another corporation (other than in connection with a merger or
acquisition), proper provision shall be made so that each share of the Series D
Preferred Stock shall, after consummation of such transaction, be subject to (i)
conversion at the option of the holder into the kind and amount of securities,
cash or other property receivable upon consummation of such transaction by a
holder of the number of shares of Common Stock into which such share of Series D
Preferred Stock would have been converted if the conversion had occurred
immediately prior to consummation of such transaction (based on the Exchange
Rate in effect immediately prior to such consummation), (ii) conversion on the
Automatic Conversion Date into the kind and amount of securities, cash or other
property receivable upon consummation of such transaction by a holder of the
number of shares of Common Stock into which such share of Series D Preferred
Stock would have been converted if the conversion on the Automatic Conversion
Date had occurred immediately prior to the date of consummation of such
transaction (based on the Exchange Rate in effect immediately prior to such
consummation) and (iii) redemption on any redemption date in exchange for the
kind and amount of securities, cash or other property receivable upon
consummation of such transaction by a holder of the number of shares of Common
Stock that would have been issuable at the Call Price in effect on such
redemption date upon a redemption of such share of Series D Preferred Stock
immediately prior to consummation of such transaction; assuming in each case
that such holder of Common Stock failed to exercise rights of election, if any,
as to the kind or amount of securities, cash or other property receivable upon
consummation of such transaction (provided that if the kind or amount of
securities, cash or other property receivable upon consummation of such
transaction is not the same for each nonelecting share, then the kind and amount
of securities, cash or other property receivable upon consummation of such
transaction for each nonelecting share shall be deemed to be the kind and amount
so receivable per share by a plurality of the nonelecting shares).
Definitions
Capitalized terms not otherwise defined have the meanings set forth in
"Definitions" following the description of Series E Preferred Stock.
The following terms shall have the meanings indicated in respect of the
Series D Preferred Stock:
"Call Price" of each share of Series D Preferred Stock shall mean $100
per share.
The "Exchange Rate" for the Series D Preferred Stock shall be equal to
(a) if the Current Market Price on the date of determination is equal to or
greater than 120% of $15.4375 (the "Threshold Common Stock Price"), the number
of shares of Common Stock equal to 0.83333333 of the Base Number (the "Upper
Exchange Rate"), (b) if the Current Market Price on the date of determination is
less than the Threshold Common Stock Price but greater than 80% of $15.4375, the
number of shares of Common Stock having a value (determined at the Current
Market Price) equal to $100 per share of Series D Preferred Stock (the "Middle
Exchange Rate"), and (c) if the Current Market Price on the date of
determination is equal to or less than 80% of $15.4375, a number of shares of
Common Stock (the "Lower Exchange Rate") equal to 1.25 multiplied by the Base
Number. The Exchange Rate is subject to adjustment as set forth in the above
section entitled "Conversion."
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Series E Preferred Stock
Ranking
On November 17, 1995, the Company issued 1,500,000 shares of Series E
Preferred Stock in a private placement. The Series E Preferred Stock ranks
senior to the Common Stock, junior to the Series A Preferred Stock and the
Series C Preferred Stock, and on a parity with the Series D Preferred Stock,
with respect to the payment of dividends and upon liquidation, dissolution or
winding up. The Series E Preferred Stock shall so rank on a parity with the
Series C Preferred Stock at such times as there shall be no shares of Series A
Preferred Stock outstanding. The Company may not, without the consent of
two-thirds of the votes of the holders of the outstanding shares of Series E
Preferred Stock and all other outstanding shares of preferred stock of the
Company (the "Preferred Stock"), ranking on a parity with the Series E Preferred
Stock either as to dividends or upon liquidation, dissolution or winding up,
voting together as a single class, create, authorize or issue, or reclassify any
authorized stock of the Company into, or create, authorize or issue any
obligation or security convertible into or evidencing a right to purchase, any
shares of any class of stock of the Company ranking prior to the Series E
Preferred Stock or ranking prior to any other series of Preferred Stock which
ranks on a parity with the Series E Preferred Stock. However, the Company may
create additional classes of stock or issue series of Preferred Stock ranking on
a parity with the Series E Preferred Stock with respect to the payment of
dividends or upon liquidation, dissolution and winding up without the consent of
any holder of Series E Preferred Stock.
Dividends
Holders of shares of the Series E Preferred Stock are entitled to
cumulative dividends payable quarterly at an annual rate of $7.00 per share.
With limited exceptions, holders of Series E Preferred Stock are entitled to
Full Cumulative Dividends before dividends may be declared on junior stock and
before such junior stock may be redeemed or purchased by the Company.
Liquidation Rights
In the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Company (not including mergers, consolidations or sales of
all or substantially all assets), the holders of each class or series of
Preferred Stock ranking senior to the Series E Preferred Stock shall first
receive full payment of their liquidation preferences. Holders of Series E
Preferred Stock are then entitled to receive a liquidation preference of $100
per share plus accrued dividends prior to any distribution on stock ranking
junior to the Series E Preferred Stock.
Redemption
Shares of Series E Preferred Stock are not redeemable at the option of
the Company.
Voting Rights
Except as indicated below or as expressly required by applicable law,
holders of Series E Preferred Stock have no voting rights.
If the equivalent of six full quarterly dividends payable on the Series
E Preferred Stock are in arrears, the maximum authorized number of directors of
the Company will be increased by two and the holders of Series E Preferred
Stock, voting separately as a class with the holders of shares of any other
series of Preferred Stock ranking on a parity with the Series E Preferred Stock
and upon which like voting rights have been conferred and are exercisable, will
be entitled to elect two directors for successive one-year terms until all
dividends in arrears on the Series E Preferred Stock have been paid or declared
and set apart for payment. Upon payment or declaration and setting apart of
funds for payment of all such dividends in arrears, the term of office of each
director elected will immediately terminate and the number of directors
constituting the entire Board of Directors of the Company will be
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reduced by the number of directors elected by the holders of the Series E
Preferred Stock and any other series of Preferred Stock ranking on a parity with
the Series E Preferred Stock as discussed above.
The Company may not, without the affirmative vote or consent of
two-thirds of the votes of the holders of the Series E Preferred Stock and each
other series of Preferred Stock ranking on a parity with the Series E Preferred
Stock and upon which like voting rights have been conferred (voting together as
a single class), create, authorize or issue, or reclassify any authorized stock
of the Company into, or create, authorize or issue any obligation or security
convertible into or evidencing a right to purchase, any shares of any class of
stock of the Company ranking prior to the Series E Preferred Stock or any other
series of Preferred Stock which ranks on a parity with the Series E Preferred
Stock as to dividends or upon liquidation, dissolution or winding up. The
Company may not, without the affirmative vote or consent of two-thirds of the
votes of the holders of the outstanding shares of the Series E Preferred Stock
and each other series of Preferred Stock of the Company similarly affected, if
any, voting together as a single class, amend, alter or repeal any provision of
the Certificate which would materially and adversely affect the preferences,
rights, powers or privileges, qualification, limitations and restrictions of the
Series E Preferred Stock and any such other series of Preferred Stock; provided,
however, that the creation, issuance or increase in the amount of authorized
shares of any other series of Preferred Stock ranking on a parity with or junior
to the Series E Preferred Stock with respect to the payment of dividends or the
distribution of assets upon liquidation, dissolution or winding up of the
affairs of the Company will not be deemed to materially and adversely affect
such rights and preferences, privileges or voting powers.
Conversion
On November 17, 1998 (the "Automatic Conversion Date"), unless earlier
converted at the option of the holder, each outstanding share of the Series E
Preferred Stock shall convert automatically (the "Automatic Conversion") into
(i) shares of Common Stock at the Exchange Rate in effect on the Automatic
Conversion Date and (ii) the right to receive an amount in cash equal to Full
Cumulative Dividends on such share to the Automatic Conversion Date.
Shares of Series E Preferred Stock may be converted, in whole or in
part, at the option of the holder thereof ("Optional Conversion"), at any time
through the close of business on the Business Day prior to November 17, 1998,
into shares of Common Stock at the Upper Exchange Rate.
The Exchange Rate is subject to adjustment (under formulae set forth in
the Certificate of Designations) from time to time as appropriate in certain
circumstances, including certain subdivisions and combinations of the Common
Stock, dividends in Common Stock and non-cash dividends and distributions on
Common Stock.
In case of any consolidation or merger to which the Company is a party
(other than a merger or consolidation in which the Company is the continuing
corporation and in which the Common Stock outstanding immediately prior to the
merger or consolidation remains unchanged), or in case of any sale or transfer
to another corporation of the property of the Company as an entirety or
substantially as an entirety, or in case of any statutory exchange of securities
with another corporation (other than in connection with a merger or
acquisition), proper provision shall be made so that each share of the Series E
Preferred Stock shall, after consummation of such transaction, be subject to (i)
conversion at the option of the holder into the kind and amount of securities,
cash or other property receivable upon consummation of such transaction by a
holder of the number of shares of Common Stock into which such share of Series E
Preferred Stock would have been converted if the conversion had occurred
immediately prior to consummation of such transaction (based on the Exchange
Rate in effect immediately prior to such consummation) and (ii) conversion on
the Automatic Conversion Date into the kind and amount of securities, cash or
other property receivable upon consummation of such transaction by a holder of
the number of shares of Common Stock into which such share of Series E Preferred
Stock would have been converted if the conversion on the Automatic Conversion
Date had occurred immediately prior to the date of consummation of such
transaction (based on the Exchange Rate in effect immediately prior to such
consummation); assuming in each case that such holder of Common Stock failed to
exercise rights of election, if any, as to the kind or amount of securities,
cash or other property receivable upon
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consummation of such transaction (provided that if the kind or amount of
securities, cash or other property receivable upon consummation of such
transaction is not the same for each nonelecting share, then the kind and amount
of securities, cash or other property receivable upon consummation of such
transaction for each nonelecting share shall be deemed to be the kind and amount
so receivable per share by a plurality of the nonelecting shares). The kind and
amount of securities into which the shares of the Series E Preferred Stock shall
be convertible after consummation of such transaction shall be subject to
adjustment as described above following the date of consummation of such
transaction. The Company may not become a party to any such transaction unless
the terms thereof are consistent with the foregoing.
Fractional Shares
No fractional shares or scrip representing fractional shares of Common
Stock shall be issued upon conversion of Series E Preferred Stock. Instead of
any fractional share of Common Stock that would otherwise be issuable upon
conversion of any shares of Series E Preferred Stock, the Company shall pay a
cash adjustment in respect of such fractional interest in an amount equal to the
same fraction of the Closing Price of a share of Common Stock (or, if there is
no such Closing Price, the fair market value of a share of Common Stock, as
determined or prescribed by the Board of Directors) at the close of business on
the Trading Day immediately preceding the date of conversion.
Listing; Transfer Agent
Whether the Series E Preferred Stock will be listed on any national
securities exchange will be indicated in the Supplemental Prospectus, if any,
relating to the public offering thereof. The transfer agent, registrar, dividend
disbursing agent and redemption agent for the Series E Preferred Stock will be
State Street Bank and Trust Company, subject to the right of the Company to
designate another bank or trust company having its principal office in the
United States and having a combined capital and surplus of at least $100,000,000
to assume some or all of such functions.
Definitions
The following terms shall have the meanings indicated in respect of the
Series E Preferred Stock:
"Base Number" shall mean the number derived from dividing $100 by
$15.4375.
"Business Day" shall mean any day other than a Saturday, Sunday, or a
day on which banking institutions in the State of New York or The Commonwealth
of Massachusetts are authorized or obligated by law or executive order to close
or a day which is or is declared a national or New York or Massachusetts state
holiday.
"Closing Price" with respect to any securities on any day shall mean
the closing sale price regular way on such day or, in case no such sale takes
place on such day, the average of the reported closing bid and asked prices,
regular way, in each case on the New York Stock Exchange, or, if such security
is not listed or admitted to trading on such Exchange, on the principal national
securities exchange or quotation system on which such security is quoted or
listed or admitted to trading, or, if not quoted or listed or admitted to
trading on any national securities exchange or quotation system, the average of
the closing bid and asked prices of such security on the over-the-counter market
on the day in question as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System, or a similarly generally accepted
reporting service, or if not so available, in such manner as furnished by any
New York Stock Exchange member firm selected from time to time by the Board of
Directors for that purpose or (solely in the case of Series C Preferred Stock) a
price determined in good faith by the Board of Directors.
"Current Market Price" shall mean the average of the daily Closing
Prices per share of Common Stock for the ten consecutive Trading Days
immediately prior to the date in question; provided, however, that, if any event
that results in an adjustment of the Exchange Rate occurs during the period
beginning on the first day of such ten-day period and ending on the applicable
conversion date, the Current Market Price as determined pursuant to the
foregoing shall be appropriately adjusted to reflect the occurrence of such
event.
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"Dividend Payment Date" shall mean January 1, April 1, July 1 and
October 1 in each year.
"Exchange Rate" for the Series E Preferred Stock shall be equal to (a)
if the Current Market Price on the date of determination is equal to or greater
than 120% of $15.4375 (the "Threshold Common Stock Price"), the number of shares
of Common Stock equal to 0.83333333 of the Base Number (the "Upper Exchange
Rate"), (b) if the Current Market Price on the date of determination is less
than the Threshold Common Stock Price but greater than $15.4375, the number of
shares of Common Stock having a value (determined at the Current Market Price)
equal to $100 per share of Series E Preferred Stock (the "Middle Exchange
Rate"), and (c) if the Current Market Price on the date of determination is
equal to or less than $15.4375, a number of shares of Common Stock (the "Lower
Exchange Rate") equal to the Base Number; provided that for all purposes
relating to Optional Conversion by a holder pursuant to the above section
entitled "Conversion," the Exchange Rate shall be equal to the Upper Exchange
Rate. The Exchange Rate is subject to adjustment as set forth in the above
section entitled "Conversion."
"Fair Market Value" on any day shall mean the average of the daily
Closing Prices of a share of Common Stock of the Company on the five (5)
consecutive Trading Days selected by the Company commencing not more than 20
Trading Days before, and ending not later than, the earlier of the day in
question and the day before the "ex" date with respect to the issuance or
distribution requiring such computation. The term "'ex' date", when used with
respect to any issuance or distribution, means the first day on which the Common
Stock trades regular way, without the right to receive such issuance or
distribution, on the exchange or in the market, as the case may be, used to
determine that day's Closing Price.
"Full Cumulative Dividends" shall mean, with respect to the Series E
Preferred Stock, or any other capital stock of the Company, as of any date the
aggregate amount of all then accumulated, accrued and unpaid dividends payable
on such shares of Series E Preferred Stock, or other capital stock, as the case
may be, in cash, whether or not earned or declared and whether or not there
shall be funds legally available for the payment thereof.
"Trading Day" shall mean (x) if the applicable security is listed or
admitted for trading on the New York Stock Exchange or another national
securities exchange, a day on which the New York Stock Exchange or such other
national securities exchange is open for business or (y) if the applicable
security is quoted on the National Market System of the National Association of
Securities Dealers Automated Quotation System, a day on which trades may be made
on such National Market System or (z) if the applicable security is not so
listed, admitted for trading or quoted, any day other than a Saturday or Sunday
or a day on which banking institutions in the State of New York are authorized
or obligated by law or executive order to close.
Certain Charter and By-Law Provisions
The Certificate and By-Laws contain various provisions that may impede
the acquisition of control of the Company by means of a tender offer, proxy
fight or other means. Such provisions include a classified Board of Directors,
restrictions on the ability of stockholders to remove directors, the ability to
fill vacancies or call a stockholder meeting, and restrictions on stockholder
proposals and amendment of certain charter and by-law provisions.
The Certificate further provides that no director of the company shall
be liable to the Company or its stockholders 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 or (iv) for any transaction from which the director derived an improper
personal benefit. Section 174 of the Delaware General Corporation Law specifies
conditions under which directors of Delaware corporations may be liable for
unlawful payment of dividends or unlawful stock purchases or redemptions.
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Section 203 of the Delaware General Corporation Law
As a Delaware corporation, the Company is subject to the provisions of
Section 203 of the General Corporation Law of the State of Delaware. Section 203
generally provides that if a person or group acquires 15% or more of a
corporation's voting stock (thereby becoming an "interested stockholder")
without prior board approval, such interested stockholder may not, for a period
of three years, engage in a wide range of business combination transactions with
the corporation. However, this restriction does not apply to a person who
becomes an interested stockholder in a transaction resulting in the interested
stockholder owning at least 85% of the corporation's voting stock (excluding
from the outstanding shares, shares held by officer-directors or pursuant to
employee stock plans without confidential tender offer decisions), or to a
business combination approved by the board of directors and authorized by the
affirmative vote of at least 66 2/3% of the outstanding voting stock not owned
by the interested stockholder. In addition, Section 203 does not apply to
certain business combinations proposed subsequent to the public announcement of
specified business combination transactions which are not opposed by the board
of directors.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities offered hereby are to be issued under an Indenture,
dated as of September 15, 1993 (the "Indenture"), between the Company and The
First National Bank of Chicago, as Trustee (the "Trustee"), or under
a substantially identical indenture with a different trustee. The following
summary of certain provisions of the Indenture, a copy of which was filed as an
exhibit to the Registration Statement, does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, all provisions of
the Indenture, including the definition therein of certain terms. Wherever
particular sections or defined terms of the Indenture are referred to, it is
intended that such sections or defined terms shall be incorporated herein by
reference. If the Debt Securities are issued under an indenture other than the
Indenture, the Prospectus Supplement will identify the trustee and will
describe any material differences between that indenture and the Indenture.
General
The Debt Securities will rank equally with all other unsecured and
unsubordinated indebtedness of the Company.
The Debt Securities that may be offered under the Indenture are not
limited in amount. As of May 30, 1996, the Company had an aggregate of
$257,500,000 in principal amount of Debt Securities outstanding under the
Indenture.
The Debt Securities may be issued in one or more series with the same
or various maturities, at par, at a premium, or with an original issue discount.
The Prospectus Supplement will set forth the initial offering price, the
aggregate principal amount and the following terms of the Debt Securities in
respect of which this Prospectus is delivered: (1) the title of such Debt
Securities; (2) any limit on the aggregate principal amount of such Debt
Securities; (3) the date or dates on which principal on such Debt Securities
will be payable; (4) the rate or rates and, if applicable, the method used to
determine the rate including any commodity, commodity index, stock exchange
index or financial index, at which such Debt Securities will bear interest, if
any, the date or dates from which such interest will accrue, the dates on which
such interest shall be payable and the record date for the interest payable on
any interest payment date; (5) the place or places where principal of, premium,
if any, and interest on such Debt Securities will be payable; (6) the period or
periods within which, the price or prices at which and the terms and conditions
upon which the Debt Securities may be redeemed; (7) the obligation, if any, of
the Company to redeem or purchase the Debt Securities pursuant to any sinking
fund or analogous provisions or at the option of a holder thereof; (8) the
denominations of such Debt Securities, if other than denominations of $1,000 and
any integral multiple thereof; (9) the portion of principal amount of such Debt
Securities that shall be payable upon acceleration, if other than the principal
amount thereof; (10) the currency of denomination of such Debt Securities; (11)
the designation of the currency or currencies in which payment of principal of
and interest on such Debt Securities will be made; (12) the manner in which the
amounts of payment of principal of premium, if any, or interest on such Debt
Securities will be determined, if such amounts may be determined by reference to
an index based on a currency or currencies other than that in which the Debt
Securities
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are denominated or designated to be payable or by reference to a commodity,
commodity index, stock exchange index or financial index; (13) if payments of
principal of, premium, if any, or interest on the Debt Securities are to be made
in currency other than the denominated currency, the manner in which the
exchange rate with respect to such payments will be determined; (14) any other
terms of such Debt Securities, which other terms will not be inconsistent with
the provisions of the Indenture; and (15) any depositaries, interest rate
calculation agents, exchange rate calculation agents or other agents with
respect to the Debt Securities other than those originally appointed. (Indenture
ss.2.2.) The Prospectus Supplement will set forth any federal income tax,
accounting or special considerations applicable to the Debt Securities.
Payment of Interest and Exchange
Each Debt Security will be issued as a Certificated Debt Security,
registered in the name of the holder or its nominee, or as a Book-Entry Debt
Security represented by a Global Debt Security registered in the name of the
Depositary or its nominee.
Certificated Debt Securities
Principal of, premium, if any, and interest on Certificated Debt
Securities will be payable to the Holders thereof at the principal office of the
Trustee in Chicago, Illinois, or at any paying agency, as defined in the
Indenture, maintained at the time by the Company for such purpose. At the option
of the Company, payment of interest on Certificated Debt Securities may be made
by check mailed to the address of the record holder thereof (the "Holder") as of
the applicable record date as such address appears in the Certificated Debt
Securities Register. Certificated Debt Securities may be transferred or
exchanged at the aforementioned Trustee's office or paying agencies in
accordance with the terms of the Indenture. No service charge will be made for
any transfer or exchange of Certificated Debt Securities, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith. Certificated Debt Securities will not be
exchangeable for Book-Entry Debt Securities, except under the circumstances
described below under "Global Debt Securities and Book-Entry System." (Indenture
ss.ss.2.4 and 2.7.)
The transfer of Certificated Debt Securities and the right to the
principal of premium, if any, and interest on such Certificated Debt Securities
may be effected only by surrender of the old certificate representing such
Certificated Debt Securities and either reissuance by the Company or the Trustee
of the old certificate to the new Holder or the issuance by the Company or the
Trustee of a new certificate to the new Holder.
Global Debt Securities and Book-Entry System
Upon issuance, all Book-Entry Debt Securities having the same Issue
Date, interest rate, if any, amortization schedule, if any, maturity date and
other terms, if any, will be represented by one or more Global Debt Securities.
Each Global Debt Security representing Book-Entry Debt Securities will be
deposited with, or on behalf of, the Depositary, and registered in the name of
the Depositary or a nominee of the Depositary. Book-Entry Debt Securities will
not be exchangeable for Certificated Debt Securities and will not otherwise be
issuable as Certificated Debt Securities.
The procedures that the Depositary has indicated it intends to follow
with respect to Book-Entry Debt Securities are set forth below.
Ownership of beneficial interests in a Book-Entry Debt Securities will
be limited to persons that have accounts with the Depositary for the related
Global Debt Security ("participants") or persons that may hold interests through
participants. Upon the issuance of a Global Debt Security, the Depositary will
credit, on its book-entry registration and transfer system, the participants'
accounts with the respective principal amounts of the Book-Entry Debt Securities
represented by such Global Debt Security beneficially owned by such
participants. The accounts to be credited shall be designated by any dealers,
underwriters or agents participating in the distribution of such Book-Entry Debt
Securities. Ownership of Book-Entry Debt Securities will be shown on, and the
transfer of such ownership interests will be effected only through, records
maintained by the Depositary for the related Global Debt Security (with respect
to interests of participants) and on the records of participants (with respect
to interests of persons holding through participants). The laws of some states
may require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such limits and such laws may impair the ability
to own, transfer or pledge beneficial interests in Book-Entry Debt Securities.
So long as the Depositary, or its nominee, is the registered owner of
such Global Debt Security, the Depositary or such nominee, as the case may be,
will be considered the sole owner or holder of the Book-Entry Debt Securities
represented by such Global Debt Security for all purposes under the Indenture.
Except as set forth below, owners of Book-Entry Debt Securities will not be
entitled to have such securities registered in their names, will not receive or
be entitled to receive physical delivery of a certificate in definitive form
representing such securities and will not be considered the owners or holders
thereof under the Indenture. Accordingly, each person owning Book-Entry Debt
Securities must rely on the procedures of the Depositary and, if such person is
not a participant, on the procedures of the participant through which such
person owns its interest, to exercise any rights of a holder under the
Indenture. The Company understands that under existing industry practices, if
the Company requests any action of holders or if an owner of Book-Entry Debt
Securities desires to give or take any action which a holder is entitled to give
or take under the Indenture, the Depositary would authorize the participants
holding the relevant Book-Entry Debt Securities to give or take such action, and
such participants would authorize beneficial owners owning through such
participants to give or take such action or would otherwise act upon the
instructions of beneficial owners holding through them.
Payments of principal, premium, if any, and interest on Book-Entry Debt
Securities will be made to the Depositary or its nominee, as the case may be, as
the registered holder of the related Global Debt Security. None of the Company,
the Trustee or any other agent of the Company or agent of the Trustee will have
any responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in such Global Debt
Security or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
The Company expects that the Depositary, upon receipt of any payment of
principal, premium, if any, or interest on a Global Debt Security, will
immediately credit participants' accounts with payments in amounts proportionate
to the respective amount of Book-Entry Debt Securities held by each such
participant as shown on the records of the Depositary. The Company also expects
that payments by participants to owners of beneficial interests in Book-Entry
Debt Securities held through such participants will be governed by standing
customer instructions and customary practices, as is now the case with the
securities held for the accounts of customers in bearer form or registered in
"street name," and will be the responsibility of such participants.
If the Depositary is at any time unwilling or unable to continue as
Depositary or ceases to be a clearing agency registered under the Exchange Act,
and a successor Depositary registered as a clearing agency under the Exchange
Act is not appointed by the Company within 90 days, the Company will issue
Certificated Debt Securities in exchange for such Global Debt Security. In
addition, the Company may at any time and in its sole discretion determine not
to have any of the Book-Entry Debt Securities represented by one or more Global
Debt Securities and, in such event, will issue Certificated Debt Securities in
exchange for such Global Debt Security or Securities. Any Certificated Debt
Securities issued in exchange for a Global Debt Security will be registered in
such name or names as the Depositary shall instruct the Trustee. It is expected
that such instructions will be based upon directions received by the Depositary
from participants with respect to ownership of Book-Entry Debt Securities
relating to such Global Debt Security.
The foregoing information in this section concerning the Depositary and
the Depositary's Book-Entry System has been obtained from sources the Company
believes to be reliable, but the Company takes no responsibility for the
accuracy thereof.
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Certain Covenants of The Company
Restrictions on Liens. The Company will not, and will not permit any
Restricted Subsidiary to, issue, assume or guarantee any Indebtedness secured by
any mortgage, security interest, pledge, lien or other encumbrance (herein
referred to as a "Mortgage" or "Mortgages") upon any Operating Property or
Operating Asset of the Company or any Restricted Subsidiary, whether such
Operating Property or Operating Asset is now owned or hereafter acquired,
without in any such case effectively providing concurrently with the issuance,
assumption or guarantee of any such Indebtedness that the Debt Securities
(together with, if the Company shall so determine, any other Indebtedness
ranking equally with the Debt Securities other than Debt Securities not having
the benefit of this provision) shall be secured equally and ratably with such
Indebtedness, except that the foregoing restrictions shall not apply to: (i) the
giving, within 180 days after the later of the acquisition or completion of
construction or completion of substantial reconstruction, renovation,
remodeling, expansion or improvement (each a "substantial improvement") of such
property, and the placing in operation of such property after the acquisition or
completion of any such construction or substantial improvement, of any purchase
money Mortgage (including security for bankers acceptances and similar inventory
financings in the ordinary course of business and vendors' rights under purchase
contracts under an agreement whereby title is retained for the purpose of
securing the purchase price thereof), or the acquiring of property not
theretofore owned by the Company or such Restricted Subsidiary subject to any
then existing Mortgage securing Indebtedness (whether or not assumed) including
Indebtedness incurred for reimbursement of funds previously expended for any
such purpose, provided that in each case (x) such Mortgage is limited to such
property, including accretions thereto and any such construction or substantial
improvement (or, with respect to bankers acceptances and similar inventory
financings in the ordinary course of business, any inventory acquired by the
Company or such Restricted Subsidiary during the 180-day period immediately
preceding the date of creation of such Mortgage); (y) the principal amount of
the Indebtedness being incurred that is secured by such Mortgage shall not
exceed the cost of such acquired property, construction or substantial
improvement, as the case may be; and (z) the principal amount of the
Indebtedness secured by such Mortgage, together with all other Indebtedness to
persons other than the Company or a Restricted Subsidiary secured by Mortgages
on such property, shall not exceed the lesser of the total costs of such
property, including any such construction or substantial improvement, to the
Company or a Restricted Subsidiary or the fair market value thereof immediately
following the acquisition, construction or substantial improvement thereof by
the Company or a Restricted Subsidiary; (ii) the giving by the Company or a
Restricted Subsidiary of a Mortgage on real property that is the sole security
for Indebtedness (w) incurred within three years after the latest of (1)
September 15, 1993, (2) the date of acquisition of such real property or (3) the
date of completion of construction or substantial improvement made thereon by
the Company or such Restricted Subsidiary, (x) incurred for the purpose of
reimbursing itself for the cost of acquisition and/or the cost of improvement of
such real property, (y) the amount of which does not exceed the lesser of the
aggregate cost of such real property and improvements or the fair market value
thereof, and (z) the holder of which shall be entitled to enforce payment of
such Indebtedness solely by resorting to the security therefor, without any
liability on the part of the Company or such Restricted Subsidiary for any
deficiency; (iii) any Mortgage on assets of the Company or any Subsidiary
existing on the date of the Indenture or any Mortgage on the assets of a
Restricted Subsidiary on the date it became a Subsidiary or any Mortgage on the
assets of a Subsidiary that is newly designated as a Restricted Subsidiary, if
such Mortgage was created while such Subsidiary was a Non-Restricted Subsidiary,
and such Mortgage would have been permitted under the provisions of this
paragraph if such Subsidiary had been a Restricted Subsidiary at the time such
Mortgage was created; (iv) any Mortgage incurred in connection with any
refunding or extension of Indebtedness secured by a Mortgage permitted under
clause (i), (ii) or (iii) above, provided that the principal amount of the
refinancing or extending Indebtedness does not exceed the principal amount of
the Indebtedness so refunded or extended and that such Mortgage applies only to
the same property or assets subject to the prior permitted Mortgage and fixtures
and building improvements thereon (and if the prior Mortgage was incurred under
clause (ii) above, the requirements of clause (z) thereof are satisfied), or (v)
any Mortgage given in favor of the Company or any Wholly Owned Restricted
Subsidiary. (Indenture ss.4.5(a).) On September 15, 1993, no Operating Property
was subject to any Mortgage.
Restrictions on Sale and Leaseback Transactions. Without equally and
ratably securing the Debt Securities, the Company will not, nor will it permit
any Restricted Subsidiary to, enter into any arrangement with any person
providing for the leasing by the Company or any Restricted Subsidiary of any
Operating Property or Operating Asset
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that has been or is to be sold or transferred by the Company or such Restricted
Subsidiary to such person subsequent to September 15, 1993 with the intention of
taking back a lease of such property (a "Sale and Leaseback Transaction") unless
the terms of such sale or transfer have been determined by the Company's Board
of Directors to be fair and arms' length and, within 180 days after the receipt
of the proceeds of such sale or transfer, the Company or any Restricted
Subsidiary applies an amount equal to the greater of the net proceeds of such
sale or transfer or the fair value of such Operating Property or Operating Asset
at the time of such sale or transfer to the prepayment or retirement (other than
any mandatory prepayment or retirement) of Senior Funded Debt of the Company or
such Restricted Subsidiary. The foregoing restriction will not apply to (i) any
Sale and Leaseback Transaction for a term of not more than three years including
renewals, (ii) any Sale and Leaseback Transaction with respect to Operating
Property if a binding commitment with respect thereto is entered into within
three years after the date such property was acquired (as the term "acquired" is
used in the definition of Operating Property) or any Sale and Leaseback
Transaction with respect to Operating Assets if a binding commitment with
respect thereto is entered into within 180 days after the later of the date such
property was acquired and, if applicable, the date such property was first
placed in operation, or (iii) any Sale and Leaseback Transaction between the
Company and a Restricted Subsidiary or between Restricted Subsidiaries provided
that the lessor shall be the Company or a Wholly Owned Restricted Subsidiary.
(Indenture ss.4.6(a).)
Exempted Debt. Notwithstanding the restrictions on Mortgages and Sale
and Leaseback Transactions described above under "Restrictions on Liens" and
"Restrictions on Sale and Leaseback Transactions," the Company or its Restricted
Subsidiaries may, in addition to amounts permitted under such restrictions,
create or assume Mortgages, and renew, extend or replace such Mortgages, or
enter into Sale and Leaseback Transactions, provided that, after giving effect
thereto, the aggregate outstanding principal amount of all Exempted Debt of the
Company and its Restricted Subsidiaries does not exceed 10% of Consolidated Net
Tangible Assets. (Indenture ss.ss.4.5(b) and 4.6(b).)
Maintenance of Properties. The Company will cause all properties used
or useful in the conduct of its business or the business of any Subsidiary to be
maintained and kept in good condition, repair and working order and supplied
with all necessary equipment and will cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in the
judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times,
provided that the Company may discontinue the operation or maintenance of any of
such properties if such discontinuance is, in the judgment of the Company,
desirable in the conduct of its business or the business of any Subsidiary and
not disadvantageous in any material respect to the Holders of the Debt
Securities.
Payment of Taxes and other Claims. The Company will pay or discharge or
cause to be paid or discharged, before the same shall become delinquent, (1) all
taxes, assessments and governmental charges in excess of $250,000 levied or
imposed upon the Company or any Subsidiary or upon the income, profits or
property of the Company or any Subsidiary, and (2) all lawful claims for labor,
materials and supplies in excess of $250,000 which, if unpaid, might by law
become a lien upon the property of the Company or any Subsidiary, provided that
the Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith by appropriate proceedings.
No Special Protection in the Event of a Highly Leveraged Transaction.
Unless otherwise indicated in the Prospectus Supplement relating thereto, the
terms of the Debt Securities will not afford the holders special protection in
the event of a highly leveraged transaction.
Certain Definitions
Set forth below are certain significant terms that are defined in
Section 1.1 of the Indenture:
"Attributable Debt" in respect of a Sale and Leaseback Transaction
means, at the time of determination, the present value (discounted at the
imputed rate of interest of such transaction determined in accordance with
generally accepted accounting principles) of the obligation of the lessee for
net rental payments during the remaining term of
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the lease included in such arrangement (including any period for which such
lease has been extended or may, at the option of the lessor, be extended). The
term "net rental payments" under any lease for any period shall mean the sum of
the rental and other payments required to be paid in such period by the lessee
thereunder, not including any amounts required to be paid by such lessee
(whether or not designated as rental or additional rental) on account of
maintenance and repairs, insurance, taxes, assessments, water rates or similar
charges required to be paid by such lessee thereunder or any amounts required to
be paid by such lessee thereunder contingent upon the amount of sales,
maintenance and repairs, insurance, taxes, assessments, water rates or similar
charges.
"Capitalized Lease Obligations" means obligations created pursuant to
leases that are required to be shown on the liability side of a balance sheet in
accordance with FASB Statement No. 13, "Accounting for Leases," as amended and
interpreted, or any successor or comparable accounting standard.
"consolidated" when used with respect to any of the terms defined in
the Indenture, refers to such terms as reflected in a consolidation of the
accounts of the Company and its Restricted Subsidiaries in accordance with
generally accepted accounting principles.
"Consolidated Net Tangible Assets" means the total amounts of assets
(less depreciation and valuation reserves and other reserves and items
deductible from the gross book value of specific asset accounts under generally
accepted accounting principles) that under generally accepted accounting
principles would be included on a consolidated balance sheet of the Company and
its Restricted Subsidiaries, after deducting therefrom (i) all liability items
except Funded Debt, Capitalized Lease Obligations, stockholders' equity and
reserves for deferred income taxes, (ii) all goodwill, trade names, trademarks,
patents, unamortized debt discount and expense and other like intangibles (other
than leasehold costs and investments in so-called safe harbor leases), which in
each such case would be so included on such balance sheet, and (iii) all amounts
which would be so included on such balance sheet in respect of Investments (less
applicable reserves) in Non-Restricted Subsidiaries in excess of the amount of
such Investments at July 31, 1993. As of July 31, 1993, the amount of
Investments in Non-Restricted Subsidiaries totaled approximately $315 million.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Exempted Debt" means the sum of the following items outstanding as of
the date Exempted Debt is being determined: (i) Indebtedness for money borrowed
of the Company and its Restricted Subsidiaries incurred after the date of the
Indenture and secured by liens created or assumed or permitted to exist pursuant
to Section 4.5(b) of the Indenture, and (ii) Attributable Debt of the Company
and its Restricted Subsidiaries in respect of all Sale and Leaseback
Transactions entered into pursuant to Section 4.6(b) of the Indenture.
"Funded Debt" of any person means Indebtedness, whether incurred,
assumed or guaranteed, maturing by its terms more than one year from the date of
creation thereof, or that is extendable or renewable at the sole option of the
obligor so that it may become payable more than one year from the date of
creation thereof; provided, however, that Funded Debt shall not include (i)
obligations created pursuant to leases, (ii) any Indebtedness or portion thereof
maturing by its terms within one year from the time of any computation of the
amount of outstanding Funded Debt unless such Indebtedness shall be extendable
or renewable at the sole option of the obligor in such manner that it may become
payable more than one year from such time, or (iii) any Indebtedness for the
payment or redemption of which money in the necessary amount shall have
deposited in trust either at or before the maturity date thereof.
"Indebtedness" of any person means indebtedness for borrowed money and
indebtedness under purchase money mortgages or other purchase money liens or
conditional sales or similar title retention agreements, in each case where such
indebtedness has been created, incurred, or assumed by such person to the extent
such indebtedness would appear as a liability upon a balance sheet of such
Person prepared in accordance with generally accepted accounting principles,
guarantees by such Person of such indebtedness, and indebtedness for borrowed
money secured by any
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mortgage, pledge or other lien or encumbrance upon property owned by such
person, even though such person has not assumed or become liable for the payment
of such indebtedness.
"Investment" means and includes any investment in stock, evidences of
indebtedness, loans or advances, however made or acquired, but shall not include
accounts receivable of the Company or of any Restricted Subsidiary arising from
transactions in the ordinary course of business, or any evidences of
indebtedness, loans or advances made in connection with the sale to any
Subsidiary of accounts receivable of the Company or any Restricted Subsidiary
arising from transactions in the ordinary course of business of the Company or
any Restricted Subsidiary.
"Non-Restricted Subsidiary" means any Subsidiary other than a
Restricted Subsidiary.
"Operating Assets" means all merchandise inventories, furniture,
fixtures and equipment (including all transportation and warehousing equipment
but excluding office equipment and data processing equipment) owned by the
Company or a Restricted Subsidiary.
"Operating Property" means all real property and improvements thereon
owned by the Company or a Restricted Subsidiary constituting, without
limitation, any store, warehouse, service center or distribution center wherever
located; provided that such term shall not include any store, warehouse, service
center or distribution center that the Company's Board of Directors declares by
resolution not to be of material importance to the business of the Company and
its Restricted Subsidiaries. Operating Property is treated as having been
"acquired" on the day the Operating Property is placed in operation by the
Company or a Restricted Subsidiary after the later of (a) its acquisition from a
third party, including a Non-Restricted Subsidiary, (b) completion of its
original construction or (c) completion of its substantial reconstruction,
renovation, remodeling, expansion or improvement (whether or not constituting an
Operating Property prior to such reconstruction, renovation, remodeling,
expansion or improvement).
"Restricted Subsidiaries" means any Subsidiary so designated by the
Board of Directors or duly authorized officers of the Company in accordance with
the Indenture provided that (a) the Board of Directors or duly authorized
officers of the Company may, subject to certain limitations, designate any
Non-Restricted Subsidiary and (b) any Subsidiary of which the majority of the
voting stock is owned directly or indirectly by one or more Non-Restricted
Subsidiaries shall be a Non-Restricted Subsidiary. As of June 3, 1996, the
Company had no Restricted Subsidiaries.
"Subsidiary" means a corporation more than 50% of the outstanding
voting stock of which is owned, directly or indirectly, by the Company or by one
or more other Subsidiaries, or by the Company and one or more other
Subsidiaries. For the purposes of this definition, "voting stock" means stock
that ordinarily has voting power for the election of directors, whether at all
times or only so long as no senior class of stock has such voting power by
reason of any contingency.
"Senior Funded Debt" means all Funded Debt of the Company or any person
(except Funded Debt, the payment of which is subordinated in the manner provided
in the Indenture to the payment of the Debt Securities).
Merger and Consolidation
The Indenture provides that the Company may, without the consent of the
Holders of the Debt Securities, consolidate with or merge into any other
corporation, or convey, transfer or lease its properties and assets
substantially as an entirety to any person, provided that in any such case (i)
the successor shall be a domestic corporation and such corporation shall assume
by a supplemental indenture the Company's obligations under the Indenture and
the Debt Securities, (ii) immediately after such transaction, and treating any
Indebtedness that becomes an obligation of the Company or a Subsidiary as a
result of such transaction as having been incurred by the Company or such
Subsidiary at the time of such transaction, no Default or Event of Default shall
have happened and be continuing, and (iii) if as a result of any such
transaction properties or assets of the Company would become subject to a
Mortgage that would not be permitted under the Indenture, the Debt Securities
would be secured, equally and ratably with (or prior to) all Indebtedness so
secured. Upon compliance with these provisions by a successor corporation, the
Company (except
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in the case of a lease) would be relieved of its obligations under the Indenture
and the Debt Securities. (Indenture ss.5.1 and 5.2.)
Events of Default
The following will be Events of Default under the Indenture with
respect to Debt Securities of any series: (a) default in the payment of any
interest upon any Debt Security of that series when it becomes due and payable,
and continuance of such default for a period of 30 days; (b) default in the
payment of principal of or premium, if any, on any Debt Security of that series
when due; (c) default in the deposit of any sinking fund payment, when and as
due in respect of any Debt Security of that series; (d) default in the
performance or breach of any other covenant or warranty of the Company in the
Indenture (other than a covenant or warranty that has been included in the
Indenture solely for the benefit of a series of Debt Securities other than that
series), which default continues uncured for a period of 60 days after written
notice to the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in principal amount of the outstanding Debt Securities
of that series as provided in the Indenture; (e) unless the terms of such series
otherwise provide, a default under any bond, debenture, note or other evidence
of Indebtedness for money borrowed by the Company (including a default with
respect to Debt Securities of any series other than that series) or under any
mortgage, indenture or instrument under which there may be issued or by which
there may be secured or evidenced any Indebtedness for money borrowed by the
Company (including the Indenture), whether such Indebtedness now exists or shall
hereafter be created, which default shall have resulted in such Indebtedness
becoming or being declared due and payable prior to the date on which it would
otherwise have become due and payable, and the principal amount of the
Indebtedness so accelerated, together with the principal amount of all other
Indebtedness similarly accelerated, shall be $10 million or more, and such
acceleration shall not have been rescinded or annulled within a period of 10
days after there shall have been given written notice to the Company by the
Trustee or to the Company and the Trustee by the Holders of at least 25% in
principal amount of the outstanding Debt Securities of that series as provided
in the Indenture; (f) certain events of bankruptcy, insolvency or
reorganization; and (g) any other Event of Default provided with respect to Debt
Securities of that series that is described in the Prospectus Supplement
accompanying this Prospectus. No Event of Default with respect to a particular
series of Debt Securities (except as to the certain events in bankruptcy,
insolvency or reorganization) necessarily constitutes an Event of Default with
respect to any other series of Debt Securities. (Indenture ss.6.1.) The
occurrence of an Event of Default would constitute an event of default under
certain of the Company's existing bank lines. In addition, the occurrence of
certain Events of Default or an acceleration under the Indenture would
constitute an event of default under certain other bank lines and other
indebtedness of the Company.
If an Event of Default with respect to Debt Securities of any series at
the time outstanding occurs and is continuing, then and in every such case the
Trustee or the Holders of not less than 25% in principal amount of the
outstanding Debt Securities of that series may, by a notice in writing to the
Company (and to the Trustee if given by Holders), declare to be due and payable
immediately the principal (or, if the Debt Securities of that series are
Discount Securities, such portion of the principal amount as may be specified in
the term of that series) and premium, if any, of all Debt Securities of that
series. In the case of an Event of Default resulting from the certain events in
bankruptcy, insolvency or reorganization, the principal (or such specified
amount) and premium, if any, of all outstanding Debt Securities shall ipso facto
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any Holder. At any time after a declaration of
acceleration with respect to Debt Securities of any series has been made, but
before a judgment or decree for payment of the money due has been obtained by
the Trustee, the Holders of a majority in principal amount of the outstanding
Debt Securities of that series may, subject to the Company having paid or
deposited with the Trustee a sum sufficient to pay overdue interest and
principal which has become due other than by acceleration and certain other
conditions, rescind and annul such acceleration if all Events of Default, other
than the non-payment of accelerated principal and premium, if any, with respect
to Debt Securities of that series have been cured or waived as provided in the
Indenture. (Indenture ss.6.2.) For information as to waiver of defaults see the
discussion set forth below under "Modification and Waiver." Reference is made to
the Prospectus Supplement relating to any series of Debt Securities that are
Discount Securities for the particular provisions relating to acceleration of a
portion of the principal amount of such Discount Securities upon the occurrence
of an Event of Default and the continuation thereof.
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The Indenture provides that the Trustee will be under no obligation to
exercise any of its rights or powers under the Indenture at the request of any
Holder, unless the Trustee receives indemnity satisfactory to it against any
loss, liability or expense. (Indenture ss.7.1(e).) Subject to certain rights of
the Trustee, the Holders of a majority in principal amount of the outstanding
Debt Securities of any series shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or exercising any trust or power conferred on the Trustee with respect to the
Debt Securities of that series. (Indenture ss.6.12.)
No Holder of any Debt Security of any series will have any right to
institute any proceeding, judicial or otherwise, with respect to the Indenture
or for the appointment of a receiver or trustee, or for any remedy thereunder,
unless such Holder shall have previously given to the Trustee written notice of
a continuing Event of Default with respect to Debt Securities of that series and
unless also 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 security and indemnity, to the Trustee to institute such proceeding
as trustee, and the Trustee shall not have received from the Holders of a
majority in 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. (Indenture ss.6.7.) Notwithstanding the foregoing,
the Holder of any Debt Security will have an absolute and unconditional right to
receive payment of the principal of, premium, if any, and any interest on such
Debt Security on or after the due dates expressed in such Debt Security and to
institute suit for the enforcement of any such payment. (Indenture ss.6.8.)
The Indenture requires the Company, within 120 days after the end of
each of its fiscal years, to furnish to the Trustee a statement as to compliance
with the Indenture. (Indenture ss.4.8.) The Indenture provides that the Trustee
may withhold notice to the Holders of Debt Securities of any series of any
Default or Event of Default (except in payment on any Debt Securities of such
series) with respect to Debt Securities of such series if it in good faith
determines that withholding such notice is in the interest of the Holders of
Debt Securities. (Indenture ss.7.5.)
Modification and Waiver
Modifications and amendments of the Indenture may be made by the
Company and the Trustee with the consent of the Holders of 66-2/3% in principal
amount of the outstanding Debt Securities of each series affected by such
modifications or amendments provided, however, that no such modification or
amendment may, without the consent of the Holder of each outstanding Debt
Security affected thereby: (a) reduce the amount of Debt Securities whose
Holders must consent to an amendment or waiver; (b) change the rate of or change
the time for payment of interest (including default interest) on any Debt
Security; (c) change the principal, premium, if any, or the fixed maturity of
any Debt Security; (d) waive a default in the payment of the principal of,
premium, if any, or interest on any Debt Security (except a rescission of
acceleration of the Debt Securities of any series by the Holders of at least a
majority in aggregate principal amount of the then outstanding Debt Securities
of such Series and a waiver of the payment default that resulted from such
acceleration); (e) make the Debt Security payable in currency other than that
stated in the Debt Security; (f) make any change to certain provisions of the
Indenture relating to remedies or amendments; (g) waive a redemption payment
with respect to any Debt Security or change any of the provisions with respect
to the redemption of any Debt Securities; (h) waive the provisions for
determining the Dollar equivalent of foreign currency denominated Securities in
connection with actions of Holders of Debt Securities under the Indenture; or
(i) waive provisions relating to conversion of a currency in which a judgment is
rendered into another required currency. (Indenture ss.9.3.)
The Holders of a majority in principal amount of the outstanding Debt
Securities of any series may on behalf of the Holders of all Debt Securities of
that series waive, insofar as that series is concerned, compliance by the
Company with provisions of the Indenture other than certain specified
provisions. (Indenture ss.9.2.) The Holders of a majority in principal amount of
the outstanding Debt Securities of any series may on behalf of the Holders of
all the Debt Securities of such series waive any past default under the
Indenture with respect to such series and its consequences, except a default in
the payment of the principal of, premium, if any, or any interest on any Debt
Security of that series or in respect of a provision which under the Indenture
cannot be modified or amended without the consent of the Holder of each
outstanding Debt Security of that series affected. (Indenture ss.6.13.)
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Defeasance of Debt Securities or Certain Covenants in Certain Circumstances
Defeasance and Discharge. The Indenture provides that the Company may
be discharged from any and all obligations in respect of the Debt Securities of
any series (except for certain obligations to register the transfer or exchange
of Debt Securities of such series, to replace stolen, lost or mutilated Debt
Securities of such series, to maintain paying agencies and hold moneys for
payment in trust) upon the deposit with the Trustee, in trust, of money and/or
government obligations in the same currency as such series that, through the
payment of interest and principal in respect thereof in accordance with their
terms, will provide money in an amount sufficient in the opinion of a nationally
recognized firm of independent public accountants to pay and discharge each
installment of principal (and 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 Indenture
and such Debt Securities. Such discharge may occur only if: the Company has
received from, or there has been published by, the United States Internal
Revenue Service a ruling to the effect that Holders of the Debt Securities of
such Series will not recognize income, gain or loss for United States federal
income tax purposes as a result of such deposit, defeasance and discharge and
will be subject to United States federal income tax on the same amount and in
the same manner and at the same times as would have been the case if such
deposit, defeasance and discharge had not occurred; and such discharge will not
be applicable to any Debt Securities of such series then listed on the New York
Stock Exchange or any other securities exchange if such deposit would cause said
Debt Securities to be de-listed as a result thereof.
(Indenture ss.8.3.)
Defeasance of Certain Covenants. The Indenture provides that unless
otherwise provided by the terms of the applicable series of Debt Securities,
upon compliance with certain conditions, (i) the Company may omit to comply with
the restrictive covenants contained in Sections 4.2 (except as to corporate
existence), 4.3 through 4.9 and Section 5.1(3) of the Indenture, including the
restrictive covenants described above under the captions "Certain Covenants of
the Company"; and (ii) cross accelerations constituting Events of Default under
Section 6.1(5) shall be inapplicable to such series. The conditions include: the
deposit with the Trustee of money and/or government obligations in the same
currency as such series that, through the payment of interest and principal in
respect thereof in accordance with their terms, will provide money in an amount
sufficient in the opinion of a nationally recognized firm of independent public
accountants 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 Indenture
and such Debt Securities; and the delivery to the Trustee of an opinion of
counsel to the effect that the Holders of the Debt Securities of such series
will not recognize income, gain or loss for United States federal income tax
purposes as a result of such deposit and related covenant defeasance and will be
subject to United States federal income tax on the same amount and in the same
manner and at the same times as would have been the case if such deposit and
related covenant defeasance had not occurred. (Indenture ss.8.4.)
Defeasance and Events of Default. In the event the Company exercises
its opinion to omit compliance with certain covenants of the Indenture with
respect to any series of Debt Securities 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 government obligations on deposit with the Trustee will
be sufficient to pay amounts due on the Debt Securities of such series at the
time of their stated maturity but may not be sufficient to pay amounts due on
the Debt Securities of such series at the time of the acceleration resulting
from such Event of Default. However, the Company shall remain liable for such
payments.
Concerning the Trustee
The Company maintains banking relationships in the ordinary course of
business with the Trustee.
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PLAN OF DISTRIBUTION
General
The Company or the Selling Stockholder, as the case may be, may sell
the Offered Securities being offered hereby by one or more methods, including
without limitation (i) through underwriters, (ii) through brokers or dealers,
(iii) through agents and (iv) directly to purchasers. The applicable Prospectus
Supplements will set forth the terms of the offering of any Offered Securities,
including (where applicable) the name or names of the underwriters, dealers or
agents, the aggregate principal amount or number of Offered Securities, the
purchase price of the Offered Securities and the proceeds to the Company or the
Selling Stockholder, as the case may be, from the sale, any underwriting
discounts and other items constituting underwriters' compensation and any
discounts and commissions allowed or paid to dealers or agents. Any public
offering price and any discounts or concessions allowed or reallowed or paid to
dealers may be changed from time to time.
The Company may also issue the Company Offered Securities to one or
more persons in exchange for outstanding securities of the Company acquired by
such persons in privately negotiated transactions or from third parties in open
market transactions. The newly issued Company Offered Securities in such cases
may be offered pursuant to this Prospectus and the applicable Prospectus
Supplement by such persons, acting as principal for their own accounts, at
market prices prevailing at the time of sale, at prices otherwise negotiated or
at fixed prices. Unless otherwise indicated in the applicable Prospectus
Supplement, the Company will only receive outstanding securities and will not
receive cash proceeds in such exchanges or resales. Dealer trading may take
place in certain of the Offered Securities, including Offered Securities not
listed on any securities exchange.
If an underwriter or underwriters are used in the sale of the Offered
Securities, the Company (and the Selling Stockholder in respect of Selling
Stockholder Offered Securities) will execute an underwriting agreement with such
underwriter or underwriters at the time an agreement for such sale is reached.
The underwriter or underwriters with respect to an underwritten offering of
Offered Securities will be set forth in the Prospectus Supplement relating to
such offering and, if an underwriting syndicate is used, the managing
underwriter or underwriters will be set forth on the cover of such Prospectus
Supplement. If any underwriter or underwriters are used in the sale of the
Offered Securities, the underwriting agreement will provide that the obligations
of the underwriters are subject to certain conditions precedent and the
underwriters with respect to a sale of Offered Securities will be obligated to
purchase all such Offered Securities if any are purchased. In connection with
the sale of Offered Securities, underwriters will receive compensation in the
form of underwriting discounts or commissions and may also receive commissions
from purchasers of Offered Securities for whom they may act as agent.
Underwriters may sell Offered Securities to or through dealers, and such dealers
may receive compensation in the form of discounts, concessions or commissions
from the underwriters and/or commissions from the purchasers for whom they may
act as agent.
The Company may also sell Company Offered Securities pursuant to one or
more standby agreements with one or more underwriters in connection with the
call for redemption of a specified class of the Company's Preferred Stock
pursuant to which such underwriter or underwriters would agree (a) to purchase
from the Company up to the number of shares of Common Stock that would be
issuable upon conversion of all of the shares of such class of Preferred Stock
at an agreed price per share of Common Stock and (b) to convert into Common
Stock any shares of such class of Preferred Stock purchased by such underwriter
or underwriters in the market. Such underwriter or underwriters may assist in
the solicitation of conversions by holders of shares of such class of Preferred
Stock.
Upon the Company's being notified by the Selling Stockholder of any
change in the identity of the Selling Stockholder or that any material
arrangement has been entered into with a broker or dealer for the sale of any
Selling Stockholder Offered Securities through a secondary distribution, or a
purchase by a broker or dealer, a Prospectus Supplement will be filed, if
required, pursuant to Rule 424(b) under the Securities Act, disclosing (a) the
names of such brokers or dealers; (b) the number of Selling Stockholder Offered
Securities to be sold; (c) the price at which such Selling Stockholder Offered
Securities are being sold; (d) the commissions paid or the discounts or
concessions allowed to such brokers or dealers; (e) where applicable, that such
broker or dealer did not conduct any investigation
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to verify the information set out or incorporated by reference in this
Prospectus, as supplemented or amended; (f) any change in the identity of the
Selling Stockholder, and (g) other facts material to the transaction.
All Offered Securities (except Common Stock) will be securities with no
established trading market. If an underwriter or underwriters are used in the
sale of any Offered Securities, the applicable Prospectus Supplement will
contain a statement as to the intention, if any, of such underwriters at the
date of such Prospectus Supplement to make a market in the Offered Securities.
Such underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. No assurance can be given concerning the
liquidity of the trading market for any Offered Securities.
Underwriters, dealers or agents who participate in the distribution of
Offered Securities may be entitled, under agreements that may be entered into
with the Company and/or the Selling Stockholder, as the case may be, to
indemnification by the Company and/or the Selling Stockholder, as the case may
be, against certain liabilities, including liabilities under the Securities Act,
or to contribution by the Company and/or the Selling Stockholder, as the case
may be, to payments such underwriters, dealers or agents may be required to make
in respect thereof. Underwriters, dealers or agents may be customers of, engage
in transactions with, or perform services for the Company or certain
subsidiaries of the Company and/or the Selling Stockholder or certain affiliates
of the Selling Stockholder in the ordinary course of business.
The Offered Securities may be sold either at a fixed price or prices
that may be changed, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices.
LEGAL OPINIONS
The legality of the Offered Securities will be passed upon for the
Company by Ropes & Gray, Boston, Massachusetts.
EXPERTS
The consolidated balance sheets of the Company as of January 27, 1996
and January 28, 1995 and the consolidated statements of income, stockholders'
equity and cash flows of the Company for the years ended January 27, 1996,
January 28, 1995, and January 29, 1994, incorporated by reference in this
prospectus, have been incorporated herein in reliance on the report of Coopers &
Lybrand L.L.P., independent accountants, given on the authority of that firm as
experts in accounting and auditing.
The consolidated balance sheets of Marshalls as of December 31, 1994
and 1993, and the consolidated statements of income, stockholders' equity and
cash flows of Marshalls for the years ended December 31, 1994, 1993 and 1992
incorporated by reference in this prospectus, have been incorporated herein in
reliance on the report of KPMG Peat Marwick LLP, independent accountants, given
on the authority of that firm as experts in accounting and auditing.
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[LOGO]
THE TJX COMPANIES, INC.
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[Prospectus for Series E Preferred Stock]
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.
PROSPECTUS (Subject to Completion,
Issued June 7, 1996)
1,500,000 Shares
[TJX LOGO]
SERIES E CUMULATIVE CONVERTIBLE PREFERRED STOCK
($1.00 par value)
--------------------
All of the shares of the Series E Cumulative Convertible Preferred
Stock, par value $1.00 per share ("Series E Preferred Stock" or "Offered
Securities"), of The TJX Companies, Inc. ("TJX" or the "Company") are being sold
by the Selling Stockholder as described herein under "Selling Stockholder." None
of the proceeds from the sale of the shares of Series E Preferred Stock will be
received by the Company. The Selling Stockholder Offered Securities may be
offered in amounts, at prices and on terms to be determined at the time of sale
and to be set forth in a Prospectus Statement.
The annual dividend rate payable with respect to each share of Series E
Preferred Stock is $7.00, is cumulative and is payable quarterly in arrears on
each January 1, April 1, July 1 and October 1, commencing on January 1, 1996.
The liquidation preference applicable to each share of Series E Preferred Stock
is equal to the sum of $100 and the amount of accrued and unpaid dividends
thereon.
On November 17, 1998 (the "Automatic Conversion Date"), unless earlier
converted at the option of the holder, each share of Series E Preferred Stock
will convert automatically into (i) a number of shares (the "Conversion Shares")
of the Company's Common Stock, par value $1.00 per share (the "Common Stock")
equal to the applicable Exchange Rate (as defined) and (ii) the right to receive
accrued and unpaid dividends thereon. The "Exchange Rate" is equal to (i) if the
Current Market Price (as defined) is equal to or greater than $18.525 (the
"Threshold Common Stock Price"), 5.398111 shares of Common Stock per each share
of Series E Preferred Stock, (ii) if the Current Market Price is less than the
Threshold Common Stock Price but greater than $15.4375, the number of shares of
Common Stock having a value (determined at the Current Market Price) equal to
$100 and (c) if the Current Market Price is less than or equal to $15.4375,
6.477733 shares of Common Stock per each share of Series E Preferred Stock. The
Exchange Rate is subject to adjustment in certain events. The "Current Market
Price" generally means the average of the daily Closing Prices (as defined) per
share of Common Stock for the ten consecutive Trading Days (as defined)
immediately prior to, but not including, the Automatic Conversion Date.
At any time prior to the close of business on the business day prior to
the Automatic Conversion Date, each share of Series E Preferred Stock is
convertible at the option of the holder thereof into 5.398111 shares of Common
Stock, subject to adjustment in certain events. For a detailed description of
the Series E Preferred Stock, see "Description of Series E Preferred Stock."
The Offered Securities may be sold for public offering to underwriters
or dealers, which may be a group of underwriters represented by one or more
managing underwriters. In addition, the Offered Securities may be sold directly
by the Selling Stockholder or through agents designated from time to time. See
"Plan of Distribution." The names of any such agents, dealers or managing
underwriters, and of any underwriters, involved in the sale of the Offered
Securities in respect of which this Prospectus is being delivered and the
applicable agent's commission, dealer's purchase price or underwriter's discount
will be set forth in the Prospectus Supplement. Any underwriters, dealers or
agents participating in the offering of Offered Securities may be deemed
"underwriters" within the meaning of the Securities Act of 1933, as amended (the
"Securities Act").
----------------------
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF
OFFERED SECURITIES UNLESS ACCOMPANIED BY A PROSPECTUS
SUPPLEMENT.
----------------------
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 STATES 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 ______________,
1996.
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No person is authorized in connection with any offering made hereby to give
any information or to make any representation not contained or incorporated by
reference in this Prospectus, and any information or representation not
contained or incorporated herein must not be relied upon as having been
authorized by the Company or the Underwriters. This Prospectus does not
constitute an offer to sell or the solicitation of an offer to buy any security
other than the securities covered by this Prospectus, nor does it constitute an
offer or solicitation by any person in any jurisdiction in which it is unlawful
for such person to make such an offer or solicitation. Neither the delivery of
this Prospectus at any time nor any sale made hereunder shall under any
circumstance imply that the information herein is correct as of any date
subsequent to the date hereof.
--------------------
TABLE OF CONTENTS
Page
Incorporation of Certain Documents by Reference.............................3
Available Information.......................................................3
Summary.....................................................................4
The Company................................................................ 9
Use of Proceeds............................................................13
Price Range of Common Stock and Dividends..................................13
Selected Consolidated Financial Information................................14
Selected Information by Major Business Segment.............................16
Management's Discussion and Analysis of Results of
Operations and Financial Condition........................................17
Selling Stockholder........................................................20
Description of Series E Preferred Stock....................................21
Federal Income Tax Considerations..........................................26
Description of Capital Stock...............................................28
Plan of Distribution.......................................................39
Legal Opinions.............................................................40
Experts....................................................................40
--------------------
IN CONNECTION WITH ANY OFFERING OF SERIES E PREFERRED STOCK HEREUNDER
AT FIXED PRICES, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH
STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SHARES OF SERIES E PREFERRED STOCK
AND/OR COMMON STOCK OF THE COMPANY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK
STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING,
IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously or simultaneously filed
with the Securities and Exchange Commission (the "Commission") (File No. 1-4908)
are incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended January
27, 1996;
(b) The Company's Current Report on Form 8-K dated May 24, 1996 (filed June 5,
1996);
(c) The Company's Amendment No. 4 on Form 8-A/A dated June 3, 1996 to the
Company's Registration Statement on Form 8-A in respect of the Common Stock,
including without limitation the description of the Common Stock set forth
therein; and
(d) The consolidated financial statements of Marshalls of Roseville, Minn., Inc.
and the unaudited pro forma condensed consolidated financial statements of the
Company set forth in the Company's Amendment No. 1 on Form 8-K/A dated November
17, 1995 (filed January 31, 1996).
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
after the date of this Prospectus and prior to the termination of the offering
made hereby shall be incorporated by reference into this Prospectus and shall be
deemed to be a part of this Prospectus from the date of filing of such
documents. See "Available Information." Any statement contained in a document
incorporated by reference herein shall be deemed to be modified or superseded to
the extent that a statement contained in this Prospectus or in the accompanying
Prospectus Supplement, or in any other subsequently filed incorporated document,
modifies or supersedes such statement. The Company will provide, upon written or
oral request, without charge, to each person to whom a copy of this Prospectus
has been delivered, a copy of any or all of the documents which have been or may
be incorporated in this Prospectus by reference, other than certain exhibits to
such documents. Requests for such copies should be directed to: The TJX
Companies, Inc., 770 Cochituate Road, Framingham, Massachusetts 01701 (telephone
(508) 390-1000), Attention: Sherry Lang, Manager of Investor Relations.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Exchange Act, and, in accordance therewith, files periodic reports, proxy
materials and other information with the Commission. Such reports, proxy
materials and other information filed by the Company can be inspected and copied
at the public reference facilities maintained by the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the
Commission's regional offices at 7 World Trade Center, 13th Floor, New York, New
York 10048, and 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Copies of such material can be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. In addition, similar information concerning the Company can be
inspected at the NYSE, 20 Broad Street, New York, New York 10005.
This Prospectus constitutes a part of a Registration Statement on Form
S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") filed by the Company with the Commission under the Securities Act of
1933, as amended (the "Securities Act"), with respect to the securities offered
hereby. This Prospectus does not contain all the information included in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. Reference is made to such
Registration Statement and to the exhibits thereto for further information with
respect to the Company and the Offered Securities.
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SUMMARY
The following summary is qualified in its entirety by the detailed
information appearing elsewhere or incorporated by reference in this Prospectus.
The Company's fiscal year ends on the last Saturday in January and the Company
identifies fiscal years by reference to the year in which the fiscal year ends.
Thus, fiscal 1996 refers to the fiscal year ended January 27, 1996. All
information as to stores currently in operation is as of January 27, 1996,
except as otherwise specifically indicated.
THE COMPANY
The TJX Companies, Inc. is the largest off-price family apparel
retailer in North America. The Company operates 587 T.J. Maxx stores, the
recently acquired Marshalls chain of 496 stores, and Winners Apparel Ltd., a
Canadian off-price family apparel chain with 52 stores. TJX is also developing
HomeGoods, a U.S. off-price home fashion chain with 22 stores, and T.K. Maxx, an
off-price family apparel concept in the United Kingdom, which has 9 stores. The
Company also has operated the Chadwick's of Boston off-price women's fashion
catalog. The Company's mission is to consistently deliver value to its customers
by providing rapidly changing assortments of brand-name merchandise at prices
substantially below department and specialty store regular prices. Net sales of
the Company for the fiscal year ended January 27, 1996 were $4.4 billion,
including Marshalls sales since its acquisition by TJX in November 1995. The
Company's combined T.J. Maxx and Marshalls division represents the substantial
majority of the Company's sales volume.
TJX completed the acquisition of Marshalls, an off-price family apparel
chain, from Melville Corporation on November 17, 1995. The purchase price
(before expenses) for the acquisition was $599.3 million, consisting of $375
million in cash, before closing adjustments, plus an additional $49.3 million
(paid on April 30, 1996) based on the final closing balance sheet, plus $175
million in TJX convertible preferred stock. The convertible preferred stock
consisted of the 1,500,000 shares of Series E Preferred Stock offered hereby
plus 250,000 shares of Series D Cumulative Convertible Preferred Stock.
As a result of the acquisition, TJX added 496 Marshalls stores to its
existing base of 587 U.S. off-price family apparel stores as of January 27,
1996. Management believes that it will realize improved operating efficiencies
for the combined entity through the integration of many administrative and
operational functions as well as through increased purchasing leverage. In
addition, through the acquisition of Marshalls, the Company will be able to
decrease the amount of excess retail square footage in the competitive off-price
retail sector through the closure of underperforming stores. During the period
from the Marshalls acquisition through the end of fiscal 1998, the Company
expects to close approximately 30 T.J. Maxx stores and 170 Marshalls stores.
TJX established a $244.1 million reserve in the allocation of the purchase price
of Marshalls relating primarily to the anticipated closing of these
approximately 170 Marshall stores. In addition, TJX recorded a charge of $35
million for the closing of these approximately 30 T.J. Maxx stores. The
Company plans to retain the independent identities of the T.J. Maxx and
Marshalls chains, including, but not limited to, certain elements of marketing,
merchandising, product assortment and store appearance.
Both T.J. Maxx and Marshalls offer a broad range of brand-name family
apparel, accessories, shoes, domestics, giftware and jewelry at prices generally
20% to 60% below department and specialty store regular prices. The Company's
strategies for increasing sales and profitability at both T.J. Maxx and
Marshalls include:
o Taking advantage of increased purchasing leverage to deliver
lower prices, to increase the differential of the prices
offered by T.J. Maxx and Marshalls as compared to those
offered by department and specialty stores and to provide
enhanced value to customers;
o Continuing the process of integrating Marshalls and T.J. Maxx
and further consolidating duplicative
functions and reducing associated operating expenses;
o Closing underperforming stores; and
o Improving the performance of Marshalls by implementing
strategies utilized by T.J. Maxx such as increased brand-name
focus, everyday low price strategy, disciplined markdown
programs, and low operating expenses.
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In September 1995, the Company sold its Hit or Miss chain of off-price
women's specialty apparel stores. On May 24, 1996, the Company's subsidiary
Chadwick's of Boston, Ltd. filed with the Commission a Registration Statement
(File No. 333-4427) related to the sale by the Company in an underwritten public
offering of up to 9,260,000 shares (or approximately 61%), excluding 1,389,000
shares (or approximately 9%) subject to an underwriters' over-allotment option,
of the common stock of Chadwick's, which operates the Chadwick's of Boston
fashion catalog. The Company expects to reduce its ownership interest in
Chadwick's over time, subject to prevailing market and other conditions.
THE OFFERING
Securities Offered.. 1,500,000 shares of the Company's Series E Preferred
Stock.
Ranking............. The shares of Series E Preferred Stock offered hereby
will rank, with respect to dividends and upon liquidation,
dissolution or winding up, senior to the Common Stock,
pari passu with the Company's outstanding Series D
Cumulative Convertible Preferred Stock, par value $1.00
per share (the "Series D Preferred Stock") and, after the
redemption or conversion of all shares of the Company's
Series A Cumulative Convertible Preferred Stock, par
value $1.00 per share (the "Series A Preferred Stock"),
pari passu with the Company's Series C Cumulative
Convertible Preferred Stock, par value $1.00 per share
(the "Series C Preferred Stock"). For so long as any
shares of Series A Preferred Stock remain outstanding,
the Series E Preferred Stock will rank junior to the
Series A Preferred Stock and the Series C Preferred
Stock.
Dividends........... The annual dividend rate payable with respect to each
share of Series E Preferred Stock is $7.00, is cumulative
and is payable quarterly in arrears on each January 1,
April 1, July 1 and October 1, commencing January 1,
1996.
Mandatory
Conversion......... On November 17, 1998 the ("Automatic Conversion
Date"), unless earlier converted at the option of the
holder, each share of Series E Preferred Stock will
convert automatically into (i) a number of shares of
Common Stock equal to the Exchange Rate and (ii) the
right to receive accrued and unpaid dividends thereon.
The "Exchange Rate" is equal to (i) if the Current
Market Price is equal to or greater than $18.525 (the
"Threshold Common Stock Price"), 5.398111 shares of
Common Stock per each share of Series E Preferred
Stock, (ii) if the Current Market Price is less than the
Threshold Common Stock Price but greater than
$15.4375, the number of shares of Common Stock
having a value (determined at the Current Market Price)
equal to $100 and (c) if the Current Market Price is less
than or equal to $15.4375, 6.477733 shares of Common
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Stock per each share of the Series E Preferred Stock.
The Exchange Rate is subject to adjustment in certain
events. The "Current Market Price" generally means the
average of the daily Closing Prices per share of
Common Stock for the ten consecutive Trading Days
immediately prior to, but not including, the Automatic
Conversion Date.
Conversion at the
Option of the
Holder............. At any time prior to the close of business on the business
day prior to the Automatic Conversion Date, each share
of Series E Preferred Stock is convertible at the option
of the holder thereof into 5.398111 shares of Common
Stock, subject to adjustment in certain events.
Liquidation
Preference......... The liquidation preference applicable to each share of
Series E Preferred Stock is equal to the sum of $100 and
the amount of accrued and unpaid dividends thereon.
Redemption at the
Option of
the Company........ The shares of Series E Preferred Stock are not
redeemable by the Company.
Voting Rights....... Except as required by law or with respect to the creation
or issuance of senior classes or series of preferred stock,
the holders of shares of Series E Preferred Stock will
generally not be entitled to any voting rights unless the
equivalent of six quarterly dividends payable on the
shares of Series E Preferred Stock are in arrears, in
which case the number of directors of the Company will
be increased by two and the holders of shares of Series E
Preferred Stock, voting separately as a class with the
holders of shares of any other series of parity preferred
stock upon which like voting rights have been conferred
and are exercisable, will be entitled to elect two
directors for a term of one year (or until the dividend
arrearage has been paid).
Proposed Listing.... Whether the shares of Series E Preferred Stock will be
listed on any national securities exchange will be
indicated in the Supplemental Prospectus. The Common
Stock is listed on the NYSE under the symbol "TJX".
Use of Proceeds......None of the proceeds from the sale of the shares of
Series E Preferred Stock will be received by the
Company.
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SUMMARY FINANCIAL DATA
The summary financial data reflects the Company's Hit or Miss division,
which was sold on September 30, 1995, as a discontinued operation. On November
17, 1995 the Company acquired Marshalls. The Company has included the results of
Marshalls in its consolidated results commencing November 18, 1995.
On May 24, 1996, the Company's subsidiary Chadwick's of Boston, Ltd.
filed with the Commission a Registration Statement related to the sale by the
Company in an underwritten public offering of up to 9,260,000 shares (or
approximately 61%), excluding 1,389,000 shares (or approximately 9%) subject to
an underwriters' over-allotment option, of the common stock of Chadwick's.
Fiscal Year Ended
-----------------
Jan. 25, Jan. 30, Jan. 29, Jan. 28, Jan. 27,
1992 1993 1994 1995 1996
-------- ------- ------- ------- -------
(in millions, except per share and store amounts)
Income statement data:
Net sales.............. $2,380.6 $2,879.3 $3,253.5 $3,489.1 $4,447.5
Operating income(1)(2)........ 194.3 239.7 261.6 214.7 201.2
Income from continuing
operations(2).............. 90.0 110.7 124.6 86.6 63.6
Net income(2)(3).............. 20.1 102.8 124.4 82.6 26.3
Earnings per common share
from continuing
operations(2).............. $1.28 $1.49 $1.58 $1.08 $.74
Dividends per common
share(4)................... 0.46 0.46 0.50 0.56 0.49
Ratio of earnings to combined
fixed charges and preferred
stock dividends(5)......... 3.79x 3.65x 3.69x 2.52x 1.70x
Cash flow data:
Earnings before interest,
taxes, depreciation and
amortization from
continuing operations...... $223.5 $259.7 $282.2 $238.9 $239.1
Capital expenditures........ 78.0 102.1 118.5 120.0 111.8
Balance sheet data:
Working capital(6).......... $158.9 $244.2 $285.4 $277.2 $409.2
Total assets(6)............. 1,004.0 1,209.1 1,331.0 1,550.8 2,745.6
Long-term debt.............. 307.4 179.8 210.9 239.5 690.7
Shareholders' equity......... 260.5 505.2 590.9 607.0 764.6
Stores in Operation -
End of Period
T.J. Maxx 437 479 512 551 587
Marshalls - - - - 496
Winners 9 15 27 37 52
HomeGoods - 6 10 15 22
T.K. Maxx - - - 5 9
- ------------------------
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(1) Operating income is the pre-tax income from the business segments before
interest and general corporate items.
See "Selected Information by Major Business Segment."
(2) For fiscal 1996, reflects an after-tax charge of $21.0 million ($35
million pre-tax), or $.29 per share, for the estimated cost of closing
approximately 30 T.J. Maxx stores in connection with the acquisition of
Marshalls.
(3) Net income includes the results of and/or charges relating to discontinued
operations. Discontinued operations relate to the Company's Hit or Miss
division which was sold on September 30, 1995 and to a reserve established
relating to lease liabilities from its former Zayre division. The Company
sold the Zayre division in October 1988 to Ames Department Stores Inc.
("Ames"). In April 1990 Ames filed for bankruptcy and certain lease
liabilities reverted back to the Company. The loss on disposal of
discontinued operations includes a $50 million after-tax charge in fiscal
1992 relating to Zayre division and an after-tax charge of $31.7 million
in fiscal 1996 relating to the sale of Hit or Miss. In addition to the
foregoing after-tax charge, the income (loss) of the Hit or Miss
division for all periods prior to September 30, 1995 is included in
discontinued operations.
(4) In the fourth quarter of fiscal 1996, the Company reduced its quarterly
dividend from $.14 to $.07 per share of Common Stock in order to utilize
the approximately $20 million in annual dividend savings in support of its
acquisition of Marshalls.
(5) For purposes of computing the ratio of earnings to fixed charges and
preferred stock dividends, "earnings" represent income from continuing
operations, provision for taxes, interest expense and the interest portion
of rentals. "Fixed charges" represents interest expense, capitalized
interest, and a portion of rentals, which is considered representative of
the interest factor. "Preferred stock dividends" represent the preferred
stock dividend requirements increased to an amount representing the
pre-tax earnings that would be required to cover such dividend
requirements.
(6) Excludes the net assets of the discontinued Hit or Miss division.
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THE COMPANY
The TJX Companies, Inc. is the largest off-price family apparel
retailer in North America. The Company operates 587 T.J. Maxx stores, the
recently acquired Marshalls chain of 496 stores, and Winners Apparel Ltd., a
Canadian off-price family apparel chain with 52 stores. TJX is also developing
HomeGoods, a U.S. off-price home fashion chain with 22 stores, and T.K. Maxx, an
off-price family apparel concept in the United Kingdom, which has 9 stores. The
Company also has operated the Chadwick's of Boston off-price women's fashion
catalog. The Company's mission is to consistently deliver value to its customers
by providing rapidly changing assortments of brand-name merchandise at prices
substantially below department store and specialty store regular prices. Net
sales of the Company for the fiscal year ended January 27, 1996 were $4.4
billion, including Marshalls sales since its acquisition by TJX in November
1995. The Company's combined T.J. Maxx and Marshalls division represents the
substantial majority of the Company's sales volume.
TJX completed the acquisition of Marshalls, an off-price family apparel
chain, from Melville Corporation on November 17, 1995. The purchase price
(before expenses) for the acquisition was $599.3 million, consisting of $375
million in cash, before closing adjustments, plus an additional $49.3 million
(paid on April 30, 1996) based on the final closing balance sheet, plus $175
million in TJX convertible preferred stock. The convertible preferred stock
consisted of the 1,500,000 shares of Series E Preferred Stock offered hereby
plus 250,000 shares of Series D Cumulative Convertible Preferred Stock.
As a result of the acquisition, TJX added 496 Marshalls stores to its
existing base of 587 U.S. off-price family apparel stores as of January 27,
1996. Management believes that it will realize improved operating efficiencies
for the combined entity through the integration of many administrative and
operational functions as well as through increased purchasing leverage. In
addition, through the acquisition of Marshalls, the Company will be able to
decrease the amount of excess retail square footage in the competitive off-price
retail sector through the closure of underperforming stores. During the period
from the Marshalls acquisition through the end of fiscal 1998, the Company
expects to close approximately 30 T.J. Maxx stores and 170 Marshalls stores. TJX
established a $244.1 million reserve in the allocation of the purchase price
of Marshalls relating primarily to the anticipated closing of these
approximately 170 Marshall stores. In addition, TJX recorded a charge of $35
million for the closing of these approximately 30 T.J. Maxx stores.The
Company plans to retain the independent identities of the T.J. Maxx and
Marshalls chains, including, but not limited to, certain elements of
merchandising, product assortment and store appearance.
Both T.J. Maxx and Marshalls offer a broad range of brand-name family
apparel, accessories, shoes, domestics, giftware and jewelry at prices generally
20% to 60% below department and specialty store regular prices. The Company's
strategies for increasing sales and profitability at both T.J. Maxx and
Marshalls include:
o Taking advantage of increased purchasing leverage to deliver
lower prices, to increase the differential of the prices
offered by T.J. Maxx and Marshalls as compared to those
offered by department and specialty stores and to provide
enhanced value to customers;
o Continuing the process of integrating Marshalls and T.J. Maxx
and further consolidating duplicative
functions and reducing associated operating expenses;
o Closing underperforming stores; and
o Improving the performance of Marshalls by implementing
strategies utilized by T.J. Maxx such as increased brand-name
focus, everyday low price strategy, disciplined markdown
programs, and low operating expenses.
In September 1995, the Company sold its Hit or Miss chain of off-price
women's specialty apparel stores. On May 24, 1996, the Company's subsidiary
Chadwick's of Boston, Ltd. filed with the Commission a Registration Statement
(File No. 333-4427) related to the sale by the Company in an underwritten public
offering of up to 9,260,000 shares (or approximately 61%), excluding 1,389,000
shares (or approximately 9%) subject to an underwriters' over-allotment option,
of the common stock of Chadwick's, which operates the Chadwick's of Boston
fashion catalog. The Company expects to reduce its ownership interest in
Chadwick's over time, subject to prevailing market and other conditions.
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T.J. Maxx
T.J. Maxx is the largest off-price family apparel chain in the
United States. T.J. Maxx was founded by the Company in 1976 and operates
587 stores in 48 states.
T.J. Maxx sells brand-name family apparel, accessories, giftware,
domestics, women's shoes and fine jewelry at prices generally 20% to 60% below
department and specialty store regular prices. T.J. Maxx's target customers are
women between the ages of 25 to 50, who typically have families with middle and
upper-middle incomes and who generally fit the profile of a department store
shopper.
The ability to purchase merchandise at favorable prices and operate
with a low cost structure is essential to T.J. Maxx's off-price mission. The
chain uses opportunistic buying strategies to purchase large quantities of
merchandise at significant discounts from initial wholesale prices. Those
strategies include special situation purchases, closeouts of current season
fashions and out-of-season purchases of fashion basic items for warehousing
until the appropriate selling season. These buying strategies rely heavily on
inventory controls that permit a virtually continuous "open-to-buy" position. In
addition, highly automated warehousing and distribution systems track, allocate
and deliver an average of 10,000 items per week to each store. Each T.J. Maxx
store is currently serviced by one of the chain's four distribution centers in
Worcester, Massachusetts; Evansville, Indiana; Las Vegas, Nevada; and Charlotte,
North Carolina.
T.J. Maxx stores are generally located in suburban community shopping
centers and average approximately 28,000 gross square feet in size. In recent
years, T.J. Maxx has enlarged a number of stores to a larger format,
approximately 30,000-40,000 gross square feet in size, and plans to continue its
program of enlarging other successful stores. This larger format allows T.J.
Maxx to expand all of its departments, with particular emphasis on its
successful giftware and domestics departments and other non-apparel categories.
During fiscal 1996, 41 stores were opened, including 22 of the new larger
prototype, and 5 were closed. In addition, 17 existing stores were expanded to
the larger format, bringing the total of T.J. Maxx stores in the larger format
to 217. In fiscal 1997, approximately 30 stores are expected to be closed;
approximately 25 new stores are planned, of which approximately 10 are expected
to be larger stores, along with the planned expansion of about 19 existing
locations.
Marshalls
Marshalls is the second largest off-price family apparel retailer in
the United States. Marshalls operates 496 stores in 38 states. Marshalls target
customers fit a profile similar to those of T.J. Maxx. Marshalls merchandise is
also similar to that carried by T.J. Maxx, except that Marshalls offers its
customers a full-line shoe department, a larger men's department and costume,
rather than fine, jewelry. Marshalls stores average approximately 32,000 gross
square feet. During fiscal 1996, 25 Marshalls stores were opened and 13 were
closed. In fiscal 1997, approximately 60 stores are expected to be closed;
approximately 10 new stores are planned. Each Marshalls store is currently
serviced by one of four distribution centers located in Woburn, Massachusetts;
Decatur, Georgia; Bridgewater, Virginia; and Chatsworth, California.
The operations and strategies of T.J. Maxx and Marshalls have been very
similar historically. In recent years, however, Marshalls had moved away from
some of its key strategies, such as everyday low prices, in favor of other
marketing concepts, including the frequent use of promotional pricing. By
restoring certain Marshalls historical strategies and effecting other
improvements, including the adoption of certain strategies similar to those of
TJX, the Company believes that it can increase Marshalls' level of profitability
and performance.
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Marshalls Acquisition
The Company believes that the Marshalls acquisition offers a number of
advantages and opportunities, including the following:
Enhanced Purchasing Power. The combined T.J. Maxx/Marshalls division
represents significantly increased purchasing power which the Company
believes will permit it to reduce its costs of merchandise, thereby
leading to lower prices and enhanced value to its customers.
Increase Price Differential with Department Stores. In recent years,
department stores have offered increased promotional pricing thereby
effectively reducing the price differential between department store
prices and the everyday low prices of T.J. Maxx and Marshalls. The
Company believes that the purchasing leverage gained as a result of the
Marshalls acquisition will permit it to reduce its prices and thereby
enhance its competitive position in an increasingly competitive
environment.
Operating Efficiencies. The Company expects to achieve significant
savings through the integration and consolidation of T.J. Maxx and
Marshalls organizations and functions in a number of areas including
the real estate, administrative, human resources and buying
organizations. In addition, the Company expects to realize substantial
savings through the consolidation of T.J. Maxx and Marshalls management
information systems and by decreased promotional advertising.
Store Closings. By the end of fiscal 1998, the Company currently
expects to close approximately 170 Marshalls stores and 30 T.J. Maxx
stores. By closing these stores, the Company will eliminate its least
productive locations, which should benefit the store sales of the
remaining nearby T.J. Maxx and Marshalls stores. In connection with the
Marshalls acquisition, the Company established reserves for store
closings which it believes will be adequate to cover the costs of such
closings in both chains.
Utilization of Best Practices of Each Chain. The Company expects to
realize additional benefits by extending the respective strengths and
expertise of each of Marshalls and T.J. Maxx to improve the performance
of each chain.
Improvement of Marshalls Performance. The Company believes it can
significantly improve Marshalls' performance by incorporating a number
of features of the T.J. Maxx model. The Company has begun the reduction
of Marshalls' emphasis on promotional pricing events in favor of the
everyday low pricing strategy of T.J. Maxx. Marshalls will also reduce
its portion of private label merchandise and give more emphasis to
national brands. The T.J. Maxx disciplined markdown approach, which
requires regular and timely markdowns of unsold merchandise, with a
goal of promoting a regular flow of fresh merchandise into the store,
has replaced the Marshalls approach, which gave less emphasis to
regular markdowns and thereby permitted a greater buildup of aging
merchandise.
Retention of T.J. Maxx and Marshalls Separate Identities.
Notwithstanding the foregoing changes, the Company intends to preserve
the separate identities of T.J. Maxx and Marshalls and thereby
capitalize on the strengths of each franchise in the marketplace.
Marshalls' broader assortment of men's clothing and its full-line
footwear department will continue, as will the chain's greater emphasis
on items such as costume jewelry. While T.J. Maxx and Marshalls will
continue to feature much of the same merchandise, each chain will also
receive different merchandise and emphasize certain vendors' products.
In order to enhance the distinct identity of Marshalls and T.J. Maxx,
the Company intends to maintain separate marketing departments for each
chain which will pursue independent marketing and advertising
strategies. Each of T.J. Maxx and Marshalls also will continue to
present different store layouts, wall design, fixturing and other
aesthetic differences designed to preserve a distinct store appearance.
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The foregoing is a description of the Company's present strategies related to
the Marshalls acquisition. Such strategies may change over time as the Company
and the off-price retail sector evolve.
Winners Apparel Ltd.
The Company acquired the Winners chain in fiscal 1991. The Winners
acquisition has provided the Company with the opportunity to introduce the
concept of off-price apparel retailing to the Canadian market. Since the
acquisition, Winners has increased its number of stores from 5 to 52.
Winners' apparel merchandising concept is substantially similar to that
of T.J. Maxx. Winners' stores average 24,000 gross square feet, and emphasize
off-price designer and brand-name misses sportswear, dresses, lingerie,
accessories and giftware, as well as menswear and clothing for children,
including infants and toddlers. In fiscal 1996, Winners opened 15 stores in new
and existing Canadian markets. Winners expects to open 12-15 stores in fiscal
1997.
HomeGoods
The Company is continuing to develop its HomeGoods stores, which are
designed to expand upon the Company's off-price presence in the home fashions
market. HomeGoods stores offer a broad and deep range of home fashion products,
including domestics, cookware, bath accessories, and giftware in a no-frills,
multi-department format.
HomeGoods has moved to a smaller 35,500 square foot prototype for new
openings and downsized existing locations. HomeGoods opened 9 stores and closed
2 stores in fiscal 1996 and now operates a total of 22 stores. HomeGoods and
T.J. Maxx are experimenting with a new format that combines the T.J. Maxx and
HomeGoods concepts in one store and have opened three such stores.
T.K. Maxx
During fiscal 1995, the Company opened its first 5 T.K. Maxx stores in
the United Kingdom, and began testing the off-price family apparel concept in
Europe. T.K. Maxx utilizes the same off-price strategy employed by T.J. Maxx and
Winners. At the end of fiscal 1996, the Company had a total of 9 stores and has
plans to open approximately 9 in fiscal 1997.
Chadwick's of Boston
On May 24, 1996, the Company's subsidiary Chadwick's of Boston, Ltd.
filed with the Commission a Registration Statement (File No. 333-4427) related
to the sale by the Company in an underwritten public offering of up to 9,260,000
shares (or approximately 61%), excluding 1,389,000 shares (or approximately 9%)
subject to an underwriters' over-allotment option, of the common stock of
Chadwick's, which operates the Chadwick's of Boston fashion catalog. The Company
expects to reduce its ownership interest in Chadwick's over time, subject to
prevailing market and other conditions.
Chadwick's, founded by the Company in 1983, offers off-price women's
career and casual fashion apparel through a catalog operation. The Chadwick's
catalog features first quality, current fashion and classic merchandise,
including career, sportswear, casual wear, dresses, suits and accessories, with
a mix of brand-name and private label merchandise, priced significantly below
conventional retailers and other catalog operations. Chadwick's target customers
are 25 to 55-year old women interested in moderately to upper-moderately priced
merchandise. Certain of Chadwick's catalogs also carry menswear.
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Competition
The retail apparel business is highly competitive. The Company
generally competes for customers with a variety of conventional and discount
retail stores, including national, regional and local independent department and
specialty stores, as well as with catalog operations, factory outlet stores and
other off-price stores. In recent years, the Company has encountered increased
competition from department stores which have become more focused on promotions
to increase sales. Competitive factors important to the Company's customers
include fashion, value, merchandise selection, brand-name recognition and, to a
lesser degree, store location. In addition, because the Company purchases much
of its inventory opportunistically, the Company competes for merchandise with
other national and regional off-price apparel and other discount outlets. Also,
many of the Company's competitors handle identical or similar lines of
merchandise and have comparable locations, and some have greater financial
resources than the Company. The Company expects that the Marshalls acquisition
will enhance its competitiveness. See "The Company" - "Marshalls Acquisition".
USE OF PROCEEDS
All of the shares of the Series E Preferred Stock of the Company are
being sold by the Selling Stockholder as described herein under "Selling
Stockholder." None of the proceeds from the sale of the shares of Series E
Preferred Stock will be received by the Company.
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
The Company's Common Stock is listed on the New York Stock Exchange,
Inc. (the "NYSE") and is traded under the symbol TJX. The following table sets
forth, for the fiscal periods indicated, the high and low sales prices per share
of the Common Stock as reported on the NYSE, and the cash dividends declared per
share of Common Stock. The reported last sale price of the Common Stock on the
NYSE on June 5, 1996 was $35.
Cash Dividends
Fiscal Year Ended High Low Declared Per Share
- ----------------- ------- ------ ------------------
January 28, 1995
1st Quarter ................ $29 3/8 $22 7/8 $.14
2nd Quarter ................ 24 7/8 18 1/8 .14
3rd Quarter ................ 23 1/4 15 5/8 .14
4th Quarter ................ 16 1/4 13 3/16 .14
January 27, 1996
1st Quarter ................ 14 11 1/8 .14
2nd Quarter ................ 15 1/2 11 3/8 .14
3rd Quarter ................ 15 3/4 11 1/2 .14
4th Quarter ................ 19 7/8 13 1/2 .07
January 30, 1997
1st Quarter ................ 30 3/4 18 1/2 .07
2nd Quarter (through
June 5, 1996)............... 36 28 .07
In the fourth quarter of fiscal 1996, the Company reduced its quarterly
dividend from $.14 to $.07 per share of Common Stock in order to use the
approximately $20 million in annual dividend savings in support of its
acquisition of Marshalls.
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SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following selected consolidated financial information of the
Company for each of the last five fiscal years is derived from the consolidated
financial statements, including the notes thereto, contained in the Company's
Annual Reports on Form 10-K for the five fiscal years ended January 27, 1996,
which have been audited by Coopers & Lybrand L.L.P., the Company's independent
accountants. The following selected consolidated financial information for the
five years ended January 27, 1996 reflects the Company's Hit or Miss division,
which was sold on September 30, 1995, as a discontinued operation. On November
17, 1995 the Company acquired Marshalls, and the Company has included the
results of Marshalls in its consolidated results commencing November 18, 1995.
This selected consolidated financial information should be read in conjunction
with the consolidated financial statements, related notes, pro forma financial
information and other financial information incorporated by reference herein.
On May 24, 1996, the Company's subsidiary Chadwick's of Boston, Ltd.
filed with the Commission a Registration Statement related to the sale by the
Company in an underwritten offering of up to 9,260,000 shares (or approximately
61%), excluding 1,389,000 shares (or approximately 9%) subject to an
underwriters' over-allotment option, of the common stock of Chadwick's.
Fiscal Year Ended
-----------------
Jan. 25, Jan. 30, Jan. 29, Jan. 28, Jan. 27,
1992 1993 1994 1995 1996
-------- -------- -------- -------- --------
(in millions, except per share and store amounts)
Income statement data:
Net sales............... $2,380.6 $2,879.3 $3,253.5 $3,489.1 $4,447.5
Operating income(1)(2).. 194.3 239.7 261.6 214.7 201.2
Income from continuing
operations(2).......... 90.0 110.7 124.6 86.6 63.6
Income (loss) from
discontinued operations,
including (loss) on the
disposal of discontinued
operations, net of income
taxes(3)................ (69.9) (6.7) 2.4 (4.0) (34.0)
Other items, net of income
taxes(4)............... - (1.2) (2.6) - (3.3)
--------- ------- ------- -------- ------
Net income(2).......... $20.1 $102.8 $124.4 $82.6 $26.3
--------- ------- ------- -------- -------
--------- ------- ------- -------- -------
Income per common share:
Continuing operations(2).. $1.28 $1.49 $1.58 $1.08 $.74
Discontinued operations... (0.99) (0.09) 0.04 (0.05) (0.46)
Net income(2)............. 0.29 1.38 1.58 1.03 0.23
Dividends per common
share(5).................. 0.46 0.46 0.50 0.56 0.49
Weighted average common
shares (in millions)...... 70.1 73.9 74.2 73.5 73.1
Ratio of earnings to combined
fixed charges and preferred
stock dividends(6)......... 3.79x 3.65x 3.69x 2.52x 1.70x
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Cash flow data:
Earnings before interest,
taxes, depreciation and
amortization from
continuing operations...... $223.5 $259.7 $282.2 $238.9 $239.1
Capital expenditures.......... 78.0 102.1 118.5 120.0 111.8
Balance sheet data:
Working capital(7)............ $158.9 $244.2 $285.4 $277.2 $409.2
Total assets(7)............... 1,004.0 1,209.1 1,331.0 1,550.8 2,745.6
Long-term debt................ 307.4 179.8 210.9 239.5 690.7
Retained earnings (deficit)... (38.1) 44.7 125.2 159.1 140.5
Shareholders' equity.......... 260.5 505.2 590.9 607.0 764.6
Stores in Operation -
End of Period:
T.J. Maxx.................... 437 479 512 551 587
Marshalls - - - - 496
Winners...................... 9 15 27 37 52
HomeGoods.................... - 6 10 15 22
T.K. Maxx.................... - - - 5 9
(1) Operating income is the pre-tax income from the business segments before
interest and general corporate items.
See "Selected Information by Major Business Segment."
(2) For fiscal 1996, reflects an after-tax charge of $21.0 million ($35 million
pre-tax), or $.29 per share, for the estimated cost of closing
approximately 30 T.J. Maxx stores in connection with the acquisition of
Marshalls.
(3) Discontinued operations relate to the Company's Hit or Miss division which
was sold on September 30, 1995 and to a reserve established relating to
lease liabilities from its former Zayre division. The Company sold the
Zayre division in October 1988 to Ames Department Stores Inc. ("Ames").
In April 1990 Ames filed for bankruptcy and certain lease liabilities
reverted back to the Company. The loss on disposal of discontinued
operations includes a $50 million after-tax charge in fiscal 1992 relating
to Zayre division and an after-tax charge of $31.7 million in fiscal 1996
relating to the sale of Hit or Miss. In addition to the foregoing
after-tax charge, the income(loss) of the Hit or Miss division for all
periods prior to September 30, 1995 is also included in discontinued
operations.
(4) Other items, net includes extraordinary charges of $1.2 million, or $.02
per share, and $3.3 million, or $.05 per share, for the early retirement of
debt in fiscal 1993 and fiscal 1996, respectively, and a charge for the net
cumulative effect of accounting changes of $2.6 million, or $.04 per share,
in fiscal 1994.
(5) In the fourth quarter of fiscal 1996, the Company reduced its quarterly
dividend from $.14 to $.07 per share of Common Stock in order to utilize
the approximately $20 million in annual dividend savings in support of its
acquisition of Marshalls.
(6) For purposes of computing the ratio of earnings to combined fixed charges
and preferred stock dividends, "earnings" represent income from continuing
operations, provision for taxes, interest expense and the interest portion
of rentals. "Fixed charges" represents interest expense, capitalized
interest, and a portion of rentals, which is considered representative of
the interest factor. "Preferred stock dividends" represent the preferred
stock dividend requirements increased to an amount representing the pre-tax
earnings that would be required to cover such dividend requirements.
(7) Excludes the net assets of discontinued Hit or Miss operations.
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SELECTED INFORMATION BY MAJOR BUSINESS SEGMENT
The following selected financial information by business segment for
each of the last five fiscal years is derived from the consolidated financial
statements of the Company. This Selected Information by Major Business Segment
for the five years ended January 27, 1996 reflects the Company's Hit or Miss
division, which was sold on September 30, 1995, as a discontinued operation. On
November 17, 1995 the Company acquired Marshalls. The Company has included the
results of Marshalls in its consolidated results commencing November 18, 1995.
Accordingly, the following selected information by major business segment
includes the historical results of Marshalls only from and after November 18,
1995.
On May 24, 1996, the Company's subsidiary Chadwick's of Boston, Ltd.,
which conducts the Company's off-price catalog operation, filed with the
Commission a Registration Statement related to the sale by the Company in an
underwritten offering of up to 9,260,000 shares (or approximately 61%),
excluding 1,389,000 shares (or approximately 9%) subject to an underwriters'
over-allotment option, of the common stock of Chadwick's.
Fiscal Year Ended
-----------------
Jan. 25, Jan. 30, Jan. 29, Jan. 28, Jan. 27,
1992 1993 1994 1995 1996
--------- -------- -------- --------- ---------
(in millions)
Net Sales:
Off-price family apparel stores $2,207.2 $2,588.6 $2,832.1 $3,055.6 $3,896.7
Off-price catalog operation... 173.4 290.7 421.4 433.5 472.4
Off-price home fashion stores. - - - - 78.4
------ ------- ------- ------- --------
$2,380.6 $2,879.3 $3,253.5 $3,489.1 $4,447.5
-------- -------- -------- -------- -------
-------- -------- -------- -------- -------
Operating income (loss):
Off-price family apparel
stores(1) $180.9 $216.7 $236.9 $208.6 $188.0
Off-price catalog operation... 13.4 23.0 24.7 6.1 26.6
Off-price home fashion stores(2) - - - - (13.4)
-------- ------ ------ ------ ------
194.3 239.7 261.6 214.7 201.2
General corporate expense(3)..
14.0 29.2 33.9 39.4 45.5
Goodwill amortization......... 2.6 2.6 2.6 2.6 2.6
Interest expense, net......... 24.4 24.1 17.9 24.5 44.2
-------- ------- ------ ----- ------
Income from continuing
operations before income
taxes, extraordinary items
and cumulative effects of
accounting changes........... $153.3 $183.8 $207.2 $148.2 $108.9
------- ------- ------- ------ -----
Depreciation and amortization:
Off-price family apparel stores $40.0 $44.2 $47.4 $53.6 $69.6
Off-price catalog operation... 2.4 3.7 5.1 6.3 7.1
Off-price home fashion stores. - - - - 1.8
Corporate, including goodwill. 3.4 3.9 4.7 6.4 7.4
------ ------ ------- ------ ------
$45.8 $51.8 $57.2 $66.3 $85.9
------ ------ ------- ------ ------
------ ------ ------- ------ -----
(1) Fiscal 1996 includes a charge of $35 million relating to the closing of
approximately 30 T.J. Maxx stores in connection with the acquisition of
Marshalls.
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(2) Fiscal 1996 includes a charge of $3.8 million for certain restructuring
costs of the HomeGoods operation.
(3) General corporate expense includes the net results of HomeGoods since its
inception in fiscal 1993 through the end of fiscal 1995. General corporate
expense also includes the net results of T.K. Maxx in all periods presented
since its inception in fiscal 1994, costs associated with the Company's
former Value Mart operation for fiscal 1993 and the net results of the
Cosmopolitan catalog for fiscal 1996.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
On September 30, 1995, the Company sold its Hit or Miss division. This
transaction was accounted for as a discontinued operation and all historical
results of the Hit or Miss division have been reclassified to discontinued
operations for comparative purposes.
On November 17, 1995, the Company acquired the Marshalls off-price
family apparel chain from Melville Corporation. Under the purchase method of
accounting, the assets and liabilities and results of operations associated with
the acquired business have been included in the Company's financial position and
results of operations since the date acquired. Accordingly, the financial
position and results of operations of the Company as of, and for the period
ending, January 27, 1996, are not directly comparable to the financial position
and results of operations of the Company for prior fiscal years, and are not
necessarily indicative of the financial position and results of operations that
may be reported by the Company for future periods. The following discussion
should be read in conjunction with the consolidated financial statements and
notes thereto contained elsewhere in this report.
On May 24, 1996, the Company's subsidiary Chadwick's of Boston, Ltd.
filed with the Commission a Registration Statement (File No. 333-4427) related
to the sale by the Company in an underwritten public offering of up to 9,260,000
shares (or approximately 61%), excluding 1,389,000 shares (or approximately 9%)
subject to an underwriters' over-allotment option, of the common stock of
Chadwick's, which operates the Chadwick's of Boston fashion catalog. The Company
expects to reduce its ownership interest in Chadwick's over time, subject to
prevailing market and other conditions.
Results of Operations
Continuing Operations. Income from continuing operations before
extraordinary item and cumulative effect of accounting changes ("income from
continuing operations") was $63.6 million in fiscal 1996 versus $86.6 million
and $124.6 million in fiscal 1995 and 1994, respectively. Income from continuing
operations per common share, on a fully diluted basis, was $.74 in fiscal 1996,
versus $1.08 in fiscal 1995 and $1.58 in fiscal 1994. The results for fiscal
1996 include a $35 million pre-tax ($21 million after-tax) charge for closing
certain T.J. Maxx stores in connection with the acquisition of Marshalls.
Excluding the $35 million pre-tax charge, income from continuing operations for
fiscal 1996 would have been $84.6 million, or $1.03 per share.
Net sales for fiscal 1996 increased 27.5% to $4.45 billion from $3.49
billion in 1995. Net sales for fiscal 1995 increased 7.2% to $3.49 billion from
$3.25 billion in fiscal 1994. Same store sales, on a consolidated basis,
decreased 2% in fiscal 1996, and were flat in fiscal 1995. The above
consolidated sales and same store sales results include those for Marshalls for
the post-acquisition period.
On a divisional basis, same stores sales at T.J. Maxx were down 2% in
fiscal 1996 and flat in fiscal 1995. Same store sales for Marshalls from the
date of acquisition in mid-November decreased 1%. Winners achieved same store
sales increases of 7% in fiscal 1996 and 10% in fiscal 1995. The continuation of
weak apparel sales in the U.S. as well as the highly promotional retail
environment were factors affecting sales in both fiscal 1995 and fiscal 1996 for
the off-price family apparel segment. Sales for Chadwick's increased 9% in
fiscal 1996 and 3% in fiscal 1995.
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This division had experienced rapid growth in the years prior to fiscal 1995
which put a strain on its operations, and in fiscal 1995, had a negative impact
on the division's ability to service its customers. Chadwick's made considerable
progress in correcting these difficulties and improving its profitability in
fiscal 1996. Lastly, HomeGoods, whose results are reported as a separate segment
beginning in fiscal 1996, experienced a same store sales increase of 1%.
Cost of sales, including buying and occupancy costs, as a percentage of
net sales, was 77.1%, 75.8% and 74.7% in fiscal 1996, 1995 and 1994,
respectively. The increase in this percentage in both fiscal 1996 and 1995
reflects higher than planned markdowns taken as a result of the weak apparel
environment and the highly promotional retail environment. In addition, the
increase in fiscal 1996 reflects the inclusion of HomeGoods in the detailed
consolidated results of the Company as HomeGoods operated at a lower margin in
fiscal 1996 than the other divisions.
Selling, general and administrative expenses as a percentage of net
sales were 18.7% in fiscal 1996, 19.3% in fiscal 1995 and 18.4% in fiscal 1994.
The decrease in the ratio in fiscal 1996 versus 1995 reflects the inclusion of
Marshalls in the Company's consolidated results, as Marshalls operates at an
expense ratio closer to that of T.J. Maxx versus the other divisions. The
expense ratio for fiscal 1996 also reflects the benefits realized by Chadwick's
due to operational improvements made at this division. The increase in fiscal
1995 in this expense ratio, versus fiscal 1994, is primarily attributable to the
Chadwick's division. Chadwick's had an expense ratio increase in fiscal 1995
primarily due to increased production and postage costs of its catalogs and
order processing costs.
The Company recorded a pre-tax charge of $35 million in fiscal 1996 for
the closing of approximately 30 T.J. Maxx stores in connection with the
acquisition of Marshalls. The Company also expects to close approximately 170
Marshalls stores for which a reserve was established in the allocation of the
purchase price under the purchase accounting method. These reserves are
primarily estimates for the costs associated with subletting or otherwise
disposing of store leases.
Interest expense was $44.2 million in fiscal 1996, $24.5 million in
fiscal 1995 and $17.9 million in fiscal 1994. The increase in fiscal 1996 versus
fiscal 1995 is primarily due to additional borrowings, including a $45 million
real estate mortgage, issued in December 1994, but which was prepaid as a result
of the Marshalls acquisition, a $375 million term loan to fund the cash portion
of the purchase price of the Marshalls acquisition and $200 million of notes
issued in June 1995 under the Company's shelf registration statement. The
increase in fiscal 1995 versus fiscal 1994 also reflects increased borrowing
levels as well as increased rates. The comparison of fiscal 1995 to fiscal 1994
is impacted by $2 million of interest income included in fiscal 1994 associated
with a federal tax refund.
The Company's effective income tax rate was 42% in fiscal 1996 and 1995
and 40% in fiscal 1994. The increase in the effective rate in fiscal 1996 and
1995 is primarily attributable to the Company's entry into the United Kingdom
where a net operating loss carryforward has been incurred. The difference in the
U.S. federal statutory tax rate and the Company's worldwide effective income tax
rate in each fiscal year is primarily attributable to the effective state income
tax rate, with the additional impact in fiscal 1996 and 1995 of the
aforementioned net operating loss carryforward attributable to the Company's
entry into the United Kingdom.
Discontinued Operations and Net Income. Net income for fiscal 1996
includes a loss on the disposal of the Hit or Miss discontinued operation, net
of income taxes, of $31.7 million. The results of the Hit or Miss division prior
to the sale have been reclassified as income (loss) from discontinued
operations, net of income taxes, which includes a loss of $2.3 million in fiscal
1996, a loss of $4.0 million in fiscal 1995 and income of $2.4 million in fiscal
1994.
In addition, in fiscal 1996, in connection with the Marshalls
acquisition and the new bank credit agreement (described below), the Company
prepaid its $45 million real estate mortgage on its Chadwick's fulfillment
center and incurred an after-tax extraordinary charge for the early retirement
of debt of $3.3 million, or $.05 per common share. In fiscal 1994, the Company
recorded an after-tax charge of $2.7 million, or $.04 per common share, for the
cumulative effect of accounting changes.
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Net income, after reflecting the above items, was $26.3 million, or
$.23 per common share, in fiscal 1996, $82.6 million, or $1.03 per common share,
in fiscal 1995 and $124.4 million, or $1.58 per common share, in fiscal 1994.
Capital Sources and Liquidity
Net cash provided by operating activities was $233.6 million, $103.4
million and $75.0 million in fiscal 1996, 1995 and 1994, respectively. The
increase in cash provided by operating activities in fiscal 1996 versus that of
fiscal 1995 was primarily attributable to the timing of the Marshalls
acquisition and the resulting favorable cash flow of the holiday selling season.
The Company also experienced an increase in cash provided by operations in
fiscal 1995 versus fiscal 1994 despite reduced net income in fiscal 1995. The
impact of the lower net income in fiscal 1995 was offset by an increase in
consolidated accounts payable to merchandise inventory ratio and lower payments
against the Company's discontinued operations reserve. Cash flows from operating
activities over the next several years will be impacted by the settlements and
disposition of leases associated with both the Company's discontinued operations
reserve and the store closing and restructuring reserves. The Company's reserve
for store closing and restructuring in respect of continuing operations was
$251.6 million at the end of fiscal 1996, and the reserve for discontinued
operations was $25.3 million.
Inventories as a percentage of net sales were 30.2% in fiscal 1996,
25.5% in fiscal 1995 and 22.1% in fiscal 1994. The fiscal 1996 percentage is not
comparable since Marshalls net sales are included only from November 18, 1995.
Using pro forma net sales for fiscal 1996, which assumes Marshalls was acquired
at the beginning of the fiscal year, inventories as a percentage of net sales in
fiscal 1996 would be 20.5%. The higher percentage in fiscal 1995 versus fiscal
1994 and the lower pro forma percentage for fiscal 1996 versus fiscal 1995
reflect higher warehouse inventory related to opportunistic merchandise
purchases and a larger percentage of spring merchandise on hand at the end of
fiscal 1995. Working capital was $409.2 million in fiscal 1996, $277.2 million
in fiscal 1995 and $285.4 million in fiscal 1994. The increase in working
capital in fiscal 1996 is primarily attributable to the acquisition of
Marshalls.
The Company's cash flows for investing activities include capital
expenditures for the last two years as set forth in the table below:
Fiscal Year Ended January 1996 1995
- --------------------------------------------------------------------------------
(in millions)
New stores $ 44.6 $53.2
Store renovations and improvements 36.5 40.0
Office and distribution centers 30.7 26.8
--------------------------------------------
Capital expenditures $111.8 $120.0
============================================
Capital expenditures for both fiscal 1996 and 1995 emphasized new stores and
store renovations.
The Company expects that capital expenditures will approximate $150
million for fiscal 1997 including approximately $46 million for new stores,
primarily T.J. Maxx and Marshalls; $69 million for improvements to existing
stores, primarily T.J. Maxx and Marshalls; and approximately $35 million for
office and distribution centers.
Investing activities for fiscal 1996 include $378.7 million paid for
the acquisition of Marshalls. In addition to the cash outlay for the acquisition
of Marshalls, the Company issued $175 million of convertible junior preferred
stock. See Note E to the consolidated financial statements for further
information on the preferred stock issued. The total purchase price for
Marshalls reflected in these financials, including acquisition costs and a
purchase price adjustment paid subsequent to the end of fiscal 1996, totals $606
million.
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Lastly, investing activities for fiscal 1996 reflect proceeds of $3
million for the sale of the Hit or Miss division. The Company also received a
$10 million note, due in seven years with 10% interest.
Financing Activities. In June 1995, the Company filed a shelf
registration statement with the Securities and Exchange Commission, which
provides for the issuance of up to $250 million of long-term debt. In June 1995,
the Company issued $200 million of long-term notes under the registration
statement. The proceeds were used, in part, to repay short-term borrowings and
for general corporate purposes, including new store and capital expenditures,
and the repayment of scheduled maturities of other outstanding long-term debt.
During fiscal 1995 and fiscal 1994, the Company borrowed an aggregate of $57.5
million under its medium term note program, (which was replaced by the shelf
registration statement mentioned above). The aggregate borrowings under the
medium term note program were used entirely to fund the Company's investments in
its Canadian and United Kingdom operations.
In connection with the purchase of Marshalls, the Company entered into
an unsecured $875 million bank credit agreement under which the Company borrowed
$375 million on a term loan basis to fund the cash portion of the Marshalls
purchase price. The Company may also borrow up to an additional $500 million on
a revolving loan basis for the working capital needs of the Company. Interest is
payable on the borrowings at rates equal to or less than prime. Subsequent to
year-end, the Company entered into two interest rate swap agreements which in
essence provide for a fixed rate of 5.9% on $200 million of the $375 million
term loan. The term loan matures on November 17, 2000, and the revolving loan
expires on November 17, 1998. The new agreement has certain financial covenants
which include a minimum net worth requirement and certain leverage and fixed
charge ratios. In connection with this financing arrangement, the Company
canceled its former committed U.S. short-term credit lines and prepaid its $45
million real estate mortgage on its Chadwick's fulfillment center, issued in
December 1994. The Company incurred an after-tax extraordinary charge of $3.3
million on the early retirement of this debt.
The Company declared quarterly dividends on its common stock of $.14
per share in fiscal 1995 and for the first three quarters of fiscal 1996. In
connection with the acquisition of Marshalls, the Company reduced the quarterly
dividend to $.07 per common share effective with the dividend payable for the
fourth quarter of fiscal 1996. Annual dividends on common stock totaled $35.5
million in fiscal 1996 and $41.6 million in fiscal 1995. The Company also has
dividend requirements on its outstanding Series A and Series C Preferred Stock
which totaled $7.2 million in each of fiscal 1996 and 1995, as well as dividend
requirements on the new Series D and Series E junior Preferred Stock issued in
the acquisition of Marshalls. Series D Preferred Stock carries an annual
dividend of $0.5 million and the Series E Preferred Stock carries an annual
dividend of $10.5 million. An aggregate of $9.4 million of preferred dividends
is reflected in investing activities for fiscal 1996. During fiscal 1995, the
Company repurchased 1.1 million shares of Common Stock for a cost of $19.3
million under a stock buy-back program, which the Company terminated due to the
acquisition of Marshalls.
The Company has traditionally funded its seasonal merchandise
requirements through short-term bank borrowings and the issuance of short-term
commercial paper. The Company has the ability to borrow up to $500 million on a
revolving loan basis under its bank agreement. As of January 27, 1996, the
entire $500 million was available for use. The maximum amount of short-term
borrowings outstanding during fiscal 1996, 1995 and 1994 was $200 million,
$181.5 million and $133 million, respectively. The Company also has C$20 million
of committed lines for its Canadian operations, all of which were available as
of January 27, 1996. Management believes that the Company's internally generated
funds along with the available credit facility and credit lines and existing
cash balances are adequate to meet its needs.
SELLING STOCKHOLDER
All of the 1,500,000 shares of Series E Preferred Stock being offered
hereby are being sold by Nashua Hollis CVS, Inc. (the "Selling Stockholder"), a
wholly owned subsidiary of Melville Corporation ("Melville"). Such shares
represent all of the outstanding shares of Series E Preferred Stock.
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In connection with the acquisition of Marshalls, the Company issued to
Melville the shares of Series E Preferred Stock. Melville subsequently
transferred the shares to the Selling Stockholder. In addition to the Series E
Preferred Stock, the Company also issued to Melville 250,000 shares of Series D
Preferred Stock (which also were subsequently transferred to the Selling
Stockholder). The shares of Series D Preferred Stock are convertible into shares
of Common Stock ranging in number from 1,349,528 to 2,024,292 (subject to
adjustment in the event of stock splits, reverse stock splits and similar
events). See "Description of Capital Stock - Series D Preferred Stock." Neither
Melville nor the Selling Stockholder owns any other equity securities of the
Company.
Because the Selling Stockholder may offer all or some of the shares of
Series E Preferred Stock pursuant to the offering contemplated by this
Prospectus, and because there are currently no agreements, arrangements or
understandings with respect to the sale of any shares of Series E Preferred
Stock that will be held by the Selling Stockholder after the completion of this
offering (except for certain restrictions on transfer contained in the
Standstill and Registration Rights Agreement referred to below), no estimate can
be given as to the amount of Series E Preferred Stock that will be held by the
Selling Stockholder after completion of this offering. See "Plan of
Distribution."
The Company and Melville entered into an agreement dated as of November
17, 1995 (the "Standstill and Registration Rights Agreement"), a copy of which
is incorporated by reference as an exhibit to the Registration Statement of
which this Prospectus is a part, pursuant to which the Company agreed to
register the offer and sale of the shares of Series E Preferred Stock held by
the Selling Stockholder under the Securities Act, and the Selling Stockholder
and the Company agreed to indemnify each other against certain liabilities,
including liabilities under the Securities Act in connection with the sale of
the shares pursuant to a registered public offering contemplated by the
Standstill and Registration Rights Agreement. Pursuant to the Standstill and
Registration Rights Agreement, the Selling Stockholder is required to pay the
underwriting discounts and commissions and expenses of its legal counsel and
accountants associated with the offering, and the Company is generally required
to pay all of the other expenses directly associated with the offering,
including, without limitation, the cost of registering the shares offered
hereby, including applicable registration and filing fees, printing expenses and
applicable expenses for legal counsel and accountants incurred by the Company.
DESCRIPTION OF SERIES E PREFERRED STOCK
The following summary description of the Series E Cumulative
Convertible Preferred Stock ("Series E Preferred Stock") does not purport to be
complete and is subject to, and qualified in its entirety by reference to, the
Restated Certificate of Incorporation of the Company, as amended (the
"Certificate"), the Certificates of Designation with respect to the Series E
Preferred Stock and the By-Laws of the Company (the "By-Laws"), copies of which
are incorporated by reference as exhibits to the Registration Statement relating
to the offering herein.
Ranking
On November 17, 1995, the Company issued 1,500,000 shares of Series E
Preferred Stock in a private placement. The Series E Preferred Stock ranks
senior to the Common Stock, junior to the Series A Preferred Stock and the
Series C Preferred Stock, and on a parity with the Series D Preferred Stock,
with respect to the payment of dividends and upon liquidation, dissolution or
winding up. The Series E Preferred Stock shall so rank on a parity with the
Series C Preferred Stock at such times as there shall be no shares of Series A
Preferred Stock outstanding. The Company may not, without the consent of
two-thirds of the votes of the holders of the outstanding shares of Series E
Preferred Stock and all other outstanding shares of preferred stock of the
Company (the "Preferred Stock"), ranking on a parity with the Series E Preferred
Stock either as to dividends or upon liquidation, dissolution or winding up,
voting together as a single class, create, authorize or issue, or reclassify any
authorized stock of the Company into, or create, authorize or issue any
obligation or security convertible into or evidencing a right to purchase, any
shares of any class of stock of the Company ranking prior to the Series E
Preferred Stock or ranking prior to any other series of Preferred Stock which
ranks on a parity with the Series E Preferred Stock. However, the Company may
create additional classes of stock or issue series of Preferred Stock ranking on
a parity with the Series E Preferred Stock with
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respect to the payment of dividends or upon liquidation, dissolution and winding
up without the consent of any holder of Series E Preferred Stock.
Dividends
Holders of shares of the Series E Preferred Stock are entitled to
receive, when and as declared by the Board of Directors of the Company out of
assets of the Company legally available for payment, cash dividends at an annual
rate of $7.00 per share of Series E Preferred Stock, payable in arrears on
January 1, April 1, July 1 and October 1 of each year commencing January 1,
1996. Each dividend is payable to holders of record as they appear on the stock
register of the Company on a record date, not more than 60 nor less than 10 days
before the payment date, fixed by the Board of Directors of the Company.
Dividends are cumulative and accrue on a daily basis from the date of original
issuance of the Series E Preferred Stock. Dividends payable on the Series E
Preferred Stock for each full quarterly dividend period are computed by
annualizing the dividend rate and dividing by four. Dividends payable for any
period greater or less than a full dividend period are computed on the basis of
a 360-day year consisting of twelve 30-day months. The Series E Preferred Stock
is not entitled to any dividend, whether payable in cash, property or stock, in
excess of Full Cumulative Dividends. No interest is payable in respect of any
accrued and unpaid dividends.
Unless Full Cumulative Dividends on all outstanding shares of any
series of Preferred Stock ranking senior to the Series E Preferred Stock have
been paid or declared and set aside for payment for all past dividend payment
periods, no dividend may be declared on shares of the Series E Preferred Stock
(other than a dividend paid in stock ranking junior to any series of Preferred
Stock ranking senior to the Series E Preferred Stock as to dividends), nor may
shares of the Series E Preferred Stock be redeemed or purchased by the Company
nor any sinking fund payment made for such redemption or purchase (other than a
purchase or redemption made by issue or delivery of stock ranking junior to any
Series of Preferred Stock ranking senior to the Series E Preferred Stock as to
dividends, or upon liquidation, dissolution or winding up). Unless Full
Cumulative Dividends on all outstanding shares of the Series E Preferred Stock
have been paid or declared and set aside for payment for all past dividend
payment periods, no dividend (other than a dividend paid in stock ranking junior
to the Series E Preferred Stock as to dividends) may be declared on any stock
ranking junior to the Series E Preferred Stock as to dividends, nor may any
stock ranking junior to the Series E Preferred Stock as to dividends or upon
liquidation, dissolution or winding up be redeemed or purchased by the Company
nor any sinking fund payment made for such redemption or purchase (other than a
purchase or redemption made by issue or delivery of stock ranking junior to the
Series E Preferred Stock as to dividends or upon liquidation, dissolution or
winding up); provided that, unless prohibited by the terms of any other
outstanding series of Preferred Stock, any monies theretofore deposited in any
sinking fund with respect to any Preferred Stock in compliance with the terms
thereof may thereafter be applied in accordance with the terms thereof. If
dividends on Series E Preferred Stock and on any other series of Preferred Stock
ranking on a parity as to dividends with the Series E Preferred Stock are in
arrears, any dividend payment on account of such arrearage must be made ratably
upon all outstanding shares of the Series E Preferred Stock and such other
series of Preferred Stock in proportion to the respective amounts of Full
Cumulative Dividends.
Liquidation Rights
In the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Company not including mergers, consolidations and sale of
all or substantially all assets, before any payment or distribution of assets
(whether from capital or surplus) is made to holders of the Series E Preferred
Stock upon liquidation, dissolution or winding up, the holders of each class or
series of Preferred Stock ranking senior to the Series E Preferred Stock upon
liquidation, dissolution or winding up shall be entitled to receive full payment
of their liquidation preferences. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company, before any payment or
distribution of assets (whether from capital or surplus) is made to holders of
Common Stock or any other stock of the Company ranking junior to the shares of
Series E Preferred Stock upon liquidation, dissolution or winding up, the
holders of Series E Preferred Stock shall receive a liquidation preference of
$100 per share and shall be entitled to receive all accrued and unpaid dividends
through the date of distribution, and the holders of any class or series of
Preferred Stock ranking on a parity with the Series E Preferred Stock as to
liquidation, dissolution or winding up shall
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be entitled to receive the full respective liquidation preferences (including
any premium) to which they are entitled and shall receive all accrued and unpaid
dividends with respect to their respective shares through and including the date
of distribution. If, upon such a voluntary or involuntary liquidation,
dissolution or winding up of the Company, the assets of the Company are
insufficient to pay in full the amounts described above as payable with respect
to the Series E Preferred Stock and any class or series of Preferred Stock of
the Company ranking on a parity with the Series E Preferred Stock as to
liquidation, dissolution or winding up, the holders of the Series E Preferred
Stock and of such other class or series of Preferred Stock will share ratably in
any such distribution of assets of the Company first in proportion to their
respective liquidation preferences until such preferences are paid in full, and
then in proportion to their respective amounts of accrued but unpaid dividends.
After payment of any such liquidating preference and accrued dividends, the
shares of Series E Preferred Stock will not be entitled to any further
participation in any distribution of assets by the Company. Neither the sale of
all or substantially all the assets of the Company, nor the merger or
consolidation of the Company into or with any other corporation, will be deemed
to be a liquidation, dissolution or winding up of the Company.
Redemption
Shares of Series E Preferred Stock are not redeemable at the option of
the Company.
Voting Rights
Except as indicated below or as expressly required by applicable law,
holders of Series E Preferred Stock have no voting rights.
If the equivalent of six full quarterly dividends payable on the Series
E Preferred Stock are in arrears, the maximum authorized number of directors of
the Company will be increased by two and the holders of Series E Preferred
Stock, voting separately as a class with the holders of shares of any other
series of Preferred Stock ranking on a parity with the Series E Preferred Stock
and upon which like voting rights have been conferred and are exercisable, will
be entitled to elect two directors for successive one-year terms until all
dividends in arrears on the Series E Preferred Stock have been paid or declared
and set apart for payment. Upon payment or declaration and setting apart of
funds for payment of all such dividends in arrears, the term of office of each
director elected will immediately terminate and the number of directors
constituting the entire Board of Directors of the Company will be reduced by the
number of directors elected by the holders of the Series E Preferred Stock and
any other series of Preferred Stock ranking on a parity with the Series E
Preferred Stock as discussed above.
The Company may not, without the affirmative vote or consent of
two-thirds of the votes of the holders of the Series E Preferred Stock and each
other series of Preferred Stock ranking on a parity with the Series E Preferred
Stock and upon which like voting rights have been conferred (voting together as
a single class), create, authorize or issue, or reclassify any authorized stock
of the Company into, or create, authorize or issue any obligation or security
convertible into or evidencing a right to purchase, any shares of any class of
stock of the Company ranking prior to the Series E Preferred Stock or any other
series of Preferred Stock which ranks on a parity with the Series E Preferred
Stock as to dividends or upon liquidation, dissolution or winding up. The
Company may not, without the affirmative vote or consent of two-thirds of the
votes of the holders of the outstanding shares of the Series E Preferred Stock
and each other series of Preferred Stock of the Company similarly affected, if
any, voting together as a single class, amend, alter or repeal any provision of
the Certificate which would materially and adversely affect the preferences,
rights, powers or privileges, qualification, limitations and restrictions of the
Series E Preferred Stock and any such other series of Preferred Stock; provided,
however, that the creation, issuance or increase in the amount of authorized
shares of any other series of Preferred Stock ranking on a parity with or junior
to the Series E Preferred Stock with respect to the payment of dividends or the
distribution of assets upon liquidation, dissolution or winding up of the
affairs of the Company will not be deemed to materially and adversely affect
such rights and preferences, privileges or voting powers.
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Conversion
On November 17, 1998 (the "Automatic Conversion Date"), unless earlier
converted at the option of the holder, each outstanding share of the Series E
Preferred Stock shall convert automatically (the "Automatic Conversion") into
(i) shares of Common Stock at the Exchange Rate in effect on the Automatic
Conversion Date and (ii) the right to receive an amount in cash equal to Full
Cumulative Dividends on such share to the Automatic Conversion Date.
Shares of Series E Preferred Stock may be converted, in whole or in
part, at the option of the holder thereof ("Optional Conversion"), at any time
through the close of business on the Business Day prior to November 17, 1998,
into shares of Common Stock at the Upper Exchange Rate.
The Exchange Rate shall be subject to adjustment (under formulae set
forth in the Certificate of Designations) from time to time as appropriate in
certain circumstances, including if the Company shall (i) pay or make a dividend
or other distribution with respect to its Common Stock in shares of Common Stock
(including by way of reclassification of any shares of its Common Stock) to all
holders of Common Stock, (ii) subdivide its outstanding shares of Common Stock
into a greater number of shares of Common Stock or combine its outstanding
shares of Common Stock into a smaller number of shares of Common Stock, (iii)
issue certain rights or warrants to all holders of its Common Stock entitling
them (for a period not exceeding 45 days from the date of such issuance) to
subscribe for or purchase shares of Common Stock at a price less than the Fair
Market Value of the Common Stock on the record date for the determination of
stockholders entitled to receive such rights or warrants, or (iv) pay a dividend
or make a distribution to all holders of its Common Stock consisting of
evidences of its indebtedness or other assets (including shares of capital stock
of the Company other than Common Stock but excluding any cash dividends or other
distributions referred to in clauses (i) or (ii) above) or shall issue to all
holders of its Common Stock rights or warrants to subscribe for or purchase any
of its securities (other than those referred to in clause (iii) above).
Notwithstanding the foregoing, there will be no adjustment in the event the
Company were to issue rights to purchase capital stock of the Company pursuant
to a shareholder rights agreement. Anything in this paragraph notwithstanding,
the Company shall be entitled to make such upward adjustments in the Exchange
Rate, in addition to those required by this paragraph, as the Company in its
sole discretion shall determine to be advisable, in order that any stock
dividends, subdivision of shares, distribution of rights to purchase stock or
securities, or distribution of securities convertible into or exchangeable for
stock (or any transaction which could be treated as any of the foregoing
transactions pursuant to Section 305 of the Internal Revenue Code of 1986, as
amended) hereafter made by the Company to its stockholders shall not be taxable.
All adjustments to the Exchange Rate shall be calculated to the nearest
1/1,000,000th of a share of Common Stock. No adjustment in the Exchange Rate
shall be required unless such adjustment would require an increase or decrease
of at least one percent in the Exchange Rate; provided, however, that any
adjustments which by reason of the foregoing are not required to be made shall
be carried forward and taken into account in any subsequent adjustment. All
adjustments to the Exchange Rate shall be made successively. Before taking any
action that would cause an adjustment increasing the Exchange Rate such that the
conversion price (for purposes of this paragraph, an amount equal to the
liquidation value per share of Series E Preferred Stock divided by the Upper
Exchange Rate as in effect from time to time) would be below the then par value
of the Common Stock, the Company will take any corporate action which may, in
the opinion of its counsel, be necessary in order that the Company may validly
and legally issue fully paid and nonassessable shares of Common Stock at the
Upper Exchange Rate as so adjusted.
In case of any consolidation or merger to which the Company is a party
(other than a merger or consolidation in which the Company is the continuing
corporation and in which the Common Stock outstanding immediately prior to the
merger or consolidation remains unchanged), or in case of any sale or transfer
to another corporation of the property of the Company as an entirety or
substantially as an entirety, or in case of any statutory exchange of securities
with another corporation (other than in connection with a merger or
acquisition), proper provision shall be made so that each share of the Series E
Preferred Stock shall, after consummation of such transaction, be subject to (i)
conversion at the option of the holder into the kind and amount of securities,
cash or other property receivable upon consummation of such transaction by a
holder of the number of shares of Common Stock into which such share of Series E
Preferred Stock would have been converted if the conversion had occurred
immediately prior to
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consummation of such transaction (based on the Exchange Rate in effect
immediately prior to such consummation) and (ii) conversion on the Automatic
Conversion Date into the kind and amount of securities, cash or other property
receivable upon consummation of such transaction by a holder of the number of
shares of Common Stock into which such share of Series E Preferred Stock would
have been converted if the conversion on the Automatic Conversion Date had
occurred immediately prior to the date of consummation of such transaction
(based on the Exchange Rate in effect immediately prior to such consummation);
assuming in each case that such holder of Common Stock failed to exercise rights
of election, if any, as to the kind or amount of securities, cash or other
property receivable upon consummation of such transaction (provided that if the
kind or amount of securities, cash or other property receivable upon
consummation of such transaction is not the same for each nonelecting share,
then the kind and amount of securities, cash or other property receivable upon
consummation of such transaction for each nonelecting share shall be deemed to
be the kind and amount so receivable per share by a plurality of the nonelecting
shares). The kind and amount of securities into which the shares of the Series E
Preferred Stock shall be convertible after consummation of such transaction
shall be subject to adjustment as described above following the date of
consummation of such transaction. The Company may not become a party to any such
transaction unless the terms thereof are consistent with the foregoing.
Fractional Shares
No fractional shares or scrip representing fractional shares of Common
Stock shall be issued upon conversion of Series E Preferred Stock. Instead of
any fractional share of Common Stock that would otherwise be issuable upon
conversion of any shares of Series E Preferred Stock, the Company shall pay a
cash adjustment in respect of such fractional interest in an amount equal to the
same fraction of the Closing Price of a share of Common Stock (or, if there is
no such Closing Price, the fair market value of a share of Common Stock, as
determined or prescribed by the Board of Directors) at the close of business on
the Trading Day immediately preceding the date of conversion.
Listing; Transfer Agent
Whether the Series E Preferred Stock will be listed on any national
securities exchange will be indicated in the Supplemental Prospectus. The
transfer agent, registrar, dividend disbursing agent and redemption agent for
the Series E Preferred Stock will be State Street Bank and Trust Company,
subject to the right of the Company to designate another bank or trust company
having its principal office in the United States and having a combined capital
and surplus of at least $100,000,000 to assume some or all of such functions.
Definitions
The following terms shall have the meanings indicated in respect of the
Series E Preferred Stock:
"Base Number" shall mean the number derived from dividing $100 by
$15.4375.
"Business Day" shall mean any day other than a Saturday, Sunday, or a
day on which banking institutions in the State of New York or The Commonwealth
of Massachusetts are authorized or obligated by law or executive order to close
or a day which is or is declared a national or New York or Massachusetts state
holiday.
"Closing Price" with respect to any securities on any day shall mean
the closing sale price regular way on such day or, in case no such sale takes
place on such day, the average of the reported closing bid and asked prices,
regular way, in each case on the New York Stock Exchange, or, if such security
is not listed or admitted to trading on such Exchange, on the principal national
securities exchange or quotation system on which such security is quoted or
listed or admitted to trading, or, if not quoted or listed or admitted to
trading on any national securities exchange or quotation system, the average of
the closing bid and asked prices of such security on the over-the-counter market
on the day in question as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System, or a similarly generally accepted
reporting service, or if not so available, in such manner as furnished by any
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New York Stock Exchange member firm selected from time to time by the Board of
Directors for that purpose or (solely in the case of Series C Preferred Stock) a
price determined in good faith by the Board of Directors.
"Current Market Price" shall mean the average of the daily Closing
Prices per share of Common Stock for the ten consecutive Trading Days
immediately prior to the date in question; provided, however, that, if any event
that results in an adjustment of the Exchange Rate occurs during the period
beginning on the first day of such ten-day period and ending on the applicable
conversion date, the Current Market Price as determined pursuant to the
foregoing shall be appropriately adjusted to reflect the occurrence of such
event.
"Dividend Payment Date" shall mean January 1, April 1, July 1 and
October 1 in each year.
"Exchange Rate" for the Series E Preferred Stock shall be equal to (a)
if the Current Market Price on the date of determination is equal to or greater
than 120% of $15.4375 (the "Threshold Common Stock Price"), the number of shares
of Common Stock equal to 0.83333333 of the Base Number (the "Upper Exchange
Rate"), (b) if the Current Market Price on the date of determination is less
than the Threshold Common Stock Price but greater than $15.4375, the number of
shares of Common Stock having a value (determined at the Current Market Price)
equal to $100 per share of Series E Preferred Stock (the "Middle Exchange
Rate"), and (c) if the Current Market Price on the date of determination is
equal to or less than $15.4375, a number of shares of Common Stock (the "Lower
Exchange Rate") equal to the Base Number; provided that for all purposes
relating to Optional Conversion by a holder pursuant to the above section
entitled "Conversion," the Exchange Rate shall be equal to the Upper Exchange
Rate. The Exchange Rate is subject to adjustment as set forth in the above
section entitled "Conversion."
"Fair Market Value" on any day shall mean the average of the daily
Closing Prices of a share of Common Stock of the Company on the five (5)
consecutive Trading Days selected by the Company commencing not more than 20
Trading Days before, and ending not later than, the earlier of the day in
question and the day before the "ex" date with respect to the issuance or
distribution requiring such computation. The term "'ex' date", when used with
respect to any issuance or distribution, means the first day on which the Common
Stock trades regular way, without the right to receive such issuance or
distribution, on the exchange or in the market, as the case may be, used to
determine that day's Closing Price.
"Full Cumulative Dividends" shall mean, with respect to the Series E
Preferred Stock, or any other capital stock of the Company, as of any date the
aggregate amount of all then accumulated, accrued and unpaid dividends payable
on such shares of Series E Preferred Stock, or other capital stock, as the case
may be, in cash, whether or not earned or declared and whether or not there
shall be funds legally available for the payment thereof.
"Trading Day" shall mean (x) if the applicable security is listed or
admitted for trading on the New York Stock Exchange or another national
securities exchange, a day on which the New York Stock Exchange or such other
national securities exchange is open for business or (y) if the applicable
security is quoted on the National Market System of the National Association of
Securities Dealers Automated Quotation System, a day on which trades may be made
on such National Market System or (z) if the applicable security is not so
listed, admitted for trading or quoted, any day other than a Saturday or Sunday
or a day on which banking institutions in the State of New York are authorized
or obligated by law or executive order to close.
FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a summary of the federal income tax
consequences expected to apply to purchasers of the Series E Preferred Stock
under current law, which is subject to change. The discussion does not cover all
aspects of federal taxation that may be relevant to, or the actual tax effect
that any of the matters described herein will have on, particular purchases, and
does not address state, local, or foreign income or other tax laws. Certain
holders (including financial institutions, tax-exempt organizations,
broker-dealers, insurance companies, and foreign individuals and entities) may
be subject to special rules not discussed below. The discussion assumes that
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purchasers of the Series E Preferred Stock will hold the Series E Preferred
Stock as a "capital asset" within the meaning of Section 1221 of the Internal
Revenue Code of 1986, as amended (the "Code").
Distributions
Distributions with respect to the Series E Preferred Stock will be
treated as dividends and taxable as ordinary income to the extent that the
distributions are made out of the Company's current and accumulated earnings and
profits. To the extent that a distribution is not made out of the Company's
current and accumulated earnings and profits, the distribution will constitute a
non-taxable return of capital reducing the holder's adjusted tax basis in its
shares of Series E Preferred Stock and, to the extent the distribution exceeds
such basis, will result in capital gain.
A corporate holder will generally be entitled to 70% dividends-received
deduction with respect to distributions that are treated as dividends on shares
of Series E Preferred Stock that the corporate holder has held for at least 46
days (91 days in the case of certain dividends). For this purpose, the period
for which the holder is treated as having held shares of Series E Preferred
Stock generally will not include any period for which the holder has an option
to sell, is under a contractual obligation to sell, has made a short sale of or
is the grantor of an option to buy substantially identical stock or securities
or as to which the holder has otherwise diminished its risk of loss by holding
other positions with respect to substantially similar or related property.
Dividends on the Series E Preferred Stock will not be eligible for the
dividends-received deduction to the extent that the holder has incurred
indebtedness that is directly attributable to the acquisition or carrying of the
relevant shares. In addition, a corporate holder may be required to reduce its
adjusted tax basis in shares of stock or to recognize gain as the result of a
payment of an "extraordinary dividend." The Company believes that regular
quarterly dividends paid to an original holder of the Series E Preferred Stock
generally will not constitute extraordinary dividends. Finally, it should be
noted that the Administration's current budget proposal contains a provision
that, if enacted, would reduce the dividends-received deduction to 50% and make
certain changes in the holding period provisions described above.
For alternative minimum tax purposes, dividends eligible for the 70%
dividends-received deduction are included in a corporate holder's "adjusted
current earnings". If such adjusted current earnings exceed the corporate
holder's regular taxable income, 75% of the excess is added to the holder's
alternative minimum taxable income and may be subject to an alternative minimum
tax.
Under certain circumstances, the operation of the conversion price
adjustment provisions of the Series E Preferred Stock may result in the deemed
receipt of a taxable distribution by the holders of the Series E Preferred Stock
if the effect of such adjustments is to increase such holder's proportionate
interests in the Company. Any such constructive distributions may constitute
(and cause other distributions to constitute) extraordinary dividends to
corporate holders.
Conversion and Disposition
Conversion of Series E Preferred Stock into Common Stock generally will
not result in the recognition of gain or loss (except with respect to cash
received in lieu of fractional shares). The holder's adjusted tax basis in
Common Stock received upon conversion (including any fractional shares which are
deemed to have been issued) generally will be equal to that of the shares of
Series E Preferred Stock converted.
Upon the sale or exchange of shares of Series E Preferred Stock, or of
shares of Common Stock acquired upon conversion of shares of Series E Preferred
Stock, a holder will recognize capital gain or loss equal to the difference
between the amount realized on such sale or exchange and the holder's adjusted
tax basis in such stock. Any capital gain or loss recognized will generally be
treated as long-term capital gain or loss if the holder held the stock for more
than one year. For this purpose, the period for which the Series E Preferred
Stock was held would be included in the holding period of Common Stock received
upon a conversion.
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Backup Withholding
The Company generally is required to withhold and remit to the U.S.
Treasury 31% of distributions paid to any individual shareholder who fails to
furnish a correct taxpayer identification number to the Company, who is
determined by the Secretary of the Treasury to have under-reported dividends or
interest income, or who fails to certify to the Company that he is not subject
to such withholding. An individual's taxpayer identification number is normally
his social security number.
THE FOREGOING SUMMARY IS INCLUDED HEREIN FOR GENERAL INFORMATION ONLY.
ACCORDINGLY, PROSPECTIVE HOLDERS OF THE SERIES E PREFERRED STOCK SHOULD CONSULT
WITH THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO SUCH HOLDERS
RELATING TO THE SERIES E PREFERRED STOCK, INCLUDING THE APPLICATION AND EFFECT
OF STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX LAWS.
DESCRIPTION OF CAPITAL STOCK
The following summary description of the Company's capital stock does
not purport to be complete and is subject to, and qualified in its entirety by
reference to, the Certificate, the respective Certificates of Designation (each,
a "Certificate of Designation") with respect to each series of Preferred Stock
described herein and the By-Laws, copies of which are incorporated by reference
as exhibits to the Registration Statement relating to the offering herein.
Authorized Capital Stock
The Company's authorized capital stock consists of 155 million shares
of capital stock, of which 150 million shares are Common Stock, $1.00 par value
per share, and 5 million shares are Preferred Stock, $1.00 par value per share.
The Certificate authorizes the issuance of shares of Preferred Stock from time
to time in one or more series not exceeding the aggregate number of shares of
Preferred Stock authorized by the Certificate, without stockholder approval,
with such voting powers, designations, preferences and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions thereof, as are set forth in resolutions adopted by the Company's
Board of Directors. Thus, without stockholder approval, the Company could
authorize the issuance of Preferred Stock with voting, conversion and other
rights that could dilute the voting power and other rights of holders of the
Common Stock and, subject to any limiting terms thereof, other series of
Preferred Stock. The Company may from time to time amend the Certificate to
increase the number of authorized shares of Common Stock or Preferred Stock in
the manner provided by the Certificate and the General Corporation Law of the
State of Delaware.
There were outstanding as of May 24, 1996 210,100 shares of Series A
Preferred Stock, 1,650,000 shares of Series C Preferred Stock, 250,000 shares of
Series D Preferred Stock and 1,500,000 shares of Series E Preferred Stock of the
Company. The Company has given notice to the holders of the Series A Preferred
Stock that it intends to redeem all outstanding shares of Series A Preferred
Stock on June 24, 1996.
Common Stock
Subject to the rights of holders of Preferred Stock, holders of Common
Stock are entitled to receive such dividends as may from time to time be
declared by the Board of Directors of the Company out of such funds legally
available for declaration of dividends. Holders of Common Stock are entitled to
one vote per share on every question submitted to them at a meeting of
stockholders or otherwise. In the event of a liquidation, dissolution or winding
up and distribution of the assets of the Company, after paying or setting aside
for the holders of Preferred Stock the full preferential amounts to which they
are entitled, and subject to any rights of any series of Preferred Stock to
participate pro rata with the Common Stock with respect to distributions, the
holders of Common Stock will be entitled to receive pro rata all of the
remaining assets of the Company available for distribution to stockholders.
There are no pre-emptive rights for holders of Common Stock. The issued and
outstanding shares of Common Stock are fully paid and
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nonassessable. Shares of Common Stock are not convertible into shares of any
other class of capital stock of the Company.
Series A Preferred Stock
The Company has given notice to the holders of the Series A Preferred
Stock that it intends to redeem all outstanding shares of Series A Preferred
Stock on June 24, 1996.
Ranking
The Series A Preferred Stock ranks, with respect to dividends or upon
liquidation, dissolution or winding up, (i) on a parity with the Series C
Preferred Stock, and other Preferred Stock permitted pursuant to the terms of
the Series A Preferred Stock and ranking with respect to dividends or upon
liquidation, dissolution or winding up on a parity with the Series A Preferred
Stock, and (ii) prior to all other capital stock of the Company. Without the
consent of the holders of two-thirds of the outstanding shares of Series A
Preferred Stock, the Company may not authorize, create or increase the
authorized amount of any class or series of stock that ranks prior to or, except
for the Series C Preferred Stock and a limited amount of Preferred Stock ranking
as to dividends or upon liquidation, dissolution or winding up on a parity with
the Series C Preferred Stock, on a parity with the Series A Preferred Stock or,
except for non-participating Preferred Stock and participating Preferred Stock
issued pursuant to certain stockholder rights plans, junior to the Series C
Preferred Stock with respect to the payment of dividends or upon liquidation,
dissolution or winding up.
Dividends
Holders of shares of the Series A Preferred Stock are entitled to
cumulative dividends payable quarterly at an annual rate of $8.00 per share.
With limited exceptions, holders of Series A Preferred Stock are entitled to
Full Cumulative Dividends before dividends may be declared on junior stock
(including the Series E Preferred Stock) and before such junior stock may be
redeemed or purchased by the Company.
Liquidation Rights
In the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Company (not including certain mergers, consolidations or
sales of all or substantially all assets), the holders of Series A Preferred
Stock are entitled to receive a liquidation preference equal to the then
applicable redemption price, plus accrued and unpaid dividends to the redemption
date, prior to any distribution on junior stock, including the Series E
Preferred Stock.
Redemption
Commencing April 1, 1995, the Series A Preferred Stock may be redeemed
by the Company at any time at a redemption price of $104.80 per share, declining
by $0.80 per share on April 1 of each year thereafter to $100 per share on April
1, 2001, plus accrued and unpaid dividends to the redemption date. Upon a Change
of Control Event (generally defined as voluntary liquidations, certain mergers
into a subsidiary, a sale of all or substantially all the Company's assets, or
certain actions affecting the public market for the Company's stock or its
status as a public corporation), a holder of Series A Preferred Stock may at its
option require redemption of its shares at a cash per share price equal to the
greater of (i) the then redemption price or (ii) the product of the higher of
the then market price of Common Stock or the price per share of Common Stock
received by any other stockholder in the Change of Control Event or related
transactions times the number of shares of Common Stock then issuable upon
conversion of a share of Series A Preferred Stock.
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Voting Rights
Holders of Series A Preferred Stock will be entitled as a separate
class to elect two directors in the event of defaults in the payment of
dividends aggregating $8.00 per share and are entitled to a separate class vote
on matters which would adversely affect the rights and preferences of the Series
A Preferred Stock. The Company may not, without the affirmative vote or consent
of the holders of at least two-thirds of the then outstanding Series A Preferred
Stock, voting as a separate class, (i) authorize, create or issue, or increase
the authorized or issued amount of, any class or series of stock ranking prior
to or on parity with the Series A Preferred Stock as to dividends or upon
liquidation, dissolution or winding up, except for Preferred Stock ranking on a
parity with the Series A Preferred Stock having an aggregate liquidation
preference of not more than $100 million; (ii) authorize, create or issue, or
increase the authorized amount of, any participating Preferred Stock; (iii)
create, authorize or issue any class or series of common stock other than the
Common Stock; (iv) amend the Certificate or By-laws if such amendment would
adversely affect the powers, rights, privileges or preferences of the Series A
Preferred Stock; (v) increase the number of shares of Series A Preferred Stock
authorized for issuance; (vi) create, authorize or issue any class or series of
capital stock or any security exercisable for or convertible into any capital
stock except as permitted under clauses (i), (ii) or (iii) above; (vii) amend
the Certificate of Designations relating to the Series A Preferred Stock or
(viii) issue any additional shares of Series A Preferred Stock.
Conversion
Shares of the Series A Preferred Stock are convertible at any time at
the option of the holder thereof into shares of Common Stock of the Company at a
conversion price of $21.00 per share of Common Stock, subject to adjustment in
certain events including subdivisions, splits or combinations of Common Stock,
stock dividends, extraordinary dividends or distributions on the Common Stock
and issuances of Common Stock and related securities at less than their current
Market Price. Upon the occurrence of a Control Adjustment Event (generally
defined to be the acquisition by any person or group of beneficial ownership of
at least 51% of the Common Stock, incumbent directors ceasing during any year to
constitute a majority of the Board of Directors or involuntary liquidation of
the Company), the conversion price is subject to adjustment downward to the
greater of $3.50 and the then market price of the Common Stock. Holders of
shares of Series A Preferred Stock have a similar adjustment election in the
event of the Registrant's failure to make payment upon any mandatory redemption.
Any share of Series A Preferred Stock outstanding on April 15, 2007 is entitled
to a conversion price adjustment to the higher of $7.00 and the then market
price of the Common Stock.
Eligibility for Sale; Registration Rights, Etc.
The holders of the Series A Preferred Stock have agreed not to transfer
any shares of Series A Preferred Stock, or Common Stock issuable upon conversion
thereof, except (i) pursuant to an effective registration under the Securities
Act, (ii) in accordance with Rule 144 or Rule 144A under the Securities Act, or
(iii) in a transaction otherwise not requiring registration under the Securities
Act. In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned his or her shares for at
least two years, including an "affiliate," as that term is defined below, is
entitled to sell, within any three-month period, that number of shares that does
not exceed the greater of 1% of the then outstanding shares or the average
weekly trading volume of the then outstanding shares during the four calendar
weeks preceding each such sale. A person (or persons whose shares are
aggregated) who is not deemed an "affiliate" of the Company, and who has
beneficially owned shares for at least three years, is entitled to sell such
shares under Rule 144 (k) without regard to any volume or other restriction
limitations described above. As defined in Rule 144, an "affiliate" of an issuer
is a person that directly or indirectly through the use of one or more
intermediaries, controls, or is controlled by, or is under common control with,
such issuer. The holders of the Series A Preferred Stock may qualify for use of
Rule 144(k).
Under their respective share purchase agreements, holders of shares of
Series A Preferred Stock are entitled to certain rights regarding registration
of their shares under the Securities Act. Such holders are entitled to include,
at the Company's expense, their shares of Series A Preferred Stock, or any
shares of any Common Stock issued upon
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conversion thereof, in certain registrations under the Securities Act by the
Company prior to April 15, 1997 of offerings of Convertible Preferred Stock or
Common Stock or rights thereto, provided that no such shares need be included in
a registration by the Company of an underwritten offering to the extent that the
underwriters determine that such inclusion would jeopardize the successful sale
of the shares to be sold by the underwriters. The holders of the Series A
Preferred Stock have not exercised any such rights with respect to the offering
made hereby. At any time prior to April 15, 1997 the holders of the Series A
Preferred Stock may demand the registration under the Securities Act, at the
Company's expense, of the public sale of a portion or all of such shares.
The share purchase agreements relating to the Series A Preferred Stock
also contain various undertakings by the Company, including limitations on
dividends and repurchases of the Company's stock, changes in the primary
business engaged in by the Company and its subsidiaries and certain restrictions
on dividends.
Definitions
Capitalized terms not otherwise defined have the meanings set forth in
"Definitions" following the description of Series E Preferred Stock.
Series C Preferred Stock
Ranking
The Series C Preferred Stock ranks senior to the Common Stock, the
Series D Preferred Stock and the Series E Preferred Stock, and on a parity with
the Series A Preferred Stock, with respect to the payment of dividends and upon
liquidation, dissolution or winding up. The Series C Preferred Stock shall so
rank on a parity with the Series D Preferred Stock and the Series E Preferred
Stock at such times as there shall be no shares of Series A Preferred Stock
outstanding. The Company may not, without the consent of two-thirds of the votes
of the holders of the outstanding shares of Series C Preferred Stock and all
other outstanding shares of Preferred Stock ranking on a parity with the Series
C Preferred Stock either as to dividends or upon liquidation, dissolution or
winding up, voting together as a single class, create, authorize or issue, or
reclassify any authorized stock of the Company into, or create, authorize or
issue any obligation or security convertible into or evidencing a right to
purchase, any shares of any class of stock of the Company ranking prior to the
Series C Preferred Stock or ranking prior to any other series of Preferred Stock
which ranks on a parity with the Series C Preferred Stock. However, the Company
may create additional classes of stock or issue series of Preferred Stock
ranking on a parity with the Series C Preferred Stock with respect to the
payment of dividends or upon liquidation, dissolution and winding up without the
consent of any holder of Series C Preferred Stock.
Dividends
Holders of shares of the Series C Preferred Stock are entitled to
cumulative dividends payable quarterly at an annual rate of $3.125 per share.
With limited exceptions, holders of Series C Preferred Stock are entitled to
Full Cumulative Dividends before dividends may be declared on junior stock
(including Series E Preferred Stock so long as the Series A Preferred Stock is
outstanding) and before such junior stock may be redeemed or purchased by the
Company.
Liquidation Rights
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company (not including mergers, consolidations or sales of all
or substantially all assets), holders of Series C Preferred Stock are entitled
to receive a liquidation preference of $50 per share plus accrued dividends,
prior to any distribution on junior stock (including the Series E Preferred
Stock so long as the Series A Preferred Stock is outstanding).
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Optional Redemption
Commencing September 1, 1995, the Series C Preferred Stock is redeemable
at the option of the Company at any time at a redemption price per share
(expressed as a percentage of the $50 liquidation preference thereof), of
104.375%, declining annually to 100% in 2002, plus accrued dividends.
Voting Rights
Except as indicated below or as expressly required by applicable law,
the holders of the Series C Preferred Stock have no voting rights.
If the equivalent of six full quarterly dividends payable on the Series
C Preferred Stock are in arrears, the holders of Series C Preferred Stock,
voting separately as a class with the holders of shares of any other series of
Preferred Stock which ranks on a parity with the Series C Preferred Stock and
has been granted like voting rights which are then exercisable (which does not
include the Series A Preferred Stock, which has separate voting rights), will be
entitled to elect two directors for successive one-year terms until all
dividends in arrears on the Series C Preferred Stock have been paid or declared
and set apart for payment.
The consent of two-thirds of the votes of the holders of the Series C
Preferred Stock and each other series of Preferred Stock which ranks on a parity
with the Series C Preferred Stock and has been granted like voting rights
(voting together as a single class), is required for the Company to create,
authorize or issue, or reclassify any authorized stock of the Company into, or
create, authorize or issue any obligation or security convertible into or
evidencing a right to purchase, any shares of any class of stock of the Company
ranking prior to the Series C Preferred Stock or any other series of Preferred
Stock which ranks on a parity with the Series C Preferred Stock. The Company may
not, without the affirmative vote or consent of two-thirds of the votes of the
holders of the outstanding shares of the Series C Preferred Stock and each other
series of Preferred Stock of the Company similarly affected, voting together as
a single class, amend, alter or repeal any provision of the Certificate which
would materially and adversely affect the preferences, rights, powers or
privileges, qualification, limitations and restrictions of the Series C
Preferred Stock and any such other series of Preferred Stock. The creation,
issuance or increase in the amount of authorized shares of any other series of
Preferred Stock ranking on a parity with or junior to the Series C Preferred
Stock with respect to the payment of dividends or the distribution of assets
upon liquidation, dissolution or winding up of the affairs of the Company will
not be deemed to have such material and adverse effect.
Conversion
Shares of the Series C Preferred Stock are convertible at any time at
the option of the holder thereof into a number of shares of Common Stock equal
to the aggregate liquidation preference of the shares of Series C Stock
surrendered for conversion divided by the conversion price of $25.9375 per share
of Common Stock, subject to adjustment as described below.
The initial conversion price of $25.9375 is subject to adjustment (under
formulae set forth in the Certificate of Designations) in certain events,
including certain subdivisions and combinations of the Common Stock, the
issuance of Common Stock as a dividend or distribution on Common Stock,
extraordinary dividends or distributions on Common Stock and payment in respect
of a tender or exchange offer by the Company or any subsidiary of the Company
for the Common Stock to the extent that the cash and value of any other
consideration included in such payment per share of Common Stock exceeds the
Current Market Price per share of Common Stock on the Trading Day next
succeeding the date of payment.
If any transaction shall occur, including without limitation (i) any
recapitalization or reclassification of shares of Common Stock (other than a
change in par value, or from par value to no par value, or from no par value to
par value, or as a result of a subdivision or combination of the Common Stock),
(ii) any consolidation or merger of the Company with or into another person or
any merger of another person into the Company (other than a merger that
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does not result in a reclassification, conversion, exchange or cancellation of
Common Stock), (iii) any sale or transfer of all or substantially all of the
assets of the Company, or (iv) any compulsory share exchange, pursuant to any of
which holders of Common Stock shall be entitled to receive other securities,
cash or other property, then appropriate provision shall be made so that the
holder of each share of Series C Preferred Stock then outstanding shall have the
right thereafter to convert such share only into (x) in the case of any such
transaction that does not constitute a Common Stock Fundamental Change (as
defined below) and subject to funds being legally available for such purpose
under applicable law at the time of such conversion, the kind and amount of the
securities, cash or other property that would have been receivable upon such
recapitalization, reclassification, consolidation, merger, sale, transfer or
share exchange by a holder of the number of shares of Common Stock issuable upon
conversion of such share of Series C Preferred Stock immediately prior to such
recapitalization, reclassification, consolidation, merger, sale, transfer or
share exchange, after giving effect, in the case of any Non-Stock Fundamental
Change (as defined below), to any adjustment in the conversion price in
accordance with clause (i) of the following paragraph, and (y) in the case of
any such transaction that constitutes a Common Stock Fundamental Change, common
stock of the kind received by holders of Common Stock as a result of such Common
Stock Fundamental Change in an amount determined in accordance with clause (ii)
of the following paragraph.
Notwithstanding any other provision in the preceding paragraphs to the
contrary, if any Fundamental Change (as defined below) occurs, then the
conversion price in effect will be adjusted immediately after such Fundamental
Change as follows:
(i) in the case of a Non-Stock Fundamental Change, the
conversion price of the shares of Series C Preferred Stock immediately
following such Non-Stock Fundamental Change shall be the lower of (A)
the conversion price in effect immediately prior to such Non-Stock
Fundamental Change, but after giving effect to any other prior
adjustments effected pursuant to the preceding paragraphs, and (B) the
product of (1) the greater of the Applicable Price (as defined below)
and the then applicable Reference Market Price (as defined below) and
(2) a fraction, the numerator of which is $50 and the denominator of
which is (x) the amount of the redemption price for one share of Series
C Preferred Stock if the redemption date were the date of such Non-Stock
Fundamental Change, plus (y) any then accrued and then-accumulated and
unpaid dividends on Series C Preferred Stock; and
(ii) in the case of a Common Stock Fundamental Change, the
conversion price of the shares of Series C Preferred Stock immediately
following such Common Stock Fundamental Change shall be the conversion
price in effect immediately prior to such Common Stock Fundamental
Change, but after giving effect to any other prior adjustments effected
pursuant to the preceding paragraphs, multiplied by a fraction, the
numerator of which is the Purchaser Stock Price (as defined below) and
the denominator of which is the Applicable Price; provided, however,
that in the event of a Common Stock Fundamental Change in which (A) 100%
of the value of the consideration received by a holder of Common Stock
is common stock of the successor, acquiror, or other third party (and
cash, if any, paid with respect to any fractional interests in such
common stock resulting from such Common Stock Fundamental Change) and
(B) all of the Common Stock of the Company shall have been exchanged
for, converted into, or acquired for, common stock of the successor,
acquiror or other third party (and any cash with respect to fractional
interests), the conversion price of the shares of Series C Preferred
Stock immediately following such Common Stock Fundamental Change shall
be the conversion price in effect immediately prior to such Common Stock
Fundamental Change multiplied by a fraction, the numerator of which is
one (1) and the denominator of which is the number of shares of common
stock of the successor, acquiror, or other third party received by a
holder of one share of Common Stock as a result of such Common Stock
Fundamental Change.
Depending upon whether a Fundamental Change is a Non-Stock Fundamental
Change or a Common Stock Fundamental Change, a holder may receive significantly
different consideration upon conversion. In the event of a Non-Stock Fundamental
Change, the holder has the right to convert shares of Series C Preferred Stock
into the kind and amount of the shares of stock and other securities or property
or assets (including cash), except as otherwise provided above, as is determined
by the number of shares of Common Stock receivable upon conversion at the
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conversion price as adjusted in accordance with clause (i) of the preceding
paragraph. However, in the event of a Common Stock Fundamental Change in which
less than 100% of the value of the consideration received by a holder of Common
Stock is common stock of the successor, acquiror or other third party, a holder
of a share of Series C Preferred Stock who converts such share following the
Common Stock Fundamental Change will receive consideration in the form of such
common stock only, whereas a holder who converted such share prior to the Common
Stock Fundamental Change would have received consideration in the form of such
common stock as well as any other securities or assets (which may include cash)
issuable upon conversion of such share of Series C Preferred Stock immediately
prior to such Common Stock Fundamental Change.
Definitions
Capitalized terms not otherwise defined have the meanings set forth in
"Definitions" following the description of Series E Preferred Stock.
The following terms shall have the meanings indicated in respect of the
Series C Preferred Stock:
"Applicable Price" shall mean (i) in the event of a Non-Stock
Fundamental Change in which the holders of the Common Stock receive only cash,
the amount of cash received by a holder of one share of Common Stock and (ii) in
the event of any other Non-Stock Fundamental Change or any Common Stock
Fundamental Change, the average of the reported last sale price for one share of
the Common Stock (determined as provided in the Certificate of Designations)
during the 10 Trading Days immediately prior to the Record Date for the
determination of the holders of Common Stock entitled to receive cash,
securities, property or other assets in connection with such Non-Stock
Fundamental Change or Common Stock Fundamental Change or, if there is no such
Record Date, prior to the date upon which the holders of the Common Stock shall
have the right to receive such cash, securities, property or other assets.
"Common Stock Fundamental Change" shall mean any Fundamental Change in
which more than 50% of the value (as determined in good faith by the Board of
Directors of the Company) of the consideration received by holders of Common
Stock consists of common stock that, for the 10 Trading Days immediately prior
to such Fundamental Change, has been admitted for listing or admitted for
listing subject to notice of issuance on a national securities exchange or
quoted on the National Market System of the National Association of Securities
Dealers, Inc. Automated Quotations System; provided, however, that a Fundamental
Change shall not be a Common Stock Fundamental Change unless either (i) the
Company continues to exist after the occurrence of such Fundamental Change and
the outstanding shares of Series C Preferred Stock continue to exist as
outstanding shares of Series C Preferred Stock, or (ii) not later than the
occurrence of such Fundamental Change, the outstanding shares of Series C
Preferred Stock are converted into or exchanged for shares of convertible
preferred stock of a corporation succeeding to the business of the Company,
which convertible preferred stock has powers, preferences and relative,
participating, optional or other rights, and qualifications, limitations and
restrictions substantially similar to those of the Series C Preferred Stock.
"Fair Market Value" shall mean the amount which a willing buyer would
pay a willing seller in an arm's length transaction.
"Fundamental Change" shall mean the occurrence of any transaction or
event or series of transactions or events pursuant to which all or substantially
all of the Common Stock of the Company shall be exchanged for, converted into,
acquired for or shall constitute solely the right to receive cash, securities,
property or other assets (whether by means of an exchange offer, liquidation,
tender offer, consolidation, merger, combination, reclassification,
recapitalization or otherwise); provided, however, in the case of any such
series of transactions or events, for purposes of adjustment of the conversion
price, such Fundamental Change shall be deemed to have occurred when
substantially all of the Common Stock of the Company shall have been exchanged
for, converted into, or acquired for, or shall constitute solely the right to
receive, such cash, securities, property or other assets, but the adjustment
shall be based upon the consideration that the holders of Common Stock received
in the transaction or event as a result of which more than 50% of the Common
Stock of the Company shall have been exchanged for, converted
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into, or acquired for, or shall constitute solely the right to receive, such
cash, securities, property or other assets; and provided, further, that such
term does not include (i) any such transaction or event in which the Company
and/or any of its subsidiaries are the issuers of all the cash, securities,
property or other assets exchanged, acquired or otherwise issued in such
transaction or event, or (ii) any such transaction or event in which the holders
of Common Stock receive securities of an issuer other than the Company if,
immediately following such transaction or event, such holders hold a majority of
the securities having the power to vote normally in the election of directors of
such other issuer outstanding immediately following such transaction or other
event.
"Non-Stock Fundamental Change" shall mean any Fundamental Change other
than a Common Stock Fundamental Change.
"Purchaser Stock Price" shall mean, with respect to any Common Stock
Fundamental Change, the average of the reported last sale price for one share of
the common stock received by holders of Common Stock (determined as provided in
the Certificate of Designations) in such Common Stock Fundamental Change during
the 10 Trading Days immediately prior to the date fixed for the determination of
the holders of Common Stock entitled to receive such common stock or, if there
is no such date, prior to the date upon which the holders of the Common Stock
shall have the right to receive such common stock.
"Reference Market Price" shall initially mean $13.8333 and, in the
event of any adjustment to the conversion price other than as a result of a
Fundamental Change, the Reference Market Price shall also be adjusted so that
the ratio of the Reference Market Price to the conversion price after giving
effect to any such adjustment shall always be the same as the ratio of the
initial Reference Market Price to the initial conversion price of $25.9375 per
share.
Series D Preferred Stock
Ranking
The Series D Preferred Stock ranks senior to the Common Stock, junior
to the Series A Preferred Stock and the Series C Preferred Stock, and on a
parity with the Series E Preferred Stock, with respect to the payment of
dividends and upon liquidation, dissolution or winding up, provided that the
Series D Preferred Stock shall so rank on a parity with the Series C Preferred
Stock at such times as there shall be no shares of Series A Preferred Stock
outstanding. The Company may not, without the consent of two-thirds of the votes
of the holders of the outstanding shares of Series D Preferred Stock and all
other outstanding shares of Preferred Stock ranking on a parity with the Series
D Preferred Stock either as to dividends or upon liquidation, dissolution or
winding up, voting together as a single class, create, authorize or issue, or
reclassify any authorized stock of the Company into, or create, authorize or
issue any obligation or security convertible into or evidencing a right to
purchase, any shares of any class of stock of the Company ranking prior to the
Series D Preferred Stock or ranking prior to any other series of Preferred Stock
which ranks on a parity with the Series D Preferred Stock. However, the Company
may create additional classes of stock or issue series of Preferred Stock
ranking on a parity with the Series D Preferred Stock with respect to the
payment of dividends or upon liquidation, dissolution and winding up without the
consent of any holder of Series D Preferred Stock.
Dividends
Holders of shares of the Series D Preferred Stock are entitled to
cumulative dividends payable quarterly at an annual rate of $1.8138 per share.
With limited exceptions, holders of Series D Preferred Stock are entitled to
Full Cumulative Dividends before dividends may be declared on junior stock and
before such junior stock may be redeemed or purchased by the Company.
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Liquidation Rights
In the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Company (not including mergers, consolidations or sales of
all or substantially all assets), the holders of each class or series of
Preferred Stock ranking senior to the Series D Preferred Stock shall first
receive full payment of their liquidation preferences. Holders of Series D
Preferred Stock are then entitled to receive a liquidation preference of $100
per share plus accrued dividends prior to any distribution on stock ranking
junior to the Series D Preferred Stock.
Mandatory Redemption in Event of Sale
Shares of the Series D Preferred Stock are subject to mandatory
redemption in the following circumstances. If at any time not less than 10
Business Days before November 17, 1996 the Company shall consummate any Sale
(generally defined as a sale of all or substantially all of the assets or stock
of an operating division or subsidiary of the Company other than T.J. Maxx or
Marshalls at a value of not less than a $25 million premium over the book value
of such assets or stock), then the Company is required to apply as much of the
Sale Proceeds (generally defined as the net cash proceeds, if any (after
subtracting all fees and expenses related to such transaction), received by the
Company in respect of any Sale) received by the Company in respect of such Sale
as is necessary to redeem all then outstanding shares of Series D Preferred
Stock (or, if fewer, as many such shares as can be redeemed at the Call Price
out of such Sale Proceeds). Upon any such redemption, the Company shall deliver
to the holders of shares of Series D Preferred Stock, in exchange for each share
so redeemed, cash in an amount equal to the sum of (i) $100 per share plus (ii)
Full Cumulative Dividends thereon to the date fixed for redemption.
Voting Rights
Except as indicated below or as expressly required by applicable law,
the holders of the Series D Preferred Stock have no voting rights.
If the equivalent of six full quarterly dividends payable on the Series
D Preferred Stock are in arrears, the maximum authorized number of directors of
the Company will be increased by two and the holders of Series D Preferred
Stock, voting separately as a class with the holders of shares of any other
series of Preferred Stock ranking on a parity with the Series D Preferred Stock
and upon which like voting rights have been conferred and are exercisable, will
be entitled to elect two directors for successive one-year terms until all
dividends in arrears on the Series D Preferred Stock have been paid or declared
and set apart for payment. Upon payment or declaration and setting apart of
funds for payment of all such dividends in arrears, the term of office of each
director elected will immediately terminate and the number of directors
constituting the entire Board of Directors of the Company will be reduced by the
number of directors elected by the holders of the Series D Preferred Stock and
any other series of Preferred Stock ranking on a parity with the Series D
Preferred Stock as discussed above.
The Company may not, without the consent of two-thirds of the votes of
the holders of the Series D Preferred Stock and each other series of Preferred
Stock ranking on a parity with the Series D Preferred Stock and upon which like
voting rights have been conferred (voting together as a single class), create,
authorize or issue, or reclassify any authorized stock of the Company into, or
create, authorize or issue any obligation or security convertible into or
evidencing a right to purchase, any shares of any class of stock of the Company
ranking prior to the Series D Preferred Stock or any other series of Preferred
Stock which ranks on a parity with the Series D Preferred Stock. The Company may
not, without the consent of two-thirds of the votes of the holders of the
outstanding shares of the Series D Preferred Stock and each other series of
Preferred Stock of the Company similarly affected, if any, voting together as a
single class, amend, alter or repeal any provision of the Certificate which
would materially and adversely affect the preferences, rights, powers or
privileges, qualification, limitations and restrictions of the Series D
Preferred Stock and any such other series of Preferred Stock. The creation,
issuance or increase in the amount of authorized shares of any other series of
Preferred Stock ranking on a parity with or junior to the Series D Preferred
Stock with respect to the payment of dividends or the distribution of assets
upon liquidation, dissolution or winding up of the affairs of the Company will
not be deemed to have such material and adverse effect.
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Conversion
On November 17, 1996 (the "Automatic Conversion Date"), unless earlier
converted at the option of the holder, each outstanding share of the Series D
Preferred Stock shall convert automatically (the "Automatic Conversion") into
(i) shares of Common Stock at the Exchange Rate in effect on the Automatic
Conversion Date and (ii) the right to receive an amount in cash equal to Full
Cumulative Dividends on such share to the Automatic Conversion Date.
Shares of Series D Preferred Stock may be converted at the option of
the holder thereof ("Optional Conversion"), at any time through the close of
business on the Business Day prior to November 17, 1996, into (i) shares of
Common Stock at the Exchange Rate in effect on the Optional Conversion Date; and
(ii) the right to receive an amount in cash equal to Full Cumulative Dividends
on such shares to the Optional Conversion Date. Notwithstanding the foregoing,
the Company may, at its option, in lieu of delivering shares of Common Stock on
the Optional Conversion Date, deliver cash in an aggregate amount equal to the
aggregate Closing Price (on the Trading Day preceding the Optional Conversion
Date) of the number of shares of Common Stock otherwise so deliverable
(together, in any event, with Full Cumulative Dividends thereon to the Optional
Conversion Date).
The Exchange Rate is subject to adjustment (under formulae set forth in
the Certificate of Designations) from time to time as appropriate in certain
circumstances, including certain subdivisions and combinations of the Common
Stock, dividends in Common Stock and non-cash dividends and distributions on
Common Stock.
In case of any consolidation or merger to which the Company is a party
(other than a merger or consolidation in which the Company is the continuing
corporation and in which the Common Stock outstanding immediately prior to the
merger or consolidation remains unchanged), or in case of any sale or transfer
to another corporation of the property of the Company as an entirety or
substantially as an entirety, or in case of any statutory exchange of securities
with another corporation (other than in connection with a merger or
acquisition), proper provision shall be made so that each share of the Series D
Preferred Stock shall, after consummation of such transaction, be subject to (i)
conversion at the option of the holder into the kind and amount of securities,
cash or other property receivable upon consummation of such transaction by a
holder of the number of shares of Common Stock into which such share of Series D
Preferred Stock would have been converted if the conversion had occurred
immediately prior to consummation of such transaction (based on the Exchange
Rate in effect immediately prior to such consummation), (ii) conversion on the
Automatic Conversion Date into the kind and amount of securities, cash or other
property receivable upon consummation of such transaction by a holder of the
number of shares of Common Stock into which such share of Series D Preferred
Stock would have been converted if the conversion on the Automatic Conversion
Date had occurred immediately prior to the date of consummation of such
transaction (based on the Exchange Rate in effect immediately prior to such
consummation) and (iii) redemption on any redemption date in exchange for the
kind and amount of securities, cash or other property receivable upon
consummation of such transaction by a holder of the number of shares of Common
Stock that would have been issuable at the Call Price in effect on such
redemption date upon a redemption of such share of Series D Preferred Stock
immediately prior to consummation of such transaction; assuming in each case
that such holder of Common Stock failed to exercise rights of election, if any,
as to the kind or amount of securities, cash or other property receivable upon
consummation of such transaction (provided that if the kind or amount of
securities, cash or other property receivable upon consummation of such
transaction is not the same for each nonelecting share, then the kind and amount
of securities, cash or other property receivable upon consummation of such
transaction for each nonelecting share shall be deemed to be the kind and amount
so receivable per share by a plurality of the nonelecting shares).
Definitions
Capitalized terms not otherwise defined have the meanings set forth in
"Definitions" following the description of Series E Preferred Stock.
The following terms shall have the meanings indicated in respect of the
Series D Preferred Stock:
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"Call Price" of each share of Series D Preferred Stock shall mean $100
per share.
The "Exchange Rate" for the Series D Preferred Stock shall be equal to
(a) if the Current Market Price on the date of determination is equal to or
greater than 120% of $15.4375 (the "Threshold Common Stock Price"), the number
of shares of Common Stock equal to 0.83333333 of the Base Number (the "Upper
Exchange Rate"), (b) if the Current Market Price on the date of determination is
less than the Threshold Common Stock Price but greater than 80% of $15.4375, the
number of shares of Common Stock having a value (determined at the Current
Market Price) equal to $100 per share of Series D Preferred Stock (the "Middle
Exchange Rate"), and (c) if the Current Market Price on the date of
determination is equal to or less than 80% of $15.4375, a number of shares of
Common Stock (the "Lower Exchange Rate") equal to 1.25 multiplied by the Base
Number. The Exchange Rate is subject to adjustment as set forth in the above
section entitled "Conversion."
Series E Preferred Stock
For a detailed description of the Series E Preferred Stock see
"Description of Series E Preferred Stock."
Certain Charter and By-Law Provisions
The Certificate and By-Laws contain various provisions that may impede
the acquisition of control of the Company by means of a tender offer, proxy
fight or other means. Such provisions include a classified Board of Directors,
restrictions on the ability of stockholders to remove directors, the ability to
fill vacancies or call a stockholder meeting, and restrictions on stockholder
proposals and amendment of certain charter and by-law provisions.
The Certificate further provides that no director of the company shall
be liable to the Company or its stockholders 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 or (iv) for any transaction from which the director derived an improper
personal benefit. Section 174 of the Delaware General Corporation Law specifies
conditions under which directors of Delaware corporations may be liable for
unlawful payment of dividends or unlawful stock purchases or redemptions.
Section 203 of the Delaware General Corporation Law
As a Delaware corporation, the Company is subject to the provisions of
Section 203 of the General Corporation Law of the State of Delaware. Section 203
generally provides that if a person or group acquires 15% or more of a
corporation's voting stock (thereby becoming an "interested stockholder")
without prior board approval, such interested stockholder may not, for a period
of three years, engage in a wide range of business combination transactions with
the corporation. However, this restriction does not apply to a person who
becomes an interested stockholder in a transaction resulting in the interested
stockholder owning at least 85% of the corporation's voting stock (excluding
from the outstanding shares, shares held by officer-directors or pursuant to
employee stock plans without confidential tender offer decisions), or to a
business combination approved by the board of directors and authorized by the
affirmative vote of at least 66 2/3% of the outstanding voting stock not owned
by the interested stockholder. In addition, Section 203 does not apply to
certain business combinations proposed subsequent to the public announcement of
specified business combination transactions which are not opposed by the board
of directors.
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PLAN OF DISTRIBUTION
General
The Selling Stockholder may sell the Offered Securities being offered
hereby by one or more methods, including without limitation (i) through
underwriters, (ii) through brokers or dealers, (iii) through agents and (iv)
directly to purchasers. The applicable Prospectus Supplements will set forth the
terms of the offering of any Offered Securities, including the name or names of
the underwriters, dealers or agents, the aggregate number of Offered Securities,
the purchase price of the Offered Securities and the proceeds to the Selling
Stockholder from the sale, any underwriting discounts and other items
constituting underwriters' compensation and any discounts and commissions
allowed or paid to dealers or agents. Any public offering price and any
discounts or concessions allowed or reallowed or paid to dealers may be changed
from time to time.
If an underwriter or underwriters are used in the sale of the Offered
Securities, the Company and the Selling Stockholder will execute an underwriting
agreement with such underwriter or underwriters at the time an agreement for
such sale is reached. The underwriter or underwriters with respect to an
underwritten offering of Offered Securities will be set forth in the Prospectus
Supplement relating to such offering and, if an underwriting syndicate is used,
the managing underwriter or underwriters will be set forth on the cover of such
Prospectus Supplement. If any underwriter or underwriters are used in the sale
of the Offered Securities, the underwriting agreement will provide that the
obligations of the underwriters are subject to certain conditions precedent and
the underwriters with respect to a sale of Offered Securities will be obligated
to purchase all such Offered Securities if any are purchased. In connection with
the sale of Offered Securities, underwriters will receive compensation in the
form of underwriting discounts or commissions and may also receive commissions
from purchasers of Offered Securities for whom they may act as agent.
Underwriters may sell Offered Securities to or through dealers, and such dealers
may receive compensation in the form of discounts, concessions or commissions
from the underwriters and/or commissions from the purchasers for whom they may
act as agent.
Upon the Company's being notified by the Selling Stockholder of any
change in the identity of the Selling Stockholder or that any material
arrangement has been entered into with a broker or dealer for the sale of any
Offered Securities through a secondary distribution, or a purchase by a broker
or dealer, a Prospectus Supplement will be filed, if required, pursuant to Rule
424(b) under the Securities Act, disclosing (a) the names of such brokers or
dealers; (b) the number of Offered Securities to be sold; (c) the price at which
such Offered Securities are being sold; (d) the commissions paid or the
discounts or concessions allowed to such brokers or dealers; (e) where
applicable, that such broker or dealer did not conduct any investigation to
verify the information set out or incorporated by reference in this Prospectus,
as supplemented or amended; (f) any change in the identity of the Selling
Stockholder, and (g) other facts material to the transaction.
In connection with distribution of the Offered Securities, the Selling
Stockholder may enter into hedging or other option transactions with
broker-dealers in connection with which, among other things, such broker-dealers
may engage in short sales of the Offered Securities pursuant to this Prospectus
in the course of hedging the positions they assume with the Selling Stockholder.
The Selling Stockholder may also sell Offered Securities short pursuant to this
Prospectus and deliver the Offered Securities to close out such short positions.
The Selling Stockholder may also enter into option or other transactions with
broker-dealers which may result in the delivery of Offered Securities to such
broker-dealers who may sell such Offered Securities pursuant to this Prospectus.
The Selling Shareholder may also pledge the Offered Securities to a
broker-dealer and upon default the broker-dealer may effect the sales of the
pledged Offered Securities pursuant to this Prospectus.
The Offered Securities will be securities with no established trading
market. If an underwriter or underwriters are used in the sale of any Offered
Securities, the applicable Prospectus Supplement will contain a statement as to
the intention, if any, of such underwriters at the date of such Prospectus
Supplement to make a market in the Offered Securities. Such underwriters will
not be obligated to do so and may discontinue any market making
-39-
3125699.10
<PAGE>
at any time without notice. No assurance can be given concerning the liquidity
of the trading market for any Offered Securities.
Underwriters, dealers or agents who participate in the distribution of
Offered Securities may be entitled, under agreements that may be entered into
with the Company and/or the Selling Stockholder, as the case may be, to
indemnification by the Company and/or the Selling Stockholder, as the case may
be, against certain liabilities, including liabilities under the Securities Act,
or to contribution by the Company and/or the Selling Stockholder, as the case
may be, to payments such underwriters, dealers or agents may be required to make
in respect thereof. Underwriters, dealers or agents may be customers of, engage
in transactions with, or perform services for the Company or certain
subsidiaries of the Company and/or the Selling Stockholder or certain affiliates
of the Selling Stockholder in the ordinary course of business.
The Offered Securities may be sold either at a fixed price or prices
that may be changed, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices.
LEGAL OPINIONS
The legality of the Offered Securities will be passed upon for the
Company by Ropes & Gray, Boston, Massachusetts.
EXPERTS
The consolidated balance sheets of the Company as of January 27, 1996
and January 28, 1995 and the consolidated statements of income, stockholders'
equity and cash flows of the Company for the years ended January 27, 1996,
January 28, 1995, and January 29, 1994, incorporated by reference in this
prospectus, have been incorporated herein in reliance on the report of Coopers &
Lybrand L.L.P., independent accountants, given on the authority of that firm as
experts in accounting and auditing.
The consolidated balance sheets of Marshalls as of December 31, 1994
and 1993, and the consolidated statements of income, stockholders' equity and
cash flows of Marshalls for the years ended December 31, 1994, 1993 and 1992
incorporated by reference in this prospectus, have been incorporated herein in
reliance on the report of KPMG Peat Marwick LLP, independent accountants, given
on the authority of that firm as experts in accounting and auditing.
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[LOGO]
THE TJX COMPANIES, INC.
-41-
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the Registrant in connection
with the distribution of the securities being registered hereunder. All of the
amounts shown are estimates, except the Securities and Exchange Commission
registration fee.
Securities and Exchange Commission registration fee.. $309,303.60
Printing and engraving fees.......................... 100,000
Accountant's fees and expenses....................... 50,000
Legal fees and expenses.............................. 200,000
Blue Sky fees and expenses........................... 20,000
Trustee and Transfer Agent fees and expenses......... 25,000
Listing fees......................................... 25,000
Rating agency fees and expenses...................... 150,000
Miscellaneous expenses............................... 20,000
---------
Total.......................................... 899,303.60
==========
Item 15. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law, as amended,
provides that a corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorney's
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
Section 145 further provides that a corporation similarly may indemnify any such
person serving in any such capacity who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor, against expenses
(including attorneys' fees) actually and reasonably incurred in connection with
the defense or settlement of such action or suit if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best interests
of the corporation and except that no indemnification shall be made in respect
of any claim, issue or matter as to which such person shall have been adjudged
to be liable to the corporation unless and only to the extent that the Delaware
Court of Chancery or such other court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnify for such expenses which the Court of Chancery
or such other court shall deem proper.
The Registrant has entered into indemnification agreements with each of
its directors and officers indemnifying them against expenses, settlements,
judgments and fines incurred in connection with any threatened, pending or
completed action, suit, arbitration or proceeding, where the individual's
involvement is by reason of the fact that such person is or was a director or
officer or served at the Company's request as a director of another organization
(except that indemnification is not provided against judgments and fines in a
derivative suit unless permitted by Delaware law). An individual may not be
indemnified if such person is found not to have acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the Registrant, except to the extent Delaware law permits broader
contractual indemnification. These indemnification agreements
3125699.10
II - 1
<PAGE>
provide procedures, presumptions and remedies which substantially strengthen the
indemnification rights beyond those provided by the Registrant's Restated
Certificate of Incorporation (the "Certificate") and by Delaware law.
The Registrant's Certificate provides that each person who was or is
made a party to, or is involved in, any action, suit, preceding or claim by
reason of the fact that he or she is or was a director, officer or employee of
the Registrant (or is or was serving at the request of the Registrant as a
director, officer, trustee, employee or agent of any other enterprise including
service with respect to employee benefit plans) shall be indemnified and held
harmless by the Registrant, to the full extent permitted by Delaware law, as in
effect from time to time, against all expenses (including attorneys' fees and
expenses), judgements, fines, penalties and amounts to be paid in settlement
incurred by such person in connection with the investigation, preparation to
defend or defense of such action, suit, proceeding or claim.
The rights to indemnification and the payment of expenses provided by
the Registrant's Certificate do not apply to any action, suit, proceeding or
claim initiated by or on behalf of a person otherwise entitled to the benefit of
such provisions. Any person seeking indemnification under the Registrant's
Certificate shall be deemed to have met the standard of conduct required for
such indemnification unless the contrary shall be established. The Registrant's
Certificate provides that the rights to indemnification and the payment of
expenses provided thereby shall not be exclusive of any other right which any
person may have or acquire under any statute, provision of the Registrant's
Certificate or By-laws, or otherwise. Any repeal or modification of such
indemnification provisions shall not adversely affect any right or protection of
a director or officer with respect to any conduct of such director or officer
occurring prior to such repeal or modification.
Section 102(b)(7) of the Delaware General Corporation Law, as amended,
permits a corporation to include in its certificate of incorporation a provision
eliminating or limiting the personal liability of a director to the corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director, provided that such provision shall not eliminate or limit the
liability of a director (i) for any breach of the director's duty of loyalty to
the corporation or its stockholders, (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 (relating to
unlawful payment of dividend and unlawful stock purchase and redemption) or (iv)
for any transaction from which the director derived an improper personal
benefit. The Registrant has provided in its Certificate that its directors shall
be exculpated from liability as provided under Delaware law.
Item 16. Exhibits
The following is an index of all exhibits filed as a part of this
Registration Statement, including exhibits filed herewith and exhibits
incorporated herein by reference.
3(i).1 Second Restated Certificate of Incorporation filed June 5,
1985 (incorporated by reference to Exhibit (3i)(a) of the Form
10-K filed for the fiscal year ended January 28, 1995).
3(i).2 Certificate of Amendment of Second Restated Certificate of
Incorporation filed June 3, 1986 (incorporated by reference to
Exhibit (3i)(b) of the Form 10-K for the fiscal year ended
January 28, 1995).
3(i).3 Certificate of Amendment of Second Restated Certificate of
Incorporation filed June 2, 1987 (incorporated by reference to
Exhibit (3i)(c) of the Form 10-K for the fiscal year ended
January 28, 1995).
3(i).4 Certificate of Amendment of Second Restated Certificate of
Incorporation filed June 20, 1989 (incorporated by reference
to Exhibit (3i)(d) of the Form 10-K for the fiscal year ended
January 28, 1995).
3125699.10
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<PAGE>
3(i).5 Certificate of Designations, Preferences and Rights of New
Series A Cumulative Convertible Preferred Stock of the
Company, filed August 12, 1992 (incorporated by reference to
Exhibit (3i)(e) of the Form 10-K for the fiscal year ended
January 28, 1995).
3(i).6 Certificate of Designations, Preferences and Rights of $3.125
Series C Cumulative Convertible Preferred Stock (incorporated
by reference to Exhibit (3i)(f) of the Form 10-K for the
fiscal year ended January 28, 1995).
3(i).7 Certificate of Designations, Preferences and Rights of Series
D Cumulative Convertible Preferred Stock (incorporated by
reference to Exhibit 10.1 of the Form 8-K dated November 17,
1995).
3(i).8 Certificate of Designations, Preferences and Rights of Series
E Cumulative Convertible Preferred Stock (incorporated by
reference to Exhibit 10.2 of the Form 8-K dated November 17,
1995).
3(ii).1 The by-laws of the Company, as amended (incorporated by
reference to Exhibit (3ii) of the Form 10-K for the fiscal
year ended January 28, 1995).
4.1 Composite copy of Share Purchase Agreements dated as of April
15, 1992 regarding Series A Cumulative Convertible Preferred
Stock (incorporated by reference to Exhibit 4(c) of Form 10-K
for the fiscal year ended January 30, 1992).
4.2 Exchange Agreement dated as of August 6, 1992 between the
Company and holders of Company's New Series A Cumulative
Convertible Preferred Stock (incorporated by reference to
Exhibit 19 of the Form 10-Q for the quarter ended July 25,
1992).
4.3 Standstill and Registration Rights Agreement dated as of
November 17, 1995 dated as of November 17, 1995 between the
Registrant and Melville Corporation (incorporated by reference
to Exhibit 10.20 of the Form 10-K for the fiscal year ended
January 27, 1996).
4.4. Indenture dated as of September 15, 1993 between TJX and The
First National Bank of Chicago as Trustee relating to the Debt
Securities (incorporated by reference to Exhibit 4.1 of the
Registrant's Registration Statement on Form S-3 No. 33-60059).
4.5. Form of Fixed Rate Note (incorporated by reference to Exhibit
4.1 of the Registrant's Registration Statement on Form S-3
No. 33-50259).
4.6. Form of Floating Rate Note (incorporated by reference to
Exhibit 4.2 of the Registrant's Registration Statement on
Form S-3 No. 33-50259).
5.1 Opinion of Ropes & Gray (to be filed by amendment).
12.1 Computation of Ratio of Earnings to Fixed Charges and Ratio
of Earnings to Combined Fixed Charges and Preferred Stock
Dividends.
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of KPMG Peat Marwick LLP.
23.3 Consent of Ropes & Gray (see Exhibit 5.1).
3125699.10
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<PAGE>
24 Power of Attorney (see page II-5).
25 Statement of Eligibility and Qualification of Trustee on Form
T-1 (to be filed by amendment).
Item 17. Undertakings
(a) 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 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to 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 the time shall be deemed to be the initial bona fide offering thereof.
(b) 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 foregoing provisions described above
in Item 15, or otherwise, the Registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer, or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933 and will be governed by the
final adjudication of such issue.
(c) The undersigned Registrant hereby undertakes:
(i) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement
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;
(ii) That, for the purpose of determining any liability under
the Securities Act of 1933, each post-effective amendment that contains
a form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(ii) 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.
(d) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, the information
omitted from the form of prospectus filed as part of a registration statement in
reliance upon Rule 430A and contained in the form of prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
of 1933 shall be deemed to be part of this registration statement as of the time
it was declared effective.
(e) The undersigned Registrant hereby undertakes to file an application
for the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with the
rules and regulations prescribed by the Commission under Section 305(b)(2) of
the Act.
3125699.10
II - 4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the Town of Framingham, Commonwealth of Massachusetts.
THE TJX COMPANIES, INC.
By:/s/ Donald G. Campbell
Donald G. Campbell
Dated: June 7, 1996 Executive Vice President - Finance
Each person whose signature appears below constitutes and appoints
Bernard Cammarata, Donald G. Campbell and Jay H. Meltzer, and each of them
singly, his or her true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement on Form S-3 and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to be done in and about
the premises, as fully to all intents and purposes as he or she might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or their substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the date indicated.
/s/ Bernard Cammarata /s/ Donald G. Campbell
Bernard Cammarata, President, Donald G. Campbell,
Chief Executive Officer Executive Vice Presi-
and Director dent-Finance and
Principal Financial
and Accounting Officer
/s/ Phyllis B. Davis /s/ Dennis F. Hightower
Phyllis B. Davis, Director Dennis F. Hightower,
Director
/s/ Richard G. Lesser /s/ Arthur F. Loewy
Richard G. Lesser, Director Arthur F. Loewy, Director
/s/ John M. Nelson /s/ John F. O'Brien
John M. Nelson, Director John F. O'Brien, Director
/s/ Robert F. Shapiro /s/ Willow B. Shire
Robert F. Shapiro, Director Willow B. Shire, Director
/s/ Burton S. Stern /s/ Fletcher H. Wiley
Burton S. Stern, Director Fletcher H. Wiley, Director
Dated: June 7, 1996
3125699.10
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<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page
3(i).1
Second Restated Certificate of Incorporation filed June 5, 1985 (incorporated by
reference to Exhibit (3i)(a) of the Form 10-K filed for the fiscal year ended
January 28, 1995).
3(i).2
Certificate of Amendment of Second Restated Certificate of Incorporation filed
June 3, 1986 (incorporated by reference to Exhibit (3i)(b) of the Form 10-K for
the fiscal year ended January 28, 1995).
3(i).3
Certificate of Amendment of Second Restated Certificate of Incorporation filed
June 2, 1987 (incorporated by reference to Exhibit (3i)(c) of the Form 10-K for
the fiscal year ended January 28, 1995).
3(i).4
Certificate of Amendment of Second Restated Certificate of Incorporation filed
June 20, 1989 (incorporated by reference to Exhibit (3i)(d) of the Form 10-K for
the fiscal year ended January 28, 1995).
3(i).5
Certificate of Designations, Preferences and Rights of New Series A Cumulative
Convertible Preferred Stock of the Company, filed August 12, 1992 (incorporated
by reference to Exhibit (3i)(e) of the Form 10-K for the fiscal year ended
January 28, 1995).
3(i).6
Certificate of Designations, Preferences and Rights of $3.125 Series C
Cumulative Convertible Preferred Stock (incorporated by reference to Exhibit
(3i)(f) of the Form 10-K for the fiscal year ended January 28, 1995).
3(i).7
Certificate of Designations, Preferences and Rights of Series D Cumulative
Convertible Preferred Stock (incorporated by reference to Exhibit 10.1 of the
Form 8-K dated November 17, 1995).
3(i).8
Certificate of Designations, Preferences and Rights of Series E Cumulative
Convertible Preferred Stock (incorporated by reference to Exhibit 10.2 of the
Form 8-K dated November 17, 1995).
3(ii).1
The by-laws of the Company, as amended (incorporated by reference to Exhibit
(3ii) of the Form 10-K for the fiscal year ended January 28, 1995).
4.1
Composite copy of Share Purchase Agreements dated as of April 15, 1992 regarding
Series A Cumulative Convertible Preferred Stock (incorporated by reference to
Exhibit 4(c) of Form 10-K for the fiscal year ended January 30, 1992).
4.2
Exchange Agreement dated as of August 6, 1992 between the Company and holders of
Company's New Series A Cumulative Convertible Preferred Stock (incorporated by
reference to Exhibit 19 of the Form 10-Q for the
quarter ended July 25, 1992).
4.3
Standstill and Registration Rights Agreement dated as of November 17, 1995 dated
as of November 17, 1995 between the Registrant and Melville
3125699.10
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Corporation (incorporated by reference to Exhibit 10.20 of the Form 10-K for the
fiscal year ended January 27, 1996).
3125699.10
<PAGE>
4.4
Indenture dated as of September 15, 1993 between TJX and The First National Bank
of Chicago as Trustee relating to the Debt Securities (incorporated by reference
to Exhibit 4.1 of the Registrant's Registration Statement on Form S-3 No.
33-60059).
4.5.
Form of Fixed Rate Note (incorporated by reference to Exhibit 4.1 of the
Registrant's Registration Statement on Form S-3 No. 33-50259).
4.6.
Form of Floating Rate Note (incorporated by reference to Exhibit 4.2 of the
Registrant's Registration Statement on Form S-3 No. 33-50259).
5.1
Opinion of Ropes & Gray (to be filed by amendment).
12.1
Computation of Ratio of Earnings to Fixed Charges and Ratio of Earnings to
Combined Fixed Charges and Preferred Stock Dividends.
23.1
Consent of Coopers & Lybrand L.L.P.
23.2
Consent of KPMG Peat Marwick LLP.
23.3
Consent of Ropes & Gray (see Exhibit 5.1).
24
Power of Attorney (see page II-5).
25
Statement of Eligibility and Qualification of Trustee on Form (to be filed by
amendment).
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Exhibit 12.1
THE TJX COMPANIES, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
(Dollars in Millions)
Fiscal Year Ended
----------------------------------------
Jan. Jan. Jan. Jan. Jan.
25, 30, 29, 28, 27,
1992 1993 1994 1995 1996
------ ------ ----- ----- ------
Income from continuing
operations $ 90.0 $110.7 $124.6 $86.6 $63.6
Add back:
Taxes 63.3 73.1 82.6 61.6 45.3
Interest expense 24.4 24.1 17.9 24.5 44.2
Interest portion of
leases 30.5 35.9 42.5 52.0 72.0
------ ------ ------ ----- ------
A) Income before taxes
and fixed charges $208.2 $243.8 $267.6 $224.7 $225.1
====== ====== ====== ====== ======
Fixed charges
Capitalized interest $ - $ .3 $ .2 $ .4 $ -
Interest expense 24.4 24.1 17.9 24.5 44.2
Interest portion of
leases 30.5 35.9 42.5 52.0 72.0
------- ------- ------- ------- -----
B) Fixed charges 54.9 60.3 60.6 76.9 116.2
Tax effected preferred
stock dividends - 6.5 11.9 12.2 16.1
-------- ------- ------- ------- ------
C) Combined fixed charges
and preferred stock
dividends $ 54.9 $ 66.8 $ 72.5 $ 89.1 $132.3
====== ====== ====== ====== ======
Ratio of earnings to fixed
charges (A+B) 3.79X 4.04X 4.42X 2.92X 1.94X
----- ----- ----- ----- -----
----- ----- ----- ----- -----
Ratio of earnings to combined
fixed charges and preferred
stock dividends (A+C) 3.79X 3.65X 3.69X 2.52X 1.70X
------ ----- ----- ----- -----
------ ----- ----- ----- -----
3125699.10
<PAGE>
Exhibit 23.1
[Letterhead of Coopers & Lybrand L.L.P.]
We consent to the incorporation by reference in the Registration Statement of
The TJX Companies, Inc. on Form S-3 of our reports dated March 12, 1996 on our
audits of the financial statements and financial statement schedule of The TJX
Companies, Inc. as of January 27, 1996 and January 28, 1995 and for the years
ending January 27, 1996, January 28, 1995 and January 29, 1994 which reports are
included in or incorporated by reference in, the Annual Report on Form 10-K of
the TJX Companies, Inc. for the fiscal year ended January 27, 1996. We also
consent to the reference to our Firm under the caption "Experts" and "Selected
Consolidated Financial Information."
/s/ Coopers & Lybrand L.L.P.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
June 6, 1996
3125699.10
<PAGE>
Exhibit 23.2
The Board of Directors
The TJX Companies, Inc.
We consent to the reference to our firm under the heading "Experts" in the
Registration Statement on Form S-3 of the TJX Companies, Inc. and to the
incorporation by reference of our report dated December 1, 1995, with respect to
the consolidated balance sheets of Marshalls of Roseville, Minn., Inc. as of
December 31, 1994 and 1993, and the related consolidated statements of income,
stockholders' equity, and cash flows for each of the years in the three-year
period ended December 31, 1994, which report appears in the Form 8-K of the TJX
Companies, Inc. dated November 17, 1995.
/s/ KPMG Peat Marwick LLP
Boston, MA
June 6, 1996
3125699.10
<PAGE>
