<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 10, 1995
REGISTRATION NO. 33-56889
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
ZENITH ELECTRONICS CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 36-1996520
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
</TABLE>
1000 MILWAUKEE AVENUE
Glenview, Illinois 60025
708-391-7000
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
Richard F. Vitkus
Senior Vice President
and
General Counsel
Zenith Electronics Corporation
1000 Milwaukee Avenue
Glenview, Illinois 60025
708-391-7000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------
COPY TO:
Thomas A. Cole, Esq.
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:From time to
time after this Registration Statement becomes effective.
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
reinvestment plans, check the following box. /X/
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<PAGE>
PROSPECTUS [LOGO]
6,500,000 SHARES
ZENITH ELECTRONICS CORPORATION
COMMON STOCK
($1.00 PAR VALUE)
------------------------
Zenith Electronics Corporation ("Zenith" or the "Company") has registered
6,500,000 shares of its Common Stock, $1.00 par value (the "Common Stock"),
which may be offered by this Prospectus from time to time at prices and on terms
to be determined at the time of a sale or sales. The Common Stock may be sold on
a negotiated or competitive bid basis to or through underwriters, dealers or
agents designated from time to time. In addition, the Common Stock may be sold
by the Company to other purchasers directly or through agents. See "Plan of
Distribution."
Certain additional terms of the Common Stock in respect of which this Prospectus
is being delivered, including, where applicable, the names of the underwriters,
dealers or agents, the public offering price, the proceeds to the Company from
such sale, and any applicable commissions, discounts and other items
constituting compensation to such underwriters, dealers or agents, will (unless
otherwise set forth under "Plan of Distribution") be set forth in a Prospectus
Supplement (the "Prospectus Supplement").
The Common Stock is listed on the New York and Chicago Stock Exchanges under the
symbol "ZE" and is also registered on the Basel, Geneva and Zurich, Switzerland
Stock Exchanges. On February 9, 1995 the last reported sale price of the Common
Stock on the New York Stock Exchange was $11 3/8 per share. See "Price Range of
Common Stock."
SEE "INVESTMENT CONSIDERATIONS" FOR A DISCUSSION OF FACTORS THAT SHOULD BE
CONSIDERED BY INVESTORS BEFORE PURCHASING THE SHARES OF COMMON STOCK OFFERED
HEREBY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is February __, 1995.
<PAGE>
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS OR THE PROSPECTUS SUPPLEMENT(S) IN CONNECTION WITH
THE OFFER MADE BY THIS PROSPECTUS AND PROSPECTUS SUPPLEMENT(S) AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY AGENT, UNDERWRITER OR DEALER. NEITHER THIS
PROSPECTUS NOR ANY PROSPECTUS SUPPLEMENT CONSTITUTES AN OFFER TO SELL OR A
SOLICITATION OF ANY OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY OR THEREBY
IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN
SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS
SUPPLEMENT NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THEREOF OR THAT THE INFORMATION
CONTAINED OR INCORPORATED BY REFERENCE HEREIN OR THEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO ITS DATE.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Certain information, as
of particular dates, concerning the Company's directors and officers, their
compensation, the principal holders of securities of the Company and any
material interests of such persons in transactions with the Company is discussed
in proxy statements of the Company distributed to stockholders of the Company
and filed with the Commission. Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549; and at the following regional offices of the Commission: Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and
13th Floor, Seven World Trade Center, New York, New York 10048. Copies of such
materials may be obtained from the Public Reference Branch of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. In addition,
such reports, proxy statements and other information can be inspected at the New
York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005 and the
Chicago Stock Exchange, 440 South LaSalle Street, Chicago, Illinois 60605.
The Company has filed with the Commission in Washington, D.C. a Registration
Statement on Form S-3 under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the securities offered hereby. This
Prospectus does not contain all of the information set forth in the Registration
Statement and exhibits thereto, as permitted by the rules and regulations of the
Commission. For further information pertaining to the Company and the securities
offered hereby, reference is made to the Registration Statement and the exhibits
thereto, which may be examined without charge at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
and copies thereof may be obtained from the Public Reference Branch of the
Commission upon payment at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents which have been filed by the Company with the
Commission are incorporated by reference in this Prospectus:
(a) the Company's Annual Report on Form 10-K for the year ended December
31, 1993;
(b) the Company's Quarterly Reports on Form 10-Q for the quarters ended
April 2, 1994, July 2, 1994 and October 1, 1994; and
(c) the Company's Current Reports on Form 8-K, dated January 11, 1994,
January 13, 1994, January 31, 1994, February 4, 1994, February 8, 1994,
February 10, 1994, February 15, 1994, March 1, 1994, April 20, 1994, April
21, 1994, May 16, 1994, July 21, 1994, August 1, 1994, August 19, 1994 and
February 9,1995.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of securities contemplated hereby shall be deemed to
be incorporated by reference in this Prospectus or any Prospectus Supplement and
to be a part hereof from the date of filing of such documents. Any statement
contained in a document incorporated by reference or deemed to be incorporated
by reference in this Prospectus or any Prospectus Supplement shall be deemed to
be modified or superseded for all purposes of this Prospectus or such Prospectus
Supplement to the extent that a statement contained herein, therein or in any
subsequently filed document which also is incorporated or deemed to be
incorporated by reference herein or in such Prospectus Supplement modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus or any Prospectus Supplement.
The Company will provide without charge to each person to whom a copy of
this Prospectus has been delivered, upon the written or oral request of such
person, a copy of any and all of the documents referred to above which have been
or may be incorporated in this Prospectus by reference (other than exhibits to
such documents, unless such exhibits are specifically incorporated by reference
therein). Requests for such copies should be directed to: David S. Levin,
Secretary, Zenith Electronics Corporation, 1000 Milwaukee Avenue, Glenview,
Illinois 60025; telephone number (708) 391-8048.
2
<PAGE>
THE COMPANY
Zenith was founded in 1918 and has been a leader in consumer electronics,
first in radio and later in monochrome and color television and other video
products.
Zenith operations involve a dominant industry segment, the design,
development, and manufacture of video products (including color television sets
and other consumer products) along with parts and accessories for such products.
These products along with purchased video cassette recorders are sold
principally to major retail dealers and independent and wholly-owned regional
wholesale distributors in the United States, Canada and other foreign countries.
The Company also sells directly to buying groups and private label customers and
customers in the lodging, health care and rent-to-own industries.
Zenith's video products also include color picture tubes that are produced
for and sold to other manufacturers and Network Systems products such as cable
and telecommunication set-top devices, interactive television and data
communication products which are sold primarily to cable television operators
and other commercial users of these products.
The Company has sold or downsized its non-core business activities. The
Company sold its monochrome video monitor business in 1993 and its power supply
business in April 1994. Its activities in color video monitors sold to computer
manufacturers have been scaled back in 1994 and will cease in the near future;
its activities in high security electronic equipment have been discontinued.
The Company has reported substantial losses from its continuing operations
for each of the last nine years. These results reflect the cumulative effect of
frequent and significant color TV price reductions during the 1980s and, in the
early 1990s, also reflected recessionary conditions in the United States. In
addition, the Company has invested significant amounts in engineering and
research in recent years, which amounts have been expensed as incurred.
The Company, which is incorporated under the laws of the State of Delaware,
has its principal executive offices at 1000 Milwaukee Avenue, Glenview, Illinois
60025. Its telephone number is (708) 391-7000.
INVESTMENT CONSIDERATIONS
THE FOLLOWING FACTORS SHOULD BE CAREFULLY CONSIDERED IN EVALUATING AN
INVESTMENT IN ANY SHARES OF COMMON STOCK OFFERED HEREBY:
LOSSES FROM CONTINUING OPERATIONS. The Company has reported substantial
losses from its continuing operations for each of the last nine years. The color
television market in the United States has been under intense pricing pressure
for many years and color television prices have dropped sharply in the past
several years. Price competition continued in 1994 and early 1995, and the
Company selectively reduced color television prices to maintain its historical
competitive price position. This, along with other factors, has resulted in
substantially reduced profit margins for the Company. In recent years the
Company has benefitted from major cost-reduction programs, but lower prices and
inflationary cost increases have more than offset such cost reduction benefits.
In the first nine months of 1994 the benefits of increased sales volume, cost
reductions, reduced duty costs related to the North American Free Trade
Agreement ("NAFTA") and reduced activities in non-core businesses have exceeded
the effect of lower prices and inflationary cost increases. These factors, along
with real estate sales, resulted in a net profit of $9 million for the third
quarter of 1994. However, a net loss of $11 million was incurred for the nine
months ended October 1, 1994 and a net loss of $97 million was incurred for the
full year 1993 despite record industry unit volume in each period. There can be
no assurance that the Company's net operating losses will not continue for the
foreseeable future.
LIQUIDITY. Cash decreased from $56 million at December 31, 1990, to $21
million at December 31, 1993. (Due to the seasonal nature of the Company's
business, cash available peaks after year ends). The decrease over the three
years consisted of $53 million of cash used by operating activities and $75
3
<PAGE>
million (net) used to purchase fixed assets. These uses of cash were offset by
$93 million of cash provided from financing activities which included the
issuance of long-term debt and sales of Common Stock. Cash decreased $21 million
during the nine months ended October 1, 1994. The decrease consisted of $96
million of cash used by operating activities and $20 million (net of $22 million
proceeds from real estate sales) used to purchase fixed assets. These uses of
cash were offset by $95 million (net) of cash provided from financing activities
which included sales of the Company's Common Stock in the amount of $83 million,
borrowings under the Credit Agreement (as defined) in the amount of $34 million
and the issuance of long-term debt in the amount of $12 million offset by cash
used for the redemption of the Company's 12 1/8% Notes due January 1995 in the
amount of $35 million. The Company's borrowings since 1990 have increased, and
in 1993 the Company entered into its current Credit Agreement dated as of May
21, 1993 with General Electric Capital Corporation, as Agent and Lender, The
Bank of New York Commercial Corporation, as Lender, and Congress Financial
Corporation, as Lender, as amended (the "Credit Agreement"). The maximum
commitment of funds available for borrowing under the Credit Agreement is $90
million, but is limited by a defined borrowing base formula related to eligible
accounts and eligible inventory (each as defined in the Credit Agreement). As of
February 6, 1995, the Company had outstanding borrowings under the Credit
Agreement of approximately $11 million. The Credit Agreement terminates on June
30, 1996 (unless extended by agreement of the lenders), at which time all
outstanding indebtedness thereunder would have to be refinanced. There can be no
assurance that the Credit Agreement will be extended or refinanced. See "Credit
Agreement." Although the Company believes that its Credit Agreement, together
with extended-term payables expected to be available from a foreign supplier and
its continuing efforts to obtain other financing sources, including sales of
Common Stock pursuant to this Prospectus, will be adequate to meet its seasonal
working capital, capital expenditure and other requirements in 1995, there can
be no assurance that the Company will not experience liquidity problems in the
future because of adverse market conditions or other unfavorable events. In such
event, the Company would be required to seek other sources of liquidity, if
available. In addition, the Company is reviewing possible capital investment
projects over the next three years (which may require an amendment to the Credit
Agreement) and options for additional financing that would be required to
support these projects. If undertaken, the projects are expected to reduce the
costs and increase production capacity primarily in the Company's picture tube
operations. There can be no assurance that these projects will be undertaken (or
that such amendment will be obtained, if requested).
BUSINESS STRATEGY. The goals of the Company's business strategy are to
improve profitability, to introduce new products (such as home theater TVs), to
develop new products (such as digital cable products incorporating the
Company-developed transmission technology selected in February 1994 by the HDTV
Grand Alliance and the FCC Advisory Committee review panel), and to re-engineer
operations. This strategy is expected to continue to involve significant
expenditures by the Company in 1995 and beyond. There can be no assurance that
the Company will achieve the goals of its business strategy, including an
expected improvement in financial results.
COMPETITION. The Company's major product areas, including the color
television market, are highly competitive. The Company's major competitors are
foreign-owned global giants, generally with greater worldwide television volume
and overall resources. In efforts to increase market share or achieve higher
production volumes, the Company's competitors have aggressively lowered their
selling prices in the past several years. Some of the Company's foreign
competitors have been capable of offsetting the effects of U.S. price reductions
through sales at higher margins in their home markets and through direct
governmental supports. There can be no assurance that such competition will not
continue to adversely affect the Company's performance or that the Company will
be able to maintain its market share in the face of such competition. Price
competition continued in 1994 and early 1995,and the Company selectively reduced
color television prices to maintain its historical competitive price position.
DILUTION: CONVERSION OF CONVERTIBLE SECURITIES. The Company's $55 million
aggregate principal amount of 8.5% Senior Subordinated Convertible Debentures
due 2000 (the "Debentures due 2000") and $12 million aggregate principal amount
of 8.5% Senior Subordinated Convertible Debentures due
4
<PAGE>
2001 (the "Debentures due 2001" and, collectively with the Debentures due 2000,
the "8.5% Debentures") are convertible into Common Stock at an initial
conversion price of $9.76 and $10.00 per share, respectively, subject in each
case to adjustment in certain events. If all of the 8.5% Debentures were
converted into Common Stock at the initial conversion prices, 6,835,246 shares
of Common Stock would be issued. No prediction can be made as to the effect, if
any, that the conversion of the 8.5% Debentures into Common Stock or the fact
that the 8.5% Debentures are outstanding and unconverted will have on the market
price of Common Stock prevailing from time to time. The conversion of 8.5%
Debentures into Common Stock could adversely affect prevailing market prices of
the Common Stock. The Company's 6 1/4% Convertible Subordinated Debentures due
2011 are convertible at $31.25 per share, subject to adjustment in certain
events.
Assuming no conversion of convertible securities, the net tangible book
value per share at October 1, 1994 was approximately $5.01. The net tangible
book value per share at October 1, 1994, assuming an average sale price of
$10.50 per share (the closing price of the Common Stock on the New York Stock
Exchange on February 6, 1995) and $14.125 per share (the high sales price of the
Common Stock on the New York Stock Exchange in the preceding 12 months) for the
shares of Common Stock offered hereby and receipt by the Company of the
estimated net proceeds of the sale of all the shares of Common Stock offered
hereby, is approximately $5.70 and $6.16, respectively. The amount of increase
in net tangible book value per share attributable to the estimated cash payments
to be made by purchasers of Common Stock (assuming a price of $10.50 per share
and $14.125 per share) is approximately $.69 and $1.15, respectively. The
immediate dilution from the assumed average sale price of $10.50 and $14.125
which would be absorbed by such purchasers (assuming all shares of Common Stock
offered hereby were sold at the assumed prices) is approximately $4.80 and
$7.97, respectively. These calculations are based upon a range of assumed
average sale prices which have been chosen solely for the purpose of
illustrating the potential dilutive effect of the sale of shares of Common Stock
offered hereby and which may or may not reflect actual sales prices of the
Common Stock made pursuant to this Prospectus. The immediate dilution absorbed
by purchasers at the time of such sales will vary based upon, among other
things, the purchase price paid by the purchasers in such sales.
NET OPERATING LOSS CARRYFORWARDS. At December 31, 1993, the consolidated
group of which the Company is the parent had for federal income tax purposes
approximately $382.4 million of net operating loss carryforwards ("NOLs") (which
expire from 2004 through 2008) and $4.4 million of unused tax credits (which
expire from 1994 through 1998). The Company expects these NOLs and credits to be
available in the future to reduce the federal income tax liability of the group.
However, should there occur an "ownership change" of the Company under Section
382 of the Internal Revenue Code of 1986, the group's ability to use the NOLs
and credits would be materially and adversely affected.
An ownership change occurs when the stock ownership by those stockholders
owning 5% or more of a corporation's stock ("5% stockholders") increases by more
than 50 percentage points over a period of not more than three years. Public
offerings of the number of shares of Common Stock offered hereby are generally
taken into account in the ownership change calculations as if the stock were
acquired by a single, new 5% stockholder. If a corporation experiences an
ownership change, its subsequent utilization of NOLs is limited annually to the
product of (i) a tax-exempt rate of return announced by the Internal Revenue
Service from time to time (currently 6.83%) and (ii) the equity value of the
corporation immediately before the ownership change,subject to certain
adjustments. This limitation, appropriately modified, also applies to the
utilization of most unused tax credits following an ownership change. Proposed
Treasury regulations prescribe a more detailed, but in this case substantially
similar, procedure for applying the rules of Section 382 to a consolidated group
of corporations.
Sale of the shares of Common Stock offered hereby are not expected to give
rise to an ownership change of the Company or its consolidated group. The
Company has knowledge of increases in the ownership of the Company's Common
Stock by 5% stockholders aggregating approximately 35 percentage points in the
three years ended December 31, 1994 (on a pro forma basis, giving effect to the
sale of the shares of Common Stock offered hereby, but without regard to
acquisitions of shares of Common Stock offered hereby by persons who might
thereby become separate 5% stockholders).
5
<PAGE>
However, acquisitions of significant interests in the Company's Common Stock
have occurred in the past, and future stock transactions, which may not be
within the control of the Company, may result in an ownership change when
aggregated with the shares of Common Stock offered hereby and these other past
Common Stock transactions.
USE OF PROCEEDS
The Company's Credit Agreement requires that the net cash proceeds to the
Company from the sale of shares of Common Stock offered hereby be used first to
repay any borrowings and other amounts payable under the Credit Agreement. Such
repayment would not reduce the Company's ability to further borrow thereunder.
As of February 6, 1995, outstanding borrowings under the Credit Agreement were
approximately $11 million and bore interest at the rate of 10 3/4% per annum.
See "Credit Agreement."
Unless otherwise specified in a Prospectus Supplement, any remaining net
proceeds will be used for reducing short-term borrowings, if any, for capital
investment projects to reduce the costs and increase production capacity
primarily in the Company's picture tube operations and/or forengineering and
research expenses or for other general corporate purposes. An amendment to the
Credit Agreement may be necessary to the extent that any capital expenditures
for capital investment projects would exceed the current limitations contained
in the Credit Agreement. There can be no assurance that the lenders under the
Credit Agreement will approve such an amendment, if requested by the Company.
Pending such use, net proceeds not required to be used to repay borrowings under
the Credit Agreement may temporarily be invested in short-term marketable
securities.
6
<PAGE>
CREDIT AGREEMENT
THE FOLLOWING IS A SUMMARY OF THE PRINCIPAL TERMS AND CONDITIONS OF THE
CREDIT AGREEMENT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE CREDIT
AGREEMENT, AS AMENDED. COPIES OF THE CREDIT AGREEMENT AND THE AMENDMENTS THERETO
ARE FILED AS EXHIBITS TO THE REGISTRATION STATEMENT AND ARE INCORPORATED BY
REFERENCE HEREIN.
The Credit Agreement provides the Company with a credit facility having an
aggregate maximum commitment of $90 million but is limited by a defined
borrowing base formula related to eligible accounts and eligible inventory (each
as defined in the Credit Agreement). The Credit Agreement includes terms,
conditions, representations and warranties, covenants, indemnities and events of
default and other provisions which are customary in such agreements.
The Credit Agreement terminates on June 30, 1996 (unless extended by
agreement of the lenders), at which time all outstanding indebtedness thereunder
would have to be refinanced. In the event that the Company receives proceeds
from the issuance of certain debt or equity securities or from the sale of
certain material assets, such proceeds must be applied to prepay any outstanding
borrowings under the Credit Agreement. In the event of certain material asset
transactions, the Credit Agreement requires a partial reduction in the maximum
commitment of the lenders. See "Use of Proceeds."
The Credit Agreement interest rate is the Base Rate (as defined) plus 1 3/4%
per annum on the outstanding borrowings. Additionally, the Company pays a 1/2%
non-use fee on the unused portion of the credit facility. Loans under the Credit
Agreement are secured by accounts receivable, inventory, general intangibles,
trademarks and the tuning system patent license agreements of the Company and
certain of its domestic subsidiaries.
The Credit Agreement contains covenants that include, among other things,
requirements to maintain certain financial tests and ratios (including a minimum
net worth and a liabilities to net worth ratio), and certain restrictions and
limitations, including those on capital expenditures, specified dollar limits on
the amount of inventory for certain of the Company's products, changes in
control, payments of dividends, sales of assets, investments, additional
borrowings, mergers and purchases of stock and assets.
The Credit Agreement contains restrictive financial covenants that must be
maintained as of the end of each fiscal quarter, including a liabilities to net
worth ratio and a minimum net worth amount. The ratio of liabilities to net
worth and minimum net worth amount varies from quarter to quarter. As of October
1, 1994, the ratio of liabilities to net worth was required to be not greater
than 4.95 to 1.0 and was actually 2.11 to 1.0, and net worth was required to be
equal to or greater than $108.0 million and was actually $224.8 million. At the
end of each fiscal quarter through March 30, 1996, the liabilities to net worth
ratio is required to be maintained at various levels ranging from a high of 4.40
to 1.0 to a low of 3.50 to 1.0, and minimum net worth is required to be
maintained at amounts ranging from a high of $166.0 million to a low of $143.0
million. The Credit Agreement restricts the amount of capital expenditures by
the Company in each fiscal year. For the fiscal years 1994 and 1995, the Company
is permitted to make capital expenditures (as defined in the Credit Agreement)
of up to $68.0 and $38.0 million, respectively. In the event the Company plans
to undertake capital investment projects in 1995 which would exceed the
permitted expenditures, the Company would need to seek an amendment to the
Credit Agreement. There can be no assurance that the lenders under the Credit
Agreement will approve such an amendment, if requested by the Company.
The Credit Agreement prohibits dividend payments on Common Stock and any of
the Company's preferred stock, if issued. See "Dividend Policy."
7
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following consolidated results of operations data relating to the years
ended December 31, 1993, December 31, 1992 and December 31, 1991 and the
following consolidated balance sheet data at December 31, 1993 and December 31,
1992 are derived from and should be read in conjunction with the consolidated
financial statements, including the notes thereto, included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1993 and incorporated
by reference herein. The consolidated results of operations data relating to the
years ended December 31, 1990 and December 31, 1989 and the consolidated balance
sheet data at December 31, 1991, December 31, 1990 and December 31, 1989 are
derived from the Company's previously audited financial statements.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------
1993(2) 1992(3) 1991 1990 1989
-------- -------- -------- -------- --------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS DATA:
Net sales............................... $1,228.2 $1,243.5 $1,321.6 $1,409.9 $1,548.9
-------- -------- -------- -------- --------
Cost of products sold................... 1,163.9 1,179.3 1,208.4 1,295.9 1,407.0
Selling, general and administrative..... 92.5 94.0 101.2 106.5 103.9
Engineering and research................ 47.8 55.4 54.1 55.9 51.4
Other operating expense (income), net... (25.2) (24.3) .5 (2.0) (2.7)
Restructuring and other charges......... 31.0 48.1 -- -- --
-------- -------- -------- -------- --------
Operating income (loss)................. (81.8) (109.0) (42.6) (46.4) (10.7)
Interest expense........................ (15.5) (13.7) (12.4) (12.6) (6.0)
Interest income......................... .3 .9 3.6 4.6 .8
Gain on sale of properties, and other,
net.................................... -- -- -- 1.1 1.1
-------- -------- -------- -------- --------
Income (loss) before income taxes....... (97.0) (121.8) (51.4) (53.3) (14.8)
Income taxes (credit)................... -- (15.9) .2 .9 .2
-------- -------- -------- -------- --------
Income (loss) from continuing
operations............................. (97.0) (105.9) (51.6) (54.2) (15.0)
Income (loss) from discontinued
operations(1).......................... -- -- -- (11.0) (51.4)
-------- -------- -------- -------- --------
Net income (loss)....................... $ (97.0) $ (105.9) $ (51.6) $ (65.2) $ (66.4)
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
PER SHARE DATA:
Income (loss) from continuing
operations............................. $ (3.01) $ (3.59) $ (1.79) $ (2.02) $ (.56)
Income (loss) from discontinued
operations(1).......................... -- -- -- (.41) (1.92)
-------- -------- -------- -------- --------
Net income (loss) per share............. $ (3.01) $ (3.59) $ (1.79) $ (2.43) $ (2.48)
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
BALANCE SHEET DATA (END OF PERIOD):
Total assets............................ $ 559.4 $ 578.6 $ 686.9 $ 722.7 $ 920.7
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
OTHER DATA (CONTINUING OPERATIONS):
Depreciation............................ $ 35.4 $ 37.7 $ 37.9 $ 38.8 $ 40.5
Capital additions, net.................. 25.7 25.7 23.9 30.8 32.9
Cash.................................... 20.8 5.8 36.3 56.3 175.7
Working capital......................... 158.6 170.6 254.3 283.8 333.1
Short-term debt......................... 34.5 10.1 -- -- 38.9
Long-term debt.......................... 170.0 149.5 149.5 151.1 150.9
Stockholders' equity.................... 152.4 210.1 308.8 345.9 404.5
<FN>
- ------------------------------
(1) On December 28, 1989, the Company sold its computer products business to
Groupe Bull and received a closing-date payment of $496.4 million in cash.
The 1990 results reflect an $11.0 million adjustment to the previously
recorded gain on such sale based upon the receipt of an additional, final
post-closing payment of $15.0 million.
(2) Includes $31.0 million of restructuring and other charges and $25.7
million of tuning system royalty income.
(3) Includes $48.1 million of restructuring and other charges, $26.0 million
of tuning system royalty income and $15.9 million of income tax credits.
</TABLE>
8
<PAGE>
CAPITALIZATION
The following table sets forth a summary of the short-term debt and
capitalization of the Company, on a consolidated basis at October 1, 1994.
<TABLE>
<CAPTION>
OCTOBER 1, 1994
---------------
(DOLLARS IN
MILLIONS)
<S> <C>
SHORT-TERM DEBT:
Total short-term debt.............................. $ 34.0
-------
-------
LONG-TERM DEBT:
6 1/4% Convertible Subordinated Debentures due 2011.... $115.0
8.5% Senior Subordinated Convertible Debentures due
2000.................................................. 55.0
8.5% Senior Subordinated Convertible Debentures due
2001.................................................. 12.0
-------
Total long-term debt............................... 182.0
-------
STOCKHOLDERS' EQUITY:
Preferred stock, $1 par value; 8,000,000 shares
authorized;
none outstanding...................................... --
Common stock, $1 par value; 100,000,000 shares
authorized;
44,933,674 shares issued(1)........................... 44.9
Additional paid-in capital............................. 279.4
Retained earnings (deficit)............................ (99.0)
Cost of 21,000 common shares in treasury............... (.5)
-------
Total stockholders' equity......................... 224.8
-------
Total long-term debt and stockholders' equity...... $406.8
-------
-------
<FN>
- ------------------------
(1) Shares of Common Stock issued and outstanding as of October 1, 1994 do not
include, as of February 1, 1995, (i) 10,515,246 shares reserved for
conversion of the 8.5% Debentures and the 6 1/4% Convertible Subordinated
Debentures, (ii) approximately 210,000 issued to, and approximately
2,920,000 shares reserved for sale to, directors, officers and key
employees of the Company under approved stock option plans,(iii)
approximately 22,850,000 shares reserved for issuance under the Company's
Stockholder Rights Plan (see "Description of Capital Stock -- Stockholder
Rights Plan") and (iv) 547,053 shares issued January 30, 1995 to the
Company's employee profit sharing plans.
</TABLE>
9
<PAGE>
PRICE RANGE OF COMMON STOCK
____The Company's Common Stock is listed on the New York and Chicago Stock
Exchanges. Set forth below are the high and low sale prices per share (as
reported on the New York Stock Exchange) for the fiscal quarters indicated.
<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
1993:
First Quarter.............................. 8 3/8 5 7/8
Second Quarter............................. 10 1/2 6 1/2
Third Quarter.............................. 8 3/8 6 1/4
Fourth Quarter............................. 8 1/8 6 1/4
1994:
First Quarter.............................. 13 1/2 7
Second Quarter............................. 10 1/2 8 1/4
Third Quarter.............................. 12 1/8 8 5/8
Fourth Quarter............................. 14 1/8 10 5/8
1995:
First Quarter (through February 9, 1995)... 11 7/8 9 7/8
</TABLE>
The last reported sale price for the Common Stock on the New York Stock
Exchange on February 9, 1995 was $11 3/8 per share.
DIVIDEND POLICY
The Company has paid no cash dividends on its Common Stock since 1982 and
does not anticipate paying any in the foreseeable future. Dividends may be paid
on the Common Stock, when and if declared by the Company's Board of Directors,
out of funds legally available therefor. In general, the Credit Agreement
provides that the Company and its subsidiaries cannot pay dividends, make any
other distributions or redeem, purchase, prepay or otherwise acquire or retire
any class of stock of the Company or its subsidiaries and restricts dividend
payments on any of the Company's preferred stock, if issued. In addition, the
agreements under which the 8.5% Debentures were issued each provide that the
aggregate amount of the dividend payments, distributions or purchases or
redemptions of any class of capital stock of the Company or its subsidiaries
from and after November 19, 1993 cannot exceed the sum of (i) 80% of the
Company's cumulative consolidated operating net income (or if a loss, 100% of
such loss) plus (ii) the aggregate net proceeds received by the Company from
certain issuances of its capital stock (except redeemable stock) less the
aggregate amount of proceeds used to prepay, redeem, retire or otherwise acquire
securities subordinate in right of payment to the 8.5% Debentures.
DILUTION
The Debentures due 2000 and the Debentures due 2001 are convertible into
Common Stock at an initial conversion price of $9.76 and $10.00 per share,
respectively, subject in each case to adjustment in certain events. If all of
the 8.5% Debentures were converted into Common Stock at the initial conversion
prices, 6,835,246 shares of Common Stock would be issued. No prediction can be
made as to the effect, if any, that the conversion of the 8.5% Debentures into
Common Stock or the fact that the 8.5% Debentures are outstanding and
unconverted will have on the market price of Common Stock prevailing from time
to time. The conversion of 8.5% Debentures into Common Stock could adversely
affect prevailing market prices of the Common Stock. The Company's 6 1/4%
Convertible Subordinated Debentures due 2011 are convertible at $31.25 per
share, subject to adjustment in certain events.
Assuming no conversion of convertible securities, the net tangible book
value per share at October 1, 1994 was approximately $5.01. The net tangible
book value per share at October 1, 1994, assuming an average sale price of
$10.50 per share (the closing price of the Common Stock on the New York Stock
Exchange on February 6, 1995) and $14.125 per share (the high sales price of the
Common
10
<PAGE>
Stock on the New York Stock Exchange in the preceding 12 months) for the shares
of Common Stock offered hereby and receipt by the Company of the estimated net
proceeds of the sale of all the shares of Common Stock offered hereby, is
approximately $5.70 and $6.16, respectively. The amount of increase in net
tangible book value per share attributable to the estimated cash payments to be
made by purchasers of Common Stock (assuming a price of $10.50 per share and
$14.125 per share) is approximately $.69 and $1.15, respectively. The immediate
dilution from the assumed average sale price of $10.50 and $14.125 which would
be absorbed by such purchasers (assuming all shares of Common Stock offered
hereby were sold at the assumed prices) is approximately $4.80 and $7.97,
respectively. These calculations are based upon a range of assumed average sale
prices which have been chosen solely for the purpose of illustrating the
potential dilutive effect of the sale of shares of Common Stock offered hereby
and which may or may not reflect actual sales prices of the Common Stock made
pursuant to this Prospectus. The immediate dilution absorbed by purchasers at
the time of such sales will vary based upon, among other things, the purchase
price paid by the purchasers in such sales.
DESCRIPTION OF CAPITAL STOCK
THE FOLLOWING SUMMARIES DO NOT PURPORT TO BE COMPLETE AND ARE SUBJECT TO,
AND ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO, THE FOLLOWING DOCUMENTS:
(I) THE COMPANY'S RESTATED CERTIFICATE OF INCORPORATION, AS AMENDED, (II) THE
COMPANY'S BY-LAWS, AS AMENDED TO DATE (THE "BY-LAWS"), AND (III) THE RIGHTS
AGREEMENT, AS AMENDED, BETWEEN THE COMPANY AND THE BANK OF NEW YORK, AS RIGHTS
AGENT (THE "RIGHTS AGREEMENT"). A COPY OF EACH OF THE RESTATED CERTIFICATE OF
INCORPORATION, BY-LAWS AND RIGHTS AGREEMENT IS FILED AS AN EXHIBIT TO THE
REGISTRATION STATEMENT AND IS INCORPORATED BY REFERENCE HEREIN.
The Company's Restated Certificate of Incorporation, as amended, authorizes
the issuance of 100,000,000 shares of Common Stock, par value $1.00 per share,
of which approximately 45,700,000 shares were outstanding on February 1, 1995,
and 8,000,000 shares of preferred stock, par value $1.00 per share (the
"Preferred Stock"), of which none is outstanding as of the date of this
Prospectus.
PREFERRED STOCK
Under the Restated Certificate of Incorporation, the Board of Directors of
the Company is authorized, without the necessity of further action or
authorization by the stockholders (unless required in a specific case by
applicable law or regulations or stock exchange rules), to issue Preferred Stock
from time to time in one or more series and to determine all relevant terms of
each such series, including but not limited to the following: (a) the number of
shares constituting such series; (b) the dividend rates and priority, if any,
and whether the dividends would be cumulative and, if so, from what date or
dates; (c) whether the holders of the shares of such series would have full,
limited or no voting powers; (d) whether, and upon what terms, the shares of
such series would be convertible into, or exchangeable for, other securities;
(e) whether and upon what terms, the shares of such series would be redeemable;
(f) whether a sinking fund would be provided for the redemption of the shares of
such series and, if so, the terms thereof; and (g) the preference, if any, to
which shares of such series would be entitled in the event of voluntary or
involuntary liquidation of the Company. The Restated Certificate of
Incorporation, however, provides that, with respect to voting powers, holders of
a series of Preferred Stock (i) will not be entitled to more than the lesser of
(x) one vote per $100 of liquidation value or (y) one vote per share and (ii)
will not be entitled to a class vote (other than as required by law and other
than the limited right to elect two additional directors in the event of the
failure to pay in full dividends on any series of Preferred Stock for any six
quarterly dividend periods).
Even though the voting rights of any Preferred Stock that may be issued will
be limited, the issuance of Preferred Stock could be used to discourage attempts
to acquire control of the Company which the Board of Directors oppose. The Board
of Directors has represented that it will not authorize the Company to issue,
without prior stockholder approval, any series of Preferred Stock to any
individual or group (i) for any defensive or anti-takeover purpose, (ii) with
features intended to make any attempted acquisition of the Company more
difficult or costly or (iii) for the purpose of creating a block of voting
11
<PAGE>
power which has agreed to support the Board and management on a controversial
issue. This representation does not preclude the Board from authorizing the
issuance of a series of Preferred Stock in a public offering.
COMMON STOCK
Holders of the Common Stock are entitled to one vote for each share held of
record, in person or by proxy, at all meetings of the stockholders and on all
propositions before such meetings. The Common Stock does not have cumulative
voting rights in the election of directors. Holders of the Common Stock have no
preemptive, subscription, redemption or conversion rights. All outstanding
shares of Common Stock are fully paid and nonassessable. In the event of
liquidation, dissolution or winding up of the affairs of the Company, the assets
remaining after provision for payment of creditors and after distribution in
full of the preferential amount to be distributed to the holders of shares of
any Preferred Stock, are distributable pro rata among holders of Common Stock.
The transfer agent and registrar of the Company's Common Stock is The Bank
of New York, 101 Barclay Street, New York, New York 10286.
STOCKHOLDER RIGHTS PLAN
Pursuant to a Stockholder Rights Plan adopted in 1986 and subsequently
amended, the Company distributed one common stock purchase right (collectively,
the "Rights") for each outstanding share of Common Stock and will issue a Right
with each share of Common Stock that subsequently becomes outstanding (including
shares of Common Stock offered hereby) unless the Board of Directors provides
otherwise at the time of issuance of such share. The Company will issue a Right
with each share of Common Stock offered hereby. Each Right will entitle the
holder thereof, until October 14, 1996 (or, if earlier, the redemption of the
Rights) to purchase one-half of one share of Common Stock at an exercise price
of $37.50, subject to certain antidilution adjustments. The Rights will be
represented by the Common Stock certificates and will not be exercisable, or
transferable apart from the Common Stock, until the earlier of (i) the tenth day
after the date (the "Stock Acquisition Date") of a public announcement that a
person or group of associated or affiliated persons (an "Acquiring Person") has
acquired beneficial ownership of 25% or more of the Common Stock or (ii) the
tenth day after the date of the commencement by any person or group of, or first
public announcement of the intent of any person or group to commence, a tender
or exchange offer, the consummation of which would result in such person or
group having beneficial ownership of 25% or more of the Common Stock (the
earlier of such days being referred to herein as the "Distribution Date"). The
Rights will at no time have any voting rights.
In the event that any person becomes an Acquiring Person (i.e. beneficial
owner of 25% or more of the Company's Common Stock), proper provision shall be
made so that each holder of a Right will thereafter have the right to receive
upon such exercise, that number of shares of Common Stock having a market value
of two times the exercise price of the Right. This provision is generally
referred to as the "flip-in" provision. Thus, a holder of a Right could purchase
shares of Common Stock having a market value of $75.00 upon payment of $37.50.
Notwithstanding the foregoing, following the occurrence of such event, all
Rights that are or (under certain circumstances) were beneficially owned by an
Acquiring Person will be null and void.
In the event that on or after the Stock Acquisition Date (i) the Company is
acquired in a merger or other business combination transaction or (ii) 50% or
more of its assets or earning power are sold (in one transaction or a series of
transactions), proper provision shall be made so that each holder of a Right
(other than an Acquiring Person) shall thereafter have the right to receive,
upon the exercise thereof at the then current exercise price of the Right, that
number of shares of common stock of the acquiring company which at the time of
such transaction would have a market value of two times the exercise price of
the Right. This provision is generally referred to as the "flip-over" provision.
At any time until the Stock Acquisition Date, the Company may redeem the
Rights in whole, but not in part, at a price of $.05 per Right, subject to
adjustment (the "Redemption Price"). After the Stock Acquisition Date, the
Company's right of redemption will be reinstated if an Acquiring Person reduces
his
12
<PAGE>
beneficial ownership to 10% or less of the outstanding shares of Common Stock in
a transaction or series of transactions not involving the Company, provided that
there is no other Acquiring Person at the time.
In addition, if a bidder who does not beneficially own more than 1% (or who
owned more than 1% of the Common Stock on April 26, 1988 but does not acquire
any additional shares after such date and prior to the submission of the
proposal described below) of the Common Stock (and who has not within the past
year owned in excess of 1% (subject to the exception set forth above) of the
Common Stock and has not disclosed, or caused the disclosure of, an intention
which relates to or would result in the acquisition of influence of control of
the Company) proposes to acquire all of the Common Stock for cash at a price
which a nationally recognized investment banker selected by such bidder states
in writing is fair, and such bidder has obtained written financing commitments
(or otherwise has financing) and complies with certain procedural requirements,
then the Company, upon the request of the bidder, will hold a special
stockholders meeting to vote on a resolution requesting the Board of Directors
to accept the bidder's proposal.
If a majority of the outstanding shares entitled to vote on the proposal
vote in favor of such resolution, then for a period of 60 days after such
meeting the Rights will be automatically redeemed at the Redemption Price
immediately prior to the consummation of any tender offer for all of such shares
at a price per share in cash equal to or greater than the price offered by such
bidder; PROVIDED, HOWEVER, that no such redemption will be permitted or required
after any person has become an Acquiring Person.
Immediately upon the action of the Board of Directors of the Company
ordering redemption of the Rights or upon the effectiveness of the redemption
pursuant to the stockholder vote, the Rights will terminate and the only right
of the holders of Rights will be to receive the Redemption Price.
At any time after any person has become an Acquiring Person, the Board of
Directors of the Company may exchange the Rights (other than the Rights owned by
such person or group which have become void), in whole or in part, for Common
Stock at an exchange ratio of one-half of a share of Common Stock per Right
(subject to adjustment), PROVIDED, that no such exchange shall be effected
unless (i) the market value of one-half of a share of Common Stock exceeds the
Redemption Price per Right and (ii) the exchange has been approved by a majority
of the Disinterested Directors (as defined).
Prior to the Distribution Date, the Company may, without the approval of the
holders of Common Stock, amend any provision of the Rights Agreement, except
that no such amendment shall be made which reduces the Redemption Price,
shortens the "Final Expiration Date" (as defined), or increases the "Purchase
Price" (as defined) or the number of one-halves of a share of Common Stock for
which a Right is exercisable.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
without conditioning the offer on a substantial number of Rights being acquired.
The Rights should not interfere with any merger or other business combination
approved by the Board of Directors of the Company since the Board of Directors
may, at its option, at any time prior to the Stock Acquisition Date redeem all
but not less than all the then outstanding Rights at the Redemption Price.
The Rights Agreement dated as of October 3, 1986 and as subsequently amended
between the Company and The Bank of New York, successor Rights Agent, specifies
the terms of the Rights, and the foregoing description of the Rights is
qualified in its entirety by reference to such Rights Agreement. A copy of the
Rights Agreement is available upon written request, which should be directed to
David S. Levin, Secretary, Zenith Electronics Corporation, 1000 Milwaukee
Avenue, Glenview, Illinois 60025.
DELAWARE STATUTE
The Company is subject to Section 203 of the Delaware General Corporation
Law ("Section 203"), which restricts certain transactions and business
combinations between a corporation and an "Interested Stockholder" owning 15% or
more of the corporation's outstanding voting stock, for a period of
13
<PAGE>
three years from the date the stockholder becomes an Interested Stockholder.
Subject to certain exceptions, unless the transaction is approved by the Board
of Directors and the holders of at least 66 2/3% of the outstanding voting stock
of the corporation (excluding shares held by the Interested Stockholder),
Section 203 prohibits significant business transactions such as a merger with,
disposition of assets to or receipt of disproportionate financial benefits by
the Interested Stockholder, or any other transaction that would increase the
Interested Stockholder's proportionate ownership of any class or series of the
corporation's stock. The statutory ban does not apply if, upon consummation of
the transaction in which any person becomes an Interested Stockholder, the
Interested Stockholder owns at least 85% of the outstanding voting stock of the
corporation (excluding shares held by persons who are both directors and
officers or by certain employee stock plans).
PLAN OF DISTRIBUTION
The shares of Common Stock offered hereby may be sold by the Company in an
at-the-market equity offering(s) or on a negotiated or competitive bid basis
through underwriters or dealers or directly to other purchasers or through
agents. Any such underwriter, dealer or agent involved in the offer and sale of
the Common Stock and any applicable commissions, discounts and other items
constituting compensation to such underwriters, dealers or agents will, unless
otherwise set forth herein, be set forth in the Prospectus Supplement.
The distribution of the shares of Common Stock offered hereby may be
effected from time to time in one or more transactions at a fixed price or
prices, which may be changed, or at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at negotiated
prices.
Unless otherwise indicated in the Prospectus Supplement, the obligations of
any underwriters to purchase an offering of Common Stock will be subject to
certain conditions precedent, and the underwriters will be obligated to purchase
all of the shares of Common Stock if any are purchased. If a dealer is utilized
in the sale of the Common Stock, the Company will sell the Common Stock to the
dealer as principal. The dealer may then resell the Common Stock to the public
at varying prices to be determined by the dealer at the time of sale.
If so indicated in the Prospectus Supplement, the Company may authorize
underwriters, dealers or other persons acting as the Company's agents to solicit
offers by certain institutions to purchase shares of Common Stock from the
Company pursuant to contracts providing for payment and delivery on a future
date. Institutions with which such contracts may be made include commercial and
savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and others, but in all cases such
institutions must be approved by the Company. The obligations of any purchaser
under any such contract will be subject to the condition that the purchase of
the shares of Common Stock shall not at the time of delivery be prohibited under
the laws of the jurisdiction to which such purchaser is subject. The
underwriters, dealers and such other persons will not have any responsibility in
respect of the validity or performance of such contracts. The Prospectus
Supplement will set forth the commission payable for solicitation of such
contracts.
Any underwriters, dealers and agents that participate in the distribution of
the Common Stock may be deemed to be underwriters as the term is defined in the
Securities Act, and any discounts or commissions received by them from the
Company and any profits on the resale of the Common Stock by them may be deemed
to be underwriting discounts and commissions under the Securities Act.
Underwriters, dealers and agents may be entitled, under agreements entered into
with the Company, to indemnification against and contribution toward certain
civil liabilities, including liabilities under the Securities Act.
The Company and NatWest Securities Limited ("Agent") intend to enter into a
Sales Agency Agreement (the "Sales Agency Agreement"), a copy of the form of
which is filed as an exhibit to the Registration Statement and is incorporated
by reference herein. Subject to the terms and conditions of the Sales Agency
Agreement, the Company may issue and sell up to 5,200,000 shares of Common Stock
(subject to the provisions described in the next paragraph) from time to time
through NatWest
14
<PAGE>
Securities Limited, as exclusive sales agent for the Company. Such sales, if
any, will be made pursuant to at-the-market offerings by means of ordinary
brokers' transactions on any national securities exchange, including the New
York Stock Exchange, on which such shares of Common Stock are listed. Such sales
will be effected during a series of one or more (up to a maximum of 52) pricing
periods (each a "Pricing Period"), each consisting of five consecutive calendar
days in duration, or such lesser number of days to be agreed to by the Company
and the Agent. During any Pricing Period, no more than 60,000 shares ("Average
Market Shares") will be sold subject to the calculation of Net Proceeds as
defined below. The aggregate number of shares of Common Stock sold in all
Pricing Periods will not exceed 5,200,000 (subject to the provisions described
in the next paragraph). In addition, for each Pricing Period, an Average Market
Price (as hereinafter defined) will be computed. With respect to any Pricing
Period, "Average Market Price" shall equal the average of the arithmetic mean of
the daily high and low sale prices of the Common Stock reported on the New York
Stock Exchange for each trading day of such Pricing Period.
The Company may sell, pursuant to this Prospectus and the Registration
Statement of which this Prospectus is a part, up to 5,200,000 shares of Common
Stock in at-the-market offerings. Pursuant to the terms of the Sales Agency
Agreement the initial amount of shares of Common Stock to be offered and sold
thereunder is 1,000,000, which may be increased from time to time up to a
maximum aggregate amount of 5,200,000 shares at the option of the Company with
the consent of the Agent.
The net proceeds to the Company with respect to sales of Average Market
Price Shares will equal 94.25 percent of the Average Market Price for each share
of Common Stock sold during the Pricing Period (subject to adjustment in certain
circumstances), plus Excess Proceeds (as defined below), if any. The
compensation to Agent for such sales in any Pricing Period will equal the
difference between the actual sale prices at which such sales are effected and
the net proceeds to the Company for such sales, but in no case will exceed ten
percent of such actual sales prices. To the extent that such actual sales prices
are less than the Average Market Price, the compensation to Agent would be
correspondingly reduced; to the extent that such actual sales prices are greater
than the Average Market Price, the compensation to Agent will be correspondingly
increased (but in no event will exceed ten percent of the actual sales price).
In the event that the average actual sales price in any Pricing Period equals
94.25 percent of Average Market Price (or less) for such Pricing Period, all of
the proceeds from such sales would be for the account of the Company and no
compensation would be payable to Agent.To the extent that Agent's compensation
under the foregoing formula would otherwise exceed ten percent of the actual
sales prices in any Pricing Period, the excess over ten percent will constitute
additional net proceeds to the Company (the "Excess Proceeds").
Any shares of Common Stock sold by Agent during the Pricing Period on behalf
of the Company other than Average Market Price Shares ("Additional Shares") will
be at a fixed commission rate of $0.125 per share for the first 200,000
Additional Shares and $0.25 per share for any Additional Shares in excess of
200,000. In no event will the compensation to Agent be in excess of any
applicable National Association of Securities Dealers, Inc. requirements.
Settlements of sales of Additional Shares will occur on the fifth business
day following the date on which such sales are made. Settlements for sales of
Average Market Price Shares will occur on a weekly basis on each Monday (or the
next succeeding business day if such Monday is not a business day) following the
end of each Pricing Period. Purchases of Common Stock from Agent as sales agent
for the Company will settle regular way on the national securities exchange
where such purchases were executed. Compensation to Agent with respect to sales
of Average Market Price Shares will be paid out of the proceeds of such
settlements. There is no arrangement for funds to be received in an escrow,
trust or similar arrangement.
After the end of each Pricing Period, the Company will file a Prospectus
Supplement under Rule 424(b)(3) promulgated under the Act, which Prospectus
Supplement will set forth the number of such shares of Common Stock sold through
Agent as sales agent (identifying separately the number of Average Market Shares
and any Additional Shares), the high and low prices at which Average Market
15
<PAGE>
Shares were sold during such Pricing Period, the net proceeds to the Company and
the compensation payable by the Company to Agent with respect to such sales
pursuant to the formula set forth above. Unless otherwise indicated in a
Prospectus Supplement, NatWest Securities Limited as sales agent will act on a
best efforts basis.
In connection with the sale of the Common Stock on behalf of the Company,
NatWest Securities Limited may be deemed to be an "underwriter" within the
meaning of the Act, and the compensation of Agent may be deemed to be
underwriting commissions or discounts. The Company has agreed to provide
indemnification and contribution to Agent against certain civil liabilities,
including liabilities under the Securities Act of 1933, as amended. Agent may
pay commissions to an affiliate of Agent in connection with sales of shares of
Common Stock pursuant to the Sales Agency Agreement. In addition, Agent may
engage in transactions with, or perform services for, the Company in the
ordinary course of business.
The offering of Common Stock pursuant to the Sales Agency Agreement will
terminate upon the earlier of (i) the sale of all shares of Common Stock subject
thereto and (ii) termination of the Sales Agency Agreement. The Sales Agency
Agreement may be terminated by the Company in its sole discretion on the date
occurring 60 days after the date of the Sales Agency Agreement and every 60 days
thereafter. The Company may also terminate the Sales Agency Agreement at any
time if the Company chooses to effect any offering of equity securities or
equity-related securities other than pursuant to the Sales Agency Agreement.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby and certain legal
matters will be passed upon for the Company by Richard F. Vitkus, Senior Vice
President-General Counsel of the Company, and by Sidley & Austin, Chicago,
Illinois. As of December 13, 1994, Mr. Vitkus owned beneficially 3,000 shares of
Common Stock and held options to purchase 8,000 shares of Common Stock, of which
none were exercisable as of such date.
EXPERTS
The Consolidated Financial Statements and Schedules of Zenith Electronics
Corporation and Subsidiaries included in the Company's Annual Report on Form
10-K for the year ended December 31, 1993, which are incorporated herein by
reference in this Prospectus, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and have been so incorporated in reliance upon the authority of said
firm as experts in accounting and auditing in giving said reports.
16
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses in connection with the issuance and distribution of the
securities being registered, other than underwriting discounts and commissions,
are estimated to be:
<TABLE>
<S> <C>
SEC Filing Fee......................... $ 27,038
*NYSE Fee............................... 3,000
*Printing and Engraving................. 5,000
*Accounting Fees........................ 3,000
*Legal Fees and Expenses................ 10,000
*Blue Sky Fees and Expenses............. 2,000
*Miscellaneous.......................... 1,962
--------
Total............................... $ 52,000
--------
--------
<FN>
- ------------------------
*Estimated
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Reference is made to Section 145 ("Section 145") of the Delaware General
Corporation Law of the State of Delaware (the "Delaware GCL") which provides for
indemnification of directors and officers in certain circumstances.
In accordance with Section 102(b)(7) of the Delaware GCL, the Company's
Restated Certificate of Incorporation, as amended, provides that directors shall
not be personally liable for monetary damages for breaches of their fiduciary
duty as directors except for (i) breaches of their duty of loyalty to the
Company or its stockholders, (ii) acts or omissions not in good faith or which
involve intentional misconduct or knowing violations of law, (iii) under Section
174 of the Delaware GCL (unlawful payment of dividends) or (iv) transactions
from which a director derives an improper personal benefit.
The Restated Certificate of Incorporation, as amended, of the Company
provides for indemnification of directors and officers to the full extent
provided by the Delaware GCL, as amended from time to time. It states that the
indemnification provided therein shall not be deemed exclusive. The Company may
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Company, or another corporation, partnership, joint
venture, trust or other enterprise against any expense, liability or loss,
whether or not the Company would have the power to indemnify him against such
expense, liability or loss, under the provisions of the Delaware GCL.
The Company has entered into agreements with each of its directors and
officers pursuant to which it has agreed to indemnify each such person under
certain circumstances.
Pursuant to Section 145 and the Certificate of Incorporation, the Company
maintains directors' and officers' liability insurance coverage.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ -----------------------------------------------------------------------
<C> <S>
1(a) Form of Sales Agency Agreement between the Company and NatWest
Securities Limited.*
4(a) Restated Certificate of Incorporation of the Company, as amended
(incorporated by reference to Exhibit 3(a) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1992).
4(b) Certificate of Amendment to Restated Certificate of Incorporation of
the Company dated May 4, 1993 (incorporated by reference to Exhibit
4(l) of the Company's Quarterly Report on Form 10-Q quarter ended
April 3, 1993).
4(c) By-laws of the Company, as amended (incorporated by reference to
Exhibit 3 to the Company's Current Report on Form 8-K, dated January
31, 1994).
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ -----------------------------------------------------------------------
<C> <S>
4(d) Specimen certificate representing Common Stock, $1.00 par value
(incorporated by reference to Exhibit 4(c) to the Company's
Registration Statement on Form S-3, Registration Number 33-15277).
4(e) Stockholder Rights Agreement, dated as of October 3, 1986 (incorporated
by reference to Exhibit 4c of the Company's Quarterly Report on Form
10-Q for the quarter ended September 28, 1991).
4(f) Amendment, dated April 26, 1988, to Stockholder Rights Agreement
(incorporated by reference to Exhibit 4(d) of the Company's Quarterly
Report on Form 10-Q for the quarter ended April 3, 1993).
4(g) Amended and Restated Summary of Rights to Purchase Common Stock
(incorporated by reference to Exhibit 4(e) of the Company's Quarterly
Report on Form 10-Q for the quarter ended July 3, 1993).
4(h) Amendment, dated July 7, 1988, to Stockholder Rights Agreement
(incorporated by reference to Exhibit 4(f) of the Company's Quarterly
Report on Form 10-Q for the quarter ended July 3, 1993).
4(i) Agreement, dated May 23, 1991, among Zenith Electronics Corporation,
The First National Bank of Boston and Harris Trust and Savings Bank
(incorporated by reference to Exhibit 1 of Form 8 dated May 30, 1991).
4(j) Amendment, dated May 24, 1991, to Stockholder Rights Agreement
(incorporated by reference to Exhibit 2 of Form 8 dated May 30, 1991).
4(k) Agreement, dated as of February 1, 1993, among Zenith Electronics
Corporation, The Bank of New York and Harris Trust and Savings Bank
(incorporated by reference to Exhibit 1 to Form 8 dated March 25,
1993).
4(l) Credit Agreement, dated as of May 21, 1993, with General Electric
Capital Corporation, as agent and lender, and the other lenders named
therein (incorporated by reference to Exhibit 4 of the Company's
Current Report on Form 8-K dated May 21, 1993).
4(m) Amendment No. 1 dated November 8, 1993 to the Credit Agreement dated
May 21, 1993, with General Electric Capital Corporation, as agent and
lender, and the other lenders named therein (incorporated by reference
to Exhibit 4(b) of the Company's Current Report on Form 8-K dated
November 19, 1993).
4(n) Amendment No. 3 dated January 7, 1994 to the Credit Agreement dated May
21, 1993, with General Electric Capital Corporation, as agent and
lender, The Bank of New York Commercial Corporation, as lender, and
Congress Financial Corporation, as lender (incorporated by reference
to Exhibit 4(b) of the Company's Current Report on Form 8-K dated
January 11, 1994).
4(o) Fourth Amendment dated as of January 28, 1994 to the Credit Agreement
dated May 21, 1993, with General Electric Capital Corporation, as
agent and lender, The Bank of New York Capital Corporation, as lender,
and Congress Financial Corporation, as lender (incorporated by
reference to Exhibit 4 of the Company's Current Report on Form 8-K
dated January 31, 1994).
4(p) Fifth Amendment dated April 21, 1994 to Credit Agreement dated May 21,
1993, with General Electric Capital Corporation, as agent and lender,
The Bank of New York Commercial Corporation, as lender, and Congress
Financial Corporation, as lender (incorporated by reference to Exhibit
4 of the Company's Current Report on Form 8-K dated April 21, 1994).
4(q) Debenture Purchase Agreement dated as of November 19, 1993 with the
institutional investors named therein (incorporated by reference to
Exhibit 4(a) of the Company's Current Report on Form 8-K dated
November 19, 1993).
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ -----------------------------------------------------------------------
<C> <S>
4(r) Amendment No. 1 dated as of November 24, 1993 to the Debenture Purchase
Agreement dated as of November 19, 1993 with the institutional
investor named therein (incorporated by reference to Exhibit 4(a) of
the Company's Current Report on Form 8-K dated November 24, 1993).
4(s) Amendment No. 2 dated as of January 11, 1994 to the Debenture Purchase
Agreement dated as of November 19, 1993 (incorporated by reference to
Exhibit 4(c) of the Company's Current Report on Form 8-K dated January
11, 1994).
4(t) Debenture Purchase Agreement dated as of January 11, 1994 with the
institutional investor named therein (incorporated by reference to
Exhibit 4(a) of the Company's Current Report on Form 8-K dated January
11, 1994).
4(u) Indenture dated as of April 1, 1986 between Zenith Electronics
Corporation and The First National Bank of Boston, as trustee, with
respect to the 6 1/4% Convertible Subordinated Debentures due 2011
(incorporated by reference to Exhibit 1 of the Company's Quarterly
Report on Form 10-Q for the quarter ended March 30, 1991).
5 Opinion of Richard F. Vitkus, Senior Vice President and General Counsel
of the Company.
23(a) Consent of Arthur Andersen LLP*
23(b) The consent of Richard F. Vitkus, Senior Vice President and General
Counsel of the Company is contained in his opinion filed as Exhibit 5
to this Registration Statement.
24 Powers of Attorney.
<FN>
- ------------------------
*Filed herewith
</TABLE>
ITEM 17. UNDERTAKINGS.
The Company hereby undertakes (1) to file, during any period in which offers
or sales are being made, a post-effective amendment to this Registration
Statement: (i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933; (ii) to reflect in the prospectus any facts or events
arising after the effective date of this Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in this
Registration Statement; and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in this
Registration Statement or any material change to such information in this
Registration Statement; provided, however, that paragraphs (1)(i) and (1)(ii) do
not apply if this Registration Statement is on Form S-3 or Form S-8 and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Company pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this Registration Statement; (2) that, for the
purpose of determining any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof; (3)
to remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering; (4) that, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Company'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 this Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof; (5) 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 this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Company 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
II-3
<PAGE>
Registration Statement as of the time it was declared effective; and (6) 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.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Company pursuant to the provisions described under Item 15 above or otherwise,
the Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted against
the Company by such director, officer or controlling person in connection with
the securities being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 caused this Amendment to
theRegistration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Glenview, State of Illinois on
February 10,1995.
ZENITH ELECTRONICS CORPORATION
By: /s/ Jerry K. Pearlman
-----------------------------------
Jerry K. Pearlman
Chairman and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below on February 10, 1995 by the
following persons in the capacities indicated:
<TABLE>
<C> <S>
/s/ Jerry K. Pearlman Director, Chairman and Chief Executive Officer
-------------------------------------------- (Principal Executive Officer)
Jerry K. Pearlman
/s/ Kell B. Benson Senior Vice President-Finance and Chief
-------------------------------------------- Financial Officer (Principal Financial and
Kell B. Benson Principal Accounting Officer)
* Director
--------------------------------------------
Harry G. Beckner
* Director
--------------------------------------------
T. Kimball Brooker
* Director
--------------------------------------------
David H. Cohen
* Director
--------------------------------------------
Ilene S. Gordon
* Director
--------------------------------------------
Charles Marshall
* Director
--------------------------------------------
Gerald M. McCarthy
* Director
--------------------------------------------
Andrew McNally IV
* Director
--------------------------------------------
Albin F. Moschner
* Director
--------------------------------------------
Peter S. Willmott
*By: /s/ Kell B. Benson
----------------------------------------
Kell B. Benson
(Attorney-in-fact)
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT PAGE
NUMBER DESCRIPTION OF EXHIBIT NUMBER
- ------ ----------------------------------------------------------- ----------
<S> <C> <C>
1(a) Form of Sales Agency Agreement between the Company and
NatWest Securities Limited.*
4(a) Restated Certificate of Incorporation of the Company, as
amended (incorporated by reference to Exhibit 3(a) to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1992).
4(b) Certificate of Amendment to Restated Certificate of
Incorporation of the Company dated May 4, 1993
(incorporated by reference to Exhibit 4(l) of the
Company's Quarterly Report on Form 10-Q quarter ended
April 3, 1993).
4(c) By-laws of the Company, as amended (incorporated by
reference to Exhibit 3 to the Company's Current Report on
Form 8-K, dated January 31, 1994).
4(d) Specimen certificate representing Common Stock, $1.00 par
value (incorporated by reference to Exhibit 4(c) to the
Company's Registration Statement on Form S-3, Registration
Number 33-15277).
4(e) Stockholder Rights Agreement, dated as of October 3, 1986
(incorporated by reference to Exhibit 4c of the Company's
Quarterly Report on Form 10-Q for the quarter ended
September 28, 1991).
4(f) Amendment, dated April 26, 1988, to Stockholder Rights
Agreement (incorporated by reference to Exhibit 4(d) of
the Company's Quarterly Report on Form 10-Q for the
quarter ended April 3, 1993).
4(g) Amended and Restated Summary of Rights to Purchase Common
Stock (incorporated by reference to Exhibit 4(e) of the
Company's Quarterly Report on Form 10-Q for the quarter
ended July 3, 1993).
4(h) Amendment, dated July 7, 1988, to Stockholder Rights
Agreement (incorporated by reference to Exhibit 4(f) of
the Company's Quarterly Report on Form 10-Q for the
quarter ended July 3, 1993).
4(i) Agreement, dated May 23, 1991, among Zenith Electronics
Corporation, The First National Bank of Boston and Harris
Trust and Savings Bank (incorporated by reference to
Exhibit 1 of Form 8 dated May 30, 1991).
4(j) Amendment, dated May 24, 1991, to Stockholder Rights
Agreement (incorporated by reference to Exhibit 2 of Form
8 dated May 30, 1991).
4(k) Agreement, dated as of February 1, 1993, among Zenith
Electronics Corporation, The Bank of New York and Harris
Trust and Savings Bank (incorporated by reference to
Exhibit 1 to Form 8 dated March 25, 1993).
4(l) Credit Agreement, dated as of May 21, 1993, with General
Electric Capital Corporation, as agent and lender, and the
other lenders named therein (incorporated by reference to
Exhibit 4 of the Company's Current Report on Form 8-K
dated May 21, 1993).
4(m) Amendment No. 1 dated November 8, 1993 to the Credit
Agreement dated May 21, 1993, with General Electric
Capital Corporation, as agent and lender, and the other
lenders named therein (incorporated by reference to
Exhibit 4(b) of the Company's Current Report on Form 8-K
dated November 19, 1993).
</TABLE>
II-6
<PAGE>
<TABLE>
<S> <C> <C>
4(n) Amendment No. 3 dated January 7, 1994 to the Credit
Agreement dated May 21, 1993, with General Electric
Capital Corporation, as agent and lender, The Bank of New
York Commercial Corporation, as lender, and Congress
Financial Corporation, as lender (incorporated by
reference to Exhibit 4(b) of the Company's Current Report
on Form 8-K dated January 11, 1994).
4(o) Fourth Amendment dated as of January 28, 1994 to the Credit
Agreement dated May 21, 1993, with General Electric
Capital Corporation, as agent and lender, The Bank of New
York Capital Corporation, as lender, and Congress
Financial Corporation, as lender (incorporated by
reference to Exhibit 4 of the Company's Current Report on
Form 8-K dated January 31, 1994).
4(p) Fifth Amendment dated April 21, 1994 to Credit Agreement
dated May 21, 1993, with General Electric Capital
Corporation, as agent and lender, The Bank of New York
Commercial Corporation, as lender, and Congress Financial
Corporation, as lender (incorporated by reference to
Exhibit 4 of the Company's Current Report on Form 8-K
dated April 21, 1994).
4(q) Debenture Purchase Agreement dated as of November 19, 1993
with the institutional investors named therein
(incorporated by reference to Exhibit 4(a) of the
Company's Current Report on Form 8-K dated November 19,
1993).
4(r) Amendment No. 1 dated as of November 24, 1993 to the
Debenture Purchase Agreement dated as of November 19, 1993
with the institutional investor named therein
(incorporated by reference to Exhibit 4(a) of the
Company's Current Report on Form 8-K dated November 24,
1993).
4(s) Amendment No. 2 dated as of January 11, 1994 to the
Debenture Purchase Agreement dated as of November 19, 1993
(incorporated by reference to Exhibit 4(c) of the
Company's Current Report on Form 8-K dated January 11,
1994).
4(t) Debenture Purchase Agreement dated as of January 11, 1994
with the institutional investor named therein
(incorporated by reference to Exhibit 4(a) of the
Company's Current Report on Form 8-K dated January 11,
1994).
4(u) Indenture dated as of April 1, 1986 between Zenith
Electronics Corporation and The First National Bank of
Boston, as trustee, with respect to the 6 1/4% Convertible
Subordinated Debentures due 2011 (incorporated by
reference to Exhibit 1 of the Company's Quarterly Report
on Form 10-Q for the quarter ended March 30, 1991).
5 Opinion of Richard F. Vitkus, Senior Vice President and
General Counsel of the Company.
23(a) Consent of Arthur Andersen LLP*
23(b) The consent of Richard F. Vitkus, Senior Vice President and
General Counsel of the Company is contained in his opinion
filed as Exhibit 5 to this Registration Statement.
24 Powers of Attorney.
<FN>
- ------------------------
*Filed herewith
</TABLE>
II-7
<PAGE>
ZENITH ELECTRONICS CORPORATION
Common Stock, $1.00 par value
SALES AGENCY AGREEMENT
February ____, 1995
NatWest Securities Limited
175 Water Street
New York, NY 10038
Gentlemen:
Zenith Electronics Corporation, a Delaware corporation (the "Company"),
confirms its agreement with NatWest Securities Limited (the "Agent"), as
follows:
1. Description of Securities. The Company proposes to issue and
sell through the Agent, as exclusive sales agent, initially up to 1,000,000
shares (the "Maximum Amount") of common stock, $1.00 par value, on the
particular terms set forth in Section 3 hereof (the "Stock"), which amount may
be increased as provided in Section 8 hereof.
2. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the Agent that:
(a) A registration statement on Form S-3 (Registration No. 33-56889)
with respect to the Stock, including a form of prospectus, has been carefully
prepared by the Company in conformity with the requirements of the Securities
Act of 1933 (the "Act") and the rules and regulations ("Rules and Regulations")
of the Securities and Exchange Commission (the "Commission") thereunder and
filed with the Commission and has become effective. Such registration statement
and prospectus may have been amended or supplemented prior to the date of this
Agreement. Any such amendment or supplement was so prepared and filed, and any
such amendment filed after the effective date of such registration statement has
become effective. No stop order suspending the effectiveness of the
registration statement has been issued, and no proceeding for that purpose has
been instituted or threatened by the Commission. Copies of such registration
statement and prospectus, any such amendment or supplement and all documents
incorporated by reference therein that were filed with the Commission on or
prior to the date of this Agreement have been delivered to the Agent. Such
registration statement, as it may have heretofore been amended, is referred to
herein as the "Registration Statement," and the final form of prospectus
included in the Registration Statement, as amended or supplemented from time to
time, is referred to herein as the "Prospectus." Any reference herein to the
Registration Statement, the Prospectus or any amendment or supplement thereto
shall be deemed to refer to and include the documents incorporated (or deemed to
be incorporated) by reference therein, and any reference herein to the terms
"amend," "amendment" or "supplement" with respect to the Registration Statement
or Prospectus shall be deemed to refer to and include the filing after the
execution hereof of any document with the Commission deemed to be incorporated
by reference therein.
(b) Each part of the Registration Statement, when such part became or
becomes effective, and the Prospectus and any amendment or supplement thereto,
on the date of filing thereof with the Commission and at each Closing Date (as
hereinafter defined), conformed or will conform in all material respects with
the requirements of the Act and the Rules and Regulations; each part of the
Registration Statement, when such part became or becomes effective, did not or
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and the Prospectus and any amendment or supplement
thereto, on the date of filing thereof with the Commission and at each Closing
Date, did not or will not include an untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; except that the
foregoing
1
<PAGE>
shall not apply to statements in or omissions from any such document in reliance
upon, and in conformity with, written information furnished to the Company by
the Agent, specifically for use in the preparation thereof.
(c) The documents incorporated by reference in the Registration
Statement or the Prospectus, or any amendment or supplement thereto, when they
became or become effective under the Act, or were or are filed with the
Commission under the Securities Exchange Act of 1934, as amended ("Exchange
Act"), as the case may be, conformed or will conform in all material respects
with the requirements of the Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder.
(d) The financial statements of the Company and its subsidiaries,
together with the related notes and schedules, set forth or incorporated by
reference in the Registration Statement and Prospectus fairly present the
financial condition and the results of operations and cash flows of the Company
and its subsidiaries as of the dates indicated or for the periods therein
specified in conformity with generally accepted accounting principles
consistently applied throughout the periods involved (except as otherwise stated
therein).
(e) The Company and each of its subsidiaries has been duly
incorporated and is an existing corporation in good standing under the laws of
its jurisdiction of incorporation, has full power and authority (corporate and
other) to conduct its business as described in the Registration Statement and
Prospectus and is duly qualified to do business in each jurisdiction in which it
owns or leases real property or in which the conduct of its business requires
such qualification except where the failure to be so qualified, considering all
such cases in the aggregate, will not have a material adverse effect on the
business, properties, financial position or results of operations of the Company
and its subsidiaries considered as a whole; and all of the outstanding shares of
capital stock of each such subsidiary have been duly authorized and validly
issued, are fully paid and non-assessable and (except for directors' qualifying
shares and except as otherwise stated in the Registration Statement) are owned
beneficially by the Company subject to no security interest, other encumbrance
or adverse claim.
(f) The outstanding shares of common stock of the Company and the
Stock have been duly authorized and are, or when issued as contemplated hereby
will be, validly issued, fully paid and non-assessable and conform, or when so
issued will conform, to the description thereof in the Prospectus. The
stockholders of the Company have no preemptive rights with respect to the Stock.
(g) Except as contemplated in the Prospectus, subsequent to the
respective dates as of which information is given in the Registration Statement
and the Prospectus, neither the Company nor any of its subsidiaries has incurred
any liabilities or obligations, direct or contingent, or entered into any
transactions, not in the ordinary course of business, that are material to the
Company and its subsidiaries considered as a whole, and there has not been on a
consolidated basis, any material change in the capital stock, or any material
increase in the short-term debt or long-term debt of the Company and its
subsidiaries (other than advances under the credit agreement dated as of May 21,
1993, as amended and as it may be further amended from time to time (the "Credit
Agreement"), to be used in the ordinary course of the Company's business), or
any material adverse change, or any development involving a prospective material
adverse change, in the condition (financial or other), business, prospects, net
worth or results of operations of the Company and its subsidiaries considered as
a whole.
(h) Except as set forth in the Prospectus, there is not pending or,
to the knowledge of the Company, threatened any action, suit or proceeding to
which the Company or any of its subsidiaries is a party, before or by any court
or governmental agency or body, that could reasonably be expected to result in
any material adverse change in the condition (financial or other), business,
prospects, net worth or results of operations of the Company and its
subsidiaries considered as a whole or that could reasonably be expected to
materially and adversely affect the properties or assets thereof considered as a
whole.
(i) There are no contracts or documents of the Company or any of its
subsidiaries that are required to be filed as exhibits to the Registration
Statement or to any of the documents incorporated by reference therein by the
Act or the Exchange Act or by the rules and regulations of the Commission
thereunder that have not been so filed.
2
<PAGE>
(j) The performance of this Agreement, and the consummation of the
transactions contemplated herein or therein will not result in a breach or
violation of any of the terms and provisions of, or constitute a default under,
any statute, any agreement or instrument to which the Company is a party or by
which it is bound or to which any of the property of the Company is subject, the
Company's charter or by-laws, or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of its
properties; no consent, approval, authorization or order of, or filing with, any
court or governmental agency or body is required for the consummation by the
Company of the transactions contemplated by this Agreement, in connection with
the issuance or sale of the Stock by the Company, except such as may be required
by the listing of the Stock on the New York Stock Exchange ("NYSE") or the
Chicago Stock Exchange ("CSE") or under the Act or state securities or blue sky
laws; and the Company has full power and authority to authorize, issue and sell
the Stock as contemplated by this Agreement, free of any preemptive rights.
3. Sale and Delivery of Securities. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to issue and sell
exclusively through Agent, and Agent agrees to sell, as exclusive sales agent
for the Company, on a best efforts basis, up to the Maximum Amount of Stock on
the terms set forth herein.
The Stock, up to the Maximum Amount, is to be sold during one or more
pricing periods (each a "Pricing Period"), each Pricing Period consisting of
five consecutive calendar days or such lesser number of days as shall be agreed
to by the Company and the Agent. The Company and the Agent shall agree to any
Pricing Period and the number of shares of Stock (not to exceed 60,000 shares)
to be sold by the Agent during each such Pricing Period (the "Average Market
Price Shares"). Subject to the terms and conditions hereof, the Agent shall use
its best efforts to (i) sell all of the Average Market Price Shares during each
such Pricing Period, and (ii) sell the entire Maximum Amount during no more than
52 Pricing Periods. The Agent shall sell the shares of Stock by means of
ordinary brokers' transactions on any national securities exchange, including
the NYSE, on which such shares of Stock are listed. The Company or the Agent
may, upon notice to the other party hereto by telephone (confirmed promptly by
telecopy) suspend or terminate the offering of Stock during any Pricing Period;
provided, however, that such suspension or termination shall not affect or
impair the parties' respective obligation with respect to shares of Stock sold
hereunder prior to the giving of such notice; provided further, that the Agent
may give notice of suspension under this sentence only in the event that the
Agent in its sole discretion determines that the Registration Statement or
Prospectus may contain an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, not misleading.
The net proceeds (the "Net Proceeds") to the Company for the Average
Market Price Shares sold by the Agent during a Pricing Period will equal the sum
of (i) the product of (x) 94.25% times (y) the average of the arithmetic mean of
the high and low sales prices of the common stock of the Company reported on the
NYSE for each trading day of such Pricing Period (the "Average Market Price"),
times (z) the number of Average Market Price Shares sold during such Pricing
Period plus (ii) Alternative Proceeds (defined below), if any, plus (iii) Excess
Proceeds (defined below), if any. Subject to adjustment as set forth in the
next two paragraphs, the compensation to the Agent with respect to the sale of
Average Market Price Shares sold hereunder shall equal the difference between
the aggregate gross sales prices at which such sales are actually effected by
the Agent and the Net Proceeds.
Prior to and from time to time during any Pricing Period, the Company may
instruct the Agent not to sell shares of Stock if such sales cannot be effected
at or above the price designated by the Company in any such instruction. If
such an instruction is given and as a result thereof the Agent is unable to sell
shares of Stock in an amount greater than or equal to the average daily number
of Average Market Price Shares actually sold during such Pricing Period, then
(i) that day's high and low sales prices of common stock of the Company reported
on the NYSE shall not be included in the calculation of Average Market Price and
(ii) the net proceeds payable to the Company (the "Alternative Proceeds") and
the compensation payable to the Agent in respect of any sales of Average Market
Price Shares effected that day by the Agent shall be equal to 94.25% and 5.75%,
respectively, of the weighted average sales prices at which the Agent has
actually effected sales of Stock during that day.
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To the extent that the compensation payable to the Agent hereunder would
otherwise exceed ten percent of the aggregate gross sales prices of the Average
Market Price Shares during any Pricing Period, such excess over ten percent
shall constitute "Excess Proceeds" payable to the Company.
During any Pricing Period, the Company and the Agent may agree upon the
sale of shares ("Additional Shares") of Stock in an amount of 1,000 shares or
more, in addition to the sale of Average Market Price Shares (such Additional
Shares to be included in the Maximum Amount). The compensation to the Agent for
sales of the first 200,000 Additional Shares sold in any Pricing Period shall be
$0.125 per share, and the compensation to the Agent for sales of Additional
Shares in excess thereof during such Pricing Period shall be $0.25 per share.
The sale of Additional Shares during any day shall be confirmed in writing by
the Agent to the Company following the close of business that day. All other
shares sold during a Pricing Period not so confirmed shall be deemed Average
Market Price Shares.
The Agent shall provide written confirmation to the Company following the
close of business on the final day of each Pricing Period setting forth the
number of Average Market Price Shares sold during the Pricing Period, the gross
proceeds from the sale of such shares, the high and low prices at which Average
Market Price Shares were sold during such Pricing Period, the Net Proceeds to
the Company, the amount of Excess Proceeds, if any, the amount of Alternative
Proceeds, if any, the compensation payable by the Company to the Agent with
respect to such sales and the Average Market Price for such Pricing Period. The
Agent hereby acknowledges that the Company will be relying upon such information
in preparing the Prospectus Supplement with respect to each Pricing Period.
Settlement for sales of Additional Shares will occur on the fifth
business day following the date on which such sales are made. Settlement for
sales of Average Market Price Shares will occur on a weekly basis as follows.
On each Monday (or the next succeeding business day if such Monday is not a
business day) following the end of a Pricing Period (each a "Closing Date"), the
Average Market Price Shares sold through the Agent during such Pricing Period
will be delivered by the Company to the Agent against payment of the Net
Proceeds for such Pricing Period. Settlement for all shares shall be effected
via the Depository Trust Corporation on a delivery-versus-payment basis.
At each such settlement, the Company shall affirm in writing each
representation, warranty, covenant and other agreement contained in this
Agreement. The Company covenants and agrees with Agent that within two (2)
business days of the termination of each Pricing Period, the Company will file a
Prospectus Supplement under Rule 424(b)(3) promulgated under the Act, which
Prospectus Supplement will set forth the number of such shares of Stock sold
through the Agent, the high and low prices at which Average Market Price Shares
were sold during such Pricing Period, the Net Proceeds to the Company and the
compensation payable by the Company to the Agent with respect to such sales (all
as provided in writing by the Agent for inclusion in each such Prospectus
Supplement). The obligations of the Agent to sell the Stock shall be subject to
the continuing accuracy of the representations and warranties of the Company
herein, to the performance by the Company of its obligations hereunder and to
the continuing satisfaction of the additional conditions specified in Section
5(a) through (i) of this Agreement.
4. Covenants. The Company covenants and agrees with Agent that:
(a) During the period in which a prospectus relating to the Stock is
required to be delivered under the Act, the Company will notify the Agent
promptly of the time when any subsequent amendment to the Registration Statement
has become effective or any subsequent supplement to the Prospectus has been
filed and of any request by the Commission for any amendment or supplement to
the Registration Statement or Prospectus or for additional information; it will
prepare and file with the Commission, promptly upon the Agent's request, any
amendments or supplements to the Registration Statement or Prospectus that, in
the Agent's reasonable opinion, may be necessary or advisable in connection with
the distribution of the Stock by the Agent; it will file no amendment or
supplement to the Registration Statement or Prospectus (other than any
prospectus supplement relating to the offering of other securities registered
under the Registration Statement or any document required to be filed under the
Exchange Act that upon filing is deemed to be incorporated by reference therein)
to which the Agent shall reasonably object by notice to the Company after having
been furnished a copy a reasonable time prior to the filing; and it will furnish
to
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the Agent at or prior to the filing thereof a copy of any such prospectus
supplement or any document that upon filing is deemed to be incorporated by
reference in the Registration Statement or Prospectus.
(b) The Company will advise the Agent, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement, of
the suspension of the qualification of the Stock for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceeding for any such
purpose; and it will promptly use its best efforts to prevent the issuance of
any stop order or to obtain its withdrawal if such a stop order should be
issued. The Company will advise the Agent immediately after it shall receive
notice of, or obtain knowledge of, the initiation by the Commission or its staff
of a review of any documents incorporated by reference in the Prospectus.
(c) Within the time during which a prospectus relating to the Stock
is required to be delivered under the Act, the Company will comply as far as it
is able with all requirements imposed upon it by the Act and by the Rules and
Regulations, as from time to time in force, so far as necessary to permit the
continuance of sales of or dealings in the Stock as contemplated by the
provisions hereof and the Prospectus. If during such period any event occurs as
a result of which the Prospectus as then amended or supplemented would include
an untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances then
existing, not misleading, or if during such period it is necessary to amend or
supplement the Registration Statement or Prospectus to comply with the Act, the
Company will promptly notify the Agent and will amend or supplement the
Registration Statement or Prospectus (at the expense of the Company) so as to
correct such statement or omission or effect such compliance.
(d) The Company will use its best efforts to qualify the Stock for
sale under the securities laws of such jurisdictions as you reasonably designate
and to continue such qualifications in effect so long as required for the
distribution of the Stock, except that the Company shall not be required in
connection therewith to qualify as a foreign corporation or to execute a general
consent to service of process in any jurisdiction.
(e) The Company will furnish to the Agent copies of the Registration
Statement, the Prospectus (including all documents incorporated by reference
therein) and all amendments and supplements to the Registration Statement or
Prospectus that are filed with the Commission during the period in which a
prospectus relating to the Stock is required to be delivered under the Act
(including all documents filed with the Commission during such period that are
deemed to be incorporated by reference therein), in each case as soon as
available and in such quantities as you may from time to time reasonably
request, and will also furnish copies of the Prospectus to the NYSE in
accordance with Rule 153 of the Rules and Regulations.
(f) The Company will make generally available to its security holders
as soon as practicable, but in any event not later than 15 months after the end
of the Company's current fiscal quarter, an earnings statement (which need not
be audited) covering a 12-month period beginning after the date of effectiveness
of the Registration Statement that shall satisfy the provisions of Section 11(a)
of the Act.
(g) The Company, whether or not the transactions contemplated
hereunder are consummated or this Agreement is terminated, will pay all expenses
incident to the performance of its obligations hereunder, will pay the expenses
of printing all documents relating to the offering, and will reimburse the Agent
for any expenses (including fees and disbursements of counsel) incurred by it in
connection with the matters referred to in Section 4(d) hereof and the
preparation of memoranda relating thereto and for any filing fee of the National
Association of Securities Dealers, Inc. relating to the Stock. The Company
shall not in any event be liable to the Agent for loss of anticipated profits
from the transactions covered by this Agreement.
(h) The Company will apply the net proceeds from the sale of the
Stock as set forth in the Prospectus.
(i) The Company will not, directly or indirectly, offer or sell, any
shares of common stock (other than the Stock) or securities convertible into or
exchangeable for, or any rights to purchase or acquire, common stock during the
period ending on the final Closing Date for the sale of Stock hereunder (a)
without giving you three business days' prior written notice specifying the
nature of the proposed sale and the date of such proposed sale, or
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(b) if, following the receipt of such notice, you object to such sale in writing
prior to the date specified in such notice as the date of such proposed sale;
provided, however, that you may not object to or prohibit the Company from (i)
issuing and/or selling shares of its common stock or warrants, options or other
rights exercisable or convertible into shares of its common stock to employees
of the Company and its subsidiaries, (ii) issuing and/or selling shares of
common stock pursuant to any employee stock option plan, stock ownership plan or
dividend reinvestment plan of the Company now or hereinafter in effect, (iii)
issuing and/or selling shares of common stock or securities convertible into or
exchangeable for, or rights to acquire common stock pursuant to a private
placement including, without limitation, pursuant to Rule 144A of the Act, (iv)
issuing and selling common stock pursuant to its contractual obligations as in
effect on the date hereof, pursuant to the Zenith Stockholders Rights Plan, (v)
issuing and contributing shares of common stock to the Zenith Hourly and
Salaried Employees Profit Sharing and Retirement Plans, and (vi) issuing common
stock issuable upon conversion of securities or the exercise of warrants,
options or other rights in effect or outstanding on the date hereof.
(j) The Company will, at any time during the term of this Agreement,
as supplemented from time to time, advise the Agent immediately after it shall
have received notice or obtained knowledge thereof, of any information or fact
that would alter or affect any opinion, certificate, letter and other document
provided to the Agent pursuant to Section 5 herein.
5. Conditions of Agent's Obligations. The obligations of the Agent
to sell the Stock as provided herein shall be subject to the accuracy, as of the
date hereof, and as of each Closing Date for any Pricing Period contemplated
under this Agreement, of the representations and warranties of the Company
herein, to the performance by the Company of its obligations hereunder and to
the following additional conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceeding for that purpose shall have
been instituted or, to the knowledge of the Company or the Agent, threatened by
the Commission, and any request of the Commission for additional information (to
be included in the Registration Statement or the Prospectus or otherwise) shall
have been complied with to your satisfaction.
(b) The Agent shall not have advised the Company that the
Registration Statement or Prospectus, or any amendment or supplement thereto,
contains an untrue statement of fact that in your opinion is material, or omits
to state a fact that in the Agent's opinion is material and is required to be
stated therein or is necessary to make the statements therein not misleading.
(c) Except as contemplated in the Prospectus, subsequent to the
respective dates as of which information is given in the Registration Statement
and the Prospectus, there shall not have been, on a consolidated basis, any
material change in the capital stock or any material increase in short-term or
long-term debt of the Company and its subsidiaries (other than advances under
the Credit Agreement to be used in the ordinary course of the Company's
business), or any material adverse change, or any development involving a
prospective material adverse change, in the condition (financial or other),
business, prospects, net worth or results of operations of the Company and its
subsidiaries considered as a whole, or any change in the rating assigned to any
securities of the Company by Moody's Investors Service, Standard & Poor's or any
similar national rating agency, that, in the Agent's judgment, makes it
impractical or inadvisable to offer or deliver the Stock on the terms and in the
manner contemplated in the Prospectus.
(d) The Agent shall have received at the date of the commencement of
the first Pricing Period hereunder (the "Commencement Date") and at the final
Closing hereunder opinions of Richard F. Vitkus., Esq., Senior Vice President-
General Counsel for the Company, dated as of the Commencement Date and dated as
of the final Closing Date, respectively, to the effect that:
(i) The Company and each of its subsidiaries has been
duly incorporated and is an existing corporation in good standing under the laws
of its jurisdiction of incorporation, has full corporate power and authority to
conduct its business as described in the Registration Statement and Prospectus
and is duly qualified to do business in each jurisdiction in which it owns or
leases real property or in which the conduct of its business
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<PAGE>
requires such qualification except where the failure to be so qualified,
considering all such cases in the aggregate, will not have a material adverse
effect on the financial condition, business, properties, or results of
operations of the Company and its subsidiaries considered as a whole; and all of
the outstanding shares of capital stock of each of the Company's subsidiaries
have been duly authorized and validly issued, are fully paid and non-assessable
and (except for director's qualifying shares and except as otherwise stated in
the Registration Statement) are owned beneficially by the Company subject to no
security interest, other encumbrance or adverse claim;
(ii) All of the outstanding shares of Common Stock of
the Company have been duly authorized and validly issued, are fully paid and
non-assessable; the shares of Stock have been duly and validly authorized, and,
when issued and delivered to and paid for by the purchasers thereof pursuant to
the Agreement, will be fully paid and nonassessable and conform to the
description thereof in the Prospectus; and the stockholders of the Company have
no preemptive rights with respect to the Stock;
(iii) To the best knowledge of such counsel no stop
order suspending the effectiveness of the Registration Statement has been issued
and no proceeding for that purpose has been instituted or threatened by the
Commission;
(iv) The Registration Statement, when it became
effective, and the Prospectus and any amendment or supplement thereto, on the
date of filing thereof with the Commission (and, if applicable, at each Closing
Date on or prior to the date of the opinion), complied (in each case other than
the financial statements, financial data, statistical data and supporting
schedules contained or incorporated by reference therein as to which such
counsel need express no opinion) as to form in all material respects with the
requirements of the Act and the Rules and Regulations; and the documents
incorporated by reference in the Registration Statement or Prospectus or any
amendment or supplement thereto (other than the financial statements, financial
data, statistical data and supporting schedules contained or incorporated by
reference therein as to which such counsel need express no opinion), when they
became effective under the Act or were filed with the Commission under the
Exchange Act, as the case may be, complied as to form in all material respects
with the requirements of the Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder;
(v) The description in the Registration Statement and
Prospectus of statutes, legal and governmental proceedings, contracts and other
documents are accurate and fairly present the information required to be shown;
and such counsel do not know of any statutes or legal or governmental
proceedings required to be described in the Prospectus that are not described as
required, or of any contracts or documents of a character required to be
described in the Registration Statement or Prospectus (or required to be filed
under the Exchange Act if upon such filing they would be incorporated by
reference therein) or to be filed as exhibits to the Registration Statement that
are not described and filed as required; and
(vi) This Agreement has been duly authorized, executed
and delivered by the Company; the performance of this Agreement and the
consummation of the transactions contemplated herein by the Company will not
result in a breach or violation of any of the terms and provisions of, or
constitute a default under, any statute, any agreement or instrument known to
such counsel to which the Company is a party or by which it is bound or to which
any of the property of the Company is subject, the Company's charter or by-laws,
or any order, rule or regulation known to such counsel of any court or
governmental agency or body having jurisdiction over the Company or any of its
properties; and no consent, approval, authorization or order of, or filing with,
any court or governmental agency or body is required for the consummation of the
transactions contemplated by this Agreement in connection with the issuance or
sale of the Stock by the Company, except such as have been obtained under the
Act and such as may be required by the listing of the Stock on the NYSE and the
CSE or under state securities or blue sky laws in connection with the sale and
distribution of the Stock by the Agent.
Such counsel shall also state that such counsel has participated
in conferences with officers and other representatives of the Company and
representatives of the independent public accountants of the Company and
representatives of Agent at which the contents of the Registration Statement,
the Prospectus and any amendment thereof or supplement thereto and related
matters were discussed and, although such counsel has not independently checked
the accuracy or completeness of, or otherwise verified, and accordingly need not
pass upon,
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and need not assume any responsibility for, the accuracy, completeness or
fairness of the statements contained in the Registration Statement or the
Prospectus or any amendment thereof or any supplement thereto, and that on the
basis thereof and relying as to materiality to a large extent upon the judgment
of officers and other representatives of the Company, nothing has come to such
counsel's attention which causes such counsel to believe that either the
Registration Statement (other than financial statements, financial data,
statistical data and supporting schedules included or incorporated by reference
therein, as to which such counsel need express no belief) when it became
effective, contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus, including any
supplement thereto (other than financial statements, financial data, statistical
data and supporting schedules included or incorporated by reference therein, as
to which such counsel need express no belief), as of their respective dates
included, or as of the date of such opinion includes, an untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
In rendering such opinion, such counsel may rely (A) as to matters involving the
application of laws of any jurisdiction other than the States of Illinois, the
General Corporation Laws of the State of Delaware, or the United States, to the
extent he deems proper and specified in such opinion, upon the opinion of other
counsel of good standing whom he believes to be reliable and who are
satisfactory to counsel for Agent and (B) as to matters of fact, to the extent
he deems proper, on certificates of responsible officers of the Company and
public officials. References to the Prospectus in this subsection include any
supplements thereto.
(e) The Agent shall have received at the Commencement Date at the
final Closing hereunder opinions of Sidley & Austin, counsel for the Company,
dated as of the Commencement Date and dated as of the final Closing Date,
respectively, to the effect that:
(i) The Company has been duly incorporated and is an
existing corporation in good standing under the laws of the State of Delaware;
(ii) All of the outstanding shares of Common Stock of
the Company have been duly and validly authorized and issued and are fully paid
and nonassessable; the shares of Stock have been duly and validly authorized,
and, when issued and delivered to and paid for by the purchasers thereof
pursuant to the Agreement, will be fully paid and nonassessable, conform to the
description thereof in the Prospectus, and the stockholders of the Company are
not entitled to preemptive rights with respect to the Stock;
(iii) The Registration Statement has become effective
under the Act; (if applicable-the filing of the Prospectus Supplements pursuant
to Rule 424(b) have been made in the manner and within the time period required
by Rule 424(b)); to the knowledge of such counsel no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceeding
for that purpose has been instituted or threatened by the Commission; the
Registration Statement and the Prospectus at the time the Registration Statement
became effective (if applicable-and the Prospectus Supplements) (in each case
other than the financial statements, financial data, statistical data and
supporting schedules contained or incorporated by reference therein as to which
such counsel need express no opinion) complied as to the form in all material
respects with the requirements of the Act and the Rules and Regulations; The
documents incorporated by reference in the Registration Statement or Prospectus
or any amendment or supplement thereto (other than financial statements,
financial data, statistical data and supporting schedules contained or
incorporated by reference therein as to which such counsel need express no
opinion) when they became effective under the Act or were filed with the
Commission under the Exchange Act or were amended subsequent to filing, as the
case may be, complied as to form in all material respects with the requirements
of the Act or the Exchange Act, as applicable, and the rules and regulations of
the Commission thereunder;
(iv) The Agreement has been duly authorized, executed
and delivered by the Company; and
(v) No consent, approval, authorization or order of
any court or governmental agency or body is required for the valid
authorization, issuance, sale and delivery of the Stock as contemplated by
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this Agreement, except such as have been obtained under the Act and such as may
be required by the listing of the Stock on the NYSE and the CSE or under the
securities or blue sky laws of any jurisdiction.
Such counsel shall also state that such counsel has participated
in conferences with officers and other representatives of the Company and
representatives of the independent public accountants of the Company and
representatives of Agent at which the contents of the Registration Statement,
the Prospectuses and any amendment thereof or supplement thereto and related
matters were discussed and, although such counsel has not independently checked
the accuracy or completeness of, or otherwise verified, and accordingly need not
pass upon, and need not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus or any amendment thereof or any supplement thereto,
and that on the basis thereof and relying as to materiality to a large extent
upon the judgment of officers and other representatives of the Company, nothing
has come to such counsel's attention which causes such counsel to believe that
either the Registration Statement (other than financial statements, financial
data, statistical data and supporting schedules included or incorporated by
reference therein, as to which such counsel need express no belief) when it
became effective, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus, including any
supplement thereto (other than financial statements, financial data, statistical
data and supporting schedules included or incorporated by reference therein, as
to which such counsel need express no belief), as of their respective dates
included, or as of the date of such opinion includes, an untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction other than the
States of Illinois and New York, the General Corporation Laws of the State of
Delaware, or the United States, to the extent they deem proper and specified in
such opinion, upon the opinion of other counsel of good standing whom they
believe to be reliable and who are satisfactory to counsel for Agent and (B) as
to matters of fact, to the extent they deem proper, on certificates of
responsible officers of the Company and public officials. References to the
Prospectus in this subsection include any supplements thereto.
(f) The Agent shall have received from Latham & Watkins, counsel for
the Agent, such opinion or opinions, dated as of the Commencement Date and dated
as of the final Closing Date contemplated by this Agreement with respect to the
incorporation of the Company, the validity of the Stock, the Registration
Statement, the Prospectus and other related matters as the Agent reasonably may
request, and such counsel shall have received such papers and information as
they request to enable them to pass upon such matters.
(g) At or prior to (i) the Commencement Date and (ii) the date of
the filing by the Company of any Quarterly Report on Form 10-Q or any Annual
Report on Form 10-K (collectively, the "Periodic Reports") (or at a later date
that is (A) no more than five days after the date of such filing and (B) at or
prior to any Closing Date occurring on or after the date of such filing), the
Agent shall have received a letter from Arthur Andersen LLP, dated the date of
delivery thereof, substantially in the form attached hereto as Annex I (with
appropriate modifications and references relating to such Periodic Reports).
(h) The Agent shall have received from the Company a certificate, or
certificates, signed by two authorized officers, including the principal
financial or accounting officer (unless such officer is unavailable), of the
Company, dated as of the Commencement Date and dated as of each Closing Date
contemplated by this Agreement, to the effect that, to the best of their
knowledge based upon reasonable investigation:
(i) The representations and warranties of the Company in this
Agreement are true and correct, as if made at and as of the Commencement Date or
the Closing Date for such Pricing Period (as the case may be), and the Company
has complied with all the agreements and satisfied all the conditions on its
part to be performed or satisfied at or prior to the Commencement Date and each
such Closing Date (as the case may be);
(ii) No stop order suspending the effectiveness of the Registration
Statement has been issued, and no proceeding for that purpose has been
instituted or is threatened, by the Commission; and
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(iii) Since the date of this Agreement there has occurred no event
required to be set forth in an amendment or supplement to the Registration
Statement or Prospectus that has not been so set forth and there has been no
document required to be filed under the Exchange Act and the rules and
regulations of the Commission thereunder that upon such filing would be deemed
to be incorporated by reference in the Prospectus that has not been so filed.
(i) The Company shall have furnished to you such further certificates
and documents as you shall have reasonably requested.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are in the form set forth
herein or, if not set forth herein, satisfactory in form and substance to the
Agent. The Company will furnish the Agent with such conformed copies of such
opinions, certificates, letters and other documents as the Agent shall
reasonably request.
6. Indemnification and Contribution. (a) The Company will
indemnify and hold harmless the Agent against any losses, claims, damages or
liabilities, joint or several, to which Agent may become subject, under the Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement made by the Company in this Agreement, (ii) an untrue
statement or alleged untrue statement of a material fact contained in (A) the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, (B) any application or other document, or any
amendment or supplement thereto, executed by the Company or based upon written
information furnished by or on behalf of the Company filed in any jurisdiction
in order to qualify the Stock under the securities or blue sky laws thereof
or filed with the Commission or any securities association or securities
exchange (each an "Application") or (iii) the omission or alleged omission to
state in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto, or in any Application, a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse Agent for any legal or other expenses
reasonably incurred by it in connection with investigating or defending against
such loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Company by the Agent specifically for use in the
preparation thereof.
(b) The Agent will indemnify and hold harmless the Company against
any losses, claims, damages or liabilities to which the Company may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
part of the Registration Statement when such part became effective, or in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made therein in reliance
upon and in conformity with written information furnished to the Company by the
Agent, specifically for use in the preparation thereof, and will reimburse the
Company for any legal or other expenses reasonably incurred by the Company in
connection with investigating or defending against any such loss, claim, damage,
liability or action as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability that it may have to
any indemnified party otherwise than under such subsection (except and only to
the extent that such omission so to notify results directly in actual prejudice
to the Company). In case any such action shall be brought against any
indemnified party, and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party
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shall be entitled to participate in, and, to the extent that it shall wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel satisfactory to such indemnified party (who shall
not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.
(d) If the indemnification provided for in this Section 6 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above, (i)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Agent on the other from the offering of
the Stock or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and the Agent on the other in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Agent on the
other shall be deemed to be in the same proportion as the total proceeds from
the offering of the Stock (before deducting expenses) received by the Company
bear to the total compensation or profit (before deducting expenses) received or
realized by the Agent from the sale of the Stock on behalf of the Company. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or the Agent and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The Company and the Agent agree that it would not be just and
equitable if contributions pursuant to this subsection (d) were to be determined
by pro rata allocations or by any other method of allocation that does not take
account of the equitable considerations referred to in the first sentence of
this subsection (d). The amount paid by an indemnified party as a result of the
losses, claims, damages or liabilities referred to in the first sentence of this
subsection (d) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
against any action or claim that is the subject of this subsection (d).
Notwithstanding the provisions of this subsection (d), the Agent shall not be
required to contribute any amount in excess of the amount by which the total
actual sales price at which the Stock sold by the Agent exceeds the amount of
any damages that Agent has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
(e) The obligations of the Company under this Section 6 shall be in
addition to any liability that the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls the
Agent within the meaning of the Act; and the obligations of the Agent under this
Section 6 shall be in addition to any liability that the Agent may otherwise
have and shall extend, upon the same terms and conditions, to each director of
the Company (including any person who, with his consent, is named in the
Registration Statement as about to become a director of the Company), to each
officer of the Company who has signed the Registration Statement and to each
person, if any, who controls the Company within the meaning of the Act.
7. Representations and Agreements to Survive Delivery. All
representations, warranties and agreements of the Company herein or in
certificates delivered pursuant hereto, and the agreements of the Agent
contained in Section 6 hereof, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of the Agent or any
controlling persons, or the Company or any of its officers, directors or any
controlling persons, and shall survive delivery of and payment for the Stock.
8. Increase in Maximum Amount. At the option of the Company, with
the consent of the Agent, the number of shares of Stock constituting the Maximum
Amount may be increased from time to time up to a maximum aggregate amount of
5,200,000 shares.
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9. Termination.
(a) The Agent shall have the right by giving notice as hereinafter
specified at any time at or prior to any Closing Date, to terminate this
Agreement if (i) the Company shall have failed, refused or been unable, at or
prior to the Closing Date, to perform any agreement on its part to be performed
hereunder, (ii) any other condition of the Agent's obligations hereunder is not
fulfilled, (iii) trading on the New York Stock Exchange or the American Stock
Exchange shall have been wholly suspended, (iv) a banking moratorium shall have
been declared by Federal or New York authorities, or (v) an outbreak of major
hostilities in which the United States is involved, a declaration of war by
Congress, any other substantial national or international calamity or any other
event or occurrence of a similar character shall have occurred since the
execution of this Agreement that, in your judgment, makes it impractical or
inadvisable to proceed with the completion of the sale of and payment for the
Stock to be sold by the Agent on behalf of the Company. Any such termination
shall be without liability of any party to any other party except that the
provisions of Section 4(g) and Section 6 hereof shall at all times be effective.
If the Agent elects to terminate this Agreement as provided in this Section, the
Agent shall provide the required notice promptly by telephone, telex or
telecopy, confirmed by letter.
(b) The Company shall have the right, by giving notice as hereinafter
specified, to terminate this Agreement in its sole discretion on the date
occurring sixty (60) days after the date of this Agreement and every sixty (60)
days thereafter. Notwithstanding the foregoing, if the Company chooses to
effect any offering of equity securities or equity-related securities (other
than the offering of securities contemplated hereby) before the completion of
the offering contemplated hereby, the Company may terminate this Agreement at
any time. Any termination shall be without liability of any party to any other
party except that the provisions of Section 4(g) and Section 6 hereof shall at
all times be effective. If the Company elects to terminate this Agreement as
provided in this Section, the Company shall provide the required notice promptly
by telephone, telex, or telecopy, confirmed by letter.
(c) Any termination of this Agreement shall be effective on the date
specified in such notice of termination; provided that such termination shall
not be effective until the close of business on the date of receipt of such
notice by the Agent. If such termination shall occur during a Pricing Period,
any Additional Shares and Average Market Price Shares shall settle in accordance
with the provisions of the second to last paragraph of Section 3 hereof.
10. Notices. All notices or communications hereunder shall be in
writing and if sent to the Agent shall be mailed, delivered, telexed or
telecopied and confirmed to the Agent at NatWest Securities Limited, 175 Water
Street, New York, New York 10038, c/oJeffrey Letzler, General Counsel, or if
sent to the Company, shall be mailed, delivered, telexed or telecopied and
confirmed to the Company at 1000 Milwaukee Avenue, Glenview, Illinois 60025-
2993, Attention: Richard F. Vitkus, Senior Vice President- General Counsel, with
a copy to Sidley & Austin, One First National Plaza, Chicago, Illinois 60603,
Attention: Thomas A. Cole, Esq. Each party to this Agreement may change such
address for notices by sending to the parties to this Agreement written notice
of a new address for such purpose.
11. Parties. This Agreement shall inure to the benefit of and be
binding upon the Company and the Agent and their respective successors and the
controlling persons, officers and directors referred to in Section 6 hereof, and
no other person will have any right or obligation hereunder.
12. Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New York without
regard to the principles of conflicts of laws.
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If the foregoing correctly sets forth the understanding between the
Company and the Agent, please so indicate in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement between the
Company and the Agent. Alternatively, the execution of this Agreement by the
Company and its acceptance by or on behalf of the Agent may be evidenced by an
exchange of telegraphic or other written communications.
Very truly yours,
ZENITH ELECTRONICS CORPORATION
By: _______________________________
Title: Vice President-Finance
Chief Financial Officer
ACCEPTED as of the date first above written
NATWEST SECURITIES LIMITED
By: ______________________________________
Title: ___________________________________
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EXHIBIT 23(A)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement on Form S-3 of our reports dated
February 14, 1994, included in Zenith Electronics Corporation's Annual Report on
Form 10-K for the year ended December 31, 1993, and to all references to our
Firm included in this Registration Statement.
ARTHUR ANDERSEN LLP
Chicago, Illinois,
February 10, 1995
