<PAGE> 1
Filed Pursuant to Rule 424(b)(5)
Registration No. 33-63227
THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT IS NOT COMPLETE AND MAY BE
CHANGED. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION, AND IS EFFECTIVE. WE ARE NOT
OFFERING TO SELL THESE SECURITIES AND ARE NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION DATED JULY 9, 1999
PROSPECTUS SUPPLEMENT
(To Prospectus dated February 1, 1996)
[TEXTRON LOGO]
TEXTRON INC.
$300,000,000
% Notes due
ISSUE PRICE: %
Interest payable and
The notes will mature on . Interest will accrue from
. We may redeem the notes in whole or in part at any time prior
to maturity at the redemption price described on page S-8. The notes will be
issued in minimum denominations of $1,000 increased in multiples of $1,000.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the notes or passed upon the adequacy
or accuracy of this prospectus supplement or the prospectus. Any representation
to the contrary is a criminal offense.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS THE COMPANY
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per note % % %
- ---------------------------------------------------------------------------------------------------------------------
Total $ $ $
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
The notes will not be listed on any national securities exchange. Currently,
there is no public market for the notes.
We expect that delivery of the notes will be made to investors on or about
.
J.P. MORGAN & CO. MORGAN STANLEY DEAN WITTER
BANC OF AMERICA SECURITIES LLC
DEUTSCHE BANC ALEX. BROWN
LEHMAN BROTHERS
July , 1999
<PAGE> 2
No person is authorized to give any information or to make any representations
other than those contained or incorporated by reference in this prospectus
supplement or the prospectus, and, if given or made, such information or
representations must not be relied upon as having been authorized. This
prospectus supplement and the prospectus do not constitute an offer to sell or
the solicitation of an offer to buy any securities other than the securities
described in this prospectus supplement or an offer to sell or the solicitation
of an offer to buy such securities in any circumstance in which such offer or
solicitation is unlawful. Neither the delivery of this prospectus supplement or
the prospectus, nor any sale made under this prospectus supplement or prospectus
shall, under any circumstances, create any implication that there has been no
change in the affairs of Textron since the date of this prospectus supplement or
that the information contained or incorporated by reference in this prospectus
supplement or prospectus is correct as of any time subsequent to the date of
such information.
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Textron..................................................... S-3
Recent Developments......................................... S-3
Capitalization of Textron................................... S-4
Ratio of Income to Fixed Charges............................ S-5
Use of Proceeds............................................. S-5
Selected Financial Data..................................... S-6
Description of the Notes.................................... S-8
Underwriting................................................ S-12
Legal Matters............................................... S-12
</TABLE>
PROSPECTUS
<TABLE>
<S> <C>
Available Information....................................... 2
Incorporation of Certain Documents by Reference............. 3
Textron Inc................................................. 4
Textron Trusts.............................................. 4
Textron Finance, L.P........................................ 4
Use of Proceeds............................................. 5
Description of Debt Securities.............................. 5
Description of Trust Preferred Securities................... 14
Description of Trust Guarantees............................. 15
Description of Partnership Preferred Securities............. 18
Description of Partnership Guarantee........................ 18
Plan of Distribution........................................ 20
Legal Opinions.............................................. 22
Experts..................................................... 22
</TABLE>
S-2
<PAGE> 3
TEXTRON
Textron Inc. is a global, multi-industry company with operations in four
business segments -- Aircraft, Automotive, Industrial and Finance. Our products
include commercial and military helicopters, light and mid-size business jets,
plastic fuel tanks, automotive trim products, golf cars and utility vehicles,
turf-care equipment, industrial pumps and gears, engineered fastening systems
and solutions and other industrial products. We also are a leading commercial
finance company for select markets.
Our Aircraft segment consists of Bell Helicopter Textron and The Cessna Aircraft
Company. Based on unit sales, Bell is the global leader in commercial helicopter
products and is the pioneer of tiltrotor aircraft development. Based on unit
sales, Cessna is the leading worldwide manufacturer of light and mid-size
business jets, single engine utility turboprop aircraft and single engine piston
aircraft.
Textron Automotive is a leading global supplier of automotive interior and
exterior trim, instrument panels, plastic fuel tanks and other automotive
systems and components. More than 100 automotive models currently carry parts
made by Textron Automotive.
Our Industrial segment consists of four major product groups. Textron Fastening
Systems is the global leader in engineered fastening systems and solutions and
vendor managed inventory services. Our Golf, Turf Care and Specialty Products
companies are the leading manufacturers of golf cars, utility vehicles and lawn
and turf-care products. Our Fluid and Power Systems businesses are leading
manufacturers of mechanical power transmission and motion control components and
systems, pumps, and weapons and electronic systems. Our Industrial Components
Group is a diverse group of businesses manufacturing market-leading tools,
accessories and testing equipment for the wire and cable industry and components
for the commercial aerospace and defense industries.
Textron Financial Corporation is a diversified commercial finance company
specializing in aircraft, golf and equipment finance and revolving credit
arrangements, including the financing of the purchase or lease of Textron
products, such as Bell helicopters, Cessna aircraft and E-Z-Go golf cars. Other
services include loan syndications, asset management, portfolio servicing and
insurance brokerage.
Our financings are conducted through two borrowing groups, Textron Finance and
Textron Manufacturing. This framework is designed to enhance our borrowing power
by separating our Finance segment, which is a borrowing unit of a specialized
business nature. Textron Finance consists of Textron Financial Corporation
consolidated with its subsidiaries, which are the entities through which we
operate in the Finance segment. Textron Finance finances its operations by
borrowing from its own group of external creditors. Textron Manufacturing is
Textron Inc., the parent company, consolidated with the entities through which
we operate in the Aircraft, Automotive and Industrial business segments.
We are incorporated under the laws of Delaware. Our principal executive offices
are located at 40 Westminster Street, Providence, Rhode Island 02903 and our
telephone number is (401) 421-2800.
RECENT DEVELOPMENTS
On January 6, 1999, we sold substantially all the assets of Avco Financial
Services, Inc., a consumer lending operation, to Associates First Capital
Corporation for $3.9 billion in cash. Our financial information in this
prospectus supplement reflects Avco as a discontinued operation.
On August 11, 1998, we announced a program to repurchase 25 million shares of
our outstanding common stock. As of June 30, 1999, we had purchased 16.1 million
shares under this program.
During the first quarter of 1999, we retired a total of $553 million in debt,
which included $168 million of 6.625% debentures originally due 2007, $165
million of 8.75% debentures originally due 2022, $146 million of medium term
notes with interest rates ranging from 9.375% to 10.01% and other debt totaling
$74 million with interest rates ranging from 3.5% to 10.04%.
S-3
<PAGE> 4
CAPITALIZATION OF TEXTRON
The following table sets forth the unaudited consolidated summary capitalization
at April 3, 1999, of Textron Inc. (a) on a historical basis and (b) as adjusted
to reflect the sale of the notes. See "Use of Proceeds." The table should be
read in conjunction with our consolidated financial statements and related notes
and other financial data included in our Annual Report on Form 10-K for the
financial year ended January 2, 1999, and our Quarterly Report on Form 10-Q for
the three month period ended April 3, 1999.
<TABLE>
<CAPTION>
AT APRIL 3, 1999
---------------------
ACTUAL AS ADJUSTED
------ -----------
(IN MILLIONS)
<S> <C> <C>
Textron Manufacturing debt:
Short-term debt........................................... $ 129 $ 129
Long-term debt due within one year........................ 52 52
Long-term debt............................................ 313 613
------ ------
Total Textron Manufacturing debt.................. 494 794
------ ------
Textron Finance debt (1).................................... 3,014 3,014
Textron-obligated mandatorily redeemable preferred
securities of a subsidiary trust holding solely
subordinated debt securities of Textron (2)............... 483 483
Shareholders' equity
Preferred stock........................................... 12 12
Common stock.............................................. 24 24
Capital surplus........................................... 961 961
Retained earnings (3)..................................... 5,454 5,454
Accumulated other comprehensive income (loss)............. (79) (79)
------ ------
6,372 6,372
Less cost of treasury shares...................... 2,021 2,021
------ ------
Total shareholders' equity........................ 4,351 4,351
------ ------
Total capitalization.............................. $8,342 $8,642
====== ======
</TABLE>
- ---------------
(1) Textron Finance debt includes $730 million owed by Textron Financial
Corporation to a non-finance subsidiary of Textron. Subsequent to April 3,
1999, Textron Financial Corporation replaced this intercompany debt with
borrowings from external creditors.
(2) The sole assets of this subsidiary trust are $515.5 million principal amount
of Textron 7.92% Junior Subordinated Deferrable Interest Debentures due
2045.
(3) Retained earnings include $322 million of undistributed earnings of Textron
Finance. Certain lending agreements of Textron Finance restrict the amount
of Textron Finance net assets available for cash dividends and other
payments to Textron Manufacturing. As of April 3, 1999, approximately $193
million of the net assets of $486 million of Textron Finance was available
to be transferred to Textron under these restrictions. These loan agreements
also contain various restrictive provisions regarding additional debt, the
creation of liens or guarantees and the making of investments. In addition,
Textron has agreed to cause Textron Financial Corporation to maintain
certain minimum levels of financial performance. No payments from Textron
were necessary in 1998, 1997 or 1996 to meet these standards.
S-4
<PAGE> 5
RATIO OF INCOME TO FIXED CHARGES
The following table sets forth our unaudited ratios of income to fixed charges
for the periods indicated. Certain prior year amounts have been reclassified to
conform to the current year presentation.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
-------------------- YEAR
APRIL 3, APRIL 4, --------------------------------
1999 1998 1998 1997 1996 1995 1994
-------- -------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Textron, including all majority owned
subsidiaries(1)................................. 5.07 3.02 3.12 3.01 2.59 2.24 2.19
Textron Manufacturing(2).......................... 9.50 4.43 4.59 4.73 3.54 2.89 2.59
</TABLE>
- ---------------
(1) For the purpose of calculating the ratio of income to fixed charges for
Textron, including all majority-owned subsidiaries, "fixed charges" include
interest expense, distributions on preferred securities of a subsidiary
trust, net of income taxes, and one-third of rental expense (which is deemed
representative of the interest factor in rental expense), including interest
and rental expense of Textron Finance. "Income" consists of income from
continuing operations before income taxes and fixed charges, adjusted to
exclude distributions on preferred securities of a subsidiary trust, net of
income taxes.
(2) Textron Manufacturing consists of Textron, the parent company, together with
the entities through which we operate in the Aircraft, Automotive and
Industrial business segments. For the purpose of calculating the ratio of
income to fixed charges for Textron Manufacturing, "fixed charges" include
interest expense, distributions on preferred securities of a subsidiary
trust, net of income taxes, and one-third of rental expenses (which is
deemed representative of the interest factor in rental expense), excluding
interest and rental expense of Textron Finance. "Income" of Textron
Manufacturing consists of income from continuing operations before income
taxes, excluding the equity in undistributed pre-tax income of Textron
Finance, and fixed charges, adjusted to exclude distributions on preferred
securities of subsidiary trust, net of income taxes.
USE OF PROCEEDS
We expect to use all of the net proceeds from the sale of the notes for general
corporate purposes, which may include capital expenditures, investments in
subsidiaries, working capital, repurchases of outstanding common shares under
our repurchase program, acquisitions and other business opportunities.
S-5
<PAGE> 6
SELECTED FINANCIAL DATA
The following table sets forth selected consolidated historical financial data
for Textron for the periods indicated. The selected audited consolidated
historical financial data for each of the three years in the period ended
January 2, 1999, are derived from the consolidated financial statements of
Textron. The fiscal year statements have been audited by Ernst & Young LLP,
independent auditors.
The selected consolidated historical financial data for the three months ended
April 3, 1999, and April 4, 1998, are derived from the unaudited consolidated
financial statements of Textron for such periods. These quarterly statements, in
the opinion of management, include all adjustments consisting only of normal
recurring adjustments necessary for a fair presentation of the financial
position and results of operations for these periods. Operating results for the
three months ended April 3, 1999, are not necessarily indicative of the results
that may be expected for the entire year ending January 1, 2000.
The selected consolidated historical financial data should be read in
conjunction with Textron's consolidated financial statements and related notes
included in our Annual Report on Form 10-K for the year ended January 2, 1999,
and our Quarterly Report on Form 10-Q for the three months ended April 3, 1999,
both of which are incorporated by reference into this prospectus supplement.
Certain prior year balances have been reclassified to conform to the current
year presentation.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
-------------------- YEAR
APRIL 3, APRIL 4, -----------------------------
1999 1998 1998 1997 1996
-------- -------- ------- ------- -------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Textron Manufacturing
Revenues............................... $ 2,653 $ 2,167 $ 9,316 $ 8,333 $ 7,179
Costs and Expenses
Cost of sales....................... 2,236 1,765 7,572 6,836 5,837
Selling and administrative.......... 204 224 958 840 761
Interest expense.................... 13 33 146 117 137
Interest income(1).................. (16) -- -- -- --
Gain on sale of division............ -- -- (97) -- --
Special charges..................... -- -- 87 -- --
------- ------- ------- ------- -------
Total costs and expenses....... 2,437 2,022 8,666 7,793 6,735
------- ------- ------- ------- -------
Textron Manufacturing income........ 216 145 650 540 444
------- ------- ------- ------- -------
Textron Finance
Revenues............................... 96 85 367 350 327
Costs and Expenses
Interest(1)......................... 41 37 155 153 147
Selling and administrative.......... 23 18 79 66 58
Provision for losses on collection
of finance receivables............ 6 5 20 23 26
------- ------- ------- ------- -------
Total costs and expenses....... 70 60 254 242 231
------- ------- ------- ------- -------
Textron Finance income.............. 26 25 113 108 96
------- ------- ------- ------- -------
</TABLE>
S-6
<PAGE> 7
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
-------------------- YEAR
APRIL 3, APRIL 4, -----------------------------
1999 1998 1998 1997 1996
-------- -------- ------- ------- -------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Income from continuing operations before
income taxes and distributions on
preferred securities of subsidiary
trust.................................. 242 170 763 648 540
Income taxes............................. (91) (65) (294) (250) (211)
Distributions on preferred securities of
subsidiary trust, net of income
taxes.................................. (6) (6) (26) (26) (23)
------- ------- ------- ------- -------
Income from continuing operations........ 145 99 443 372 306
Discontinued operations, net of income
taxes:
Income from operations................. -- 43 165 186 192
Gain or (loss) on disposal(2).......... 1,615 -- -- -- (245)
Extraordinary loss from debt retirement,
net of income taxes.................... (43) -- -- -- --
------- ------- ------- ------- -------
Net income............................... $ 1,717 $ 142 $ 608 $ 558 $ 253
======= ======= ======= ======= =======
Diluted income from continuing operations
per share(3)........................... $ 0.93 $ 0.59 $ 2.68 $ 2.19 $ 1.78
======= ======= ======= ======= =======
BALANCE SHEET DATA:
Total assets(1).......................... $13,978 $12,191 $13,721 $11,330 $11,514
Textron Manufacturing long-term debt..... 365 1,044 944 846 627
Textron Finance debt(1).................. 3,014 2,413 2,829 2,365 2,441
Preferred securities of subsidiary
trust.................................. 483 483 483 483 483
Total shareholder's equity............. 4,351 3,362 2,997 3,228 3,183
OTHER DATA:
Capital expenditures..................... 98 82 475 374 312
Depreciation............................. 81 65 292 254 213
</TABLE>
- ---------------
(1) As of April 3, 1999, Textron Financial Corporation owed $730 million to a
non-finance subsidiary of Textron. The interest income of Textron
Manufacturing and the interest expense of Textron Finance each include
approximately $9 million of interest on this intercompany debt for the three
months ended April 3, 1999, and such amounts are included in both total
assets and Textron Finance debt, respectively. Subsequent to April 3, 1999,
Textron Financial Corporation replaced this intercompany debt with
borrowings from external creditors.
(2) In January 1999, Textron sold Avco Financial Services, resulting in a $1.6
billion after-tax gain. In 1996, Textron agreed to sell Paul Revere
Corporation, resulting in a net after tax loss of $245 million.
(3) Diluted income from continuing operations per share reflects the effect of
the two-for-one stock split in the form of a stock dividend paid in May
1997.
S-7
<PAGE> 8
DESCRIPTION OF THE NOTES
The notes are a series of "Senior Debt Securities" described in the accompanying
prospectus. The notes will be limited to $300,000,000 aggregate principal amount
and will mature on . The notes will not be subject to any optional or
mandatory sinking fund. Reference should be made to the accompanying prospectus
for a detailed summary of additional provisions of the notes and of the
indenture dated as of April 15, 1987, between Textron and The Chase Manhattan
Bank (formerly known as Chemical Bank, successor by merger to Manufacturers
Hanover Trust Company), as trustee, as supplemented by the First Supplemental
Indenture dated as of March 15, 1988, and the Second Supplemental Senior
Indenture dated as of February 6, 1996, under which the notes will be issued.
We expect that the notes initially will be represented by one or more global
securities deposited with The Depository Trust Company (DTC), or its
subcustodian, and registered in the name of the nominee of DTC. The notes will
be available for purchase in minimum denominations of $1,000 and integral
multiples of $1,000, in registered book-entry form only, except as set forth
below under the caption "Book-entry System."
The notes are direct, unsecured obligations of Textron Inc. exclusively. Since a
significant part of Textron's operations are conducted through subsidiaries, a
significant portion of Textron's cash flow and, consequently, its ability to
service debt, including the notes, is dependent upon the earnings of its
subsidiaries and the transfer of funds by those subsidiaries to Textron, in the
form of dividends or other transfers, supplemented with borrowings.
Financing for Textron and its subsidiaries is conducted through two borrowing
groups, Textron Manufacturing and Textron Finance. Textron Finance finances its
operations by borrowing from its own group of external creditors. Lending
agreements of Textron Finance restrict the amount of Textron Finance net assets
available for cash dividends and other payments to Textron Inc. See
"Capitalization." Creditors of Textron's subsidiaries would be entitled to a
claim on the assets of such subsidiaries prior to any claims by Textron.
Consequently, in the event of a liquidation or reorganization of any subsidiary,
creditors of the subsidiary are likely to be paid in full before any
distribution is made to Textron, except to the extent that Textron itself is
recognized as a creditor of such subsidiary. Any claims of Textron as the
creditor of its subsidiary would be subordinate to any security interest in the
assets of such subsidiary and any indebtedness of such subsidiary senior to that
held by Textron.
As of April 3, 1999, the subsidiaries of Textron had an aggregate of $3.2
billion of outstanding indebtedness and $3.8 billion of other obligations.
PAYMENT OF INTEREST
The interest rate on the notes will be % per annum. Textron will pay
interest in arrears on and of each year, beginning
. Interest on the notes will accrue from . Textron will pay
interest to the persons in whose names the notes are registered at the close of
business on the preceding or . Textron will pay interest
computed on the basis of a 360-day year consisting of twelve 30-day months.
REDEMPTION AT OUR OPTION
Textron may redeem the notes at its option, in whole or in part at any time, at
a redemption price equal to the greater of:
- 100% of the principal amount of notes to be redeemed, or
- as determined by the Quotation Agent, the sum of the present values of
the remaining scheduled payments of principal on such notes and interest
on such notes that would be due after the redemption date but for such
redemption (not including any portion of such interest payments accrued
as of the redemption date) discounted to the redemption date on a
semi-annual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Adjusted Treasury Rate plus basis points,
S-8
<PAGE> 9
plus, in either of the above cases, accrued and unpaid interest on such notes up
to, but not including, the redemption date. Certain terms used in this
description of Textron's option to redeem the notes are defined below under this
section.
Textron will mail a notice of redemption at least 30 days but not more than 60
days before the redemption date to each holder of notes to be redeemed. We
understand that under DTC's current practice, if Textron elects to redeem less
than all of the notes, DTC would determine by lot the notes to be redeemed. If
at the time of a partial redemption, individual notes have been issued in
definitive form, the trustee will select in a fair and appropriate manner the
notes to be redeemed.
Unless Textron defaults in payment of the redemption price and accrued and
unpaid interest on the notes, on and after the redemption date, interest will
stop accruing on the notes or portions of the notes called for redemption.
For purposes of this section "Redemption at Our Option," the following terms
have the following meanings:
"Adjusted Treasury Rate" means, with respect to the redemption of notes on a
redemption date, the annual rate equal to the semi-annual equivalent yield to
maturity of the Comparable Treasury Issue, assuming a price for the Comparable
Treasury Issue (expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price for such redemption date.
"Comparable Treasury Issue" means, with respect to the redemption of notes on a
redemption date, the United States Treasury security selected by the Quotation
Agent as having a maturity comparable to the remaining term of the notes to be
redeemed that would be used, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt securities
of comparable maturity to the remaining term of such notes.
"Comparable Treasury Price" means, with respect to the redemption of notes on a
redemption date:
- the average of the Reference Treasury Dealer Quotations for such
redemption date, after excluding the highest and lowest such Reference
Treasury Dealer Quotations, or
- if the trustee obtains fewer than three such Reference Treasury Dealer
Quotations, the average of all such Reference Treasury Dealer quotations.
"Primary Treasury Dealer" means a primary U.S. Government securities dealer in
New York City.
"Quotation Agent" means the Reference Treasury Dealer appointed by us.
"Reference Treasury Dealer" means (a) each of J.P. Morgan Securities Inc.,
Morgan Stanley & Co. Incorporated, Banc of America Securities LLC, Deutsche Bank
Securities Inc. and Lehman Brothers Inc. and their successors; provided,
however, that if any of the foregoing ceases to be a Primary Treasury Dealer, we
shall substitute another Primary Treasury Dealer and (b) any other Primary
Treasury Dealer selected by us.
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and the redemption of notes on a redemption date, the average,
as determined by us, of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) which
such Reference Treasury Dealer quotes in writing to the trustee at 5:00 p.m.,
New York City time, on the third business day before such redemption date.
BOOK-ENTRY SYSTEM
We expect that the notes initially will be represented by a global security
deposited with DTC and registered in the name of the nominee of DTC. Except as
set forth below, the notes will be available for purchase in registered
book-entry form only. Book entry form means that unless and until certificated
notes are issued under the limited circumstances described below, no beneficial
owner of a note will be entitled to receive a definitive certificate
representing a note. So long as DTC or any successor depositary
S-9
<PAGE> 10
or its nominee is the registered holder of the global note, the depositary, or
such nominee, as the case may be, will be considered to be the sole owner or
holder of the notes for all purposes of the indenture.
DTC has advised us that it is a limited-purpose trust company organized under
the laws of the State of New York, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial
Code, and a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act. DTC holds securities for its participating
organizations and facilitates the clearance and settlement of securities
transactions between participating organizations through electronic book-entry
changes in accounts of its participating organizations, which eliminates the
need for physical movement of certificates. Participants include securities
brokers and dealers, banks, trust companies and clearing corporations and may
include certain other organizations (including the underwriters). Indirect
access to the DTC system is also available to others such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly. Beneficial
owners of the notes that are not participants or indirect participants who
desire to purchase, sell or otherwise transfer ownership of, or other interest
in, the notes may do so only through participants and indirect participants.
Payments with respect to the global note will be made by a paying agent
appointed by us to DTC or any successor depositary, or its nominee. Textron
expects that any such depositary, or its nominee, upon receipt of any payment of
principal or of interest on the global note will credit the accounts of its
participants with payments in amounts proportionate to such participants'
ownership interest in the global note. Beneficial owners of the notes, directly
or indirectly, will receive distributions of principal and interest in
proportion to their beneficial ownership through the participants. Consequently,
any payments to beneficial owners of the notes will be subject to the terms,
conditions, and time of payment required by the depositary, the participants and
indirect participants, as applicable.
Textron expects that such payments will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers registered in "street name." Such payments will be the responsibility
of such participants and indirect participants. Neither Textron, the trustee for
the notes, any paying agent nor the registrar for the notes will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the notes or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
Under the rules, regulations and procedures creating and affecting DTC and its
operations, DTC is required to make book-entry transfers among participants on
whose behalf it acts with respect to the notes and is required to receive and
transmit distributions of principal and interest on the notes. Participants and
indirect participants with which beneficial owners of the notes have accounts
similarly are required to make book-entry transfers and receive and transmit
such payments on behalf of their respective beneficial owners of the notes.
Accordingly, although beneficial owners of the notes will not possess
certificated notes, we expect that beneficial owners should receive payments and
should be able to transfer their interests.
Since it is anticipated that the only holder of the notes will be the depositary
or its nominee, beneficial owners of the notes will not be recognized as holders
of the notes under the indenture unless certificated definitive notes are
issued. So long as the notes are represented by the global note, beneficial
owners of the notes will only be permitted to exercise the rights of holders of
the notes indirectly through the participants who in turn will exercise such
rights through the depositary.
If the depositary is at any time unwilling, unable or ineligible to continue as
depositary and a successor depositary is not appointed by Textron within 90
days, Textron will issue individual notes in definitive form in exchange for the
global note representing the notes. In addition, Textron may at any time and in
its sole discretion determine not to have the notes represented by the global
note and, in such event, will issue individual notes in definitive form in
exchange for the global note representing the notes. Furthermore, if Textron so
specifies with respect to the notes, an owner of a beneficial interest in the
global note
S-10
<PAGE> 11
representing notes may, on terms acceptable to Textron, the trustee and the
depositary, receive individual notes of such series in exchange for such
beneficial interests.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the notes will be made by the underwriters in immediately
available funds. So long as the notes are represented by the global note, all
payments of principal and interest will be made by Textron in immediately
available funds.
So long as the notes are represented by the global note, the notes will trade in
DTC's same-day funds settlement system until maturity, and secondary market
trading activity in the notes will therefore be required by DTC to settle in
immediately available funds. No assurance can be given as to the effect, if any,
of settlement in immediately available funds on trading activity in the notes.
S-11
<PAGE> 12
UNDERWRITING
Textron is selling the notes to the underwriters named below under an
underwriting agreement dated , 1999. The underwriters, and the
principal amount of notes each of them has severally agreed to purchase from us,
are as follows:
<TABLE>
<CAPTION>
PRINCIPAL
UNDERWRITERS AMOUNT OF NOTES
- ------------ ---------------
<S> <C>
J.P. Morgan Securities Inc................................. $
Morgan Stanley & Co. Incorporated..........................
Banc of America Securities LLC.............................
Deutsche Bank Securities Inc. .............................
Lehman Brothers Inc. ......................................
------------
Total............................................ $300,000,000
============
</TABLE>
Under the terms and conditions of the underwriting agreement, if the
underwriters take any of the notes, then the underwriters are obligated to take
and pay for all of the notes.
The notes are a new issue of securities with no established trading market and
will not be listed on any national securities exchange. The underwriters have
advised us that they intend to make a market for the notes, but they have no
obligation to do so and may discontinue market making at any time without
providing any notice. We can give no assurance as to the liquidity of any
trading market for the notes.
The underwriters initially propose to offer part of the notes directly to the
public at the offering prices described on the cover page and part to certain
dealers at a price that represents a concession not in excess of % of the
principal amount of the notes. Any underwriter may allow, and any such dealer
may reallow, a concession not in excess of % of the principal amount of the
notes to certain other dealers. After the initial offering of the notes, the
underwriters may from time to time vary the offering price and other selling
terms.
We also agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act of 1933, as amended, or to
contribute to payments which the underwriters may be required to make in respect
of any such liabilities.
In connection with the offering of the notes, the underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
notes. Specifically, the underwriters may overallot in connection with the
offering of the notes, creating a syndicate short position. In addition, the
underwriters may bid for, and purchase, notes in the open market to cover
syndicate short positions or to stabilize the price of the notes. Finally, the
underwriting syndicate may reclaim selling concessions allowed for distributing
the notes in the offering of the notes, if the syndicate repurchases previously
distributed notes in syndicate covering transactions, stabilization transactions
or otherwise. Any of these activities may stabilize or maintain the market price
of the notes above independent market levels. The underwriters are not required
to engage in any of these activities and may end any of them at any time.
Expenses associated with this offering, to be paid by us, are estimated to be
$ .
In the ordinary course of their respective businesses, the underwriters and
their affiliates have engaged, and may in the future engage, in commercial
banking and/or investment banking transactions with us and our affiliates.
LEGAL MATTERS
The validity of the notes offered hereby and certain matters relating thereto
will be passed upon on behalf of Textron by Michael D. Cahn, Associate General
Counsel of Textron and for the underwriters by Davis Polk & Wardwell, New York,
New York.
S-12
<PAGE> 13
PROSPECTUS
$1,010,985,000
TEXTRON INC.
SENIOR DEBT SECURITIES, SUBORDINATED DEBT
SECURITIES AND JUNIOR SUBORDINATED DEBT SECURITIES
------------------------
TEXTRON CAPITAL I
TEXTRON CAPITAL II
TEXTRON CAPITAL III
TEXTRON FINANCE, L.P.
PREFERRED SECURITIES GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
TEXTRON INC.
------------------------
Textron Inc. ("Textron"), a Delaware corporation, may offer, from time to
time, its (i) unsecured senior debt securities (the "Senior Debt Securities"),
(ii) unsecured subordinated debt securities (the "Subordinated Debt Securities")
or (iii) unsecured junior subordinated debt securities (the "Junior Subordinated
Debt Securities"), each consisting of debentures, notes or other evidences of
indebtedness (item (i), (ii) or (iii) above being referred to herein as the
"Debt Securities"), or any combination of the foregoing, in each case in one or
more series and in amounts, at prices and on terms to be determined at or prior
to the time of any such offering. Textron's obligations under the Subordinated
Debt Securities and the Junior Subordinated Debt Securities will be subordinate
and junior in right of payment to certain other senior indebtedness of Textron
as described herein or as may be described in an accompanying Prospectus
Supplement (the "Prospectus Supplement").
Textron Capital I, Textron Capital II and Textron Capital III (each, a
"Textron Trust" and, together, the "Textron Trusts"), each a statutory business
trust formed under the laws of the State of Delaware, may offer, from time to
time, preferred securities, representing undivided beneficial interests in the
assets of the respective Textron Trust ("Trust Preferred Securities") with the
payment of periodic cash distributions ("distributions") and payments on
liquidation, redemption or otherwise of such Trust Preferred Securities
guaranteed (each, a "Trust Guarantee") on a subordinated basis by Textron to the
extent described herein. See "Description of Trust Guarantees." Textron Finance,
L.P. ("Textron Partnership"), a limited partnership formed under the laws of the
State of Delaware, may offer, from time to time, its preferred securities
("Partnership Preferred Securities") in one or more series with the payment of
distributions and payments on liquidation, redemption or otherwise guaranteed
(the "Partnership Guarantee") on a subordinated basis by Textron to the extent
described herein. See "Description of Partnership Guarantee." Textron's
obligations under the Trust Guarantees will rank pari passu with its obligations
under the Partnership Guarantee and the senior most preferred or preference
stock of Textron. See "Description of Trust Guarantees -- Status of Trust
Guarantees" and "Description of Partnership Guarantee -- Status of Partnership
Guarantee." Junior Subordinated Debt Securities may be issued and sold from time
to time in one or more series by Textron to (i) a Textron Trust, or a trustee of
such trust, in connection with the investment of the proceeds from the offering
of Trust Preferred Securities, (ii) Textron Partnership in connection with the
investment of the proceeds from the offering of Partnership Preferred Securities
or (iii) other purchasers, including the general public.
Specific terms of the Debt Securities of any series, the Trust Preferred
Securities of any Textron Trust or the Partnership Preferred Securities in
respect of which this Prospectus is being delivered (the "Offered Securities")
will be set forth in a Prospectus Supplement with respect to such Offered
Securities, which will describe, without limitation and where applicable, the
following: (i) in the case of Debt Securities, the specific designation,
aggregate principal amount, denomination, maturity, premium, if any, redemption
or sinking fund provisions, if any, interest rate (which may be fixed or
variable), if any, the time and method of calculating interest payments, if any,
dates on which premium, if any, and interest, if any, will be payable, the
currency in which principal of, premium, if any, and interest, if any, on the
Debt Securities will be payable, the right of Textron, if any, to defer payment
of interest on the Junior Subordinated Debt Securities and the maximum length of
such deferral period, the initial public offering price, subordination terms,
and any listing on a securities exchange and other specific terms of the
offering of Debt Securities, and (ii) in the case of Trust Preferred Securities
and Partnership Preferred Securities (collectively, the "Preferred Securities"),
the designation, number of securities, liquidation preference per security,
initial public offering price, any listing on a securities exchange,
distribution rate (or method of calculation thereof), dates on which
distributions shall be payable and dates from which distributions shall accrue,
any voting rights, any redemption or sinking fund provisions, any other rights,
preferences, privileges, limitations or restrictions relating to the Preferred
Securities and the terms upon which the proceeds of the sale of the Preferred
Securities shall be used to purchase a specific series of Junior Subordinated
Debt Securities of Textron. If so specified in the applicable Prospectus
Supplement, Offered Securities may be issued in whole or in part in the form of
one or more temporary or permanent global securities.
The Offered Securities may be offered in amounts, at prices and on terms to
be determined at the time of offering; provided, however, that the aggregate
initial public offering price of all Offered Securities shall not exceed
$1,010,985,000 (or (i) its equivalent (based on the applicable exchange rate at
the time of sale) if Debt Securities are issued with principal amounts
denominated in one or more foreign currencies or currency units as shall be
designated by Textron, or (ii) such greater amount, if Debt Securities are
issued at an original issue discount, as shall result in aggregate proceeds of
$1,010,985,000). Any Prospectus Supplement relating to any series of Offered
Securities will contain information concerning certain United States federal
income tax considerations, if applicable, to the Offered Securities.
Textron, any of the Textron Trusts or Textron Partnership may sell the
Offered Securities directly, through agents designated from time to time or
through underwriters or dealers. See "Plan of Distribution." If any agents of
Textron, each of the Textron Trusts or Textron Partnership or any underwriters
or dealers are involved in the sale of the Offered Securities, the names of such
agents, underwriters or dealers and any applicable commissions and discounts
will be set forth in any related Prospectus Supplement.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE COMMISSIONER OF
INSURANCE FOR THE STATE OF NORTH CAROLINA, NOR HAS THE COMMISSIONER OF
INSURANCE RULED UPON THE ACCURACY OR THE ADEQUACY OF
THIS DOCUMENT.
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF SECURITIES UNLESS
ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
THE DATE OF THIS PROSPECTUS IS FEBRUARY 1, 1996.
<PAGE> 14
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR ANY ACCOMPANYING PROSPECTUS
SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY TEXTRON, ANY OF THE TEXTRON TRUSTS
OR TEXTRON PARTNERSHIP, OR ANY UNDERWRITER, AGENT OR DEALER. NEITHER THE
DELIVERY OF THIS PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT NOR ANY SALE MADE
THEREUNDER SHALL, UNDER ANY CIRCUMSTANCE, CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF TEXTRON, ANY OF THE TEXTRON TRUSTS OR TEXTRON
PARTNERSHIP SINCE THE DATE THEREOF. THIS PROSPECTUS AND ANY PROSPECTUS
SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION.
------------------------
AVAILABLE INFORMATION
This Prospectus constitutes a part of a registration statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") filed by Textron, each of the Textron Trusts and Textron Partnership
with the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Offered Securities. This Prospectus does not contain all of the information set
forth in such Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. Reference is made
to such Registration Statement and to the exhibits relating thereto for further
information with respect to Textron, the Textron Trusts, Textron Partnership and
the Offered Securities. Any statements contained herein concerning the
provisions of any document filed as an exhibit to the Registration Statement or
otherwise filed with the Commission or incorporated by reference herein are not
necessarily complete, and, in each instance, reference is made to the copy of
such document so filed for a more complete description of the matter involved.
Each such statement is qualified in its entirety by such reference.
Textron 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
Commission. Such reports, proxy statements and other information concerning
Textron can be inspected and copied at prescribed rates at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the following Regional Offices of the Commission: 7 World
Trade Center, New York, New York 10048; and Citicorp Center, 500 W. Madison St.,
Chicago, Illinois 60661-2511. Copies of such material can be obtained from the
Public Reference Section of the Commission, at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. Such reports, proxy statements and
other information can also be inspected at the office of the New York Stock
Exchange, Inc. on which Textron common stock is traded, at 20 Broad Street, New
York, New York 10005.
No separate financial statements of the Textron Trusts or Textron
Partnership have been included or incorporated by reference herein. Textron does
not consider that such financial statements would be material to holders of the
Preferred Securities because (i) all of the voting securities of the Textron
Trusts and Textron Partnership will be owned, directly or indirectly, by
Textron, a reporting company under the Exchange Act, (ii) the Textron Trusts and
Textron Partnership have no independent operations but exist for the sole
purpose of issuing securities representing undivided beneficial interests in
their respective assets and investing the proceeds thereof in Junior
Subordinated Debt Securities issued by Textron, (iii) the obligations of the
Textron Trusts under the Trust Preferred Securities are fully and
unconditionally guaranteed by Textron to the extent that the respective Textron
Trust has funds available to meet such obligations, and (iv) the obligations of
Textron Partnership under the Partnership Preferred Securities are fully and
unconditionally guaranteed by Textron to the extent Textron Partnership has
funds legally available to meet such obligations. See "Description of Debt
Securities," "Description of Trust Guarantees" and "Description of Partnership
Guarantee."
2
<PAGE> 15
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Textron (File No. 1-5480) with the
Commission pursuant to the Exchange Act are incorporated by reference herein and
made a part hereof:
(a) Annual Report on Form 10-K for the fiscal year ended December 31, 1994;
(b) Quarterly Reports on Form 10-Q for the fiscal quarters ended April 1,
July 1 and September 30, 1995; and
(c) Current Report on Form 8-K dated February 1, 1996.
All documents filed by Textron pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date hereof and prior to the
termination of the offering of the Offered Securities pursuant hereto shall be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained herein
or in a document incorporated or deemed to be incorporated by reference herein
or in any Prospectus Supplement shall be deemed to be modified or superseded for
purposes of this Prospectus, or in any Prospectus Supplement, to the extent that
a statement contained herein or therein (or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein or
therein) modifies or supersedes such statement. Any 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.
Textron undertakes to 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 or all of the foregoing documents incorporated herein
by reference, other than exhibits to such documents, unless such exhibits are
specifically incorporated by reference into such documents. Such requests should
be directed to: Corporate Communications Department, Textron Inc., 40
Westminster Street, Providence, Rhode Island 02903, telephone (401) 421-2800.
3
<PAGE> 16
TEXTRON INC.
Textron is a global, multi-industry company with operations in six business
segments: Aircraft, Automotive, Industrial, Systems and Components, Finance and
Paul Revere insurance. Textron's products and services include Bell helicopters,
Cessna aircraft, Speidel watchbands, Avco Financial Services, E-Z-GO golf cars,
Jacobsen lawn and turf-care equipment and disability insurance provided by The
Paul Revere Corporation.
Textron's corporate office is located at 40 Westminster Street, Providence,
Rhode Island 02903; its telephone number is (401) 421-2800.
TEXTRON TRUSTS
Each of the Textron Trusts is a statutory business trust formed under
Delaware law pursuant to (i) a declaration of trust (the "Declaration") executed
by Textron, as sponsor for such trust (the "Sponsor"), and the trustees of such
trusts and (ii) the filing of a certificate of trust with the Secretary of State
of the State of Delaware on October 4, 1995. Each of the Textron Trusts exists
for the exclusive purposes of (i) issuing the Trust Preferred Securities and
common securities representing undivided beneficial interests in the assets of
the Trust (the "Trust Common Securities" and, together with the Trust Preferred
Securities, the "Trust Securities"), (ii) investing the gross proceeds from the
sale of the Trust Securities in the Junior Subordinated Debt Securities and
(iii) engaging in only those other activities necessary or incidental thereto.
All of the Trust Common Securities will be directly or indirectly owned by
Textron. The Trust Common Securities will rank pari passu, and payments will be
made thereon pro rata, with the Trust Preferred Securities, except that, upon an
event of default under the Declaration, the rights of the holders of the Trust
Common Securities to payment in respect of distributions and payments upon
liquidation, redemption and otherwise will be subordinated to the rights of the
holders of the Trust Preferred Securities. Textron will directly or indirectly
acquire Trust Common Securities in an aggregate liquidation amount equal to at
least 3% of the total capital of each Textron Trust.
Each Textron Trust has a term of approximately 55 years but may terminate
earlier, as provided in each Declaration. Each Textron Trust's business and
affairs will be conducted by the trustees (the "Textron Trustees") appointed by
Textron as the direct or indirect holder of all the Trust Common Securities. The
holder of the Trust Common Securities will be entitled to appoint, remove or
replace any of, or increase or reduce the number of, the Textron Trustees of the
Textron Trusts. The duties and obligations of the Textron Trustees shall be
governed by the Declaration of such Textron Trust. Each Textron Trust will have
two Textron Trustees (the "Regular Trustees") who are employees or officers of
or who are affiliated with Textron. One Textron Trustee of each Textron Trust
will be a financial institution that is not affiliated with Textron and has a
specified minimum amount of aggregate capital, surplus, and undivided profits of
not less than $50,000,000, which shall act as property trustee and as indenture
trustee for the purposes of compliance with the provisions of Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act"), pursuant to the terms set
forth in a Prospectus Supplement (the "Institutional Trustee"). In addition,
unless the Institutional Trustee maintains a principal place of business in the
State of Delaware and otherwise meets the requirements of applicable law, one
Textron Trustee of each Textron Trust will have a principal place of business or
reside in the State of Delaware (the "Delaware Trustee"). Textron will pay all
fees and expenses related to the Textron Trusts and the offering of the Trust
Securities.
The office of the Delaware Trustee for each of the Textron Trusts is The
Chase Manhattan Bank (USA), 802 Delaware Avenue, Wilmington, Delaware 19801. The
address for each Textron Trust is c/o Textron, the Sponsor of the Textron
Trusts, at Textron's corporate headquarters located 40 Westminster Street,
Providence, Rhode Island 02903, telephone (401) 421-2800.
TEXTRON FINANCE, L.P.
Textron Partnership is a limited partnership formed under the laws of the
State of Delaware. Textron Partnership exists for the sole purpose of issuing
its partnership interests and investing the net proceeds thereof
4
<PAGE> 17
in Junior Subordinated Debt Securities. All of its partnership interests, as of
the date hereof, are beneficially owned, directly or indirectly, by Textron.
Textron is the sole general partner in Textron Partnership (the "General
Partner"). Textron Holdings, Inc., a Delaware corporation and wholly-owned
subsidiary of Textron ("Textron Holdings"), is, as of the date hereof, the sole
limited partner in Textron Partnership. Upon the issuance of Partnership
Preferred Securities, which securities represent limited partner interests in
Textron Partnership, Textron Holdings will remain as a limited partner, but will
have no interest in the profits and dividends or in the assets of Textron
Partnership. Textron Partnership has a term of approximately 99 years, unless
earlier dissolved. Textron Partnership's office in the State of Delaware is c/o
The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle County, Delaware 19801, telephone: (302) 658-7581. All of
Textron Partnership's business and affairs will be conducted by Textron, as
General Partner. The business address of Textron Partnership is c/o Textron
Inc., 40 Westminster Street, Providence, Rhode Island 02903, telephone number
(401) 421-2800.
USE OF PROCEEDS
The proceeds from the sale by each Textron Trust of its Trust Preferred
Securities and the proceeds from the sale by Textron Partnership of its
Partnership Preferred Securities will be invested in the Junior Subordinated
Debt Securities of Textron. Except as may otherwise be described in the
Prospectus Supplement relating to a series of Senior Debt Securities,
Subordinated Debt Securities or Junior Subordinated Debt Securities, Textron
intends to use the net proceeds from the sale of such series of Senior Debt
Securities, Subordinated Debt Securities or Junior Subordinated Debt Securities
for general corporate purposes.
DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and provisions
of the Debt Securities to which any Prospectus Supplement may relate. The
particular terms of the Debt Securities offered by any Prospectus Supplement and
the extent, if any, to which such general provisions may apply to the Debt
Securities so offered will be described in the Prospectus Supplement relating to
such Debt Securities.
The Debt Securities may be issued, from time to time, in one or more
series, and will constitute either Senior Debt Securities, Subordinated Debt
Securities or Junior Subordinated Debt Securities. The Senior Debt Securities
may be issued under an Indenture, dated as of April 15, 1987, between Textron
and Chemical Bank (as successor to Manufacturers Hanover Trust Company), as
trustee (the "Senior Debt Trustee"), as supplemented by the First Supplemental
Senior Indenture, dated as of March 15, 1988, and a Second Supplemental Senior
Indenture, each between Textron and the Senior Debt Trustee (the "Senior
Indenture"). The Subordinated Debt Securities may be issued under an Indenture,
dated as of May 1, 1985, between Textron and The Chase Manhattan Bank, N.A., as
trustee (the "Subordinated Debt Trustee"), as supplemented by the First
Supplemental Subordinated Indenture, dated as of December 18, 1986, and a Second
Supplemental Subordinated Indenture, each between Textron and the Subordinated
Debt Trustee (the "Subordinated Indenture"). The Junior Subordinated Debt
Securities may be issued under an Indenture (the "Junior Subordinated
Indenture") between Textron and The Chase Manhattan Bank, N.A., as trustee (the
"Junior Subordinated Debt Trustee").
The following summaries of certain provisions of the Debt Securities, and
the Senior Indenture, the Subordinated Indenture and the Junior Subordinated
Indenture (each individually, an "Indenture" and collectively, the
"Indentures"), do not purport to be complete and are subject to, and are
qualified in their entirety by express reference to, all of the provisions of
the Indentures, including the definitions therein of certain terms, copies
and/or forms of which are filed or incorporated by reference as exhibits to the
Registration Statement. The Senior Debt Trustee, the Subordinated Debt Trustee
and the Junior Subordinated Debt Trustee are each referred to herein as a "Debt
Trustee." All article and section references appearing herein are to articles
and sections of the Indentures, unless otherwise indicated, and capitalized
5
<PAGE> 18
terms which are not otherwise defined in this Prospectus shall have the meanings
specified in the Indentures to which they relate.
TERMS APPLICABLE TO SENIOR DEBT SECURITIES, SUBORDINATED DEBT SECURITIES AND
JUNIOR SUBORDINATED DEBT SECURITIES
General. The Debt Securities will be direct, unsecured obligations of
Textron. No Indenture limits the amount of Debt Securities which may be issued
thereunder, and each provides that Debt Securities may be issued thereunder in
series up to the aggregate principal amount which may be authorized from time to
time by the Board of Directors. (Senior Indenture and Subordinated Indenture,
sec. 301; Junior Subordinated Indenture, sec. 3.1)
Reference is made to the Prospectus Supplement which accompanies this
Prospectus for the following terms and other information with respect to the
Debt Securities being offered thereby: (i) the designation, priority, aggregate
principal amount, authorized denominations and the currency or currency units
for which Debt Securities may be purchased or in which such Debt Securities may
be denominated and/or the currency or currency units in which principal of,
premium, if any, and/or interest, if any, on such Debt Securities will be
payable and whether Textron or the Holders of any such Debt Securities may elect
to receive payments in respect of such Debt Securities in a currency or currency
units other than that in which such Debt Securities are stated to be payable;
(ii) the percentage of their principal amount at which such Debt Securities will
be issued; (iii) the date on which such Debt Securities will mature; (iv) the
rate per annum at which such Debt Securities will bear interest or the method of
determination of such rate; (v) the dates on which such interest will be
payable; (vi) the rights, if any, to defer payments of interest on the Junior
Subordinated Debt Securities by extending the interest payment period, and the
maximum duration of such extensions; (vii) the place or places where payments on
such Debt Securities shall be made; (viii) any redemption terms or sinking fund
provisions; (ix) the terms of subordination of Debt Securities of that series;
(x) whether Debt Securities will be issued in fully registered form without
coupons attached, in bearer form with or without coupons, or both; (xi) whether
Debt Securities issued in fully registered form will be represented by either a
global security delivered to a depositary and recorded in a book-entry system
maintained by such depositary or by a certificate delivered to the Holder; (xii)
the restrictions, if any, applicable to the exchange of Debt Securities of a
series of one form for another of such series and to the offer, sale and
delivery of the Debt Securities; (xiii) whether and under what circumstances
Textron will pay additional amounts in the event of certain developments with
respect to United States withholding tax or information reporting laws; or (xiv)
other specific terms.
Unless otherwise specified in the applicable Prospectus Supplement, Debt
Securities will be issued in fully registered form without coupons, will be
exchangeable for other Debt Securities of the same series, registered in the
same name, for a like aggregate principal amount in authorized denominations,
and will be transferable at any time or from time to time at the Corporate Trust
Office of the respective Debt Trustee or at any other office or agency of
Textron maintained for that purpose. No charge will be made to the Holder for
any such exchange or transfer except for any tax or governmental charge
incidental thereto.
One or more series of Debt Securities may be sold at a substantial discount
below their stated principal amount, bearing interest at a rate which at the
time of issuance is below market rates. Federal income tax consequences and
special considerations applicable to any such series will be described in the
Prospectus Supplement relating thereto.
If a Prospectus Supplement specifies that Debt Securities are denominated
in a currency other than United States dollars, such Prospectus Supplement shall
also specify the currency in which the principal, premium, if any, and interest
on such Debt Securities will be payable, which may be United States dollars
based upon the exchange rate for such other currency existing on or about the
time a payment is due.
Unless otherwise described in the Prospectus Supplement accompanying this
Prospectus, there are no covenants or provisions contained in any of the
Indentures which afford the Holders of the Debt Securities protection in the
event of a highly leveraged transaction involving Textron.
6
<PAGE> 19
Consolidation, Merger and Sale of Assets. Each Indenture provides that
Textron will not consolidate with or merge into any other corporation or convey,
transfer or lease its assets substantially as an entirety unless (a) the
successor is a corporation organized in the United States and expressly assumes
the due and punctual payment of the principal of (and premium, if any) and
interest on all Debt Securities issued thereunder and the performance of every
other covenant of the respective Indenture on the part of Textron and (b)
immediately thereafter no Event of Default and no event which, after notice or
lapse of time, or both, would become an Event of Default, shall have happened
and be continuing. Upon any such consolidation, merger, conveyance or transfer,
the successor corporation shall succeed to and be substituted for Textron under
the respective Indenture and thereafter the predecessor corporation shall be
relieved of all obligations and covenants under the respective Indenture and
Debt Securities. (Article Eight)
Events of Default. Each Indenture provides that the following are Events
of Default thereunder with respect to any series of Senior, Subordinated or
Junior Subordinated Debt Securities, as the case may be: (a) default in the
payment of the principal of (or premium, if any, on) any Debt Security of such
series at its Maturity; (b) default in making a sinking fund payment, if any,
when and as the same shall be due and payable by the terms of the Debt
Securities of such series; (c) default for 30 days in the payment of any
installment of interest on any Debt Security of such series; (d) default for 90
days after written notice in the performance of any other covenant in respect of
the Debt Securities of such series contained in the respective Indenture; (e)
certain events of bankruptcy, insolvency or reorganization, or court appointment
of a receiver, liquidator or trustee of Textron or its property; and (f) any
other Event of Default provided in the applicable resolution of the Board of
Directors or supplemental indenture under which such series of Debt Securities
is issued. (Senior Indenture and Subordinated Indenture, Section 501; Junior
Subordinated Indenture, Section 5.1) An Event of Default with respect to a
particular series of Debt Securities issued under any Indenture does not
necessarily constitute an Event of Default with respect to any other series of
Debt Securities issued thereunder. The applicable Debt Trustee may withhold
notice to the Holders of any series of Debt Securities of any default with
respect to such series (except in the payment of principal, premium or interest)
if it considers such withholding to be in the interests of such Holders. (Senior
Indenture and Subordinated Indenture, Section 602; Junior Subordinated
Indenture, Section 6.2)
If an Event of Default with respect to any series of Debt Securities shall
have occurred and be continuing, the applicable Debt Trustee or the Holders of
25% in aggregate principal amount of the Debt Securities of such series may
declare the principal, or in the case of discounted Debt Securities, such
portion thereof as may be described in the Prospectus Supplement accompanying
this Prospectus, of all the Debt Securities of such series to be due and payable
immediately. (Senior Indenture and Subordinated Indenture, Section 502; Junior
Subordinated Indenture, Section 5.2)
Each Indenture contains a provision entitling the respective Debt Trustee
to be indemnified by the Holders before proceeding to exercise any right or
power under such Indenture at the request of any of the Holders. (Senior
Indenture and Subordinated Indenture, Section 603; Junior Subordinated
Indenture, Section 6.3) Each Indenture provides that the Holders of a majority
in principal amount of the Outstanding Debt Securities of any series thereunder
may direct the time, method and place of conducting any proceeding for any
remedy available to the applicable Debt Trustee or exercising any trust or
power conferred upon such Debt Trustee, with respect to the Debt Securities of
such series. (Senior Indenture and Subordinated Indenture, Section 512; Junior
Subordinated Indenture, Section 5.12) The right of a Holder to institute a
proceeding with respect to an Indenture is subject to certain conditions
precedent including notice and indemnity to the applicable Debt Trustee, but
the Holder has an absolute right to receipt of principal, premium, if any, and
interest at the respective Stated Maturities (or, in the case of redemption, on
the Redemption Date) or to institute suit for the enforcement thereof. (Senior
Indenture and Subordinated Indenture, Sections 507 and 508; Junior Subordinated
Indenture, Sections 5.7 and 5.8)
The Holders of not less than a majority in principal amount of the
Outstanding Debt Securities of any series under any of the Indentures may on
behalf of the Holders of all the Debt Securities of such series waive any past
defaults except (a) a default in payment of the principal of (or premium, if
any) or interest, if any, on any Debt Security of such series and (b) a default
in respect of a covenant or provision of the respective Indenture which cannot
be amended or modified without the consent of the Holder of each Debt Security
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affected; provided, however, that with respect to Junior Subordinated Debt
Securities, if the Junior Subordinated Debt Securities of such series are held
by a Textron Trust or a trustee of such trust or by Textron Partnership, such
waiver or modification to such waiver shall not be effective until the holders
of a majority in liquidation preference of Trust Securities of the applicable
Textron Trust or of the applicable series of Partnership Preferred Securities,
as the case may be, shall have consented to such waiver or modification to such
waiver; provided further, that if the consent of the Holder of each Outstanding
Junior Subordinated Debt Security is required, such waiver shall not be
effective until each holder of the Trust Securities of the applicable Textron
Trust or of the applicable series of Partnership Preferred Securities, as the
case may be, shall have consented to such waiver. (Senior Indenture and
Subordinated Indenture, sec. 513; Junior Subordinated Indenture, sec. 5.13)
Each Indenture requires Textron to furnish to the applicable Debt Trustee
an annual statement as to defaults, if any, by Textron under such Indenture.
(Senior Indenture, sec. 1006; Subordinated Indenture, sec. 1004; Junior
Subordinated Indenture, sec. 10.4)
Modifications and Amendments. Modifications and amendments of each
Indenture may be made by Textron and the respective Debt Trustee with the
consent of the Holders of a majority in principal amount of the Debt Securities
at the time Outstanding of each series which is affected thereby, PROVIDED that
no such modification or amendment may, without the consent of the Holder of each
Debt Security affected thereby: (i) modify the terms of payment of principal,
premium, if any, or interest; or (ii) reduce the percentage of Holders of Debt
Securities necessary to modify or amend the applicable Indenture or waive
compliance by Textron with any covenant or past default or in the case of Senior
Debt Securities reduce quorum or voting requirements for meetings of Holders
PROVIDED, FURTHER, that with respect to Junior Subordinated Debt Securities, if
the Junior Subordinated Debt Securities of such series are held by a Textron
Trust or a trustee of such trust or by Textron Partnership, such supplemental
indenture shall not be effective until the holders of a majority in liquidation
preference of Trust Securities of the applicable Textron Trust or of the
applicable series of Partnership Preferred Securities, as the case may be, shall
have consented to such supplemental indenture; PROVIDED FURTHER, that if the
consent of the Holder of each Outstanding Junior Subordinated Debt Security is
required, such supplemental indenture shall not be effective until each holder
of the Trust Securities of the applicable Textron Trust or of the applicable
series of Partnership Preferred Securities, as the case may be, shall have
consented to such supplemental indenture. (Senior Indenture and Subordinated
Indenture, sec. 902; Junior Subordinated Indenture, sec. 9.2)
Discharge and Defeasance. Textron may discharge all of its obligations
(except those set forth below) to holders of any series of Debt Securities
issued under any Indenture, which Debt Securities have not already been
delivered to the applicable Debt Trustee for cancellation and which either have
become due and payable or are by their terms due and payable within one year (or
are to be called for redemption within one year) by depositing with the
applicable Debt Trustee an amount certified to be sufficient to pay when due the
principal of and premium, if any, and interest, if any, on all outstanding Debt
Securities of such series and to make any mandatory sinking fund payments
thereon when due. (Senior Indenture and Subordinated Indenture, sec. 401; Junior
Subordinated Indenture, sec. 4.1)
Unless otherwise specified in the applicable Prospectus Supplement with
respect to the Debt Securities of a series, Textron, at its option, (i) will be
discharged from any and all obligations in respect of the Debt Securities of
such series, other than with respect to Junior Subordinated Debt Securities
issued in connection with Trust Preferred Securities (except for certain
obligations to register the transfer or exchange of Debt Securities of such
series, to replace mutilated, defaced, destroyed, lost or stolen Debt Securities
of such series, and to maintain Paying Agents and hold moneys for payment in
trust) or (ii) need not comply with certain covenants specified in the
applicable Prospectus Supplement with respect to the Debt Securities of that
series, and the occurrence of an event described in clause (d) under "Events of
Default" above with respect to any defeased covenant and clause (f) of the
"Events of Default" above shall no longer be an Event of Default if, in either
case, Textron deposits with the Debt Trustee, in trust, money or U.S. Government
Obligations that through the payment of interest thereon and principal thereof
in accordance with their terms will provide money in an amount sufficient to pay
all the principal of (and premium, if any) and any interest on the Debt
Securities of such series on the dates such payments are due (which may include
one or more redemption
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dates designated by Textron) in accordance with the terms of such Debt
Securities. Such a trust may only be established, if, among other things,
Textron shall have delivered an Opinion of Counsel, which, in the case of a
discharge pursuant to clause (i), must be based upon a ruling or administrative
pronouncement of the Internal Revenue Service, to the effect that the Holders of
the Debt Securities will not recognize gain or loss for Federal income tax
purposes as a result of such deposit or defeasance and will be subject to
Federal income tax in the same manner as if such defeasance had not occurred.
(Senior Indenture and Subordinated Indenture, sec.sec. 402, 403 and 404; Junior
Subordinated Indenture, sec.sec. 4.2, 4.3 and 4.4) In the event Textron omits to
comply with its remaining obligations under the applicable Indenture after a
defeasance of such Indenture with respect to the Debt Securities of any series
as described under clause (ii) above and the Debt Securities of such series are
declared due and payable because of the occurrence of any undefeased Event of
Default, the amount of money and U.S. Government Obligations on deposit with the
Debt Trustee may be insufficient to pay amounts due on the Debt Securities of
such series at the time of the acceleration resulting from such Event of
Default. However, Textron will remain liable in respect of such payments.
Concerning the Debt Trustees. Each of the Senior Debt Trustee, the
Subordinated Debt Trustee and the Junior Subordinated Debt Trustee have extended
substantial credit facilities (the borrowings under which constitute Senior
Indebtedness) to Textron. Textron and certain of its subsidiaries also maintain
bank accounts, borrow money and have other customary banking or investment
banking relationships with each Debt Trustee in the ordinary course of business.
Global Securities. Each Indenture provides that the registered Debt
Securities of a series may be issued in the form of one or more fully registered
Global Securities (a "Registered Global Security") that will be deposited with a
depositary (a "Depositary") or with a nominee for a Depositary identified in the
Prospectus Supplement relating to such series and registered in the name of the
Depositary or a nominee thereof. (Senior Indenture and Subordinated Indenture,
sec. 301; Junior Subordinated Indenture, sec. 3.1) In such case, one or more
Registered Global Securities will be issued in a denomination or aggregate
denominations equal to the portion of the aggregate principal amount of
outstanding registered Debt Securities of the series to be represented by such
Registered Global Security or Securities. Unless and until it is exchanged in
whole for Debt Securities in definitive registered form, a Registered Global
Security may not be transferred except as a whole by the Depositary for such
Registered Global Security to a nominee of such Depositary or by a nominee of
such Depositary to such Depositary or another nominee of such Depositary or by
such Depositary or any such nominee to a successor of such Depositary or a
nominee of such successor. The Depositary currently accepts only debt securities
that are payable in U.S. dollars.
The specific terms of the depositary arrangement with respect to any
portion of a series of Debt Securities to be represented by a Registered Global
Security will be described in the Prospectus Supplement relating to such series.
Ownership of beneficial interests in a Registered Global Security will be
limited to persons that have accounts with the Depositary for such Registered
Global Security ("participants") or persons that may hold interests through
participants. Upon the issuance of a Registered Global Security, the Depositary
for such Registered Global Security will credit, on its book-entry registration
and transfer system, the participants' accounts with the respective principal
amounts of the Debt Securities represented by such Registered Global Security
beneficially owned by such participants. The accounts to be credited shall be
designated by any dealers, underwriters or agents participating in the
distribution of such Debt Securities. Ownership of beneficial interests in such
Registered Global Security will be shown on, and the transfer of such ownership
interests will be effected only through records maintained by the Depositary for
such Registered Global Security (with respect to interests of participants) and
on the records of participants (with respect to interests of persons holding
through participants). The laws of some states may require that certain
purchasers of securities take physical delivery of such securities in definitive
form. Such limits and such laws may impair the ability to own, transfer or
pledge beneficial interests in Registered Global Securities.
So long as the Depositary for a Registered Global Security, or its nominee,
is the registered owner of such Registered Global Security, such Depositary or
such nominee, as the case may be, will be considered the sole owner or holder of
the Debt Securities represented by such Registered Global Security for all
purposes under
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the applicable Indenture. Except as set forth below, owners of beneficial
interests in a Registered Global Security will not be entitled to have the Debt
Securities represented by such Registered Global Security registered in their
names, will not receive or be entitled to receive physical delivery of such Debt
Securities in definitive form and will not be considered the owners or holders
thereof under the Indenture. Accordingly, each person owning a beneficial
interest in a Registered Global Security must rely on the procedures of the
Depositary for such Registered Global Security and, if such person is not a
participant, on the procedures of the participant through which such person owns
its interest, to exercise any rights of a holder under the applicable Indenture.
Textron understands that under existing industry practices, if Textron requests
any action of holders or if an owner of a beneficial interest in a Registered
Global Security desires to give or take any action which a holder is entitled to
give or take under the applicable Indenture, the Depositary for such Registered
Global Security would authorize the participants holding the relevant beneficial
interests to give or take such action, and such participants would authorize
beneficial owners owning through such participants to give or take such action
or would otherwise act upon the instructions of beneficial owners holding
through them.
Principal, premium, if any, and interest payments on Debt Securities
represented by a Registered Global Security registered in the name of a
Depositary or its nominee will be made to such Depositary or its nominee, as the
case may be, as the registered owner of such Registered Global Security. None of
Textron, the applicable Debt Trustee or any other agent of Textron or agent of
the Debt Trustee will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in such Registered Global Security or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
Textron expects that the Depositary for any Debt Securities represented by
a Registered Global Security, upon receipt of any payment of principal, premium
or interest in respect of such Registered Global Security, will immediately
credit participants' accounts with payments in amounts proportionate to their
respective beneficial interests in such Registered Global Security as shown on
the records of such Depositary. Textron also expects that payments by
participants to owners of beneficial interests in such Registered Global
Security held through such participants will be governed by standing customer
instructions and customary practices, as is now the case with the securities
held for the accounts of customers in bearer form or registered in "street
name," and will be the responsibility of such participants.
If the Depositary for any Debt Securities represented by a Registered
Global Security is at any time unwilling or unable to continue as Depositary or
ceases to be a clearing agency registered under the Exchange Act, and a
successor Depositary registered as a clearing agency under the Exchange Act is
not appointed by Textron within 90 days, Textron will issue such Debt Securities
in definitive form in exchange for such Registered Global Security. In addition,
Textron may at any time and in its sole discretion determine not to have any of
the Debt Securities of a series represented by one or more Registered Global
Securities and, in such event, will issue Debt Securities of such series in
definitive form in exchange for all of the Registered Global Security or
Securities representing such Debt Securities. Any Debt Securities issued in
definitive form in exchange for a Registered Global Security will be registered
in such name or names as the Depositary shall instruct the relevant Trustee. It
is expected that such instructions will be based upon directions received by the
Depositary from participants with respect to ownership of beneficial interests
in such Registered Global Security.
The Debt Securities of a series may also be issued in the form of one or
more bearer global Securities (a "Bearer Global Security") that will be
deposited with a common depositary for Euro-clear and Cedel Bank, societe
anonyme, or with a nominee for such depositary identified in the Prospectus
Supplement relating to such series. The specific terms and procedures, including
the specific terms of the depositary arrangement, with respect to any portion of
a series of Debt Securities to be represented by a Bearer Global Security will
be described in the Prospectus Supplement relating to such series.
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PARTICULAR TERMS OF THE SENIOR DEBT SECURITIES
Ranking of Senior Debt Securities. The Senior Debt Securities will
constitute part of the senior debt of Textron and rank equally with all other
unsecured debt of Textron except subordinated debt.
Limitation upon Mortgages. The Senior Indenture prohibits Textron and its
Restricted Subsidiaries from issuing, assuming or guaranteeing any mortgage,
security interest, pledge, lien or other encumbrance ("mortgages") upon any
Principal Property of Textron or any Restricted Subsidiary or upon any shares of
stock or indebtedness of any Restricted Subsidiary without equally and ratably
securing the Senior Debt Securities. The foregoing restriction, however, will
not apply to: (a) mortgages on property, shares of stock or indebtedness of any
corporation existing at the time such corporation becomes a Restricted
Subsidiary; (b) mortgages on property existing at the time of acquisition of
such property by Textron or a Restricted Subsidiary, or mortgages to secure the
payment of all or any part of the purchase price of such property upon the
acquisition thereof or to secure indebtedness incurred prior to, at the time of,
or within 180 days after, the acquisition thereof for the purpose of financing
all or any part of the purchase price thereof, or mortgages to secure the cost
of improvements to such acquired property; (c) mortgages to secure indebtedness
of a Restricted Subsidiary owing to Textron or another Restricted Subsidiary;
(d) mortgages existing at the date of the Senior Indenture; (e) mortgages on
property of a corporation existing at the time such corporation is merged into
or consolidated with Textron or a Restricted Subsidiary or at the time of a
sale, lease or other disposition of the properties of a corporation as an
entirety or substantially as an entirety to Textron or a Restricted Subsidiary;
(f) certain mortgages in favor of governmental entities; or (g) extensions,
renewals or replacements of any mortgage referred to in the foregoing clauses
(a) through (f). (Section 1004)
Notwithstanding the restrictions outlined in the preceding paragraph,
Textron or any Restricted Subsidiary will be permitted to issue, assume or
guarantee any mortgage without equally and ratably securing the Senior Debt
Securities, provided that after giving effect thereto, the aggregate amount of
all debt so secured by mortgages (not including mortgages permitted under
clauses (a) through (g) above) does not exceed 10% of the shareholders' equity
of Textron and its consolidated Subsidiaries computed in accordance with
generally accepted accounting principles as set forth on the most recent
consolidated balance sheet of Textron and its consolidated Subsidiaries.
(Section 1004)
Limitation upon Sale and Leaseback Transactions. The Senior Indenture
prohibits Textron and its Restricted Subsidiaries from entering into any sale
and leaseback transaction with respect to any Principal Property other than any
such transaction involving a lease for a term of not more than three years or
any such transaction between Textron and a Restricted Subsidiary or between
Restricted Subsidiaries, unless either (a) Textron or such Restricted Subsidiary
would be entitled to incur indebtedness secured by a mortgage on Principal
Property at least equal in amount to the Attributable Debt with respect to such
sale and leaseback transaction, without equally and ratably securing the Senior
Debt Securities, pursuant to the limitation in the Senior Indenture described
above under "Limitation upon Mortgages," or (b) Textron shall apply an amount
equal to the greater of the net proceeds of such sale or the Attributable Debt
with respect to such sale and leaseback transaction to (i) the retirement of
Senior Indebtedness that matures more than twelve months after the creation of
such Senior Indebtedness or (ii) the acquisition, construction, development or
improvement of properties, facilities or equipment which are, or upon such
acquisition, construction, development, or improvement will be, a Principal
Property or a part thereof. (Section 1005)
Certain Definitions. The term "Attributable Debt" when used in connection
with a sale and leaseback transaction referred to above shall mean the total net
amount of rent (discounted at the rate per annum borne by the Senior Debt
Securities) required to be paid during the remaining term of the applicable
lease. (Section 101)
The term "Principal Property" shall mean any manufacturing plant or
manufacturing facility which is (i) owned by Textron or any Restricted
Subsidiary, (ii) located within the continental United States, and (iii) in the
opinion of the Board of Directors materially important to the total business
conducted by Textron and the Restricted Subsidiaries taken as a whole. (Section
101)
The term "Restricted Subsidiary" shall mean any Subsidiary (i)
substantially all the property of which is located within the continental United
States and (ii) which owns any Principal Property; provided that the
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term "Restricted Subsidiary" shall not include any Subsidiary which is
principally engaged in leasing or in financing receivables, or which is
principally engaged in financing Textron's operations outside the continental
United States. (sec. 101)
The term "Subsidiary" shall mean a corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly, by Textron
or by one or more other Subsidiaries, or by Textron and one or more other
Subsidiaries. (sec. 101)
Waiver of Certain Covenants. Compliance by Textron with the foregoing and
certain other restrictive covenants may be omitted with respect to the Senior
Debt Securities of any series if before the time for such compliance the Holders
of a majority in principal amount of such series at the time Outstanding shall
waive such compliance. (sec. 1007)
PARTICULAR TERMS OF THE SUBORDINATED DEBT SECURITIES
Ranking of Subordinated Debt Securities. The Subordinated Debt Securities
will rank senior to any Junior Subordinated Debt Securities and will be
subordinated and junior in right of payment to any Senior Debt Securities and
certain other indebtedness of Textron to the extent set forth in the Prospectus
Supplement that will accompany this Prospectus.
PARTICULAR TERMS OF THE JUNIOR SUBORDINATED DEBT SECURITIES
General. Junior Subordinated Debt Securities are issuable in one or more
series pursuant to a resolution of Textron's Board of Directors or established
in one or more indentures supplemental to the Junior Subordinated Indenture
(each, a "Supplemental Indenture"). (sec. 3.1)
Ranking of Junior Subordinated Debt Securities. The Junior Subordinated
Debt Securities will be subordinated and junior in right of payment to any
Senior Debt Securities and Subordinated Debt Securities and certain other
indebtedness of Textron to the extent set forth in the Prospectus Supplement
that will accompany this Prospectus.
Events of Default. In addition to those Events of Default described above
under "Terms Applicable to Senior Debt Securities, Subordinated Debt Securities
and Junior Subordinated Debt Securities -- Events of Default," the Junior
Subordinated Indenture provides that the following are Events of Default
thereunder with respect to any series of Junior Subordinated Debt Securities:
(a) in the event Junior Subordinated Debt Securities of a series are issued and
sold to a Textron Trust or a trustee of such trust in connection with the
issuance of Trust Securities by such Textron Trust, such Textron Trust shall
have voluntarily or involuntarily dissolved, wound-up its business or otherwise
terminated its existence, except in connection with (i) the distribution of
Junior Subordinated Debt Securities to holders of Trust Securities in
liquidation or redemption of their interests in such Textron Trust upon a
Special Event, (ii) the redemption of all of the outstanding Trust Securities of
such Textron Trust or (iii) certain mergers, consolidations or amalgamations,
each as permitted by the Declaration of such Textron Trust, or (b) in the event
Junior Subordinated Debt Securities of a series are issued and sold to Textron
Partnership in connection with the issuance of Partnership Preferred Securities
by Textron Partnership, Textron Partnership shall have voluntarily or
involuntarily dissolved, wound-up its business or otherwise terminated its
existence, except in connection with (i) the distribution of Junior Subordinated
Debt Securities to holders of Partnership Preferred Securities in liquidation or
redemption of their interests in Textron Partnership, (ii) the redemption of all
of the outstanding Partnership Preferred Securities of Textron Partnership or
(iii) certain mergers, consolidations or amalgamations, each as permitted by the
limited partnership agreement of Textron Partnership. (sec. 5.1)
Certain Provisions Applicable to Textron Trusts. In the event Junior
Subordinated Debt Securities are issued to a Textron Trust (or a trustee of such
trust) in connection with the issuance of Trust Securities by any Textron Trust,
such Junior Subordinated Debt Securities subsequently may be distributed PRO
RATA to the holders of such Trust Securities in connection with the dissolution
of such Textron Trust upon the occurrence of certain events described in the
Prospectus Supplement relating to such Trust Securities. Only one series of
Junior Subordinated Debt Securities will be issued to a Textron Trust, or a
trustee of such trust, in connection
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with the issuance of Trust Securities by such Textron Trust. If Junior
Subordinated Debt Securities are issued to a Textron Trust or a trustee of such
trust in connection with the issuance of Trust Securities by such Textron Trust
and (i) there shall have occurred any event that would constitute an Event of
Default, (ii) Textron shall be in default with respect to its payment of any
obligations under the related Trust Guarantee or Trust Common Guarantee (as
defined below), or (iii) Textron shall have given notice of its election to
defer payments or interest on such Junior Subordinated Debt Securities by
extending the interest payment period as provided in the Junior Subordinated
Indenture and such period, or any extension thereof, shall be continuing, then
(a) Textron will not declare or pay any dividend on, make any distributions with
respect to, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock or make any guarantee payment with respect
thereto, and (b) Textron shall not make any payment of interest, principal (or
premium, if any, on) or repay, repurchase or redeem any debt securities issued
by Textron which rank pari passu with or junior to such Junior Subordinated Debt
Securities. The Trust Guarantee or Trust Common Guarantee, however, will except
from the foregoing (i) any stock dividends paid by Textron where the dividend
stock is the same stock as that on which the dividend is being paid and (ii) any
purchases by Textron of its common stock from The Paul Revere Corporation ("Paul
Revere") or its subsidiaries pursuant to the Agreement to Purchase Stock, dated
April 12, 1990, among Textron, The Paul Revere Life Insurance Company, The Paul
Revere Protective Life Insurance Company and The Paul Revere Variable Annuity
Insurance Company, and the Stock Purchase Agreement, dated as of September 23,
1993, between Textron and Paul Revere (together, the "Paul Revere Stock Purchase
Agreements").
In the event Junior Subordinated Debt Securities are issued to a Textron
Trust or a trustee of such trust in connection with the issuance of Trust
Securities of such Textron Trust, for so long as such Trust Securities remain
outstanding, Textron will covenant (i) to directly or indirectly maintain 100%
ownership of the Trust Common Securities of such Textron Trust; PROVIDED,
HOWEVER, that any permitted successor of Textron under the Junior Subordinated
Indenture may succeed to Textron's ownership of such Trust Common Securities
(ii) not voluntarily dissolve, wind-up or terminate such Textron Trust, except
in connection with a distribution of Junior Subordinated Debt Securities upon a
Special Event and in connection with certain mergers, consolidations or
amalgamations permitted by the Declaration of the applicable Textron Trust,
(iii) timely perform its duties as Sponsor of the applicable Textron Trust and
(iv) to use its reasonable efforts to cause such Textron Trust (a) to remain a
statutory business trust, except in connection with the distribution of Junior
Subordinated Debt Securities to the holders of Trust Securities in liquidation
of such Textron Trust, the redemption of all of the Trust Securities of such
Textron Trust, or certain mergers, consolidations or amalgamations, each as
permitted by the Declaration of such Textron Trust, and (b) to otherwise
continue to be classified as a grantor trust for United States federal income
tax purposes. (Section 10.5)
Certain Provisions Applicable to Textron Partnership. In the event Junior
Subordinated Debt Securities are issued to Textron Partnership in connection
with the issuance of a series of Partnership Preferred Securities by Textron
Partnership, such Junior Subordinated Debt Securities subsequently may be
distributed to the holders of such series of Partnership Preferred Securities in
connection with the dissolution of Textron Partnership upon the occurrence of
certain events described in the Prospectus Supplement relating to such series of
Partnership Preferred Securities. If Junior Subordinated Debt Securities are
issued to Textron Partnership in connection with the issuance of Partnership
Preferred Securities by Textron Partnership and (i) there shall have occurred
any event that would constitute an Event of Default, (ii) Textron shall be in
default with respect to its payment of any obligations under the related
Partnership Guarantee (as defined below), or (iii) Textron shall have given
notice of its election to defer payments or interest on such Junior Subordinated
Debt Securities by extending the interest payment period as provided in the
Junior Subordinated Indenture and such period, or any extension thereof, shall
be continuing, then (a) Textron will not declare or pay any dividend on, make
any distributions with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock or make any
guarantee payment with respect thereto and (b) Textron shall not make any
payment of interest, principal (or premium, if any, on) or repay, repurchase or
redeem any debt securities issued by Textron which rank PARI PASSU with or
junior to such Junior Subordinated Debt Securities. The Partnership Guarantee,
however, will except from the foregoing (i) any stock dividends paid by Textron
where the dividend stock is the same stock as that on which the
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dividend is being paid and (ii) any purchases by Textron of its common stock
from Paul Revere or its subsidiaries pursuant to the Paul Revere Stock Purchase
Agreements.
So long as any Junior Subordinated Debt Securities are held by Textron
Partnership, Textron will covenant that the General Partner shall not (i) direct
the time, method and place of conducting any proceeding for any remedy available
to the Special Representative, or exercising any trust or power conferred on the
Special Representative with respect to the Junior Subordinated Debt Securities,
(ii) waive any past default which is waivable under the Junior Subordinated
Indenture, (iii) exercise any right to rescind or annul a declaration that the
principal of all the Junior Subordinated Debt Securities shall be due and
payable, or (iv) consent to any amendment, modification or termination of the
Junior Subordinated Debt Securities or of the Junior Subordinated Indenture
without, in each case, obtaining the prior approval of the holders of at least a
majority or more of the aggregate liquidation preference of the Partnership
Preferred Securities then outstanding, provided, however, that where a consent
under the Junior Subordinated Debt Securities would require the consent of each
holder affected thereby, no such consent shall be given by the General Partner
without the prior consent of each holder of the Partnership Preferred
Securities. The General Partner shall not revoke any action previously
authorized or approved by a vote of Partnership Preferred Securities without the
approval of the holders of Partnership Preferred Securities representing a
majority or more of the aggregate liquidation preference of the Outstanding
Partnership Preferred Securities. (Section 10.6)
Textron will also covenant (i) to remain the sole direct or indirect
general partner of Textron Partnership and maintain direct or indirect ownership
of 100% of the general partner interests thereof; provided that any permitted
successor of Textron under the Junior Subordinated Indenture may succeed to
duties as General Partner, (ii) to contribute capital to the extent required to
maintain its capital at an amount equal to at least 3% of the total capital
contributions to Textron Partnership, (iii) not to voluntarily dissolve, wind-up
or terminate Textron Partnership, except in connection with the distribution of
Junior Subordinated Debentures upon a Special Event and in connection with the
certain mergers, consolidations or amalgamations permitted by the agreement of
limited partnership of Textron Partnership, (iv) timely perform all of its
duties as General Partner of Textron Partnership and (v) to use its reasonable
efforts to cause Textron Partnership to remain a limited partnership except in
connection with a distribution of Junior Subordinated Debt Securities upon a
Special Event as provided in the limited partnership agreement of Textron
Partnership, the redemption of all Partnership Preferred Securities of the
applicable series and in connection with certain mergers, consolidations or
amalgamations permitted by the limited partnership agreement of Textron
Partnership, and otherwise continue to be treated as a partnership for United
States federal income tax purposes. (Section 10.6)
DESCRIPTION OF TRUST PREFERRED SECURITIES
Each Textron Trust may issue, from time to time, only one series of Trust
Preferred Securities having terms described in the Prospectus Supplement
relating thereto. The Declaration of each Textron Trust authorizes the Regular
Trustees of such Textron Trust to issue on behalf of such Textron Trust one
series of Trust Preferred Securities. The Declaration will be qualified as an
indenture under the Trust Indenture Act. The Trust Preferred Securities will
have such terms, including distributions, redemption, voting, liquidation rights
and such other preferred, deferred or other special rights or such restrictions
as shall be set forth in the Declaration or made part of the Declaration by the
Trust Indenture Act. Reference is made to any Prospectus Supplement relating to
the Trust Preferred Securities of a Textron Trust for specific terms, including
(i) the distinctive designation of such Trust Preferred Securities, (ii) the
number of Trust Preferred Securities issued by such Textron Trust, (iii) the
annual distribution rate (or method of determining such rate) for Trust
Preferred Securities issued by such Textron Trust and the date or dates upon
which such distributions shall be payable, (iv) whether distributions on Trust
Preferred Securities issued by such Textron Trust shall be cumulative, and, in
the case of Trust Preferred Securities having such cumulative distribution
rights, the date or dates or method of determining the date or dates from which
distributions on Trust Preferred Securities issued by such Textron Trust shall
be cumulative, (v) the amount or amounts which shall be paid out of the assets
of such Textron Trust to the Holders of Trust Preferred Securities of such
Textron Trust upon voluntary or involuntary dissolution, winding-up or
termination of such Textron Trust, (vi) the obligation, if any, of such Textron
Trust to purchase or redeem Trust Preferred Securities issued by such Textron
Trust and the price or
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prices at which, the period or periods within which and the terms and conditions
upon which Trust Preferred Securities issued by such Textron Trust shall be
purchased or redeemed, in whole or in part, pursuant to such obligation, (vii)
the voting rights, if any, of Trust Preferred Securities issued by such Textron
Trust in addition to those required by law, including the number of votes per
Trust Preferred Security and any requirement for the approval by the holders of
Trust Preferred Securities, or of Trust Preferred Securities issued by one or
more Textron Trusts, or of both, as a condition to specified action or
amendments to the Declaration of such Textron Trust, and (viii) any other
relevant rights, preferences, privileges, limitations or restrictions of Trust
Preferred Securities issued by such Textron Trust consistent with the
Declaration of such Textron Trust or with applicable law. All Trust Preferred
Securities offered hereby will be guaranteed by Textron to the extent set forth
below under "Description of Trust Guarantees." Certain United States federal
income tax considerations applicable to any offering of Trust Preferred
Securities will be described in the Prospectus Supplement relating thereto.
In connection with the issuance of Trust Preferred Securities, each Textron
Trust will issue one series of Trust Common Securities. The Declaration of each
Textron Trust authorizes the Regular Trustees of such trust to issue on behalf
of such Textron Trust one series of Trust Common Securities having such terms
including distributions, redemption, voting, liquidation rights or such
restrictions as shall be set forth therein. The terms of the Trust Common
Securities issued by such Textron Trust will be substantially identical to the
terms of the Trust Preferred Securities issued by such trust and the Trust
Common Securities will rank pari passu, and payments will be made thereon pro
rata with the Trust Preferred Securities except that, upon an Event of Default
under the Declaration, the rights of the holders of the Trust Common Securities
to payment in respect of distributions and payments upon liquidation, redemption
and otherwise will be subordinated to the rights of the holders of the Trust
Preferred Securities. Except in certain limited circumstances, the Trust Common
Securities will also carry the right to vote and to appoint, remove or replace
any of the Textron Trustees of such Textron Trust. All of the Trust Common
Securities of a Textron Trust will be directly or indirectly owned by Textron.
DESCRIPTION OF TRUST GUARANTEES
Set forth below is a summary of information concerning the Trust Guarantees
that will be executed and delivered by Textron for the benefit of the holders,
from time to time, of Trust Preferred Securities. Each Trust Guarantee will be
qualified as an indenture under the Trust Indenture Act. The Chase Manhattan
Bank, N.A. will act as indenture trustee under each Trust Guarantee (the "Trust
Preferred Securities Guarantee Trustee"). The terms of each Trust Guarantee will
be those set forth in such Trust Guarantee and those made part of such Trust
Guarantee by the Trust Indenture Act. The summary does not purport to be
complete and is subject in all respects to the provisions of, and is qualified
in its entirety by reference to, the form of Trust Guarantee, which is filed as
an exhibit to the Registration Statement of which this Prospectus forms a part,
and the Trust Indenture Act. Each Trust Guarantee will be held by the Trust
Preferred Securities Guarantee Trustee for the benefit of the holders of the
Trust Preferred Securities of a Textron Trust.
GENERAL
Pursuant to and to the extent set forth in each Trust Guarantee, Textron
will irrevocably and unconditionally agree to pay in full to the holders of the
Trust Preferred Securities issued by a Textron Trust (except to the extent paid
by such Textron Trust), as and when due, regardless of any defense, right of
set-off or counterclaim which such Textron Trust may have or assert, the
following payments (the "Trust Guarantee Payments"), without duplication: (i)
any accrued and unpaid distributions that are required to be paid on such Trust
Preferred Securities, to the extent such Textron Trust shall have funds
available therefor, (ii) the redemption price, including all accrued and unpaid
distributions (the "Redemption Price"), to the extent such Textron Trust has
funds available therefor with respect to any Trust Preferred Securities called
for redemption by such Textron Trust and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of such Textron Trust (other than in
connection with the distribution of Junior Subordinated Debt Securities to the
holders of Trust Preferred Securities or the redemption of all of the Trust
Preferred Securities) the lesser of (a) the aggregate of the liquidation amount
and all accrued and unpaid distributions on such Trust Preferred
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Securities to the date of payment to the extent such Textron Trust has funds
available therefor or (b) the amount of assets of such Textron Trust remaining
for distribution to holders of such Trust Preferred Securities in liquidation of
such Textron Trust. Textron's obligation to make a Trust Guarantee Payment may
be satisfied by direct payment of the required amounts by Textron to the holders
of Trust Preferred Securities or by causing such Textron Trust to pay such
amounts to such holders.
Each Trust Guarantee will be a guarantee on a subordinated basis with
respect to the Trust Preferred Securities issued by a Textron Trust from the
time of issuance of such Trust Preferred Securities but will not apply to any
payment of distributions except to the extent such Textron Trust shall have
funds available therefor. If Textron does not make interest payments on the
Junior Subordinated Debt Securities purchased by a Textron Trust, such Textron
Trust will not pay distributions on the Trust Preferred Securities issued by
such Textron Trust and will not have funds available therefor. See "Particular
Terms of the Junior Subordinated Debt Securities." The Trust Guarantee, when
taken together with Textron's obligations under the Subordinated Debt
Securities, the Subordinated Indenture, and the Declaration provide a full and
unconditional guarantee on a subordinated basis by Textron of payments due on
the Trust Preferred Securities.
Textron has also agreed to irrevocably and unconditionally guarantee the
obligations of each Textron Trust with respect to the Trust Common Securities
(the "Trust Common Guarantees") to the same extent as the Trust Guarantees,
except that, upon an Event of Default under the Junior Subordinated Indenture,
holders of Trust Preferred Securities of Textron Trust under the Trust Guarantee
shall have priority over holders of Trust Common Securities of such Textron
Trust under the applicable Trust Common Guarantee with respect to distributions
and payments on liquidation, redemption or otherwise.
CERTAIN COVENANTS OF TEXTRON
In each Trust Guarantee, Textron will covenant that, so long as any Trust
Preferred Securities issued by a Textron Trust remain outstanding, if there
shall have occurred any event that would constitute an Event of Default under
such Trust Guarantee or the Declaration of such Textron Trust, then (a) Textron
will not declare or pay any dividend on, make any distributions with respect to,
or redeem, purchase, acquire or make a liquidation payment with respect to, any
of its capital stock or make any guarantee payment with respect thereto and (b)
Textron shall not make any payment of interest, principal (or premium, if any,
on) or repay, repurchase or redeem any debt securities issued by Textron which
rank pari passu with or junior to such Junior Subordinated Debt Securities. Each
Trust Guarantee, however, will except from the foregoing (i) any stock dividends
paid by Textron where the dividend stock is the same stock as that on which the
dividend is being paid and (ii) any purchases by Textron of its common stock
from Paul Revere or its subsidiaries pursuant to the Paul Revere Stock Purchase
Agreements.
MODIFICATION OF THE TRUST GUARANTEES; ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights
of holders of Trust Preferred Securities (in which case no vote will be
required), each Trust Guarantee may be amended only with the prior approval of
the holders of not less than a majority in liquidation amount of the outstanding
Trust Preferred Securities issued by a Textron Trust. The manner of obtaining
any such approval of holders of such Trust Preferred Securities will be set
forth in an accompanying Prospectus Supplement. All guarantees and agreements
contained in a Trust Guarantee shall bind the successors, assignees, receivers,
trustees and representatives of Textron and shall inure to the benefit of the
holders of the Trust Preferred Securities of a Textron Trust then outstanding.
EVENTS OF DEFAULT
An Event of Default under the Trust Guarantee will occur upon the failure
of Textron to perform any of its payments or other obligations thereunder. The
holders of a majority in liquidation amount of the Trust Preferred Securities to
which a Trust Guarantee relates have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trust
Preferred Securities Guarantee Trustee in
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respect of the Trust Guarantee or to direct the exercise of any trust or power
conferred upon the Trust Preferred Securities Guarantee Trustee under the Trust
Guarantee.
Notwithstanding the foregoing, any holder of Trust Preferred Securities
relating to such Trust Guarantee may institute a legal proceeding directly
against Textron to enforce such holder's rights under such Trust Guarantee
without first instituting a legal proceeding against a Textron Trust, the Trust
Preferred Securities Guarantee Trustee or any other person or entity.
Textron will be required to provide annually to the Trust Preferred
Securities Guarantee Trustee a statement as to the performance by Textron of
certain of its obligations under each of the Trust Guarantees and as to any
default in such performance.
INFORMATION CONCERNING THE TRUST PREFERRED SECURITIES GUARANTEE TRUSTEE
The Trust Preferred Securities Guarantee Trustee, prior to the occurrence
of a default, undertakes to perform only such duties as are specifically set
forth in the Trust Guarantee and, after default with respect to a Trust
Guarantee, shall exercise the same degree of care as a prudent individual would
exercise in the conduct of his or her own affairs. Subject to such provision,
the Trust Preferred Securities Guarantee Trustee is under no obligation to
exercise any of the powers vested in it by a Trust Guarantee Agreement at the
request of any holder of Trust Preferred Securities unless it is offered
reasonable indemnity against the costs, expenses and liabilities that might be
incurred thereby.
TERMINATION OF THE TRUST GUARANTEES
Each Trust Guarantee will terminate as to the Trust Preferred Securities
issued by a Textron Trust upon full payment of the Redemption Price of all Trust
Preferred Securities of such Textron Trust, upon distribution of the Junior
Subordinated Debt Securities held by such Textron Trust to the holders of the
Trust Preferred Securities of a Textron Trust or upon full payment of the
amounts payable in accordance with the Declaration of such Textron Trust upon
liquidation of such Textron Trust. Each Trust Guarantee will continue to be
effective or will be reinstated, as the case may be, if at any time any holder
of Trust Preferred Securities issued by a Textron Trust must restore payment of
any sums paid under such Trust Preferred Securities or such Trust Guarantee.
STATUS OF THE TRUST GUARANTEES
Each Trust Guarantee will constitute an unsecured obligation of Textron and
will rank (i) subordinate and junior in right of payment to all other
liabilities of Textron, (ii) pari passu with the most senior preferred or
preference stock now or hereafter issued by Textron and with any guarantee now
or hereafter entered into by Textron in respect of any preferred or preference
stock of any affiliate of Textron (including the Partnership Guarantee) and
(iii) senior to Textron's common stock. The terms of the Trust Preferred
Securities provide that each holder of Trust Preferred Securities issued by a
Textron Trust by acceptance thereof agrees to the subordination provisions and
other terms of the applicable Trust Guarantee.
Each Trust Guarantee will constitute a guarantee of payment and not of
collection (that is, the guaranteed party may institute a legal proceeding
directly against the guarantor to enforce its rights under a Trust Guarantee
without instituting a legal proceeding against any other person or entity).
GOVERNING LAW
The Trust Guarantees will be governed by and construed in accordance with
the law of the State of New York.
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DESCRIPTION OF PARTNERSHIP PREFERRED SECURITIES
Textron Partnership may issue, from time to time, Partnership Preferred
Securities, in one or more series, having terms described in the Prospectus
Supplement relating thereto. The agreement of limited partnership of Textron
Partnership will be amended and restated (as so amended and restated, the
"Limited Partnership Agreement") to authorize the establishment of one or more
series of Partnership Preferred Securities, having such terms, including
dividends, redemption, voting, liquidation rights and such other preferred,
deferred or other special rights or such restrictions as shall be set forth
therein or otherwise established by the General Partner pursuant thereto.
Reference is made to the Prospectus Supplement relating to the Partnership
Preferred Securities of a particular series for specific terms, including (i)
the distinctive designation of such series that shall distinguish it from other
series; (ii) the number of Partnership Preferred Securities included in such
series, which number may be increased or decreased from time to time unless
otherwise provided by the General Partner in creating the series; (iii) the
annual dividend rate (or method of determining such rate) for Partnership
Preferred Securities of such series and the date or dates upon which such
dividends shall be payable; (iv) whether dividends on Partnership Preferred
Securities of such series shall be cumulative, and, in the case of Partnership
Preferred Securities of any series having cumulative dividend rights, the date
or dates or method of determining the date or dates from which dividends on
Partnership Preferred Securities of such series shall be cumulative; (v) the
amount or amounts that shall be paid out of the assets of Textron Partnership to
the holders of Partnership Preferred Securities of such series upon voluntary or
involuntary dissolution, winding-up or termination of Textron Partnership; (vi)
the price or prices at which, the period or periods within which, and the terms
and conditions upon which, Partnership Preferred Securities of such series may
be redeemed or purchased, in whole or in part, at the option of Textron
Partnership or the General Partner; (vii) the obligation, if any, of Textron
Partnership to purchase or redeem Partnership Preferred Securities of such
series and the price or prices at which, the period or periods within which, and
the terms and conditions upon which, Partnership Preferred Securities of such
series shall be purchased or redeemed, in whole or in part, pursuant to such
obligation; (viii) the voting rights, if any, of Partnership Preferred
Securities of such series in addition to those required by law, including the
number of votes per Partnership Preferred Security and any requirement for the
approval by the holders of Partnership Preferred Securities, or of Partnership
Preferred Securities of one or more series, or of both, as a condition to
specified action or amendments to the Limited Partnership Agreement; and (ix)
any other relative rights, preferences, privileges, limitations or restrictions
of Preferred Securities of the series not inconsistent with the Limited
Partnership Agreement or with applicable law. All Partnership Preferred
Securities offered hereby will be guaranteed by Textron to the extent set forth
below under "Description of Partnership Guarantee." Any applicable federal
income tax considerations applicable to any offering of Preferred Securities
will be described in the Prospectus Supplement relating thereto.
DESCRIPTION OF PARTNERSHIP GUARANTEE
Set forth below is a summary of information concerning the Partnership
Guarantee that will be executed and delivered by Textron for the benefit of the
holders from time to time of Partnership Preferred Securities. The summary does
not purport to be complete and is subject in all respects to the provisions of,
and is qualified in its entirety by reference to, the Partnership Guarantee,
which is filed as an exhibit to the Registration Statement of which this
Prospectus forms a part.
GENERAL
Pursuant to and to the extent set forth in the Partnership Guarantee,
Textron will irrevocably and unconditionally agree to pay in full to the holders
of the Partnership Preferred Securities of each series (to the extent not paid
by Textron Partnership), as and when due, regardless of any defense, right of
set-off or counterclaim that Textron Partnership may have or assert, the
following payments (the "Partnership Guarantee Payments"), without duplication:
(i) any accrued and unpaid dividends that have theretofore been declared on the
Partnership Preferred Securities of such series, (ii) the redemption price,
including all accrued and unpaid dividends (the "Redemption Price"), with
respect to any Partnership Preferred Securities called for redemption by Textron
Partnership and (iii) upon a liquidation of Textron Partnership, the lesser of
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(a) the aggregate of the liquidation preference and all accrued and unpaid
dividends on the Partnership Preferred Securities of such series to the date of
payment and (b) the amount of assets of Textron Partnership remaining available
for distribution to holders of Partnership Preferred Securities of such series
in liquidation of Textron Partnership, payable in kind. Textron's obligation to
make a Partnership Guarantee Payment may be satisfied by direct payment of the
required amounts by Textron to the holders of Partnership Preferred Securities
or by causing Textron Partnership to pay such amounts to such holders.
The Partnership Guarantee will be a guarantee on a subordinated basis with
respect to each series of Partnership Preferred Securities from the time of
issuance of such series of Partnership Preferred Securities, but will not apply
to any payment of dividends unless and until such dividends are declared. If
Textron does not make interest payments on the Junior Subordinated Debt
Securities purchased by Textron Partnership, it is expected that Textron
Partnership will not declare or pay dividends on the Partnership Preferred
Securities. See "Particular Terms of the Junior Subordinated Debt Securities."
Textron, as General Partner, will be required to declare distributions on the
Partnership Preferred Securities in connection with each distribution payment
date to the extent that Textron reasonably anticipates that, at the time of
payment, Textron Partnership has (1) cash on hand sufficient to make such
distribution payments and (2) funds legally available for such distribution
payment. The Partnership Guarantee, when taken together with Textron's
obligations under the Junior Subordinated Debt Securities, the Subordinated
Indenture, the Limited Partnership Agreement and the written action of the
General Partner with respect to the applicable series of Partnership Preferred
Securities will provide a full and unconditional guarantee on a subordinated
basis by Textron of payments due on the Preferred Securities.
CERTAIN COVENANTS OF TEXTRON
In the Partnership Guarantee, Textron will covenant that, so long as any
Partnership Preferred Securities remain outstanding, if at such time Textron
shall be in default with respect to its payment obligations under the
Partnership Guarantee or there shall have occurred any Event of Default under
the Junior Subordinated Indenture, then (a) Textron will not declare or pay any
dividend on, make any distributions with respect to, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its capital stock
or make any guarantee payment with respect thereto, and (b) Textron shall not
make any payment of interest, principal (or premium, if any, on) or repay,
repurchase or redeem any debt securities issued by Textron which rank pari passu
with or junior to such Junior Subordinated Debt Securities. The Partnership
Guarantee, however, will except from the foregoing (i) any stock dividends paid
by Textron where the dividend stock is the same stock as that on which the
dividend is being paid and (ii) any purchases by Textron of its common stock
from Paul Revere or its subsidiaries pursuant to the Paul Revere Stock Purchase
Agreements.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights
of holders of Partnership Preferred Securities (in which case no consent will be
required), the Partnership Guarantee may be amended only with the prior approval
of the holders of not less than a majority in liquidation preference of the
outstanding Partnership Preferred Securities. The manner of obtaining any such
approval of holders of the Partnership Preferred Securities of each series will
be as set forth in an accompanying Prospectus Supplement. All guarantees and
agreements contained in the Partnership Guarantee shall bind the successors,
assigns, receivers, trustees and representatives of Textron and shall inure to
the benefit of the holders of the Partnership Preferred Securities then
outstanding.
TERMINATION OF THE PARTNERSHIP GUARANTEE
The Partnership Guarantee will terminate and be of no further force and
effect as to the Partnership Preferred Securities of any series upon full
payment of the Redemption Price of all Partnership Preferred Securities of such
series, and will terminate completely upon full payment of the amounts payable
in accordance with the Limited Partnership Agreement upon liquidation of Textron
Partnership. See "Description of Debt Securities -- Events of Default" and
"Particular Terms of the Junior Subordinated Debt Securities -- Events of
Default" for a description of the events of default and enforcement rights of
the holders of Junior Subordinated Debt Securities. The Partnership Guarantee
will continue to be effective or
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will be reinstated, as the case may be, if at any time any holder of Partnership
Preferred Securities of any series must, in accordance with the Delaware Revised
Uniform Limited Partnership Act (the "Partnership Act"), restore payment of any
sum paid under such series of Partnership Preferred Securities or the
Partnership Guarantee. The Partnership Act provides that a limited partner of a
limited partnership who wrongfully receives a distribution, may be liable to the
limited partnership for the amount of such distribution.
STATUS OF THE PARTNERSHIP GUARANTEE
Textron's obligations under the Partnership Guarantee to make the
Partnership Guarantee Payments will constitute an unsecured obligation of
Textron and will rank (i) subordinate and junior in right of payment to all
other liabilities of Textron, (ii) pari passu with the most senior preferred or
preference stock now or hereafter issued by Textron and with any guarantee now
or hereafter entered into by Textron in respect of any preferred or preference
stock of any affiliate of Textron (including any Trust Guarantee) and (iii)
senior to Textron's common stock. The Limited Partnership Agreement provides
that each holder of Partnership Preferred Securities by acceptance thereof
agrees to the subordination provisions and other terms of the Partnership
Guarantee.
The Partnership Guarantee will constitute a guarantee of payment and not of
collection (that is, the guaranteed party may institute a legal proceeding
directly against the guarantor to enforce its rights under the guarantee without
first instituting a legal proceeding against any other person or entity). The
Partnership Guarantee will be deposited with the General Partner to be held for
the benefit of the holders of each series of the Partnership Preferred
Securities. In the event of the appointment of a Special Representative to,
among other things, enforce the Partnership Guarantee, the Special
Representative may take possession of the Partnership Guarantee for such
purpose. If no Special Representative has been appointed to enforce the
Partnership Guarantee, the General Partner has the right to enforce the
Partnership Guarantee on behalf of the holders of each series of the Partnership
Preferred Securities. The holders of not less than a majority in aggregate
liquidation preference of the Partnership Preferred Securities have the right to
direct the time, method and place of conducting any proceeding for any remedy
available in respect of the Partnership Guarantee, including the giving of
directions to the General Partner or the Special Representative, as the case may
be. If the General Partner or the Special Representative fails to enforce the
Partnership Guarantee as above provided, any holder of Preferred Securities may
institute a legal proceeding directly against Textron to enforce its rights
under the Partnership Guarantee, without first instituting a legal proceeding
against Textron Partnership or any other person or entity. Notwithstanding the
foregoing, if Textron has failed to make a guarantee payment, a holder of
Partnership Preferred Securities may directly institute a proceeding against
Textron to enforce such payment under the Partnership Guarantee. The Partnership
Guarantee will not be discharged except by payment of the Partnership Guarantee
Payments in full (without duplication of amounts theretofore paid by Textron
Partnership).
GOVERNING LAW
The Partnership Guarantee will be governed by and construed in accordance
with the law of the State of New York.
PLAN OF DISTRIBUTION
Textron may sell any series of Debt Securities and any Textron Trust and
Textron Partnership may sell Preferred Securities in one or more of the
following ways from time to time: (i) to or through underwriters or dealers,
(ii) directly to purchasers, or (iii) through agents. The Prospectus Supplement
with respect to any Offered Securities will set forth (i) the terms of the
offering of the Offered Securities, including the name or names of any
underwriters, dealers or agents, (ii) the purchase price of the Offered
Securities and the proceeds to Textron, Textron Trust or Textron Partnership, as
the case may be, from such sale, (iii) any underwriting discounts and
commissions or agency fees and other items constituting underwriters' or agents'
compensation, (iv) any initial public offering prices, (v) any discounts or
concessions allowed or reallowed or paid to dealers, and (vi) any securities
exchange on which such Offered Securities may be listed. Any initial
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public offering price, discounts or concessions allowed or reallowed or paid to
dealers may be changed from time to time.
If underwriters are used in the sale, the Offered Securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
The Offered Securities may be offered to the public either through underwriting
syndicates represented by one or more managing underwriters or directly by one
or more firms acting as underwriters. The underwriter or underwriters with
respect to a particular underwritten offering of Offered Securities will be
named in the Prospectus Supplement relating to such offering and, if an
underwriting syndicate is used, the managing underwriter or underwriters will be
set forth on the cover of such Prospectus Supplement. Unless otherwise set forth
in the Prospectus Supplement relating thereto, the obligations of the
underwriters to purchase the Offered Securities will be subject to certain
conditions precedent, and the underwriters will be obligated to purchase all the
Offered Securities if any are purchased.
If dealers are utilized in the sale of Offered Securities, Textron, the
applicable Textron Trust and/or Textron Partnership will sell such Offered
Securities to the dealers as principals. The dealers may then resell such
Offered Securities to the public at varying prices to be determined by such
dealers at the time of resale. The names of the dealers and the terms of the
transaction will be set forth in the Prospectus Supplement relating thereto.
Any series of Debt Securities may be sold from time to time either directly
by Textron or through agents designated by Textron. Any series of Preferred
Securities may be sold from time to time either directly by a Textron Trust
and/or Textron Partnership or by their respective designated agents. Any agent
involved in the offer or sale of the Offered Securities in respect to which this
Prospectus is delivered will be named, and any commissions payable by Textron,
the applicable Textron Trust and/or Textron Partnership to such agent will be
set forth in the Prospectus Supplement relating thereto. Unless otherwise
indicated in the Prospectus Supplement, any such agent will be acting on a best
efforts basis for the period of its appointment.
The Debt Securities may be sold directly by Textron and the Preferred
Securities may be sold directly by a Textron Trust and/or Textron Partnership to
institutional investors or others who may be deemed to be underwriters within
the meaning of the Securities Act with respect to any resale thereof. The terms
of any such sales will be described in the Prospectus Supplement relating
thereto.
If so indicated in the Prospectus Supplement, Textron, the applicable
Textron Trust and/or Textron Partnership will authorize agents, underwriters or
dealers to solicit offers from certain types of institutions to purchase Offered
Securities from Textron, such Textron Trust and/or Textron Partnership at the
public offering price set forth in the Prospectus Supplement pursuant to delayed
delivery contracts (the "Contracts") providing for payment and delivery on a
specified date or dates in the future. Such Contracts will not be subject to any
conditions except (a) the purchase by an institution of the Offered Securities
covered by its Contracts shall not at the time of delivery be prohibited under
the laws of any jurisdiction in the United States to which such institution is
subject and (b) if the Offered Securities are being sold to underwriters, the
Company shall have sold to such underwriters the total principal amount of the
Offered Securities less the principal amount thereof covered by the Contracts.
The Prospectus Supplement will set forth the commission payable for solicitation
of such Contracts.
Agents, dealers and underwriters may be entitled, under agreements with
Textron, a Textron Trust and/or Textron Partnership, to indemnification by
Textron, the applicable Textron Trust and/or Textron Partnership against certain
civil liabilities, including liabilities under the Securities Act, or to
contribution with respect to payments that such agents, dealers or underwriters
may be required to make in respect thereof. Agents, dealers and underwriters may
be customers of, engage in transactions with, or perform services for Textron, a
Textron Trust and/or Textron Partnership in the ordinary course of business.
Each series of Offered Securities will be a new issue of securities and
will have no established trading market. Any underwriters to whom Offered
Securities are sold for public offering and sale may make a market in such
Offered Securities, but such underwriters will not be obligated to do so and may
discontinue any
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market making at any time without notice. The Offered Securities may or may not
be listed on a national securities exchange. No assurance can be given that
there will be a market for the Offered Securities.
LEGAL OPINIONS
The validity of the Senior Debt Securities, Subordinated Debt Securities,
Junior Subordinated Debt Securities, Trust Guarantees and Partnership Guarantee
and certain legal matters relating thereto will be passed upon for Textron, the
Textron Trusts and Textron Partnership by Michael D. Cahn, Assistant General
Counsel-Corporate of Textron. The validity of the Trust Preferred Securities and
Partnership Preferred Securities and certain legal matters relating thereto will
be passed upon for Textron, the Textron Trusts and Textron Partnership by
Skadden, Arps, Slate, Meagher & Flom, New York, New York.
EXPERTS
The consolidated financial statements and schedules of Textron Inc.
included or incorporated by reference in Textron's Annual Report on Form 10-K
for the fiscal year ended December 31, 1994, incorporated in this Prospectus by
reference, have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements and schedules are, and
consolidated audited financial statements to be included in subsequently filed
documents will be, incorporated herein in reliance upon the reports of Ernst &
Young pertaining to such financial statements (to the extent covered by consents
filed with the Securities and Exchange Commission) given upon the authority of
such firm as experts in accounting and auditing.
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