<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 11, 1994
REGISTRATION NO. 33-51987
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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DIGITAL EQUIPMENT CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
MASSACHUSETTS 04-2226590
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
</TABLE>
146 MAIN STREET, MAYNARD, MASSACHUSETTS 01754-25711
(508) 493-5111
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
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GAIL S. MANN, ESQ.
SECRETARY AND CLERK
DIGITAL EQUIPMENT CORPORATION
MSO2-3/F13
111 Powdermill Road
Maynard, Massachusetts 01754
(508) 493-2206
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
<TABLE>
<S> <C>
RICHARD J. TESTA, ESQ. RICHARD E. FLOOR, ESQ.
TESTA, HURWITZ & THIBEAULT GOODWIN, PROCTER & HOAR
Exchange Place Exchange Place
53 State Street 53 State Street
Boston, Massachusetts 02109 Boston, Massachusetts 02109
(617) 248-7000 (617) 570-1000
</TABLE>
Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this Registration Statement, as the
Registrant shall determine.
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If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES
MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE
REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR
SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH
OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED MARCH 11, 1994
PROSPECTUS
$1,000,000,000
DIGITAL EQUIPMENT CORPORATION
DEBT SECURITIES
PREFERRED STOCK
DEPOSITARY SHARES
WARRANTS TO PURCHASE SECURITIES
------------------------
Digital Equipment Corporation (the "Corporation") may offer from time to
time together or separately up to $1,000,000,000 in the aggregate of (a) its
unsecured debt securities (the "Debt Securities"), which may be either senior
debt securities (the "Senior Debt Securities") or subordinated debt securities
(the "Subordinated Debt Securities"), (b) shares of preferred stock, par value
$1.00 per share (the "Preferred Stock"), of the Corporation in one or more
series, (c) depositary shares of the Corporation (the "Depositary Shares"), or
(d) warrants to purchase capital stock or Debt Securities of the Corporation
(the "Warrants"), each on terms to be determined at the time of sale. The
Subordinated Debt Securities may be issued as convertible debt securities which
may be convertible into shares of common stock of the Corporation, par value
$1.00 per share (the "Common Stock"), or other securities. The Debt Securities,
the Preferred Stock, the Depositary Shares and the Warrants are collectively
referred to herein as the "Securities."
When a particular series of Securities is offered, a supplement to this
Prospectus (each a "Prospectus Supplement") will be delivered with the
Prospectus. For Debt Securities, the Prospectus Supplement will set forth with
respect to such series (the "Offered Debt Securities"): the designation
(including whether senior or subordinated and whether convertible); aggregate
principal amount; authorized denominations; maturity; rate or rates (or method
of determining the same) and the time or times of payment of any interest;
purchase price; any optional or mandatory redemption provisions; any sinking
fund provisions; any terms regarding payment in or on the basis of currencies
other than U.S. dollars (including composite currencies); provisions relating to
any conversion feature of the Offered Debt Securities; and any other specific
terms of the Offered Debt Securities. For Preferred Stock and Depositary Shares,
the Prospectus Supplement will set forth with respect to such series (the
"Offered Preferred Stock" or the "Offered Depositary Shares"): the designation,
rights, preferences and limitations, including rate or rates (or method of
determining the same) and the time or times of payment of dividends; voting
rights, if any; liquidation preference; any conversion, redemption or sinking
fund provisions; and any other specific terms of the Offered Preferred Stock or
the Offered Depositary Shares. In addition, with respect to the Offered
Depositary Shares, the Prospectus Supplement will set forth the fraction of a
share of Preferred Stock represented by each of the Offered Depositary Shares.
For Warrants, the Prospectus Supplement will set forth with respect to such
series (the "Offered Warrants"): the description of the securities for which the
Offered Warrants will be exercisable and the offering price, exercise price,
duration, detachability, call provisions and any other specific terms of the
Offered Warrants.
The Securities may be sold directly by the Corporation, through agents
designated from time to time or to or through underwriters or dealers. See "Plan
of Distribution." If any such agents or underwriters are involved in the sale of
any Securities, the names of such agents or underwriters and any applicable
commissions or discounts will be set forth in the applicable Prospectus
Supplement.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------------
This Prospectus may not be used to consummate sales of Securities unless
accompanied by the applicable Prospectus Supplement.
The date of this Prospectus is March , 1994.
<PAGE> 3
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's Regional Offices at Seven World
Trade Center, 13th Floor, New York, New York 10048 and Northwest Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of
such material can also be obtained upon written request from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. In addition, certain of the Corporation's securities
are listed on the New York Stock Exchange, the Pacific Stock Exchange, the
Chicago Stock Exchange and the Montreal Exchange, and the aforementioned
materials may also be inspected at the offices of such exchanges at 20 Broad
Street, New York, New York; 301 Pine Street, San Francisco, California; 440
South LaSalle Street, Chicago, Illinois; and La Tour de la Bourse, P.O. Box 61,
800 Victoria Square, Montreal, Quebec H4Z1A9 Canada, respectively.
The Corporation has filed with the Commission a registration statement on
Form S-3 under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the Securities offered hereby (the "Registration Statement").
This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information pertaining
to the Securities and the Corporation, reference is made to the Registration
Statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Corporation's Annual Report on Form 10-K for the fiscal year ended July
3, 1993, as amended by Form 10-K/A dated March 11, 1994, the Corporation's
Quarterly Reports on Form 10-Q for the quarters ended October 2, 1993 and
January 1, 1994 filed with the Commission (File No. 1-5296) pursuant to the
Exchange Act and the documents incorporated by reference therein are
incorporated herein by reference.
All documents filed by the Corporation pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of the Securities 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 herein by reference shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document that is incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Corporation will provide, without charge, to each person to whom a copy
of this Prospectus is delivered, on the written or oral request of such person,
a copy of any or all of the documents incorporated herein by reference (other
than exhibits thereto, unless such exhibits are specifically incorporated by
reference into such documents). Written requests for such copies should be
directed to Inquiry Section, Digital Equipment Corporation, 44 Whitney Street
(NR02/H3), Northborough, MA 01532-2599. Telephone requests should be directed to
Investor Relations Department, Digital Equipment Corporation, 146 Main Street
(ML03-2/T98), Maynard, Massachusetts 01754, telephone (508) 493-7182.
2
<PAGE> 4
THE COMPANY
The Corporation is one of the world's largest suppliers of networked
computer systems, software and services and a leader in interactive, distributed
computing and multivendor systems integration in open computing environments.
The Corporation offers a full range of desktop, client-server and production
systems and related peripheral equipment, software and services used in a wide
variety of applications and industries. The Corporation conducts operations in
approximately 100 countries and derives more than 60% of its revenues from
outside of the United States.
The Corporation's principal executive offices are located at 146 Main
Street, Maynard, Massachusetts 01754-2571, and its telephone number is (508)
493-5111.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratios of earnings to fixed charges of
the Corporation and its consolidated subsidiaries for each of the years in the
five year period ended July 3, 1993 and for the six months ended January 1, 1994
and December 26, 1992.
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
-------------------------------------------------- -------------------------
JULY 3, JUNE 27, JUNE 29, JUNE 30, JULY 1, JANUARY 1, DECEMBER 26,
1993 1992 1991 1990 1989 1994 1992
------- -------- -------- -------- ------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges (unaudited)(a)......... (b) (c) (d) 1.6x(e) 8.5x (f) (g)
</TABLE>
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(a) For the purpose of calculating the ratio of earnings to fixed charges,
"earnings" consist of income before income taxes and "fixed charges." "Fixed
charges" include interest on indebtedness and one-third of all rental expense,
excluding rent on capitalized leases (being deemed representative of the
interest factor in rental expense).
(b) Earnings were inadequate to cover fixed charges by $229 million.
(c) Earnings were inadequate to cover fixed charges by $2,078 million and
by $578 million excluding restructuring charges.
(d) Earnings were inadequate to cover fixed charges by $519 million; the
ratio would have been 3.6x excluding restructuring charges.
(e) The ratio would have been 4.3x excluding restructuring charges.
(f) Earnings were inadequate to cover fixed charges by $175 million.
(g) Earnings were inadequate to cover fixed charges by $316 million.
For the fiscal years 1991 through 1993 and for the six months ended January
1, 1994, the ratios of earnings to fixed charges were negative. This is a
continuation of a trend of declining fixed charge coverage ratios that has
occurred over the last several years. A negative ratio means that the
Corporation had insufficient earnings before taxes and fixed charges to cover
its fixed charges. This situation results from operating loss, including
restructuring charges, in recent periods. Continued poor operating results could
cause the ratio to remain negative.
3
<PAGE> 5
USE OF PROCEEDS
Unless otherwise described in the applicable Prospectus Supplement, the
Corporation intends to use the net proceeds from the sale of the Securities for
working capital and for other general corporate purposes, which may include the
financing of capital expenditures and possible acquisitions of, or investments
in, businesses and assets.
DESCRIPTION OF DEBT SECURITIES
GENERAL
The Corporation may offer Debt Securities consisting of Senior Debt
Securities and/or Subordinated Debt Securities. Senior Debt Securities may be
issued from time to time in series under an indenture, dated as of September 15,
1992, as supplemented from time to time, between the Corporation and Citibank,
N.A., as trustee (the "Senior Trustee"), a copy of which is incorporated by
reference into the Registration Statement of which this Prospectus is a part
(the "Senior Indenture"). Subordinated Debt Securities may be issued from time
to time in series under an indenture between the Corporation and Bankers Trust
Company, as trustee (the "Subordinated Trustee"), a copy of which has been filed
as an exhibit to the Registration Statement of which this Prospectus is a part
(the "Subordinated Indenture"). The Senior Indenture and the Subordinated
Indenture are sometimes referred to collectively as the "Indentures," and the
Senior Trustee and the Subordinated Trustee are sometimes referred to
collectively as the "Trustees." The Subordinated Debt Securities may be
convertible into shares of Common Stock of the Corporation. The Indentures do
not limit the aggregate principal amount of Debt Securities which may be issued
by the Corporation thereunder and provide that the Debt Securities may be issued
in one or more series. The statements under this caption are summaries of
certain provisions contained in the Indentures, do not purport to be complete
and are qualified in their entirety by reference to the Indentures. Capitalized
terms used herein and not defined shall have the meanings assigned to them in
the applicable Indenture. Section references referred to below, unless otherwise
noted, refer to the respective Sections of both Indentures. The following
summaries set forth certain general terms and provisions of the Indentures and
the Debt Securities. Further terms of the Offered Debt Securities will be set
forth in the applicable Prospectus Supplement.
The Debt Securities will be direct, unsecured obligations of the
Corporation. The indebtedness represented by the Senior Debt Securities will
rank on a parity with all other unsecured and unsubordinated indebtedness of the
Corporation. The indebtedness represented by the Subordinated Debt Securities
will be subordinated in right of payment to the prior payment in full of the
Senior Indebtedness of the Corporation as described under "Ranking of Debt
Securities." The particular terms of the Offered Debt Securities will be
described in the applicable Prospectus Supplement, along with any applicable
modifications of or additions to the general terms of the Debt Securities as
described herein and in the applicable Indenture and any applicable federal
income tax considerations. Accordingly, for a description of the terms of the
Offered Debt Securities, reference must be made to both the Prospectus
Supplement relating thereto and the description of the Debt Securities set forth
in this Prospectus.
The applicable Prospectus Supplement will describe the following terms of
the Offered Debt Securities: (a) the title of the Offered Debt Securities and
whether such Offered Debt Securities are Senior Debt Securities or Subordinated
Debt Securities; (b) any limit on the aggregate principal amount of the Offered
Debt Securities; (c) the price (expressed as a percentage of the aggregate
principal amount thereof) at which the Offered Debt Securities will be issued;
(d) the date or dates on which the principal of the Offered Debt Securities will
be payable; (e) the rate or rates (which may be fixed or variable) at which the
Offered Debt Securities will bear any interest (or the method of determining the
same) and the date or dates from which such interest will accrue; (f) the dates
on which any interest on the Offered Debt Securities will be payable and the
Regular Record Dates for the interest payable on such Interest Payment Dates;
(g) any mandatory or optional sinking fund or analogous provisions; (h) the
period or periods within which and the price or prices at which the Offered Debt
Securities may, pursuant to any optional or mandatory redemption provisions
(including any provisions for redemption or repurchase at the option of the
holder), be redeemed and the
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<PAGE> 6
other terms and conditions of any such optional or mandatory redemption; (i) if
the Offered Debt Securities are Original Issue Discount Securities, the amount
of principal payable upon acceleration of such Original Issue Discount
Securities following an Event of Default; (j) the currency or currencies, which
may be a composite currency such as the European Currency Unit, in which payment
of the principal of (and premium, if any) and/or interest on the Offered Debt
Securities will be payable if other than the currency of the United States; (k)
any currency (including composite currencies) other than the stated currency of
the Debt Securities in which the principal of (and premium, if any) and/or
interest on the Offered Debt Securities may, at the election of the Corporation
or the holders, be payable, and the periods within which, and terms and
conditions upon which, such election may be made; (1) the manner in which the
amount of payments of principal of (and premium, if any) and/or interest on the
Offered Debt Securities is to be determined if such determination is to be made
with reference to an index; (m) whether the Offered Debt Securities are to be
issued in the form of one or more Global Securities, and, if so, the identity of
the depositary for such series (the "Debt Depositary"); (n) if the Offered Debt
Securities are to be issued upon the exercise of Warrants, the time, manner and
place for such Offered Debt Securities to be authenticated and delivered; (o)
any deletions from, modifications of or additions to the Events of Default or
covenants of the Corporation with respect to the Offered Debt Securities,
whether or not such Events of Default or covenants are consistent with the
Events of Default or covenants set forth in the general provisions of the
applicable Indenture, and any change in the right of any Trustee or any of the
holders to declare the principal amount of any of the Offered Debt Securities
due and payable; (p) if the Offered Debt Securities are Subordinated Debt
Securities, whether they will be convertible into Common Stock of the
Corporation or exchangeable for other securities, and, if so, the terms and
conditions upon which the Offered Debt Securities will be so convertible or
exchangeable, including the conversion or exchange price and the conversion or
exchange period; (q) any other terms of the Offered Debt Securities.
If so provided in the applicable Prospectus Supplement, Debt Securities may
be issued as Original Issue Discount Securities to be sold at a substantial
discount below their principal amount. In such cases, special Federal income tax
and other considerations applicable to such Original Issue Discount Securities
will be described in the applicable Prospectus Supplement.
EXCHANGE AND TRANSFER
At the option of the holder, subject to the terms of the applicable
Indenture and the limitations applicable to Global Securities, Debt Securities
of each series may be exchanged for other Debt Securities of the same series of
any authorized denomination and of a like tenor and aggregate principal amount.
Subject to the terms of the applicable Indenture and the limitations applicable
to Global Securities, Debt Securities issued in fully registered form may be
presented for exchange as provided above or for registration of transfer (duly
endorsed or with the form of transfer endorsed thereon duly executed) at the
office of the applicable Trustee or other security registrar or at the office of
any transfer agent designated by the Corporation for such purpose. No service
charge will be made for any registration of transfer or exchange of such Debt
Securities, but the Corporation may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith. Such
transfer or exchange will be effected upon the security registrar or such
transfer agent, as the case may be, being satisfied with the documents of title
and identity of the person making the request.
If the Debt Securities of any series are to be redeemed in part, the
Corporation will not be required to (i) issue, register the transfer of, or
exchange any Debt Security of that series during a period beginning at the
opening of business 15 days before the day of mailing of a notice of redemption
of any such Debt Security that may be selected for redemption and ending at the
close of business on the day of such mailing, or (ii) register the transfer of
or exchange any Debt Security so selected for redemption, in whole or in part,
except the unredeemed portion of any such Debt Security being redeemed in part.
GLOBAL SECURITIES
Some or all of the Debt Securities of any series may be represented, in
whole or in part, by one or more Global Securities which will have an aggregate
principal amount equal to that of the Debt Securities
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<PAGE> 7
represented thereby. Each Global Security will be registered in the name of a
Debt Depositary or a nominee thereof identified in the applicable Prospectus
Supplement, will be deposited with such Debt Depositary or nominee or a
custodian therefor and will bear a legend regarding the restrictions on exchange
and registration of transfer thereof referred to below and any such other
matters as may be provided for pursuant to the applicable Indenture.
Notwithstanding any provision of the applicable Indenture or any security
described herein, no Global Security may be exchanged in whole or in part for
Debt Securities registered, and no transfer of a Global Security in whole or in
part may be registered, in the name of any Person other than the Debt Depositary
for such Global Security or any nominee of such Debt Depositary, unless (i) the
Debt Depositary has notified the Corporation that it is unwilling or unable to
continue as Debt Depositary for such Global Security or has ceased to be
qualified to act as such as required by the applicable Indenture, (ii) there
shall have occurred and be continuing an Event of Default with respect to the
Debt Securities represented by such Global Security, or (iii) there shall exist
such circumstances, if any, in addition to or in lieu of those described above
as may be described in the applicable Prospectus Supplement. All Debt Securities
issued in exchange for a Global Security or any portion thereof will be
registered in such names as the Debt Depositary may direct.
Ownership of beneficial interests in a Global Security will be limited to
institutions that have accounts with the Debt Depositary or its nominee
("participants") and to the persons that may hold beneficial interests through
participants. In connection with the issuance of any Global Security, the Debt
Depositary will credit, on its book-entry registration and transfer system, the
respective principal amounts of Debt Securities represented by the Global
Security to the accounts of its participants. Ownership of beneficial interests
in a Global Security will be shown only on, and the transfer of those ownership
interests will be effected only through, records maintained by the Debt
Depositary (with respect to participants' interest) or any such participant
(with respect to interests of persons held by such participants on their
behalf). Payments, transfers, exchanges and other matters relating to beneficial
interests in a Global Security may be subject to various policies and procedures
adopted by the Debt Depositary from time to time.
As long as the Debt Depositary, or its nominee, is the registered holder of
a Global Security, the Debt Depositary or such nominee, as the case may be, will
be considered the sole owner and holder of such Global Security and the Debt
Securities represented thereby for all purposes under the terms of the Debt
Securities and the applicable Indenture. Except in the limited circumstances
referred to above, owners of beneficial interests in a Global Security will not
receive or be entitled to receive physical delivery of certificated Debt
Securities in exchange therefor and will not be considered to be the owners or
holders of such Global Security or any Debt Securities represented thereby for
any purpose under the Debt Securities or the applicable Indenture. All payments
of principal of and any premium and interest on a Global Security will be made
to the Debt Depositary or its nominee, as the case may be, as the holder
thereof. The Corporation expects that the Debt Depositary, upon receipt of any
payment of principal, premium or interest, will credit participants' accounts on
the payment date with payments in amounts proportionate to their respective
beneficial interest in the principal amount of a Global Security for such Debt
Securities as shown on the records of the Debt Depositary. The Corporation also
expects that payments by participants to owners of beneficial interests in such
Global Security held through them will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in "street name," and will be the
responsibility of such participants. The laws of some jurisdictions require that
certain purchasers of securities take physical delivery of such securities in
definitive form. These laws may impair the ability to transfer beneficial
interests in a Global Security. None of the Corporation, any Trustee or any
agent of the Corporation or any Trustee will have any responsibility or
liability for any aspect of the Debt Depositary's or any participant's records
relating to, or for payments made on account of, beneficial interests in a
Global Security, or for maintaining, supervising or reviewing any records
relating to such beneficial interest.
Secondary trading in notes and debentures of corporate issuers is generally
settled in clearing-house or next-day funds. In contrast, beneficial interests
in a Global Security, in some cases, may trade in the Debt Depositary's same-day
funds settlement system, in which case, secondary market trading activity in
those beneficial interests would be required by the Debt Depositary to settle in
immediately available funds. There is no assurance as to the effect, if any,
that settlement in immediately available funds would have on trading
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<PAGE> 8
activity in such beneficial interests. Also, settlement for purchases of
beneficial interests in a Global Security upon the original issuance thereof may
be required to be made in immediately available funds.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of interest on a Debt Security on any interest payment date will be made to the
Person in whose name such Debt Security is registered at the close of business
on the Regular Record Date for such interest. Unless otherwise indicated in the
applicable Prospectus Supplement, principal of and any premium and interest on
the Debt Securities of a particular series will be payable at the office of such
paying agent or paying agents as the Corporation may designate for such purpose
from time to time, except that, at the option of the Corporation, payment of any
interest may be made by check mailed to the address of the Person entitled
thereto as such address appears in the security register.
All moneys paid by the Corporation to a paying agent for the payment of the
principal of or any premium or interest on any Debt Security which remain
unclaimed at the end of two years after such principal, premium or interest has
become due and payable will be repaid to the Corporation, and the holder of such
Debt Security thereafter may look only to the Corporation for payment thereof.
EVENTS OF DEFAULT
Unless otherwise set forth in the applicable Prospectus Supplement, the
following are Events of Default under the Indentures with respect to Debt
Securities of any series: (a) failure to pay any interest on any Debt Security
of that series when due, continued for 30 days; (b) failure to pay principal of
or any premium on any Debt Security of that series when due; (c) failure to
deposit any sinking fund payment when due in respect of any Debt Security of
that series; (d) failure to perform any other covenant of the Corporation in the
applicable Indenture (other than a covenant included in such Indenture solely
for the benefit of series of Debt Securities other than that series) continued
for 90 days after written notice as provided in the applicable Indenture; (e)
certain events in bankruptcy or of insolvency or reorganization involving the
Corporation; and (f) any other Event of Default provided with respect to Debt
Securities of that series in the applicable Prospectus Supplement. (Section 501)
If an Event of Default with respect to Debt Securities of any series occurs and
is continuing, either the Trustee or the holders of at least 25% in aggregate
principal amount of the outstanding Debt Securities of that series may declare
the principal amount (or, if the Debt Securities of that series are Original
Issue Discount Securities, such portion of the principal amount as may be
specified in the terms of that series) of all of the Debt Securities of that
series to be due and payable immediately. At any time after a declaration of
acceleration with respect to Debt Securities of any series has been made, but
before a judgment or decree based on acceleration has been obtained, the holders
of a majority in aggregate principal amount of outstanding Debt Securities of
that series may, under certain circumstances, rescind and annul such
acceleration. (Section 502)
The Indentures provide that, subject to the duty of the Trustees during
default to act with the required standard of care, the Trustees will be under no
obligation to exercise any of their respective rights or powers under the
Indentures at the request or direction of any of the holders of Debt Securities,
unless such holders shall have offered to the Trustees reasonable indemnity.
(Section 603) Subject to such provisions for the indemnification of the
Trustees, the holders of a majority in aggregate principal amount of the
outstanding Debt Securities of any series will have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the applicable Trustee, or exercising any trust or power conferred on such
Trustee, with respect to the Debt Securities of that series. (Section 512)
The Corporation is required to furnish to the Trustees annually a statement
as to the performance by the Corporation of certain of its obligations under the
Indentures and as to any default in such performance. (Section 1007)
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<PAGE> 9
COVENANTS OF THE CORPORATION
The applicable Prospectus Supplement will describe any material covenants
in respect of a series of Debt Securities. The general provisions of the
Indentures do not contain any provisions that would limit the ability of the
Corporation to incur indebtedness or that would afford holders of Debt
Securities protection in the event of a highly leveraged or similar transaction
involving the Corporation.
Unless otherwise indicated in the applicable Prospectus Supplement, Senior
Debt Securities will include the following covenants of the Corporation:
Limitation on Liens.
The Corporation will not issue, incur, create, assume or guarantee,
and will not permit any Restricted Subsidiary to issue, incur, create,
assume or guarantee, any debt for money borrowed secured by a mortgage,
security interest, pledge, lien, charge or other encumbrance ("Mortgages")
upon any Principal Property of the Corporation or any Restricted Subsidiary
or upon any shares of stock or indebtedness of any Restricted Subsidiary
(whether such Principal Property, shares or indebtedness are now existing
or owed or hereafter created or acquired) without in each such case
effectively providing concurrently with the issuance, incurrence, creation,
assumption or guaranty of any such secured debt, or the grant of a mortgage
with respect to any such indebtedness, that the Senior Debt Securities
(together with, if the Corporation shall so determine, any other
indebtedness of or guarantee by the Corporation or such Restricted
Subsidiary ranking equally with the Senior Debt Securities) shall be
secured equally and ratably with such secured debt. The foregoing
restriction, however, will not apply to: (a) Mortgages on property, shares
of stock or indebtedness or other assets of any corporation existing at the
time such corporation becomes a Restricted Subsidiary; (b) Mortgages
existing at the time of acquisition of such property by the Corporation 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 debt incurred prior to, at the time of, or within 180 days after,
the acquisition of such property for the purpose of financing all or part
of the purchase price thereof, or Mortgages to secure the cost of
improvements to such acquired property or the cost of construction of such
property; (c) Mortgages to secure indebtedness of a Restricted Subsidiary
owing to the Corporation 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 the Corporation 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 the Corporation 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); provided, however,
that any Mortgages permitted by any of the foregoing clauses (a), (b), (c),
(d), (e) and (f) shall not extend to or cover any property of the
Corporation or such Restricted Subsidiary, as the case may be, other than
the property specified in such clauses and improvements thereto. (Section
1010)
Notwithstanding the restrictions outlined in the preceding paragraph,
the Corporation or any Restricted Subsidiary will be permitted to issue,
incur, create, assume or guarantee debt secured by a Mortgage which would
otherwise be subject to such restrictions, 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 Consolidated Net Tangible Assets of the Corporation.
(Section 1010)
Limitation on Sale and Lease-Back.
The Corporation will not, nor will it permit any Restricted Subsidiary
to, enter into any sale and lease-back 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 the
Corporation and a Restricted Subsidiary or between Restricted Subsidiaries,
unless: (a) the Corporation or such Restricted Subsidiary would be entitled
to incur indebtedness secured by a Mortgage on the Principal Property
involved in such transaction at least equal in amount to the Attributable
Debt with respect to such sale
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and lease-back transaction, without equally and ratably securing the Senior
Debt Securities, pursuant to the limitation in the Senior Indenture on
liens; or (b) the Corporation 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 lease-back transaction within 120 days to the retirement (other
than any mandatory retirement or by payment at maturity) of debt for money
borrowed of the Corporation or a Restricted Subsidiary that matures more
than twelve months after the creation of such indebtedness. (Section 1011)
DEFEASANCE AND DISCHARGE OF DEBT SECURITIES
Unless otherwise indicated in the applicable Prospectus Supplement, the
following provisions will apply to Debt Securities under the Indentures: the
Corporation, at its option (a) will be discharged from any and all obligations
in respect to any series of Debt Securities (except for certain obligations to
register the transfer or exchange of such Debt Securities, to replace stolen,
lost or mutilated Debt Securities, to maintain paying agencies and to hold
monies for payment in trust and, with respect to Subordinated Debt Securities
which are convertible or exchangeable, the right to convert or exchange); or (b)
need not comply with certain restrictive covenants of the Indentures in respect
of such series of Debt Securities, in either case upon the deposit with the
Trustee (and in the case of a discharge, 91 days after such deposit), in trust,
of money and/or U.S. Government Obligations (as defined in the Indentures) which
through the payment of interest and principal in respect thereof in accordance
with their terms, without regard to any reinvestment thereof, will provide money
in an amount sufficient to pay the principal of and each installment of interest
on such Debt Securities on the Stated Maturity of such payments in accordance
with the terms of the applicable Indenture and such Debt Securities. In the case
of discharge under clause (a), such a trust may be established only if, among
other things, the Corporation has received from, or there has been published by,
the Internal Revenue Service a ruling, or there has otherwise been a change in
law, to the effect that holders of such Debt Securities will not recognize
income, gain or loss for federal income tax purposes as a result of such
deposit, defeasance and discharge and will be subject to federal income tax on
the same amounts and in the same manner and at the same times as would have been
the case if such deposit, defeasance and discharge had not occurred. (Section
403) In the event of any such discharge under clause (a), the holders of such
Debt Securities would thereafter be able to look only to such trust fund for
payment of principal (and premium, if any) and interest.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Indentures provide that the Corporation, without the consent of the
holders of any of the outstanding Debt Securities, may consolidate or merge with
or into, or transfer or lease its assets as an entirety or substantially as an
entirety to, any corporation or may acquire or lease the assets of any person,
provided that: (a) the corporation formed by such consolidation or into which
the Corporation is merged or which acquires or leases the assets of the
Corporation as an entirety or substantially as an entirety is organized under
the laws of any domestic jurisdiction and assumes the Corporation's obligations
on the Debt Securities and under the Indentures and, with respect to
Subordinated Debt Securities which are convertible or exchangeable, provides for
conversion or exchange rights in accordance with the Subordinated Indenture; (b)
immediately after giving effect to the transaction, no Event of Default, and no
event which, after notice or lapse of time or both, would become an Event of
Default, shall have occurred and be continuing; and (c) certain other conditions
are met. Upon compliance with these provisions by a successor corporation, the
Corporation would be relieved of its obligations under the Indentures and the
Debt Securities. (Sections 801 and 802)
The Senior Indenture also provides that, if upon any such consolidation,
merger, sale, conveyance or lease, any Principal Property would become subject
to any Mortgage, the Corporation or such successor corporation will be obligated
under such Senior Indenture to cause the Senior Debt Securities to be secured
equally and ratably with (or, at the Corporation's or such successor
corporation's option, prior to) any indebtedness secured by such Mortgage.
MODIFICATION AND WAIVER
Modifications and amendments of the Indentures may be made by the
Corporation and the applicable Trustee with the consent of the holders of a
majority in aggregate principal amount of the outstanding Debt
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Securities of each series affected by such modification or amendment; provided,
however, that no such modification or amendment may, without the consent of the
holder of each outstanding Debt Security affected thereby: (a) change the stated
maturity date of the principal of, any installment of principal or interest on,
or sinking fund payments in respect of, such Debt Security; (b) alter the
redemption or conversion provisions of such Debt Security in a manner materially
adverse to the holder thereof; (c) reduce the principal amount of, or any
premium or interest on, such Debt Security; (d) reduce the amount of principal
of an Original Issue Discount Security payable upon acceleration of the maturity
thereof; (e) change the place or currency of payment of principal of, or any
premium or interest on, such Debt Security; (f) impair the right to institute
suit for the enforcement of any payment on or with respect to such Debt
Security; (g) with respect to Subordinated Debt Securities which are convertible
or exchangeable, adversely affect the right to convert or exchange any such
Subordinated Debt Security; (h) with respect to Subordinated Debt Securities,
modify the provisions of the Subordinated Indenture with respect to
subordination in a manner materially adverse to the Subordinated Debt
Securities; or (i) reduce the percentage in principal amount of outstanding Debt
Securities of any series the consent of the holders of which is required for
modification or amendment of the applicable Indenture or for waiver of
compliance with certain provisions of such Indenture or for waiver of certain
defaults. (Section 902)
The holders of a majority in aggregate principal amount of the outstanding
Debt Securities of each series may, on behalf of all holders of Debt Securities
of that series, waive, insofar as that series is concerned: (a) compliance by
the Corporation with certain restrictive provisions of the applicable Indenture;
or (b) any past default under the applicable Indenture, except a default in the
payment of principal or any premium or interest and, with respect to any
Subordinated Debt Securities which are convertible, a default in respect of the
right to convert. (Sections 1008 and 513)
Modifications and amendments may be made by the Corporation and the Trustee
to the Indentures, without the consent of any holder of any Debt Security of any
series, to add covenants and Events of Default, and to make provisions with
respect to other matters and issues arising under the Indentures, provided that
any such provision does not adversely affect the rights of the holders of Debt
Securities of any series. (Section 901)
RANKING OF DEBT SECURITIES
The Senior Debt Securities will be unsecured and unsubordinated obligations
of the Corporation and will rank on a parity with all other unsecured and
unsubordinated indebtedness of the Corporation.
Unless otherwise provided in the applicable Prospectus Supplement,
Subordinated Debt Securities will be subject to the following subordination
provisions.
The payment of the principal of, interest on, or any other amounts due on,
the Subordinated Debt Securities will be subordinated in right of payment to the
prior payment in full of all Senior Indebtedness (as defined below) of the
Corporation. (Section 1601) No payment on account of the principal of,
redemption of, interest on or any other amounts due on the Subordinated Debt
Securities and no redemption, purchase or other acquisition of the Subordinated
Debt Securities may be made, unless (i) full payment of amounts then due for
principal, sinking funds, interest (including interest accruing on or after the
filing of any petition in bankruptcy or for reorganization relating to the
Corporation, whether or not a claim for such post-petition interest is allowed
in such proceeding), penalties, reimbursement or indemnification amounts, fees
and expenses, and of all other amounts then due on all Senior Indebtedness shall
have been made or duly provided for pursuant to the terms of the instrument
governing such Senior Indebtedness, and (ii) at the time of, or immediately
after giving effect to, any such payment, redemption, purchase or other
acquisition, there shall not exist under any Senior Indebtedness or any
agreement pursuant to which any Senior Indebtedness has been issued, any default
which shall not have been cured or waived and which shall have resulted in the
full amount of such Senior Indebtedness being declared due and payable. In
addition, the Subordinated Indenture provides that, if holders of any Senior
Indebtedness notify the Corporation and the Subordinated Trustee that a default
has occurred giving the holders of such Senior Indebtedness the right to
accelerate the maturity thereof, no payment on account of principal, sinking
fund or other redemption, interest or any other amounts
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due on the Subordinated Debt Securities and no purchase, redemption or other
acquisition of the Subordinated Debt Securities will be made for the period (the
"Payment Blockage Period") commencing on the date such notice is received and
ending on the earlier of (A) the date on which such event of default shall have
been cured or waived or (B) 180 days from the date such notice is received.
(Section 1603) Notwithstanding the foregoing, only one payment blockage notice
with respect to the same event of default or any other events of default
existing and known to the person giving such notice at the time of such notice
on the same issue of Senior Indebtedness may be given during any period of 360
consecutive days. (Section 1603) No new Payment Blockage Period may be commenced
by the holders of Senior Indebtedness during any period of 360 consecutive days
unless all events of default which triggered the preceding Payment Blockage
Period have been cured or waived. (Section 1603) Upon any distribution of its
assets in connection with any dissolution, winding-up, liquidation or
reorganization of the Corporation, all Senior Indebtedness must be paid in full
before the holders of the Subordinated Debt Securities are entitled to any
payments whatsoever. (Section 1602)
The Subordinated Indenture does not restrict the amount of Senior
Indebtedness or other indebtedness of the Corporation or any subsidiary of the
Corporation. As a result of these subordination provisions, in the event of the
Corporation's insolvency, holders of the Subordinated Debt Securities may
recover ratably less than general creditors of the Corporation.
CONVERTIBLE SUBORDINATED DEBT SECURITIES
The terms and conditions, if any, on which any series of Subordinated Debt
Securities are convertible into Common Stock of the Corporation will be set
forth in the applicable Prospectus Supplement. Such terms will include the
conversion price, the conversion period and the manner in which the right to
convert may be exercised, the events requiring an adjustment of the conversion
price and provisions affecting conversion in the event of the redemption of the
convertible Subordinated Debt Securities. (Sections 1701, 1702 and 1704)
CERTAIN DEFINITIONS
"Attributable Debt" when used in connection with a sale and lease-back
transaction involving a Principal Property means, at the time of determination,
the lesser of: (a) the fair value of such property (as determined in good faith
by the Board of Directors of the Corporation); or (b) the present value of the
total net amount of rent required to be paid under such lease during the
remaining term thereof (including any renewal term or period for which such
lease has been extended), discounted at the rate of interest set forth or
implicit in the terms of such lease. For purposes of the foregoing definition,
rent shall not include amounts required to be paid by the lessee, whether or not
designated as rent or additional rent, on account of or contingent upon
maintenance and repair, insurance, taxes, assessments, water rates and similar
charges.
"Consolidated Net Tangible Assets" means, as of any particular time, the
aggregate amount of assets (less applicable reserves and other properly
deductible items) after deducting therefrom: (a) all current liabilities except
for: (1) notes and loans payable, (2) current maturities of long-term debt, and
(3) current maturities of obligations under capital leases; and (b) certain
intangible assets, to the extent included in said aggregate amount of assets,
all as set forth on the most recent consolidated balance sheet of the
Corporation and its consolidated subsidiaries and computed in accordance with
generally accepted accounting principles.
"Indebtedness" means, with respect to any person, (i) any obligation of
such person to pay the principal of, premium, if any, interest on (including
interest accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to such person, whether or not a claim for such
post-petition interest is allowed in such proceeding), penalties, reimbursement
or indemnification amounts, fees, expenses or other amounts relating to any
indebtedness of such person (A) for borrowed money (whether or not the recourse
of the lender is to the whole of the assets, of such person or only to a portion
thereof), (B) evidenced by notes, debentures or similar instruments (including
purchase money obligations) given in connection with the acquisition of any
property or assets (other than inventory or similar property acquired in the
ordinary course of business), including securities, for the payment of which
such person is liable, directly or indirectly, or the payment of which is
secured by a lien, charge or encumbrance on property or assets of such person,
(C) for
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goods, materials or services purchased in the ordinary course of business (other
than trade accounts payable arising in the ordinary courses of business), (D)
with respect to letters of credit or bankers acceptances issued for the account
of such person or performance bonds, (E) for the payment of money relating to a
Capitalized Lease Obligation (as defined in the Indenture), or (F) under
interest rate swaps, caps or similar agreements and foreign exchange contracts,
currency swaps or similar agreements; (ii) any liability of others of the kind
described in the preceding clause (i) which such person has guaranteed or which
is otherwise its legal liability; and (iii) any and all deferrals, renewals,
extensions and refunding of, or amendments, modifications or supplements to, any
liability of the kind described in any of the preceding clauses (i) or (ii).
"Principal Property" means the principal corporate office and any
manufacturing plant or manufacturing facility (whether now owned or hereafter
acquired) which: (a) is owned by the Corporation or any Restricted Subsidiary;
(b) is located within the United States of America; and (c) has not been
determined in good faith by the Board of Directors of the Corporation not to be
materially important to the total business conducted by the Corporation and its
subsidiaries taken as a whole.
"Restricted Subsidiary" means any Subsidiary which owns any Principal
Property; provided, however, that the term "Restricted Subsidiary" does not
include any Subsidiary which is principally engaged in leasing or in financing
receivables, or which is principally engaged in financing the Corporation's
operations outside the United States of America.
"Senior Indebtedness" means Indebtedness of the Corporation, whether
outstanding on the date of the Subordinated Indenture or thereafter created,
incurred, assumed or guaranteed by the Corporation, other than the following:
(1) any Indebtedness as to which, in the instrument evidencing such Indebtedness
or pursuant to which such Indebtedness was issued, it is expressly provided that
such Indebtedness is subordinate in right of payment to all indebtedness of the
Corporation not expressly subordinated to such Indebtedness; (2) any
Indebtedness which by its terms refers explicitly to the Subordinated Debt
Securities and states that such Indebtedness shall not be senior, shall be pari
passu or shall be subordinated in right of payment to the Subordinated Debt
Securities; and (3) with respect to any series of Subordinated Debt Securities,
any Indebtedness of the Corporation evidenced by Subordinated Debt Securities of
the same or of another series. Notwithstanding anything to the contrary in the
foregoing, Senior Indebtedness shall not include: (a) Indebtedness of or amounts
owed by the Corporation for compensation to employees, or for goods or materials
purchased in the ordinary course of business, or for services, or (b)
Indebtedness of the Corporation to a subsidiary of the Corporation.
"Subsidiary" means any corporation of which at least a majority of the
outstanding stock having the voting power to elect a majority of the board of
directors of such corporation is at the time owned, directly or indirectly, by
the Corporation or by one or more Subsidiaries, or by the Corporation and one or
more Subsidiaries.
CONCERNING THE TRUSTEES
Citibank, N.A. is the Senior Trustee under the Senior Indenture. Bankers
Trust Company is the Subordinated Trustee under the Subordinated Indenture. Each
of the Trustees has dealings with the Corporation in the ordinary course of
business and from time to time may also make loans to the Corporation and its
Subsidiaries. In addition, Citibank, N.A. has also been appointed as the
Preferred Stock Depositary. A Trustee may resign or be removed with respect to
one or more series of Debt Securities and a successor Trustee appointed with
respect to such series. (Section 610)
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DESCRIPTION OF CAPITAL STOCK
GENERAL
The Corporation is authorized to issue up to 450,000,000 shares of Common
Stock and up to 25,000,000 shares of Preferred Stock which may be issued by the
Board of Directors of the Corporation from time to time. The particular terms of
any series of Preferred Stock offered hereunder will be described in the
applicable Prospectus Supplement. If so indicated in a Prospectus Supplement,
the terms of any such series may differ from the terms set forth below.
The following summary descriptions of capital stock and Rights (as defined
below) do not purport to be complete and are subject to, and qualified in their
entirety by reference to, the more complete descriptions thereof set forth in
the Corporation's Restated Articles of Organization, as amended (the "Restated
Articles"), the Certificate of Designation relating to each series of Preferred
Stock (the "Certificate of Designation"), the Corporation's By-laws, as amended,
and the Rights Plan (as defined below). The applicable Certificate of
Designation will be filed as an exhibit to or incorporated by reference in the
Registration Statement of which this Prospectus is a part at or prior to the
time of issuance of the Offered Preferred Stock.
DESCRIPTION OF COMMON STOCK
The Corporation's Restated Articles authorize the issuance of up to
450,000,000 shares of Common Stock. Each share of the Common Stock is entitled
to one vote at all meetings of stockholders for the election of directors and on
all other matters. Dividends may be paid to the holders of the Common Stock when
and if declared by the Board of Directors out of funds legally available
therefor. The Common Stock has no pre-emptive or similar rights. The holders are
not liable to further call or assessment. Upon liquidation, dissolution or
winding up of the affairs of the Corporation, its assets remaining after
provision for payment of creditors would be distributed pro rata among holders
of the Common Stock, subject to the preferential rights of any then outstanding
Preferred Stock.
The Common Stock is listed on the New York Stock Exchange, the Chicago
Stock Exchange, the German Stock Exchanges of Frankfurt, Munich and Berlin, the
Montreal Exchange, the Pacific Stock Exchange and the Swiss Exchanges of Zurich,
Geneva and Basel, and is admitted to unlisted trading privileges on the Boston
Stock Exchange, Cincinnati Stock Exchange, Luxembourg Stock Exchange and
Philadelphia Stock Exchange.
First Chicago Trust Company of New York is the transfer agent for the
Common Stock. The Corporation also serves as a co-transfer agent in connection
with the Corporation's various employee stock programs.
DESCRIPTION OF PREFERRED STOCK
The following sets forth certain general terms and provisions of the
Preferred Stock which would be offered hereby. Further terms of the Offered
Preferred Stock will be set forth in the applicable Prospectus Supplement.
The Corporation's Restated Articles authorize the issuance of up to
25,000,000 shares of Preferred Stock. As of the date of this Prospectus, no
shares of Preferred Stock are currently outstanding, and no shares are reserved
for issuance. Subject to limitations prescribed by law, the Board of Directors
is authorized at any time to issue one or more series of Preferred Stock; to
determine all designations, preferences and limitations for any such series; and
to determine the number of shares in any such series.
The Board of Directors is authorized to determine for each series of
Preferred Stock, and the Prospectus Supplement will set forth with respect to
such series, the following designations, preferences and limitations, if any:
the dividend rights, the redemption provisions, the rights upon liquidation,
dissolution or winding up of the Corporation, the conversion or exchange rights,
the sinking fund provisions, the voting rights, provided that the holders of
shares of Preferred Stock will not be entitled to more than one vote per share
when voting as a class with the holders of shares of Common Stock; and the other
preferences, powers, qualifications, special or
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relative rights and privileges and limitations or restrictions of such
preferences or rights, if any. No holders of shares of the capital stock of the
Corporation have any pre-emptive rights to acquire any securities of the
Corporation.
DIVIDENDS
Holders of shares of Preferred Stock shall be entitled to receive, when, as
and if declared by the Board of Directors out of funds of the Corporation
legally available for payment, dividends payable at such dates and at such rates
per share as set forth in the applicable Prospectus Supplement. The Prospectus
Supplement will also state applicable record dates regarding the payment of
dividends.
CONVERTIBILITY
No series of Preferred Stock will be convertible into, or exchangeable for,
other securities or property except as set forth in the related Prospectus
Supplement.
REDEMPTION AND SINKING FUND
No series of Preferred Stock will be redeemable or receive the benefit of a
sinking fund except as set forth in the related Prospectus Supplement.
LIQUIDATION
Upon any voluntary or involuntary liquidation, dissolution or winding up of
the Corporation, holders of any series of Preferred Stock will be entitled to
receive the liquidation preference per share specified in the Prospectus
Supplement, if any, in each case together with any applicable accrued and unpaid
dividends and before any distribution to holders of the Common Stock or any
class of stock ranking junior to the Preferred Stock as to dividends and
liquidation preferences. In the event there are insufficient assets to pay such
liquidation preferences for all classes of Preferred Stock in full, the
remaining assets shall be allocated ratably among all series of Preferred Stock
based upon the aggregate liquidation preference for all outstanding shares for
such series. After payment of the full amount of the liquidation preference to
which they are entitled, the holders of shares of Preferred Stock will not be
entitled to any further participation in any distribution of assets by the
Corporation unless otherwise provided in a Prospectus Supplement, and, in such
case, the remaining assets of the Corporation shall be distributable exclusively
among the holders of the Common Stock and any class of stock ranking junior to
the Preferred Stock as to dividends and liquidation preferences, according to
their respective interests.
VOTING
No series of Preferred Stock will be entitled to vote except as provided
below or in the related Prospectus Supplement. The holders of shares of
Preferred Stock will not be entitled to more than one vote per share when voting
as a class with the holders of shares of Common Stock. Unless otherwise
specified in a Prospectus Supplement, the affirmative vote of the holders of
two-thirds of the outstanding shares of a series of Preferred Stock voting
separately is required to authorize any amendment, alteration or repeal of the
Restated Articles or of the Certificate of Designation which would adversely
affect the rights of any such class or series of Preferred Stock.
MISCELLANEOUS
Preferred Stock, upon issuance against full payment of the purchase price
therefor, will be fully paid and nonassessable. Neither the par value nor the
liquidation preference is indicative of the price at which the Preferred Stock
will actually trade on or after the date of issuance. Payment of dividends on
any series of Preferred Stock may be restricted by loan agreements, indentures
and other transactions entered into by the Corporation. The transfer agent for
each series of Preferred Stock will be specified in the related Prospectus
Supplement.
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DESCRIPTION OF RIGHTS
On December 11, 1989, the Board of Directors unanimously adopted a
Stockholder Rights Plan (the "Rights Plan"). Under the Rights Plan, the
Corporation distributed to its stockholders a dividend of one Common Stock
Purchase Right (a "Right" and collectively, the "Rights") for each outstanding
share of the Corporation's Common Stock. Initially, each Right will entitle
holders of Common Stock to buy one share of Common Stock of the Corporation at
an exercise price of $400, subject to adjustment. The Rights will become
exercisable only if a person or group acquires 20% or more of the Common Stock,
or announces a tender or exchange offer which would result in its ownership of
30% or more of the Common Stock, or a person owning 10% or more of the Common
Stock is determined by the Board of Directors to be an "Adverse Person," as
defined in the Rights Plan.
If any person or group becomes the beneficial owner of 25% or more of the
Common Stock except pursuant to a tender offer for all shares which the
directors determine to be at a fair price and in the best interests of the
Corporation; a 20% or more stockholder engages in a merger with the Corporation
in which the Corporation survives and its Common Stock remains outstanding and
unchanged; certain other events involving the Corporation and a 20% or more
stockholder occur; or, under certain circumstances, the Board of Directors
determines a 10% or more stockholder to be an Adverse Person, each Right not
then held by such person or related parties will entitle its holder to purchase,
at the Right's then current exercise price, Common Stock of the Corporation (or,
in certain circumstances as determined by the Board of Directors, a combination
of cash, property, Common Stock or other securities) having a value of twice the
Right's exercise price. In addition, at any time after a stockholder acquires a
20% or more equity interest in the Corporation, if the Corporation is involved
in a merger or other business combination transaction with another person in
which its Common Stock is changed or converted, or sells or transfers more than
50% of its assets or earning power to another person, each Right that has not
previously been exercised or voided will entitle its holder to purchase, at the
Right's then current exercise price, shares of common stock of such other person
having a value of twice the Right's exercise price. The Corporation generally is
entitled to redeem the Rights at $.01 per Right at any time until the Board of
Directors determines a 10% or more stockholder to be an Adverse Person or the
tenth day following public announcement that a 20% equity interest in the
Corporation has been acquired. The Rights Plan will expire on December 21, 1999
unless the Rights are earlier redeemed by the Corporation.
The adoption of the Rights Plan has the effect of making an unsolicited
takeover of the Corporation more difficult and more costly to any potential
acquiror in circumstances in which the Board of Directors determines that such
an unsolicited takeover is not in the best interests of the Corporation's
stockholders.
ANTI-TAKEOVER NATURE OF CERTAIN RESTATED ARTICLES, BY-LAWS AND MASSACHUSETTS LAW
PROVISIONS
Massachusetts General Laws Chapter 156B, Section 50A requires that
publicly-held Massachusetts corporations have a classified board of directors
consisting of three classes as nearly equal in size as possible, unless the
corporation elects not to be covered by Section 50A. Consequently, the Board of
Directors of the Corporation is divided into three classes, with each class
serving three years and with the terms of office of the respective classes
expiring in successive years. The Corporation's By-laws contain provisions which
give effect to Section 50A.
The Corporation's By-laws also provide that special meetings of
stockholders may be called upon written application of one or more stockholders
who hold at least 90% of the capital stock entitled to vote at the meeting. The
effect of this provision is to make it more difficult for the stockholders to
call a special meeting of stockholders. In addition, the Corporation's By-laws
require advance notice (i) for any business to be properly brought before a
stockholders' meeting by a stockholder and (ii) of nominations of persons for
election to the Board of Directors at the annual meeting.
The Corporation is subject to the provisions of Chapter 110F of the
Massachusetts General Laws, the so-called Business Combination Statute. Under
Chapter 110F, a Massachusetts corporation with over 200 stockholders, such as
the Corporation, may not engage in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person becomes an interested stockholder, unless (i) the interested
stockholder obtains the approval of the Board of Directors
15
<PAGE> 17
prior to becoming an interested stockholder, (ii) the interested stockholder
acquires 90% of the outstanding voting stock of the corporation (excluding
shares held by certain affiliates of the corporation) at the time it becomes an
interested stockholder, or (iii) the business combination is approved by both
the Board of Directors and the holders of two-thirds of the outstanding voting
stock of the corporation (excluding shares held by the interested stockholder).
An "interested stockholder" is a person who, together with affiliates and
associates, owns (or at any time within the prior three years did own) 5% or
more of the outstanding voting stock of the corporation. A "business
combination" includes a merger, a stock or assets sale, and other transactions
resulting in a financial benefit to the stockholders.
By vote of the Board of Directors, the Corporation has elected to be exempt
from the applicability of Massachusetts General Laws, Chapter 110D, entitled
"Regulation of Control Share Acquisitions." In general, this statute provides
that any stockholder of a corporation subject to this statute who acquires 20%
or more of the outstanding voting stock of a corporation (except in certain
transactions) may not vote such stock unless the stockholders of the corporation
so authorize. The Board of Directors may amend the Corporation's By-laws at any
time to subject the Corporation to this statute prospectively.
DESCRIPTION OF DEPOSITARY SHARES
GENERAL
The Corporation may, at its option, elect to offer Depositary Shares rather
than full shares of Preferred Stock. In the event such option is exercised, each
of the Depositary Shares will represent ownership of and entitlement to all
rights and preferences of a fraction of a share of Preferred Stock of a
specified series (including dividend, voting, redemption and liquidation
rights). The applicable fraction will be specified in the applicable Prospectus
Supplement. The shares of Preferred Stock represented by the Depositary Shares
will be deposited with a depositary (the "Preferred Stock Depositary") named in
the applicable Prospectus Supplement, under a deposit agreement (the "Deposit
Agreement") among the Corporation, Citibank, N.A. or another financial
institution, as Depositary, and the holders of certificates evidencing
Depositary Shares ("Depositary Receipts"). Depositary Receipts will be delivered
to those persons purchasing Depositary Shares in the offering. The Preferred
Stock Depositary will be the transfer agent, registrar and dividend disbursing
agent for the Depositary Shares. Holders of Depositary Receipts agree to be
bound by the Deposit Agreement, which requires holders to take certain actions
such as filing proof of residence and paying certain charges.
The description set forth herein and in any Prospectus Supplement of
certain provisions of the Deposit Agreement and of the Depositary Shares and
Depositary Receipts does not purport to be complete and is subject to and
qualified in its entirety by reference to the forms of Deposit Agreement and
Depositary Receipts and the Certificate of Designation relating to each series
of Preferred Stock which have been or will be filed as exhibits to or
incorporated by reference into the Registration Statement of which this
Prospectus is a part, at or prior to the issuance of Depositary Shares.
Upon surrender of Depositary Receipts at the office of the Preferred Stock
Depositary and upon payment of the charges provided in the Deposit Agreement and
subject to the terms thereof, a holder of Depositary Shares is entitled to have
the Preferred Stock Depositary deliver to such holder the whole shares of
Preferred Stock underlying the Depositary Shares evidenced by the surrendered
Depositary Receipts. Partial shares of Preferred Stock will not be issued. If
the Depositary Receipts delivered by the holder evidence a number of Depositary
Shares in excess of the number of Depositary Shares representing the number of
whole shares of Preferred Stock to be withdrawn, the Preferred Stock Depositary
will deliver to such holder at the same time a new Depositary Receipt evidencing
such excess number of Depositary Shares. Holders of Preferred Stock thus
withdrawn will not thereafter be entitled to deposit such shares under the
Deposit Agreement or to receive Depositary Receipts evidencing Depositary Shares
therefor.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Preferred Stock Depositary will distribute all cash dividends or other
cash distributions received in respect of the series of Preferred Stock
represented by the Depositary Shares to the record holders of
16
<PAGE> 18
Depositary Receipts relating to such Preferred Stock in proportion to the
respective number of Depositary Shares owned by such holders on the relevant
record date, which will be the same record date as the record date fixed by the
Corporation for the applicable series of Preferred Stock. The Preferred Stock
Depositary shall distribute only such amount, however, as can be distributed
without attributing to any holder of Depositary Shares a fraction of one cent,
and any balance not so distributed shall be added to and treated as part of the
next sum received by the Preferred Stock Depositary for distribution to record
holders of Depositary Shares.
In the event of a distribution other than in cash, the Preferred Stock
Depositary will distribute property received by it to the record holders of
Depositary Receipts entitled thereto, in proportion, as nearly as practicable,
to the respective number of Depositary Shares owned by such holders on the
relevant record date. If the Preferred Stock Depositary, after consultation with
the Corporation, determines that it is not feasible to make such distribution,
the Preferred Stock Depositary may, with the approval of the Corporation, adopt
any other method for such distribution as it deems appropriate, including the
sale of such property and distribution of the net proceeds from such sale to
such holders.
LIQUIDATION PREFERENCE
In the event of the liquidation, dissolution or winding up of the affairs
of the Corporation, whether voluntary or involuntary, the holders of each
Depositary Share will be entitled to the fraction of the liquidation preference
accorded each share of the applicable series of Preferred Stock, as set forth in
the related Prospectus Supplement.
REDEMPTION OF DEPOSITARY SHARES
If a series of Preferred Stock represented by the applicable series of
Depositary Shares is subject to redemption, such Depositary Shares will be
redeemed from the proceeds received by the Preferred Stock Depositary resulting
from the redemption, in whole or in part, of such series of Preferred Stock held
by the Preferred Stock Depositary. The redemption price per Depositary Share
will be equal to the applicable fraction of the redemption price per share
payable with respect to such series of Preferred Stock. Whenever the Corporation
redeems shares of Preferred Stock held by the Preferred Stock Depositary, the
Preferred Stock Depositary will redeem as of the same redemption date the number
of Depositary Shares representing the shares of Preferred Stock so redeemed. The
Preferred Stock Depositary will mail the notice of redemption promptly upon
receipt of such notice from the Corporation and not less than 35 nor more than
60 days prior to the date fixed for redemption of the Preferred Stock and the
Depositary Shares to the record holders of the Depositary Receipts. If less than
all of the Depositary Shares are to be redeemed, the Depositary Shares to be
redeemed will be selected by lot or pro rata as may be determined by the
Preferred Stock Depositary.
After the date fixed for redemption, the Depositary Shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of such Depositary Shares will cease, except the right to receive the
moneys payable upon such redemption and any money or other property to which the
holders of such Depositary Shares were entitled upon such redemption upon
surrender to the Preferred Stock Depositary of the Depositary Receipts
evidencing such Depositary Shares.
VOTING
Promptly upon receipt of notice of any meeting at which the holders of the
series of Preferred Stock represented by an applicable series of Depositary
Shares are entitled to vote, the Preferred Stock Depositary will mail the
information contained in such notice of meeting to the record holders of the
Depositary Receipts relating to such Preferred Stock. Each record holder of such
Depositary Receipts on the record date (which will be the same date as the
record date for the related Preferred Stock) will be entitled to instruct the
Preferred Stock Depositary as to the exercise of the voting rights pertaining to
the number of shares of Preferred Stock underlying such holder's Depositary
Shares. The Preferred Stock Depositary will endeavor, insofar as practicable, to
vote the number of shares of Preferred Stock underlying such Depositary Shares
in accordance with such instructions, and the Corporation will agree to take all
action which may be deemed necessary by the Preferred Stock Depositary in order
to enable the Preferred Stock Depositary to do so. The
17
<PAGE> 19
Preferred Stock Depositary will abstain from voting shares of Preferred Stock to
the extent it does not receive specific instructions from the holders of
Depositary Receipts relating to such Preferred Stock.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between the Corporation and the Preferred Stock Depositary. However, unless
otherwise indicated in the applicable Prospectus Supplement, any amendment which
materially and adversely alters the rights of the existing holders of Depositary
Shares will not be effective unless such amendment has been approved by the
record holders of a majority of the Depositary Shares then outstanding. No such
amendment may impair the rights, subject to the terms of the Deposit Agreement,
of any owner of any Depositary Shares to surrender the Depositary Receipts
evidencing such Depositary Shares with instructions to the Preferred Stock
Depositary to deliver to the holder the Preferred Stock and all money and other
property, if any, represented thereby, except in order to comply with mandatory
provisions of applicable law. A Deposit Agreement may be terminated by the
Corporation or the Preferred Stock Depositary only if (i) all outstanding
Depositary Shares relating thereto have been redeemed or surrendered by the
holders thereof or (ii) there has been a final distribution in respect of the
Preferred Stock of the relevant series in connection with any liquidation,
dissolution or winding up of the Corporation and such distribution has been
distributed to the holders of the related Depositary Shares.
CHARGES OF PREFERRED STOCK DEPOSITARY
The Corporation will pay all transfer and other taxes and governmental
charges arising solely from the existence of the Preferred Stock Depositary
arrangements. The Corporation will pay charges of the Preferred Stock Depositary
in connection with the initial deposit of the Preferred Stock and any redemption
of the Preferred Stock and all withdrawals of Preferred Stock by owners of
Depositary Shares. Holders of Depositary Shares will pay transfer and other
taxes and governmental charges and such other charges as are expressly provided
in the Deposit Agreement to be for their accounts.
MISCELLANEOUS
The Preferred Stock Depositary will forward to the holders of Depositary
Shares all reports and communications from the Corporation which are delivered
to the Preferred Stock Depositary and which the Corporation is required to
furnish to the holders of Preferred Stock. In addition, the Preferred Stock
Depositary will make available for inspection by holders of Depositary Receipts
at the principal office of the Preferred Stock Depositary, and at such other
places as it may from time to time deem advisable, any reports and
communications received from the Corporation which are received by the Preferred
Stock Depositary as the holder of Preferred Stock.
Neither the Preferred Stock Depositary nor the Corporation will be liable
if it is prevented or delayed by law or any circumstance beyond its control in
performing its respective obligations under the Deposit Agreement. Neither the
Preferred Stock Depositary nor the Corporation shall be liable under the Deposit
Agreement except for its negligence or willful misconduct. The obligations of
the Corporation and the Preferred Stock Depositary under the Deposit Agreement
will be limited to performance in good faith of their duties thereunder and they
will not be obligated to prosecute or defend any legal proceeding in respect of
any Depositary Shares or Preferred Stock unless satisfactory indemnity is
furnished. In the performance of their duties, the Corporation and the Preferred
Stock Depositary may rely upon (a) written advice of counsel or accountants, (b)
information provided by persons presenting Preferred Stock for deposit, by
holders of Depositary Shares or by other persons believed to be competent, and
(c) documents believed by them to be genuine.
RESIGNATION AND REMOVAL OF PREFERRED STOCK DEPOSITARY
The Preferred Stock Depositary may resign at any time by delivering to the
Corporation notice of its election to do so, and the Corporation may at any time
remove the Preferred Stock Depositary, any such resignation or removal to take
effect upon the appointment of a successor Preferred Stock Depositary and its
acceptance of such appointment. Such successor Preferred Stock Depositary must
be appointed within 90
18
<PAGE> 20
days after delivery of the notice of resignation or removal and must be a bank
or trust company having its principal office in the United States and having a
combined capital and surplus of at least $50,000,000.
FEDERAL INCOME TAX CONSEQUENCES
Owners of the Depositary Shares will be treated for federal income tax
purposes as if they were owners of the Preferred Stock represented by such
Depositary Shares. Accordingly, such owners will be entitled to take into
account for federal income tax purposes income and deductions to which they
would be entitled if they were holders of such Preferred Stock. In addition, (i)
no gain or loss will be recognized for federal income tax purposes upon the
withdrawal of Preferred Stock in exchange for Depositary Shares, (ii) the tax
basis of each share of Preferred Stock to an exchanging owner of Depositary
Shares will, upon such exchange, be the same as the aggregate tax basis of the
Depositary Shares exchanged therefor, and (iii) the holding period for Preferred
Stock in the hands of an exchanging owner of Depositary Shares will include the
period during which such person owned such Depositary Shares.
DESCRIPTION OF WARRANTS
GENERAL
The Corporation may issue warrants ("Warrants"), including Warrants to
purchase Debt Securities or Warrants to purchase Common Stock. Warrants may be
issued independently or together with Debt Securities, Preferred Stock or
Depositary Shares offered by any Prospectus Supplement and may be attached to or
separate from such Debt Securities, Preferred Stock or Depositary Shares. Each
series of Warrants will be issued under a separate warrant agreement (each a
"Warrant Agreement" and collectively, the "Warrant Agreements") to be entered
into between the Corporation and a warrant agent (the "Warrant Agent"), all as
set forth in the applicable Prospectus Supplement. The Warrant Agent will act
solely as an agent of the Corporation in connection with the Warrant
certificates relating to the Warrants and will not assume any obligation or
relationship of agency or trust for or with any holders of Warrant certificates
or beneficial owners of Warrants.
The following summaries of certain provisions of the Warrant Agreements and
the Warrants do not purport to be complete and are subject to, and are qualified
in their entirety by reference to, all the provisions of the Warrant Agreement
and the Warrant certificates relating to each series of Warrants which will be
filed as an exhibit or incorporated by reference into the Registration Statement
of which this Prospectus is a part at or prior to the time of the issuance of
such series of Warrants.
If Warrants are offered, the applicable Prospectus Supplement will describe
the terms of such Warrants, including the following, where applicable: (i) the
offering price; (ii) the number, amount, designation, exercise price and terms,
as the case may be, of Common Stock or Debt Securities purchasable upon exercise
of such Warrants (the "Warrant Securities"); (iii) the designation and terms of
any series of Debt Securities, Preferred Stock or Depositary Shares with which
Warrants are being offered and the number of such Warrants being offered with
each such Debt Security, share of Preferred Stock or Depositary Share; (iv) the
date, if any, on and after which such Warrants and the related series of Debt
Securities, Preferred Stock or Depositary Shares will be transferable
separately; (v) the date on which the right to exercise such Warrants shall
commence and the date on which such right shall expire (the "Expiration Date");
(vi) whether the Warrants will be issued in registered or bearer form; (vii) any
special federal income tax consequences; (viii) the terms, if any, on which the
Corporation may accelerate the date by which the Warrants must be exercised; and
(ix) any other terms of such Warrants.
Warrant certificates may (i) be exchanged for new Warrant certificates of
different denominations, (ii) if in registered form, be presented for
registration of transfer, and (iii) be exercised at the corporate trust office
of the Warrant Agent or any other office indicated in the applicable Prospectus
Supplement. Prior to the exercise of any Warrant to purchase Debt Securities,
holders of such Warrants will not have any of the rights of holders of Debt
Securities purchasable upon such exercise, including the right to receive
payments of principal of, premium, if any, or interest, if any, on such Debt
Securities or to enforce covenants in the
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<PAGE> 21
applicable Indenture. Prior to the exercise of any Warrants to purchase Common
Stock, holders of such Warrants will not have any rights of holders of such
Common Stock, including the right to receive payments of dividends, if any, or
to exercise voting rights.
Any Warrants issued by the Corporation will involve a certain degree of
risk, including risks arising from fluctuations in the price of the underlying
securities and general risks applicable to the securities market (or markets) on
which the underlying securities are traded. These risks reflect the nature of a
Warrant as an asset which, other factors held constant, tends to decline in
value over time and which becomes worthless upon expiration. Prospective
purchasers of the Warrants should be experienced with respect to options and
option transactions and understand the risks associated with options.
EXERCISE OF WARRANTS
Each Warrant will entitle the holder thereof to purchase such principal
amount of Debt Securities or number of shares of Common Stock, as the case may
be, at such exercise price as shall in each case be set forth in, or calculable
from, the applicable Prospectus Supplement. After the close of business on the
Expiration Date (or such later date to which such Expiration Date may be
extended by the Corporation), unexercised Warrants will become void.
Warrants may be exercised by delivering to the Warrant Agent payment as
provided in the applicable Prospectus Supplement of the amount required to
purchase the Debt Securities or Common Stock, as the case may be, purchasable
upon such exercise, together with certain information set forth on the reverse
side of the Warrant certificate. Warrants will be deemed to have been exercised
upon receipt of payment of the exercise price, subject to receipt within 5
business days of the Warrant certificate evidencing such Warrants. Upon receipt
of such payment and the Warrant certificate properly completed and duly executed
at the office of the Warrant Agent or any other office indicated in the
applicable Prospectus Supplement, the Corporation will, as soon as practicable,
issue and deliver the Debt Securities or Common Stock, as the case may be,
purchasable upon such exercise. If fewer than all of the Warrants represented by
such Warrant certificate are exercised, a new Warrant certificate will be issued
for the remaining Warrants.
AMENDMENTS AND SUPPLEMENTS TO WARRANT AGREEMENTS
The Warrant Agreements may be amended or supplemented without the consent
of the holders of the Warrants issued thereunder to effect changes that are not
inconsistent with the provisions of the Warrants and that do not adversely
affect the interests of the holders of the Warrants.
COMMON STOCK WARRANT ADJUSTMENTS
Unless otherwise specified in the applicable Prospectus Supplement, the
exercise price of, and the number of shares of Common Stock purchasable upon
exercise of a Warrant to purchase Common Stock will be subject to adjustment in
certain events as set forth in the applicable Prospectus Supplement.
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<PAGE> 22
PLAN OF DISTRIBUTION
The Corporation may sell Securities (1) through underwriters or dealers,
(2) directly to one or more purchasers, or (3) through agents. The applicable
Prospectus Supplement will set forth the terms of the Securities offered
thereby, including the name or names of any underwriters, the purchase price of
the Securities, and the proceeds to the Corporation from the sale, any
underwriting discounts and other items constituting underwriters' compensation,
any initial public offering price, any discounts or concessions allowed or
reallowed or paid to dealers, and any securities exchange or market on which the
Securities may be listed.
If underwriters are used in the sale, the Securities will be acquired by
the underwriters for their own account and may be resold from time to time in
one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. The
obligations of the underwriters to purchase the Securities will be subject to
certain conditions precedent, and the underwriters will be obligated to purchase
all the Securities of the series offered by the applicable Prospectus Supplement
if any of the Securities are purchased. Any initial public offering price and
any discounts or concessions allowed or reallowed or paid to dealers may be
changed from time to time.
Securities may also be sold directly by the Corporation through agents
designated by the Corporation from time to time. Any agent involved in the
offering and sale of Securities in respect of which this Prospectus is delivered
will be named, and any commissions payable by the Corporation to such agent will
be set forth, in the applicable Prospectus Supplement. Unless otherwise
indicated in the applicable Prospectus Supplement, any such agent will be acting
on a best-efforts basis for the period of its appointment.
The distribution of Securities may be effected from time to time in one or
more transactions at a fixed price or prices, which may be changed, at prices
related to prevailing market prices at the time of sale or at negotiated prices.
In connection with the sale of Securities, underwriters or agents may
receive compensation from the Corporation or from purchasers of Securities for
whom they may act as agent, in the form of discounts, concessions or
commissions. Underwriters, dealers and agents that participate in the
distribution of Securities may be deemed to be underwriters within the meaning
of the Securities Act, and any discounts or commissions received by them from
the Corporation and any profit on the resale of Securities by them may be deemed
to be underwriting discounts and commissions under the Securities Act.
If so indicated in the applicable Prospectus Supplement, the Corporation
will authorize underwriters, agents or dealers to solicit offers by certain
institutions to purchase Securities from the Corporation at the public offering
price set forth in the Prospectus Supplement pursuant to delayed delivery
contracts ("Contracts") providing for payment and delivery on the date or dates
stated in the applicable Prospectus Supplement. There may be limitations on the
minimum amount which may be purchased by any such institutional investor or on
the portion of the aggregate amount of the particular Securities which may be
sold pursuant to such arrangements. Institutions with whom Contracts, when
authorized, may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions, and other institutions but will in all cases be subject to the
approval of the Corporation. Contracts will not be subject to any conditions
except: (a) the purchase by an institution of the Securities covered by its
Contract 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 Securities are being sold to underwriters, the Corporation shall have
sold to such underwriters the total amount of the Securities less the amount
thereof covered by Contracts. The underwriters will not have any responsibility
in respect of the validity or performance of the Contracts.
Unless otherwise indicated in the applicable Prospectus Supplement, all
Securities offered will be a new issue of securities with no established trading
market. Any underwriters to whom such Securities are sold by the Corporation for
public offering and sale may make a market in such Securities, but such
underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. No assurance can be given as to the liquidity
of or the trading markets for any such Securities.
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<PAGE> 23
Agents and underwriters may engage in transactions with, or perform
services for, the Corporation in the ordinary course of business.
Under agreements which may be entered into by the Corporation, dealers and
agents who participate in the distribution of Securities may be entitled, and
the Corporation has agreed that underwriters, if any, will be entitled, to
indemnification by the Corporation against certain liabilities, including
liabilities under the Securities Act.
LEGAL OPINIONS
The validity of the Offered Securities will be passed upon for the
Corporation by Testa, Hurwitz & Thibeault, Boston, Massachusetts, and for any
underwriters, dealers or agents by Goodwin, Procter & Hoar, Boston,
Massachusetts. From time to time, Goodwin, Procter & Hoar serves as special
counsel to the Corporation as to certain environmental matters.
EXPERTS
The consolidated balance sheets of the Corporation as of July 3, 1993 and
June 27, 1992, and the related consolidated statements of operations, cash
flows, and stockholders' equity for each of the three years in the period ended
July 3, 1993, and the related financial statement schedules, all included in the
Corporation's Annual Report on Form 10-K for the fiscal year ended July 3, 1993,
as amended by Form 10-K/A dated March 11, 1994, incorporated by reference in
this Prospectus, have been incorporated herein in reliance on the report, which
includes an explanatory paragraph indicating that the Corporation changed its
method of accounting for post retirement benefits other than pensions in 1992,
of Coopers & Lybrand, independent accountants, given on the authority of that
firm as experts in accounting and auditing.
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<PAGE> 24
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated costs and expenses (other than
underwriting discounts and commissions) payable in connection with the
distribution of the Securities registered hereby.
<TABLE>
<CAPTION>
AMOUNT
--------
<S> <C>
Securities and Exchange Commission registration fee............ $344,828
Printing and engraving expenses................................ 8,000
Legal fees and expenses........................................ 75,000
Accounting fees and expenses................................... 20,000
Blue Sky fees and expenses (including legal fees).............. 1,000
Trustee fees and expenses...................................... 2,500
Depositary fees and expenses................................... 10,000
Rating agency fees............................................. 135,000
Miscellaneous.................................................. 53,672
--------
Total................................................ $650,000
--------
--------
</TABLE>
All of the above are estimated except the Securities and Exchange
Commission registration fee.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Any Underwriters who execute either the Underwriting Agreement for Debt
Securities and Warrants to Purchase Debt Securities or the Underwriting
Agreement for Preferred Shares, Depositary Shares and Warrants to Purchase
Equity Securities filed as Exhibit 1.1 and Exhibit 1.2, respectively, to this
Registration Statement, will agree to indemnify the Corporation's directors and
officers who sign this Registration Statement against certain liabilities which
might arise under the Securities Act of 1933 (the "Act") from information
furnished to the Corporation by or on behalf of any such indemnifying party.
The Corporation is required by its By-laws generally to indemnify any
director, officer or employee against all expenses and liabilities reasonably
incurred by or imposed upon such person in connection with any legal action in
which such person is involved by reason of such person's position with the
Corporation unless such person shall have been finally adjudicated in any
action, suit or proceeding not to have acted in good faith in the reasonable
belief that such person's action was in the best interests of the Corporation.
The Corporation may pay expenses incurred by any such person in defending a
civil or criminal action or proceeding in advance of the final disposition of
such action upon the Corporation's receipt of the undertaking of such person to
repay such amount if such person shall be adjudicated not to be entitled to
indemnification.
The Corporation's Restated Articles include a provision limiting the
personal liability of a director of the Corporation to its stockholders for
monetary damages for breaches of their fiduciary duty except (i) for any breach
of the director's duty of loyalty to the Corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) under section sixty-one or sixty-two of
Chapter 156B of the Massachusetts General Laws, or (iv) for any transaction from
which the director derived an improper personal benefit.
Directors and officers are also insured against certain liabilities under
directors and officers' liability insurance policies maintained by the
Corporation.
II-1
<PAGE> 25
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE
------ ------------------------------------------------------------------------- ----
<C> <S> <C>
1.1+ --Form of Underwriting Agreement for Debt Securities and Warrants to
Purchase Debt Securities...............................................
1.2+ --Form of Underwriting Agreement for Preferred Shares, Depositary Shares
and Warrants to Purchase Equity Securities.............................
4.1+ --Indenture relating to the Senior Debt Securities dated as of September
15, 1992 between Citibank, N.A., as Trustee, and the Corporation
(including form of Senior Debt Securities), filed as Exhibit 4 to the
Corporation's Registration Statement on Form S-3, Registration Number
33-51378, filed on August 27, 1992, is hereby incorporated by
reference..............................................................
4.2+ --Form of Indenture relating to the Subordinated Debt Securities between
Bankers Trust Company, as Trustee, and the Corporation (including form
of Subordinated Debt Securities).......................................
4.3+ --Articles of Amendment filed with the Secretary of State of the
Commonwealth of Massachusetts on November 4, 1993......................
4.4* --Specimen Certificate of Preferred Stock of the Corporation.............
4.5+ --Form of Depositary Receipt (included in Exhibit 4.6)...................
4.6+ --Form of Deposit Agreement..............................................
4.7+ --Form of Standard Debt Securities Warrant Agreement Provisions..........
4.8+ --Form of Standard Common Stock Warrant Agreement Provisions.............
5 + --Opinion of Testa, Hurwitz & Thibeault, counsel to the Corporation, as
to the legality of the Securities being registered.....................
12 + --Computation of ratio of earnings to fixed charges......................
23.1++ --Consent of Coopers & Lybrand...........................................
23.2+ --Consent of Testa, Hurwitz & Thibeault (included in Exhibit 5)..........
24.1+ --Power of Attorney......................................................
25 + --Statement of Eligibility and Qualification of Subordinated Debt
Securities Trustee on Form T-1.........................................
</TABLE>
- ---------------
* To be filed by amendment or incorporated herein by reference.
+ Previously filed.
++ Filed herewith.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant
II-2
<PAGE> 26
pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934
(the "Exchange Act") that are incorporated by reference in this Registration
Statement;
(2) That for the purpose of determining any liability under the Act, each
such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof;
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering;
(4) That, for purposes of determining any liabilities under the Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in the form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Act shall be deemed to be part of this Registration Statement as of
the time it was declared effective;
(5) That, for the purpose of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof; and
(6) To file an application for the purpose of determining the eligibility
of the trustee, with respect to the Indenture relating to the Subordinated Debt
Securities, to act under Subsection (a) of Section 310 of the Trust Indenture
Act in accordance with the rules and regulations prescribed by the Commission
under Section 305(b)(2) of such Act.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Act, each filing of the Registrant's annual
report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Corporation
pursuant to the foregoing provisions described in Item 15 above and under an
Underwriting Agreement, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-3
<PAGE> 27
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 2 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the Town of Maynard and the Commonwealth of
Massachusetts, on this 11th day of March 1994.
DIGITAL EQUIPMENT CORPORATION
GAIL S. MANN
By:.................................
GAIL S. MANN
SECRETARY AND CLERK
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to the Registration Statement has been signed by the following persons in
the capacities indicated below on the 11th day of March, 1994:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
- ------------------------------------------ ---------------------------------
<C> <S> <C>
ROBERT B. PALMER* President, Chief Executive
........................................ Officer (Principal Executive
ROBERT B. PALMER Officer) and Director
WILLIAM M. STEUL* Vice President -- Finance and
........................................ Chief Financial Officer
WILLIAM M. STEUL (Principal Financial Officer)
VINCENT J. MULLARKEY* Vice President and Corporate
........................................ Controller (Principal Accounting
VINCENT J. MULLARKEY Officer)
VERNON R. ALDEN* Director
........................................
VERNON R. ALDEN
PHILIP CALDWELL* Director
........................................
PHILIP CALDWELL
COLBY H. CHANDLER* Director
........................................
COLBY H. CHANDLER
ARNAUD DE VITRY* Director
........................................
ARNAUD DE VITRY
ROBERT R. EVERETT* Director
........................................
ROBERT R. EVERETT
KATHLEEN F. FELDSTEIN* Director
........................................
KATHLEEN F. FELDSTEIN
</TABLE>
II-4
<PAGE> 28
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
- ------------------------------------------ ---------------------------------
<C> <S> <C>
THOMAS P. GERRITY* Director
........................................
THOMAS P. GERRITY
THOMAS L. PHILLIPS* Director
........................................
THOMAS L. PHILLIPS
DELBERT C. STALEY* Director
........................................
DELBERT C. STALEY
</TABLE>
GAIL S. MANN
*By:.....................................
GAIL S. MANN
ATTORNEY-IN-FACT
II-5
<PAGE> 1
EXHIBIT 23.1
CONSENT OF CERTIFIED PUBLIC ACCOUNTANTS
We consent to the inclusion in this amendment no. 2 to the registration
statement on form S-3 of our reports dated July 28, 1993, on our audits of the
financial statements and financial statement schedules of Digital Equipment
Corporation. We also consent to the reference to our firm under the caption
"Experts."
COOPERS & LYBRAND
Boston, Massachusetts
March 11, 1994
