<PAGE>
File No. 33-50983
Rule 424(b)(5)
Prospectus Supplement
(To Prospectus dated August 2, 1994)
W. R. Grace & Co.-Conn.
$300,000,000
8% NOTES DUE 2004
Unconditionally guaranteed by
W. R. Grace & Co.
INTEREST PAYABLE FEBRUARY 15 AND AUGUST 15
Issue price: 99.794%
The Notes will bear interest from August 9, 1994 at the rate of 8% per annum,
payable semiannually on February 15 and August 15, commencing February 15, 1995.
The Notes will not be redeemable prior to maturity on August 15, 2004 and will
not be subject to any sinking fund. See "Description of Notes and Guarantees"
herein.
All of the Notes will initially be represented by Global Securities (each a
"Global Note"), which will be deposited with The Depository Trust Company
("DTC") and registered in the name of its nominee. Beneficial ownership of the
Notes will be limited to institutions that have accounts with DTC
("Participants") or persons that hold interests through Participants. A
beneficial interest in a Global Note will be shown on, and transfers thereof
will be effected only through, records maintained by the Participants. A
beneficial interest in a Global Note will be exchanged for Notes in certificated
form only under limited circumstances. See "Description of Debt Securities and
Guarantees -- Book-Entry Debt Securities" in the accompanying Prospectus.
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 SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Underwriting
Price to discounts and Proceeds to
Public (1) commissions (2) Company (1)(3)
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
Per Note 99.794% .650% 99.144%
- --------------------------------------------------------------------------------------------------
Total $299,382,000 $1,950,000 $297,432,000
- --------------------------------------------------------------------------------------------------
</TABLE>
(1) Plus accrued interest, if any, from August 9, 1994.
(2) The Company and the Guarantor have agreed to indemnify the Underwriters
against certain liabilities, including liabilities under the Securities Act
of 1933.
(3) Before deduction of expenses, payable by the Company, estimated at $250,000.
The Notes are offered, subject to prior sale, when, as and if accepted by the
Underwriters and subject to approval of certain legal matters by Shearman &
Sterling, counsel for the Underwriters. It is expected that delivery of the
Global Notes will be made on or about August 9, 1994 through the facilities of
DTC, against payment therefor in next-day funds.
J.P. Morgan Securities Inc.
Citicorp Securities, Inc.
Merrill Lynch & Co.
Salomon Brothers Inc
August 2, 1994
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
No dealer, salesman or other person has been authorized to give any
information or to make any representations other than those contained or
incorporated by reference in this Prospectus Supplement and the accompanying
Prospectus in connection with the offer made by this Prospectus Supplement and
the accompanying Prospectus and, if given or made, such information or
representations must not be relied upon as having been authorized by the
Company, the Guarantor or any Underwriter. This Prospectus Supplement and the
accompanying Prospectus do not constitute an offer to sell or a solicitation of
an offer to buy any security in any jurisdiction in which or to any person to
whom it is unlawful to make such offer or solicitation. Neither the delivery of
this Prospectus Supplement and the accompanying Prospectus nor any sale made
hereunder and thereunder shall under any circumstances create an implication
that there has been no change in the affairs of the Company or the Guarantor
since the date hereof.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
---------
PROSPECTUS SUPPLEMENT
<S> <C>
Grace............................................................................. S-3
Use of Proceeds................................................................... S-3
Capitalization.................................................................... S-4
Selected Consolidated Financial Data.............................................. S-5
Description of Notes and Guarantees............................................... S-6
Underwriting...................................................................... S-6
PROSPECTUS
Available Information............................................................. 2
Documents Incorporated by Reference............................................... 2
Grace............................................................................. 3
Use of Proceeds................................................................... 3
Grace Financial Information....................................................... 3
Description of Debt Securities and Guarantees..................................... 3
Description of Warrants........................................................... 20
Plan of Distribution.............................................................. 21
Legal Opinions.................................................................... 22
Experts........................................................................... 23
</TABLE>
S-2
<PAGE>
GRACE
Grace is primarily engaged in the specialty chemical business on a worldwide
basis and in specialized health care activities. In its chemical operations,
Grace develops, manufactures and markets specialty chemicals and materials and
related application systems. In health care, Grace is primarily engaged in
supplying kidney dialysis and home infusion and respiratory therapy services and
products.
As used herein, the term "Company" refers to W. R. Grace & Co.-Conn., a
Connecticut corporation wholly owned by W. R. Grace & Co.; the term "Guarantor"
refers to W. R. Grace & Co., a New York corporation; and the term "Grace" refers
to the Guarantor and/or one or more of its subsidiaries.
USE OF PROCEEDS
The net proceeds from the sale of the Notes will be used by the Company to
repay commercial paper borrowings and/or bank borrowings, with various
maturities and bearing interest at various rates, that were incurred to finance
capital expenditures and working capital requirements and for other general
corporate purposes. Pending such use, the proceeds may be temporarily invested.
Information concerning Grace's capital expenditures is set forth in the
documents incorporated herein by reference. Morgan Guaranty Trust Company of New
York and J.P. Morgan Delaware, banking affiliates of J.P. Morgan Securities
Inc., and Citibank, N.A., a banking affiliate of Citicorp Securities, Inc., are
currently lenders to Grace. If the proceeds of this offering are used to repay
bank borrowings, a portion of the proceeds may be received by these banking
affiliates. See "Underwriting".
S-3
<PAGE>
CAPITALIZATION
The following table sets forth Grace's consolidated capitalization at March
31, 1994 and as adjusted to give effect to (1) the sale of the Notes offered
hereby and the application of the net proceeds therefrom (estimated at $297.4
million) to repay commercial paper borrowings and/or bank borrowings and (2) an
after-tax charge of $200.0 million, recorded in the second quarter of 1994,
relating to a May 1994 decision of the United States Court of Appeals for the
Second Circuit that had the effect of reducing the amount of insurance coverage
available to Grace with respect to asbestos property damage litigation and
claims.
<TABLE>
<CAPTION>
MARCH 31, 1994
ACTUAL AS ADJUSTED
------ -----------
(DOLLARS IN
MILLIONS)
<S> <C> <C>
SHORT-TERM DEBT (1):
Commercial paper and bank borrowings (2)................ $ 332 $ 35
Current maturities of long-term debt.................... 6 6
Other short-term borrowings............................. 371 371
------ -----------
Total short-term debt............................. $ 709 $ 412
------ -----------
------ -----------
LONG-TERM DEBT (1):
Commercial paper and bank borrowings (2)................ $ 510 $ 510
Notes offered hereby.................................... - 300
7.4% Notes Due 2000..................................... 300 300
7.75% Notes Due 2002.................................... 150 150
6.5% Notes Due 1995..................................... 150 150
Sundry indebtedness (due 1994 - 2003)................... 38 38
------ -----------
1,148 1,448
Less amounts due within one year........................ 6 6
------ -----------
Total long-term debt.................................. 1,142 1,442
------ -----------
MINORITY INTERESTS........................................ 297 297
------ -----------
SHAREHOLDERS' EQUITY:
Capital stock:
Preferred stocks...................................... 7 7
Common stock (93,909,000 shares outstanding).......... 94 94
Paid in capital......................................... 302 302
Retained earnings....................................... 1,202 1,002
Cumulative translation adjustments...................... (81) (81)
------ -----------
Total shareholders' equity........................ 1,524 1,324
------ -----------
------ -----------
Total capitalization...................................... $2,963 $3,063
------ -----------
------ -----------
<FN>
- ------------------------
(1) This table does not reflect the sale, subsequent to March 31, 1994, of
$108.5 million principal amount of Medium-Term Notes or the application of
the $108.1 million of net proceeds therefrom to repay commercial paper
borrowings and/or bank borrowings. The Medium-Term Notes mature at various
dates from 1996 to 1999 and bear interest at rates from 6.55% to 7.84% per
annum or at floating rates based on LIBOR.
(2) Under its bank revolving credit agreement, Grace may borrow up to $1,225
million at interest rates based upon the prevailing prime, federal funds
and/or Eurodollar rates. Of the $1,225 million, approximately $715 million
is available under a 364-day facility expiring August 29, 1994, and the
remainder is available under a three-year facility expiring September 1,
1995. At March 31, 1994, borrowings of $63 million were outstanding under
the revolving credit agreement; these borrowings are included in Long-Term
Debt - Commercial paper and bank borrowings above. At March 31, 1994, $779
million was reserved to support commercial paper borrowings and other bank
borrowings outstanding, leaving net unused credit facilities of $383
million. Grace's ability to borrow the maximum amounts available under
these facilities is subject to compliance with certain covenants, including
minimum net worth and interest coverage requirements. Grace believes that,
as of March 31, 1994, after giving effect to the sale of the Notes offered
hereby, the financings referred to in Note (1) above and the after-tax
charge referred to in the above table, it would have been able to borrow
from approximately $409 million to $789 million of additional funds under
the revolving credit agreement, depending upon the application of the
proceeds of such borrowings.
</TABLE>
S-4
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data set forth below have been derived
from the consolidated financial statements previously filed with the SEC. The
following information should be read in conjunction with the consolidated
financial statements and related notes included in Grace's reports filed under
the Exchange Act that are incorporated by reference in the Prospectus. See
"Documents Incorporated by Reference" in the Prospectus.
Separate financial information for the Company is not included herein or in
reports filed by the Guarantor pursuant to the Exchange Act, as the Guarantor is
a holding company and has no substantial operations other than those conducted
by the Company and its subsidiaries. The assets and pretax income of the Company
and its consolidated subsidiaries are substantially equivalent to those of the
Guarantor and its consolidated subsidiaries.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
-------------------------------------------------- ---------------------
1989 1990 1991 1992 1993 1993 1994
------ ------ --------- ---------- --------- --------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Sales and revenues (1).............. $3,820 $4,310 $4,387 $4,337 $4,408 $ 986 $1,077
Interest expense.................... 121 137 115 90 82 19(2) 16(2)
Income from continuing operations
before income taxes................ 208 272 334(3) 193(4) 221(5) 54 49
Income from continuing operations... 146 175 202 58 134 32 38
Income (loss) from discontinued
operations......................... 107 28 17 (162) (108) (3) --
Cumulative effect of accounting
changes............................ -- -- -- (190)(6) -- -- --
Net income (loss)................... 253 203 219 (294) 26 28 38
Ratio of earnings to fixed charges
(7)................................ 1.82x 1.99x 2.34x 1.92x 2.51x 2.41x 2.52x
Ratio of earnings to combined fixed
charges and preferred stock
dividends (7)...................... 1.81x 1.98x 2.33x 1.91x 2.50x 2.40x 2.51x
CASH FLOW DATA:
Net pretax cash flows provided by
(used for) operating activities of
continuing operations.............. $ 125 $ 378 $ 559 $ 359 $ 302 (168) (68)
Depreciation and amortization....... 199 227 233 225 228 53(8) 59
Capital expenditures................ 485 514 447 398 310 69 71
Businesses acquired in purchase
transactions, net of cash
acquired........................... 125 187 131 61 307 74 24
Net proceeds from divestments....... 380 -- 366 221 465 268 49
Dividends........................... 120 121 123 126 128 32 33
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital..................... $ 577 $ 700 $ 368 $ 452 $ 280(9) $ 660 $ 324(9)
Property and equipment, net......... 2,220 2,462 2,558 1,708 1,454 1,713 1,449
Total assets........................ 5,619 6,227 6,007 5,599 6,109 5,642 6,157
Short-term debt..................... 379 322 466 465 533 337 709
Long-term debt...................... 1,638 1,964 1,793 1,354 1,173 1,671 1,142
Total shareholders' equity.......... 1,730 1,913 2,025 1,545 1,518 1,510 1,524(10)
<FN>
- ----------------------------------
(1) Sales and revenues for the years 1989 through 1992 include sales and
revenues of divested units.
(2) Does not include financing-related costs of $1 million and $5 million for
the three months ended March 31, 1993 and 1994, respectively.
(3) Includes net gains on strategic restructuring of $6.1 million for 1991.
(4) Includes a provision of $140 million relating to a fumed silica plant in
Belgium.
(5) Includes a provision of $159 million relating to asbestos-related insurance
coverage.
(6) Grace adopted Statement of Financial Accounting Standards ("SFAS") No. 106,
relating to accounting for certain postretirement benefits, in 1992. The
adoption of SFAS No. 106, concurrent with the adoption of SFAS No. 109
(relating to accounting for income taxes), resulted in a charge of $190
million, net of $98 million of deferred income taxes.
(7) Calculation excludes discontinued operations.
(8) Includes a credit of $2 million relating to financing-related costs for the
three months ended March 31, 1993.
(9) Excludes the current portion of minority interests.
(10) Does not reflect an after-tax charge of $200 million recorded in the second
quarter of 1994. See "Capitalization".
</TABLE>
S-5
<PAGE>
DESCRIPTION OF NOTES AND GUARANTEES
The following description of the terms of the Notes and Guarantees offered
hereby supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of the Debt Securities and the
Guarantees (each as defined in the Prospectus) set forth under the heading
"Description of Debt Securities and Guarantees" in the Prospectus, to which
description reference is hereby made. Whenever particular defined terms used in
the Indenture (as defined in the Prospectus) are referred to, such defined terms
are incorporated herein by reference.
GENERAL
The Notes will be limited to $300,000,000 aggregate principal amount and
will mature on August 15, 2004. Each Note will bear interest at the rate per
annum shown on the cover page of this Prospectus Supplement from August 9, 1994
or from the most recent Interest Payment Date to which interest has been paid or
provided for, payable semiannually in arrears on February 15 and August 15 of
each year, commencing February 15, 1995, to the person in whose name the Note
(or any predecessor Note) is registered at the close of business on the February
1 or August 1, as the case may be, next preceding such Interest Payment Date.
The Notes will be issued only in registered form without coupons in
denominations of $1,000 and integral multiples thereof.
The Notes will be unconditionally guaranteed by the Guarantor as described
in the Prospectus.
The Notes may not be redeemed prior to maturity and will not be subject to
the operation of any sinking fund.
The defeasance and covenant defeasance provisions of the Indenture described
under "Description of Debt Securities and Guarantees -- Defeasance and Covenant
Defeasance" in the Prospectus will apply to the Notes.
BOOK-ENTRY NOTES
Except in certain limited circumstances, the Notes will be issued only in
the form of Global Notes that will be deposited with, or on behalf of, DTC and
registered in the name of its nominee. See "Description of Debt Securities and
Guarantees--Book-Entry Debt Securities" in the Prospectus for further
information.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
dated the date hereof, the Company has agreed to sell to each of the
Underwriters named below, severally, and each of the Underwriters has severally
agreed to purchase, the principal amount of Notes set forth opposite its name
below:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
NAME OF NOTES
- -------------------------------------------------------------------------- --------------
<S> <C>
J.P. Morgan Securities Inc................................................ $ 75,000,000
Citicorp Securities, Inc.................................................. 75,000,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.................................................... 75,000,000
Salomon Brothers Inc...................................................... 75,000,000
--------------
Total................................................................... $ 300,000,000
--------------
--------------
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are obligated to take and pay for all of the Notes if any are
taken.
The Underwriters initially propose to offer the Notes directly to the public
at the public offering price set forth on the cover page of this Prospectus
Supplement and to certain dealers at such price less a concession not in excess
of .40% of the principal amount of the Notes. The Underwriters may allow, and
S-6
<PAGE>
such dealers may reallow, a concession not in excess of .25% of the principal
amount of the Notes to certain other dealers. After the initial public offering,
the public offering price and such concessions may be changed.
The Company does not intend to apply for listing of the Notes on a national
securities exchange, but has been advised by the Underwriters that they intend
to make a market in the Notes. The Underwriters are not obligated, however, to
make a market in the Notes and may discontinue market making at any time without
notice. No assurance can be given as to the liquidity of the trading market for
the Notes.
The Company and the Guarantor have agreed to indemnify the Underwriters
against certain liabilities, including liabilities under the Securities Act.
J.P. Morgan Securities Inc. and Citicorp Securities, Inc. and/or their
affiliates have in the past performed, and may in the future perform, commercial
banking and investment banking services for Grace. See "Use of Proceeds".
Merrill Lynch, Pierce, Fenner & Smith Incorporated and Salomon Brothers Inc
and/or their affiliates have in the past performed, and may in the future
perform, investment banking services for Grace.
S-7
<PAGE>
PROSPECTUS
W. R. GRACE & CO.-CONN.
DEBT SECURITIES
WARRANTS TO PURCHASE DEBT SECURITIES
-----------------
W. R. Grace & Co.-Conn. ("Company"), the principal operating subsidiary of
W. R. Grace & Co. ("Guarantor"), may offer from time to time, together or
separately, its debt securities ("Debt Securities") and warrants to purchase
Debt Securities ("Warrants") on terms to be determined at the time of offering.
The Guarantor will unconditionally guarantee the Debt Securities.
By separate prospectus, the Guarantor may offer from time to time certain of
its securities. Securities with an aggregate issue price of up to $750,000,000
(or the equivalent thereof, if any of the securities are denominated other than
in U.S. dollars) may be issued, in one or more series, under this Prospectus and
such separate prospectus.
The Debt Securities will be unsecured and will rank equally with all other
unsecured and unsubordinated indebtedness for borrowed money of the Company, and
the guarantees thereon ("Guarantees") will be unsecured and will rank equally
with all other unsecured and unsubordinated indebtedness for borrowed money of
the Guarantor. See "Description of Debt Securities and Guarantees".
The Debt Securities and/or Warrants proposed to be sold pursuant to this
Prospectus and the accompanying prospectus supplement ("Prospectus Supplement")
are referred to as the "Offered Securities", and the Offered Securities,
together with any Debt Securities issuable upon exercise of Warrants, are
referred to as the "Securities".
The Prospectus Supplement sets forth certain terms of each series or issue
of Securities in respect of which this Prospectus and the Prospectus Supplement
are being delivered, including (where applicable): (1) in the case of Debt
Securities (including Debt Securities issuable upon exercise of Warrants), their
title, aggregate principal amount, maturity, rate of any interest (or the manner
of calculation and time of payment thereof), any redemption or repayment terms,
the currency or currencies, currency unit or units or composite currency or
currencies ("Currency") in which such Debt Securities will be denominated or
payable, any index, formula or other method pursuant to which principal, premium
or interest may be determined and the form of such Debt Securities (which may be
in global, registered or bearer form); (2) in the case of Warrants, their
exercise price, detachability date, expiration date and other terms; and (3) any
initial public offering price, the purchase price, the net proceeds to the
Company, and the other terms of the offering of the Securities.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
Offered Securities may be sold directly to purchasers or to or through
underwriters, dealers or agents. If any underwriters, dealers or agents are
involved in the offering of any Offered Securities, their names and any
applicable fee, commission or discount arrangements will be set forth in the
Prospectus Supplement. See "Plan of Distribution".
------------------------
The date of this Prospectus is August 2, 1994.
<PAGE>
AVAILABLE INFORMATION
The Guarantor is subject to the informational requirements of the Securities
Exchange Act of 1934 ("Exchange Act") and in accordance therewith files reports
and other information with the Securities and Exchange Commission ("SEC").
Reports, proxy statements and other information filed by the Guarantor with the
SEC can be inspected and copied at the public reference facilities of the SEC at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
SEC's New York Regional Office, Seven World Trade Center, New York, New York
10048, and Chicago Regional Office, 500 West Madison Street, Chicago, Illinois
60606. Copies of such material can also be obtained at prescribed rates from the
Public Reference Section of the SEC at its Washington address and can be
inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street,
New York, New York 10005, and the Chicago Stock Exchange, Inc., One Financial
Place, 440 South LaSalle Street, Chicago, Illinois 60606.
Separate financial information for the Company is not included herein or in
reports filed by the Guarantor pursuant to the Exchange Act, as the Guarantor is
a holding company that has no substantial operations other than those conducted
by the Company and its subsidiaries. The assets and pre-tax income of the
Company and its consolidated subsidiaries are substantially equivalent to those
of the Guarantor and its consolidated subsidiaries.
This Prospectus constitutes a part of a registration statement (together
with all amendments and exhibits, the "Registration Statement") filed by the
Company and the Guarantor with the SEC under the Securities Act of 1933
("Securities Act") with respect to the Securities (and certain other securities
offered by the Guarantor and the Company under a separate prospectus). This
Prospectus does not contain all of the information in the Registration
Statement, certain portions of which have been omitted in accordance with the
rules and regulations of the SEC. Reference is made to the Registration
Statement and the exhibits thereto, as well as the documents incorporated by
reference in this Prospectus, for further information with respect to the
Company and the Guarantor, as well as the Securities.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed with the SEC are incorporated by reference in
this Prospectus:
(1) The Guarantor's Annual Report on Form 10-K (including Exhibit 12,
"Computation of Ratio of Earnings to Fixed Charges") for the latest fiscal
year for which such a Report has been filed.
(2) All Quarterly Reports on Form 10-Q and Current Reports on Form 8-K
(including, where applicable, Exhibit 12, "Computation of Ratio of Earnings
to Fixed Charges and Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends") filed by the Guarantor since the end of the
latest fiscal year for which an Annual Report on Form 10-K has been filed by
the Guarantor.
All documents filed by the Guarantor pursuant to Section 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 any offering of Securities made by this Prospectus shall be
deemed to be incorporated by reference in and to be a part of this Prospectus
from the date any such document is filed.
A copy of any document incorporated by reference in this Prospectus
(including any exhibit incorporated by reference in any such document or in this
Prospectus) may be obtained without charge by contacting Shareholder Services,
W. R. Grace & Co., One Town Center Road, Boca Raton, Florida 33486-1010
(407/362-2000).
2
<PAGE>
GRACE
Grace is primarily engaged in the specialty chemical business on a worldwide
basis and in specialized health care activities. In its chemical operations,
Grace develops, manufactures and markets specialty chemicals and materials and
related application systems. In health care, Grace is primarily engaged in
supplying kidney dialysis and home infusion and respiratory therapy services and
products.
As used in this Prospectus, the term "Company" refers to W. R. Grace &
Co.-Conn., a Connecticut corporation wholly owned by W. R. Grace & Co.; the term
"Guarantor" refers to W. R. Grace & Co., a New York corporation; and the term
"Grace" refers to the Guarantor and/or one or more of its subsidiaries
(including the Company). Grace's principal executive offices are located at One
Town Center Road, Boca Raton, Florida 33486-1010, and its telephone number is
407/362-2000.
USE OF PROCEEDS
Unless otherwise provided in the Prospectus Supplement, the net proceeds
from the sale of the Securities will be used by Grace to repay commercial paper
borrowings and/or bank borrowings, with various maturities and bearing interest
at various rates, that were incurred to finance capital expenditures and working
capital requirements and for other general corporate purposes. The amounts and
timing of such repayments will depend upon conditions in the future; pending
such use, the proceeds may be temporarily invested. Information concerning
Grace's capital expenditures is set forth in the documents incorporated herein
by reference and may be set forth in the Prospectus Supplement.
GRACE FINANCIAL INFORMATION
Financial information for Grace, including its ratio of earnings to fixed
charges, is set forth in the documents incorporated herein by reference and may
be set forth in the Prospectus Supplement. See "Documents Incorporated by
Reference".
Separate financial information for the Company is not included herein or in
the documents incorporated herein by reference, as the Guarantor is a holding
company that has no substantial operations other than those conducted by the
Company and its subsidiaries. The assets and pre-tax income of the Company and
its consolidated subsidiaries are substantially equivalent to those of the
Guarantor and its consolidated subsidiaries. See "Available Information".
DESCRIPTION OF DEBT SECURITIES AND GUARANTEES
The Company may issue Debt Securities either separately or together with
Warrants. The Debt Securities will be issued under an Indenture dated as of
January 28, 1993 ("Indenture") among the Company, the Guarantor and NationsBank
of Georgia, National Association, Trustee ("Trustee"). The Indenture has been
filed as an exhibit to the Registration Statement. The Indenture is subject to
and governed by the Trust Indenture Act of 1939 ("TIA"). The following summary
of the material provisions of the Indenture does not purport to be complete and
is subject to, and qualified in its entirety by reference to, the Indenture,
including the definitions of certain terms therein, and to the specific terms of
the Offered Debt Securities (as defined below) that are described in the
Prospectus Supplement.
GENERAL
The Indenture provides that any Debt Securities proposed to be sold pursuant
to this Prospectus and the Prospectus Supplement ("Offered Debt Securities") and
any Debt Securities issuable upon the exercise of Warrants ("Underlying Debt
Securities"), as well as other unsecured and unsubordinated debt securities of
the Company issuable under the Indenture, may be issued in one or more series,
in each case as authorized from time to time by the Company; the Indenture does
not
3
<PAGE>
limit the aggregate principal amount of debt securities that may be issued
thereunder. Reference is made to the Prospectus Supplement relating to the
Offered Debt Securities, the Underlying Debt Securities or both, as the case may
be, for the following:
(1) The title of such Debt Securities.
(2) The aggregate principal amount of such Debt Securities, the
percentage of their principal amount at which such Debt Securities will be
issued and the date or dates on which the principal of such Debt Securities
will be payable or the method by which such date or dates will be determined
or extended.
(3) The rate or rates (which may be fixed or variable) at which such
Debt Securities will bear interest, if any, and, if variable, the method by
which such rate or rates will be determined.
(4) The date or dates from which any interest will accrue or the method
by which such date or dates will be determined, the date or dates on which
any interest will be payable (including the Regular Record Dates for such
Interest Payment Dates in the case of any Registered Securities) and the
basis on which any interest will be calculated if other than on the basis of
a 360-day year of twelve 30-day months.
(5) The place or places, if any, other than or in addition to New York
City, where the principal of (and premium, if any, on) and interest, if any,
on such Debt Securities will be payable, where any Registered Securities may
be surrendered for registration of transfer, where such Debt Securities may
be surrendered for exchange and where notices or demands to or upon the
Company and the Guarantor in respect of such Debt Securities may be served.
(6) The period or periods within which, the price or prices at which,
the Currency in which, and the other terms and conditions upon which, such
Debt Securities may be redeemed, in whole or in part, at the option of the
Company, if the Company is to have that option.
(7) The obligation, if any, of the Company and the Guarantor to redeem,
purchase or repay such Debt Securities, in whole or in part, pursuant to any
sinking fund or analogous provision or at the option of a holder thereof,
and the period or periods within which, the price or prices at which, the
Currency in which, and the other terms and conditions upon which, such Debt
Securities will be so redeemed, purchased or repaid.
(8) The Currency, if other than U.S. dollars, in which such Debt
Securities will be denominated or in which the principal of (and premium, if
any, on) and interest, if any, on such Debt Securities will be payable.
(9) Whether the amount of payments of principal of (and premium, if
any, on) and interest, if any, on such Debt Securities may be determined
with reference to an index, formula or other method (which index, formula or
method may, without limitation, be based on one or more Currencies,
commodities or equity or other indices) and the manner in which such amounts
will be determined.
(10) Whether the Company, the Guarantor or a holder may elect payment
of the principal of (and premium, if any, on) and interest, if any, on such
Debt Securities in a Currency other than that in which such Debt Securities
are stated to be payable, the period or periods within which, and the terms
and conditions upon which, such election may be made, and the time and
manner of determining the exchange rate between the Currency in which such
Debt Securities are denominated or stated to be payable and the Currency in
which such Debt Securities are to be so payable.
(11) Any deletions from, modifications of or additions to the Events of
Default or covenants of the Company or the Guarantor with respect to such
Debt Securities (which Events of Default or covenants may not be consistent
with the Events of Default or covenants set forth in the general provisions
of the Indenture).
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(12) If other than the entire principal amount thereof, the portion of
the principal amount of such Debt Securities that will be payable upon
declaration of acceleration of the maturity thereof or the method by which
such portion will be determined.
(13) Any provisions in modification of, in addition to or in lieu of
any of the provisions concerning defeasance and covenant defeasance
contained in the Indenture that will be applicable to such Debt Securities.
(14) Any provisions granting special rights to the holders of such Debt
Securities upon the occurrence of such events as may be specified.
(15) If other than the Trustee, the designation of any Paying Agent or
Security Registrar for such Debt Securities, and the designation of any
transfer or other agents or depositories for such Debt Securities.
(16) The designation of the Exchange Rate Agent, if any.
(17) Whether such Debt Securities are to be issuable as Registered
Securities, Bearer Securities or both, any restrictions applicable to the
offer, sale or delivery of Bearer Securities and the terms, if any, upon
which Bearer Securities may be exchanged for Registered Securities and vice
versa (if permitted by applicable laws and regulations).
(18) Whether such Debt Securities will be issuable initially in
temporary global form, whether any such Debt Security is to be issuable in
permanent global form (a "Global Security") with or without coupons and, if
so, whether beneficial owners of interests in any Global Security may
exchange such interests for Debt Securities of like tenor of any authorized
form and denomination and the circumstances under which any such exchanges
may occur, if other than in the manner provided in the Indenture, and, if
Registered Securities are to be issuable as a Global Security, the identity
of the depository for such Debt Securities.
(19) The person to whom any interest on any Registered Security will be
payable, if other than the person in whose name such Debt Security (or one
or more Predecessor Securities) is registered at the close of business on
the Regular Record Date for such interest, the manner in which, or the
person to whom, any interest on any Bearer Security will be payable, if
otherwise than upon presentation and surrender of the coupons appertaining
thereto as they severally mature, and the extent to which, or the manner in
which, any interest payable on a temporary Debt Security issued in global
form will be paid (if other than as described in "Book-Entry Debt
Securities" below).
(20) The denomination or denominations in which such Debt Securities
will be issuable, if other than $1,000 or any integral multiple thereof in
the case of Registered Securities and $5,000 in the case of Bearer
Securities.
(21) If such Debt Securities will be issuable upon the exercise of
Warrants, the time, manner and place for such Debt Securities to be
authenticated and delivered.
(22) Whether and under what circumstances the Company or the Guarantor
will pay Additional Amounts, as contemplated by Section 1010 of the
Indenture, on such Debt Securities to any holder who is not a United States
person (including any modification of the definition of such term as
contained in the Indenture) in respect of any tax, assessment or
governmental charge and, if so, whether the Company will have the option to
redeem such Debt Securities rather than pay such Additional Amounts (and the
terms of any such option).
(23) Any other terms, conditions, rights and preferences (or
limitations on such rights and preferences) of such Debt Securities not
inconsistent with the provisions of the Indenture (Section 301).
If applicable, the Prospectus Supplement will also set forth information
concerning any Warrants offered thereby and a discussion of any relevant federal
income tax considerations.
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Debt Securities may provide for less than the entire principal amount
thereof to be due and payable upon a declaration of acceleration of maturity. A
discussion of the federal income tax and other considerations applicable to any
Original Issue Discount Securities will be set forth in the Prospectus
Supplement relating thereto.
If the terms of any series of Debt Securities provide that the Company or
the Guarantor may be required to pay Additional Amounts in respect thereof, for
purposes of this Prospectus, any reference to the payment of the principal of
(and premium, if any, on) or interest, if any, on such Debt Securities will be
deemed to include mention of the payment of the Additional Amounts provided for
by the terms of such Debt Securities.
The Debt Securities will be unsecured obligations of the Company and will
rank on a parity with all other unsecured and unsubordinated indebtedness for
borrowed money of the Company. The Debt Securities will be guaranteed by the
Guarantor as provided below.
The Debt Securities referred to on the cover page of this Prospectus, and
any additional debt securities issued under the Indenture, are herein
collectively referred to, while a single Trustee is acting with respect to all
debt securities issued thereunder, as the "Indenture Securities". The Indenture
provides that there may be more than one Trustee thereunder, each with respect
to one or more series of Indenture Securities. At a time when two or more
Trustees are acting under the Indenture, each with respect to only certain
series, the term "Indenture Securities" as used herein will mean the series with
respect to which each respective Trustee is acting. In the event that there is
more than one Trustee under the Indenture, the powers and trust obligations of
each Trustee as described herein will extend only to the series of Indenture
Securities for which it is the Trustee. If two or more Trustees are acting under
the Indenture, then the Indenture Securities for which each Trustee is acting
would be treated as if issued under separate indentures.
The general provisions of the Indenture do not limit the ability of the
Company or the Guarantor to incur indebtedness and do not afford holders of Debt
Securities protection in the event of highly leveraged or similar transactions
involving the Company or the Guarantor. However, the general provisions of the
Indenture do provide that neither the Company, the Guarantor nor any Restricted
Subsidiary will subject certain of its properties or assets to any mortgage or
other encumbrance unless the Indenture Securities outstanding thereunder, the
related Guarantees or both, as the case may be, are secured equally and ratably
with or prior to such other indebtedness thereby secured. See "Liens" and "Sale
and Leaseback Transactions" under the heading "Certain Covenants". Reference is
made to the Prospectus Supplement for information with respect to any deletions
from, modifications of or additions to the Events of Default or covenants of the
Company and the Guarantor that are described below, including any addition of a
covenant or other provision providing event risk or similar protection.
If any series of Debt Securities is sold for, payable in or denominated in
one or more Currencies other than U.S. dollars, applicable restrictions,
elections, terms and other information with respect to such series and such
Currencies, and a discussion of the federal income tax and other considerations
applicable thereto, will be set forth in the Prospectus Supplement relating
thereto.
Under the Indenture, the Company has the ability to issue Indenture
Securities with terms different from those of Indenture Securities previously
issued thereunder and, without the consent of the holders, to reopen a previous
issue of a series of Indenture Securities and issue additional Indenture
Securities of such series (unless such reopening was restricted when such series
was created) in an aggregate principal amount determined by the Company (Section
301).
There is no requirement that future issues of debt securities of the Company
be issued under the Indenture, and the Company will be free to employ other
indentures or documentation, possibly containing provisions different from those
included in the Indenture or applicable to one or more issues of Indenture
Securities, in connection with such future issues.
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GUARANTEES
The Debt Securities will have endorsed thereon Guarantees by which the
Guarantor will unconditionally guarantee the due and punctual payment of the
principal of (and premium, if any, on) and interest, if any, on the Debt
Securities, when and as the same become due and payable, whether at Stated
Maturity, upon redemption or repayment, upon declaration of acceleration or
otherwise.
The Guarantees will be unsecured obligations of the Guarantor and will rank
on a parity with all other unsecured and unsubordinated indebtedness for
borrowed money of the Guarantor (including any other unsecured and
unsubordinated guarantees given by the Guarantor).
The Guarantees will be unconditional obligations of the Guarantor,
regardless of the enforceability of the related Debt Securities or the Indenture
(Section 1701).
FORM AND DENOMINATIONS
Debt Securities of a series may be issuable solely as Registered Securities,
solely as Bearer Securities or as both Registered Securities and Bearer
Securities. Unless otherwise provided in the applicable Prospectus Supplement,
Debt Securities denominated in U.S. dollars (other than Global Securities, which
may be of any denomination) are issuable in denominations of $1,000 and integral
multiples of $1,000 (in the case of Registered Securities) and in the
denomination of $5,000 (in the case of Bearer Securities). The Indenture also
provides that Debt Securities of a series may be issuable in global form. See
"Book-Entry Debt Securities" below. Unless otherwise indicated in the applicable
Prospectus Supplement, Bearer Securities will have interest coupons attached
(Sections 201 and 302).
PAYMENT, TRANSFER AND EXCHANGE
If Debt Securities of a series are issuable solely as Registered Securities,
the Company and the Guarantor will be required to maintain an office or agency
in each Place of Payment for such series, and may from time to time designate
additional offices or agencies, at which the principal of (and premium, if any,
on) and interest, if any, on such series will be payable. If so provided in the
Prospectus Supplement, the Place of Payment for a series issuable solely as
Registered Securities will be New York City, and the Company and the Guarantor
will initially designate the office of the agent of the Trustee in New York City
as an office where such principal, premium and interest will be payable. If so
provided in the Prospectus Supplement, the Company and the Guarantor will also
initially designate the corporate trust office of the Trustee in Atlanta,
Georgia as an additional office or agency for payment of the Debt Securities of
such series. Notwithstanding the foregoing, at the option of the Company or the
Guarantor, interest, if any, may be paid on Registered Securities (1) by check
mailed to the person entitled thereto at such person's address appearing in the
Security Register or (2) by wire transfer to an account located inside the
United States maintained by the person entitled thereto as specified in the
Security Register (Sections 307 and 1002). Unless otherwise provided in the
Prospectus Supplement, payment of any installment of interest on Registered
Securities will be made to the person in whose name such Registered Security is
registered at the close of business on the Regular Record Date for such interest
(Section 307).
If Debt Securities of a series are issuable solely as Bearer Securities or
as both Registered Securities and Bearer Securities and if so provided in the
applicable Prospectus Supplement, the Company and the Guarantor will be required
to maintain an office or agency (1) in each Place of Payment outside the United
States at which, subject to any applicable laws and regulations, the principal
of (and premium, if any, on) and interest, if any, on such series will be
payable and (2) in New York City, for payments with respect to any Registered
Securities of such series (and for payments with respect to Bearer Securities of
such series in the limited circumstances described below, but not otherwise);
provided that, if required in connection with any listing of such Debt
Securities on a stock exchange located outside the United States, the Company
and the Guarantor will maintain an office or agency for such Debt Securities in
any city located outside the United States required by such stock exchange
(Section 1002). The initial locations of such offices or agencies will be
specified in the applicable Prospectus Supplement. Unless otherwise provided in
the Prospectus Supplement, principal of (and premium, if any) and interest, if
any, on Bearer Securities may be paid by wire transfer to
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an account maintained by the person entitled thereto with a bank located outside
the United States (Sections 307 and 1002). Unless otherwise provided in the
Prospectus Supplement, payment of any installment of interest on any Bearer
Securities on or before maturity will be made only against surrender of coupons
for such interest installments as they severally mature (Section 1001). Unless
otherwise provided in the Prospectus Supplement, no payment with respect to any
Bearer Security will be made at any office or agency of the Company or the
Guarantor in the United States or by check mailed to any address in the United
States or by transfer to an account maintained with a bank located in the United
States; provided that payments of principal of (and premium, if any, on) and
interest, if any, on Bearer Securities payable in U.S. dollars will be made at
the office or agency of the Company and the Guarantor in New York City if (but
only if) payment of the full amount thereof in U.S. dollars at all offices or
agencies outside the United States maintained by the Company and the Guarantor
is illegal or effectively precluded by exchange controls or other similar
restrictions (Section 1002).
The Company and the Guarantor may from time to time designate additional
offices or agencies, approve a change in the location of any office or agency
and, except as provided above, rescind the designation of any office or agency.
Unless otherwise provided in the Prospectus Supplement, with respect to any
series of Debt Securities denominated or payable in one or more Currencies other
than U.S. dollars, the Company and the Guarantor will maintain one or more
Exchange Rate Agents for the purpose of making any exchange determinations
specified in the Prospectus Supplement (Sections 313 and 1002). Unless otherwise
provided in the Prospectus Supplement, all payments of principal of (and
premium, if any, on) and interest, if any, on any Debt Security that is payable
in a Currency other than U.S. dollars will be made in U.S. dollars in the event
that such Currency (1) is a currency, and it ceases to be used both by the
government of the country that issued the currency and by a central bank or
other public institutions of or within the international banking community for
the settlement of transactions, (2) is the ECU, and it ceases to be used both
within the European Monetary System and for the settlement of transactions by
public institutions of or within the European Communities or (3) is any other
currency unit (or composite currency) other than the ECU, and it ceases to be
used for the purposes for which it was established (each of the events described
in clauses (1) through (3), a "Conversion Event") (Section 312).
All moneys paid by the Company or the Guarantor to the Trustee or a Paying
Agent for the payment of principal of (or premium, if any, on) or interest, if
any, on any Debt Security that remains unclaimed for two years after such
principal, premium or interest becomes due and payable will be repaid to the
Company or the Guarantor, as the case may be, and the holder of such Debt
Security or any related coupon will (subject to applicable abandoned property or
similar laws) thereafter look only to the Company or the Guarantor for payment
thereof (Section 1003).
Registered Securities of any series will be exchangeable for other
Registered Securities of the same series of any authorized denominations and of
a like aggregate principal amount. If (but only if) provided in the Prospectus
Supplement, Bearer Securities of any series (with all unmatured coupons, except
as provided below, and all matured coupons in default) may be similarly
exchanged for Registered Securities of the same series of any authorized
denominations. If so provided, Bearer Securities of such series surrendered in
exchange for Registered Securities during the period (1) on or after a Regular
Record Date and before the opening of business on the relevant Interest Payment
Date or (2) on or after a Special Record Date and before the opening of business
on the related proposed date for payment of Defaulted Interest, will be
surrendered without the coupon relating to such Interest Payment Date or
proposed date for payment, and such interest or Defaulted Interest, as the case
may be, will not be payable in respect of the Registered Security issued in
exchange for such Bearer Security, but will be payable only to the holder of
such coupon when due in accordance with the terms of the Indenture. Unless
otherwise specified in the Prospectus Supplement, Bearer Securities will not be
issued in exchange for Registered Securities (Section 305).
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Registered Securities of a series may be presented for registration of
transfer and Debt Securities of a series may be presented for exchange (1) at
each office or agency required to be maintained by the Company and the Guarantor
for payment of such series, as described above, and (2) at each other office or
agency that the Company and the Guarantor may designate from time to time for
such purposes. Registration of transfers and exchanges will be effected if the
transfer agent is satisfied with the evidence of ownership and identity of the
person making the request and, in the case of Registered Securities, if the
transfer form thereon is duly executed. No service charge will be made for any
registration of transfer or exchange of Debt Securities, but the Company may
require payment of any tax or other governmental charge payable in connection
therewith (Section 305).
In the event of any redemption in part, the Company will not be required (1)
to register the transfer of or exchange Debt Securities of any series during a
period beginning at the opening of business 15 days before any selection of Debt
Securities of that series to be redeemed and ending at the close of business on
the date the relevant notice of redemption is mailed or published, as the case
may be, (2) to register the transfer of or exchange any Registered Security or
portion thereof called for redemption, except the unredeemed portion, if any, of
a Registered Security being redeemed in part, (3) to exchange any Bearer
Security called for redemption, except to exchange such Bearer Security for a
Registered Security of that series and like tenor that is simultaneously
surrendered for redemption or (4) to register the transfer of or exchange any
Debt Security that has been surrendered for repayment at the option of the
holder, except the portion, if any, of such Debt Security not to be so repaid
(Section 305).
CONSOLIDATION, MERGER AND SALE OF ASSETS
Neither the Company nor the Guarantor may consolidate with or merge into any
other corporation or other entity, or convey or transfer its properties and
assets substantially as an entirety to any person, unless each of the following
conditions is satisfied:
(1) Immediately thereafter, no Event of Default (or event that with
notice or lapse of time, or both, would be such) with respect to the
Indenture Securities will have happened and be continuing.
(2) The corporation formed by such consolidation or into which the
Company or the Guarantor is merged, or the person to which such properties
and assets will have been conveyed or transferred, assumes the Company's
obligation as to the due and punctual payment of the principal of (and
premium, if any, on) and interest, if any, on the Indenture Securities or
the Guarantor's obligations under the Guarantees, as the case may be, and
the performance and observance of every covenant to be performed by the
Company or the Guarantor, as the case may be, under the Indenture, and will
be organized under the laws of the United States, one of the States thereof
or the District of Columbia; provided that the requirements of this clause
(2) will not apply to a transaction in which the Guarantor consolidates with
or merges into the Company.
(3) In the event of any such consolidation, merger, conveyance or
transfer, the Indenture provides that, if any Principal Facility or any
Restricted Security would thereupon become subject to any Lien, the
Indenture Securities (or the related Guarantees, as the case may be) will be
secured, as to such Principal Facility or Restricted Security, equally and
ratably with (or prior to) the Debt that upon the occurrence of such
transaction would become secured by such Lien, unless such Lien could be
created under the Indenture without equally and ratably securing such
Indenture Securities or Guarantees.
(4) The Company or the Guarantor has delivered to the Trustee an
officers' certificate and opinion of counsel, each stating that the
transaction complies with these conditions (Sections 801 and 803).
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In the event that any transaction described in and complying with the
conditions listed in the immediately preceding paragraph occurs, the Company or
the Guarantor would be discharged from all obligations and covenants under the
Indenture, and all obligations under the Indenture Securities or the Guarantees,
as the case may be, and could be dissolved and liquidated (Section 802).
For the purpose of providing the equal and ratable security referred to in
clause (3) above, the principal amount of Indenture Securities outstanding under
the Indenture that are Original Issue Discount Securities or Indexed Securities
will mean the amount that, at the time of making such provision for such equal
and ratable security, would be due and payable pursuant to Section 502 of the
Indenture and the terms of such Original Issue Discount Securities or Indexed
Securities upon an acceleration thereof (see "Events of Default" below), and the
extent of such equal and ratable security will be adjusted, to the extent
permitted by law, as and when such amount changes over time pursuant to the
terms of such Original Issue Discount Securities or Indexed Securities (Sections
502 and 803).
MODIFICATION AND WAIVER
The Indenture permits the Company, the Guarantor and the applicable Trustee,
with the consent of the holders of not less than a majority in aggregate
principal amount of outstanding Indenture Securities affected thereby, to
execute supplemental indentures adding any provisions to or changing or
eliminating any provisions of the Indenture or modifying the rights of such
holders, except that no such supplemental indenture may, without the consent of
the holder of each outstanding Indenture Security affected thereby:
(1) Change the Stated Maturity of the principal of (or premium, if any,
on) or any installment of interest on any Indenture Security, or reduce the
principal amount thereof (or any premium, if any, thereon) or the rate of
interest, if any, thereon, or change any obligation of the Company and the
Guarantor to pay Additional Amounts on any Indenture Security as
contemplated by Section 1010 of the Indenture, or change any Place of
Payment where or the Currency in which any such principal, premium or
interest is payable, or reduce the amount of the principal of an Indexed
Security or an Original Issue Discount Security that would be due and
payable upon an acceleration of maturity thereof or the amount thereof
provable in bankruptcy, or adversely affect the right of repayment, if any,
at the option of the holder, or impair the right to institute suit for the
enforcement of any such payment on or after the Stated Maturity thereof (or
on or after any Redemption Date or Repayment Date).
(2) Reduce the quorum and voting requirements at meetings of holders.
(3) Change in any manner adverse to the interests of the holders of the
outstanding Indenture Securities the terms and conditions of the obligations
of the Guarantor in respect of the due and punctual payment of the principal
of (and premium, if any, on) and interest, if any, on such Indenture
Securities.
(4) Reduce the percentage in principal amount of outstanding Indenture
Securities (or of outstanding Indenture Securities of any series, as the
case may be), the consent of the holders of which is required for any
supplemental indenture or to waive certain covenants or Events of Default
under the Indenture (Section 902).
The holders of a majority in aggregate principal amount of outstanding
Indenture Securities have the right to waive compliance by the Company and the
Guarantor with certain covenants contained in the Indenture (Section 1011).
Modification and amendment of the Indenture may be made by the Company, the
Guarantor and the Trustee without the consent of any holder, for any of the
following purposes: (1) to evidence the succession of another person to the
Company or the Guarantor as obligor under the Indenture; (2) to add to the
covenants of the Company or the Guarantor for the benefit of the holders of any
series of Indenture Securities and any related coupons; (3) to add Events of
Default for the benefit of the holders of any such series; (4) to add or change
any provisions of the Indenture to facilitate the
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issuance of Bearer Securities; (5) to change or eliminate any provisions of the
Indenture, provided that any such change or elimination will become effective
only when there is no Indenture Security outstanding thereunder of any series
that is entitled to the benefit of such provisions; (6) to secure the Indenture
Securities outstanding under the Indenture or the related Guarantees pursuant to
the requirements of Section 803 or 1008 of the Indenture, or otherwise; (7) to
establish the form or terms of Indenture Securities of any series or the related
Guarantees, as permitted by Sections 201 and 301 of the Indenture; (8) to
provide for the acceptance of appointment by a successor Trustee or facilitate
the administration of the trusts under the Indenture by more than one Trustee;
(9) to close the Indenture with respect to the authentication and delivery of
additional series of Indenture Securities and to cure any ambiguity or
inconsistency in such Indenture, provided such action does not adversely affect
in any material respect the interests of holders of Indenture Securities of any
series thereunder and related coupons; or (10) to supplement any of the
provisions of the Indenture to the extent necessary to permit or facilitate
defeasance and discharge of any series of Indenture Securities and the related
Guarantees thereof, provided that such action does not adversely affect in any
material respect the interests of the holders of the Indenture Securities and
related coupons (Section 901).
The Indenture provides that in determining whether the holders of the
requisite principal amount of Indenture Securities of a series then outstanding
have given any request, demand, authorization, direction, notice, consent or
waiver thereunder or whether a quorum is present at a meeting of holders of such
Indenture Securities, (1) the principal amount of an Original Issue Discount
Security that will be deemed to be outstanding will be the amount of the
principal thereof that would be due and payable as of the date of such
determination upon acceleration of the maturity thereof, (2) the principal
amount of an Indenture Security denominated in a Currency other than U.S.
dollars will be the U.S. dollar equivalent, determined as of the date of
original issuance of such Indenture Security, of the principal amount thereof
(or, in the case of an Original Issue Discount Security, the U.S. dollar
equivalent as of such date of original issuance of the amount determined as
provided in clause (1) above) and (3) the principal amount of an Indexed
Security that may be counted in making such determination or calculation and
that will be deemed outstanding for such purpose will be equal to the principal
face amount of such Indexed Security at original issuance, unless otherwise
provided with respect to such Indenture Security pursuant to Section 301
(Section 101).
The Indenture contains provisions for convening meetings of holders of
Indenture Securities of a series if Indenture Securities of that series are
issuable as Bearer Securities (Section 1501). A meeting may be called at any
time by (1) the Trustee or (2) upon request by the Company, the Guarantor or the
holders of at least 10% in aggregate principal amount of the Indenture
Securities of such series outstanding, in any such case upon notice given as
provided in the Indenture (Section 1502). Except for any consent that must be
given by the holder of each Indenture Security affected thereby, as described
above, any resolution presented at a meeting (or an adjourned meeting duly
reconvened) at which a quorum is present may be adopted by the affirmative vote
of the holders of a majority in principal amount of the Indenture Securities of
that series; provided that any resolution with respect to any request, demand,
authorization, direction, notice, consent, waiver or other action that may be
made, given or taken only by the holders of a specified percentage, which is
less than a majority, in principal amount of Indenture Securities of a series
may be adopted at a meeting (or an adjourned meeting duly reconvened) at which a
quorum is present by the affirmative vote of the holders of at least such
specified percentage. Any resolution passed or decision taken at any meeting of
holders of Indenture Securities of a series duly held in accordance with the
Indenture will be binding on all holders of Indenture Securities of that series
and any related coupons. The quorum at any meeting called to adopt a resolution
will be persons holding or representing a majority in principal amount of the
outstanding Indenture Securities of a series; provided that, if any action is to
be taken at such meeting with respect to a consent or waiver that may only be
given by the holders of not less than a specified percentage in principal amount
of the outstanding Indenture Securities of a series, the persons entitled to
vote such specified percentage will constitute a quorum; and provided further
that,
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at the reconvening of any meeting adjourned for lack of a quorum, the holders of
25% in principal amount of the outstanding Indenture Securities of a series at
the time will constitute a quorum for the taking of any action set forth in the
notice of the original meeting.
Notwithstanding the foregoing, if any action is to be taken at a meeting of
holders of Indenture Securities of a series with respect to any request, demand,
authorization, direction, notice, consent, waiver or other action that the
Indenture expressly provides may be made, given or taken by the holders of a
specified percentage in principal amount of all outstanding Indenture Securities
affected thereby, or of the holders of that series and one or more additional
series, then (1) there will be no minimum quorum requirement for such meeting
and (2) the principal amount of the outstanding Indenture Securities of that
series that vote in favor of such request, demand, authorization, direction,
notice, consent, waiver or other action will be taken into account in
determining whether such request, demand, authorization, direction, notice,
consent, waiver or other action has been made, given or taken under the
Indenture (Section 1504).
EVENTS OF DEFAULT
The following are Events of Default with respect to any series of Indenture
Securities: (1) default in the payment of any installment of interest upon any
Indenture Security of such series when it becomes due and payable, continued for
30 days; (2) default in the payment of the principal of (or premium, if any, on)
any Indenture Security of such series at its maturity; (3) failure on the part
of the Company or the Guarantor to observe or perform any other covenant or
agreement contained in the Indenture (other than a covenant or agreement
included in the Indenture solely for the benefit of less than all series of
Indenture Securities or a covenant the default in the performance of which would
be covered by clause (6) below) for 60 days after written notice of such
failure, requiring the Company or the Guarantor to remedy the same, has been
given to the Company and the Guarantor by the Trustee or to the Company, the
Guarantor and the Trustee by the holders of at least 25% in aggregate principal
amount of outstanding Indenture Securities; (4) default under any indenture or
instrument under which the Company, the Guarantor or any Restricted Subsidiary
(other than a Restricted Subsidiary principally engaged in business outside the
United States and Canada) has at the time outstanding indebtedness for borrowed
money or guarantees thereof in any individual instance in excess of $25,000,000
and, if not already matured in accordance with its terms, such indebtedness has
been accelerated and such acceleration is not rescinded or annulled within three
Business Days after notice thereof has been given to the Company and the
Guarantor by the Trustee or to the Company, the Guarantor and the Trustee by the
holders of at least 25% in aggregate principal amount of outstanding Indenture
Securities of such series; provided that, if, prior to the entry of judgment in
favor of the Trustee for payment of the Indenture Securities of such series, the
default under such indenture or instrument has been remedied or cured by the
Company, the Guarantor or such Restricted Subsidiary, or waived by the holders
of such indebtedness, then the Event of Default under the Indenture will be
deemed likewise to have been remedied, cured or waived; (5) certain events in
bankruptcy, insolvency or reorganization; and (6) any other Event of Default
included in the Indenture for the benefit of Indenture Securities of such
series.
If an Event of Default described in clause (1), (2), (4) or (6) above with
respect to outstanding Indenture Securities of any series has occurred and is
continuing, the Trustee or the holders of not less than 25% in aggregate
principal amount of the outstanding Indenture Securities of that series may
declare the principal amount (or, if the Indenture Securities of that series are
Original Issue Discount Securities or Indexed Securities, such portion of the
principal amount as may be specified in the terms of that series) of all
outstanding Indenture Securities of such series to be immediately due and
payable. If an Event of Default described in clause (3) or (5) above has
occurred and is continuing, the Trustee or the holders of not less than 25% in
principal amount of all the outstanding Indenture Securities may declare the
principal amount (or, if any such Indenture Securities are Original Issue
Discount Securities or Indexed Securities, such portion of the principal amount
as may be specified in the terms of that series) of all of the outstanding
Indenture Securities to be immediately due and payable. However, at any time
after such a declaration of acceleration with respect to outstanding
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Indenture Securities of a series (or of all outstanding Indenture Securities, as
the case may be) has been made, but before a judgment has been obtained by the
Trustee, the holders of a majority in principal amount of outstanding Indenture
Securities of such series (or of all outstanding Indenture Securities, as the
case may be) may, subject to certain conditions, rescind and annul such
declaration if all Events of Default (other than the nonpayment of accelerated
principal, or a specified portion thereof, premium, or interest, if any) with
respect to outstanding Indenture Securities of such series (or of all
outstanding Indenture Securities, as the case may be) have been cured or waived
as provided in the Indenture (Section 502). The holders of not less than a
majority in aggregate principal amount of the outstanding Indenture Securities
of a series (or of all outstanding Indenture Securities, as the case may be)
have the right, subject to certain conditions and exceptions, to waive defaults
other than defaults in the payment of the principal of (or premium, if any, on)
or interest, if any, on any Indenture Security of such series and defaults in
respect of a covenant or provision that cannot be modified or amended without
the consent of the holder of each outstanding Indenture Security of such series
affected thereby (Sections 502 and 513). Reference is made to the Prospectus
Supplement relating to any series of Debt Securities that are Original Issue
Discount Securities or Indexed Securities for the particular provisions relating
to acceleration of a portion of the principal amount thereof upon the occurrence
and the continuation of an Event of Default.
No holder of any Indenture Security of any series will have any right to
institute any proceeding with respect to the Indenture, or for any remedy under
the Indenture, unless (1) such holder has previously given written notice to the
Trustee of a continuing Event of Default with respect to the Indenture
Securities of such series, (2) the holders of at least 25% in aggregate
principal amount of outstanding Indenture Securities of such series in the case
of any Event of Default described in clause (1), (2), (4) or (6) above, or the
holders of at least 25% in aggregate principal amount of all outstanding
Indenture Securities in the case of any Event of Default described in clause (3)
or (5) above, have made a written request and offered reasonable security or
indemnity to the Trustee to institute such proceeding, (3) the Trustee has
failed to institute any such proceeding within 60 days after its receipt of such
notice, request and offer and (4) no direction inconsistent with such written
request has been given to the Trustee during such 60-day period by the holders
of a majority in aggregate principal amount of outstanding Indenture Securities
of such series (or of all outstanding Indenture Securities, as the case may be).
No one or more of such holders will have any right under any provision of the
Indenture to affect, disturb or prejudice the rights of any other holders of
outstanding Indenture Securities of the same series (in the case of an Event of
Default described in clause (1), (2), (4) or (6) above), or holders of all
outstanding Indenture Securities (in the case of an Event of Default described
in clause (3) or (5) above), or to obtain preference or priority over any other
holders, or to enforce any right under the Indenture, except in the manner
provided in the Indenture and for the equal and ratable benefit of all the
holders of outstanding Indenture Securities of the same series (in the case of
an Event of Default described in clause (1), (2), (4) or (6) above), or holders
of all outstanding Indenture Securities (in the case of an Event of Default
described in clause (3) or (5) above) (Section 507).
Subject to provisions relating to the duties of the Trustee in case an Event
of Default has occurred and is continuing, the Trustee is under no obligation to
exercise any of the rights or powers under the Indenture at the request or
direction of any holders unless such holders have offered to the Trustee
reasonable security or indemnity (Section 602 and TIA Section 315). Subject to
such provision for the indemnification of the Trustee and certain limitations
contained in the Indenture, the holders of a majority in principal amount of
outstanding Indenture Securities of a series (or of all outstanding Indenture
Securities, as the case may be) will have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred on the Trustee (Section 512).
The Trustee will, within 90 days after the occurrence of a default actually
known to it with respect to the outstanding Indenture Securities of any series,
give notice to all holders of such series of all uncured defaults; provided
that, except in the case of default in the payment of the principal of (or
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premium, if any, on) or interest, if any, on any outstanding Indenture Security
of such series, the Trustee will be protected in withholding such notice if it
determines in good faith that the withholding of such notice is in the interests
of such holders; and provided further that, in the case of a default with
respect to the outstanding Indenture Securities of the character specified in
clause (3) of the definition of Events of Default, no such notice will be given
until at least 30 days after the occurrence thereof (Section 601).
The Company and the Guarantor will be required to furnish annually to the
Trustee a statement as to the fulfillment by the Company and the Guarantor of
all of their respective obligations under the Indenture (Section 1004).
DEFEASANCE AND COVENANT DEFEASANCE
The Indenture provides that the Company may elect either (1) to defease and
be discharged, for itself and the Guarantor, from any and all obligations with
respect to all or a portion of the Indenture Securities of any series and any
related coupons (except for the obligations (a) to pay Additional Amounts, if
any; (b) to register the transfer of or exchange such Indenture Securities and
any related coupons; (c) to replace temporary or mutilated, destroyed, lost or
stolen Indenture Securities of such series and any related coupons; (d) to
maintain an office or agency in respect of such Indenture Securities and any
related coupons; and (e) to hold moneys for payment in trust) ("defeasance"); or
(2) to be released, for itself and the Guarantor, from its obligations with
respect to such outstanding Indenture Securities and any related coupons under
Sections 1008 and 1009 of the Indenture (being the restrictions described above
under "Liens" and "Sale and Leaseback Transactions", respectively, under the
heading "Certain Covenants") or, if so provided in the Prospectus Supplement,
its and the Guarantor's obligations with respect to any other covenant, and any
omission to comply with such obligations will not constitute a default or an
Event of Default with respect to such Indenture Securities and any related
coupons ("covenant defeasance"), in the case of either clause (1) or clause (2),
upon the irrevocable deposit by the Company or the Guarantor with the Trustee
(or other qualifying trustee), in trust, of (i) an amount, in the Currency in
which such Indenture Securities and any related coupons are then specified as
payable at Stated Maturity, (ii) Government Obligations (as defined below)
applicable to such Indenture Securities and any related coupons (with such
applicability being determined on the basis of the Currency in which such
Indenture Securities are then specified as payable at Stated Maturity) that,
through the payment of principal and interest in accordance with their terms,
will provide money in an amount, or (iii) a combination thereof in an amount,
sufficient to pay the principal of (and premium, if any, on) and interest, if
any, on such Indenture Securities and any related coupons, and any mandatory
sinking fund or analogous payments thereon, on the scheduled due dates therefor.
Such a trust may only be established if, among other things, the Company has
delivered to the Trustee an opinion of counsel to the effect that the holders of
such Indenture Securities and any related coupons will not recognize income,
gain or loss for United States federal income tax purposes as a result of such
defeasance or covenant defeasance and will be subject to United States federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such defeasance or covenant defeasance had not
occurred, and such opinion, in the case of defeasance under clause (1) above,
must refer to and be based upon a ruling of the Internal Revenue Service or a
change in applicable United States federal income tax law occurring after the
date of the Indenture (Article 14).
Unless otherwise provided in the applicable Prospectus Supplement,
"Government Obligations" means securities that are (1) direct obligations of the
government that issued the Currency in which the Indenture Securities of a
series are payable or (2) obligations of a person controlled or supervised by
and acting as an agency or instrumentality of such government, the payment of
which obligations is unconditionally guaranteed by such government, that, in
either case, are full faith and credit obligations of such government payable in
such Currency and are not callable or redeemable at the option of the issuer
thereof. Such term will also include a depository receipt issued by a bank or
trust company
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as custodian with respect to any such Government Obligation or a specific
payment of principal of or interest on any such Government Obligation held by
such custodian for the account of the holder of a depository receipt; provided
that (except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt with
respect to any amount received by the custodian in respect of the Government
Obligation for the specific payment of interest or principal of the Government
Obligation evidenced by such depository receipt (Section 101).
Unless otherwise provided in the Prospectus Supplement, if, after the
Company or the Guarantor has deposited funds, Government Obligations or both to
effect defeasance with respect to any Indenture Securities (1) the holder of
such an Indenture Security is entitled to, and does, elect pursuant to the terms
of such Indenture Security to receive payment in a Currency other than that in
which such deposit has been made or (2) a Conversion Event occurs, the
indebtedness represented by such Indenture Security and any related coupons will
be deemed to have been, and will be, fully discharged and satisfied through the
payment of the principal of (and premium, if any, on) and interest, if any, on
such Indenture Security as they become due out of the proceeds yielded by
converting (from time to time in the case of such an election) the amount so
deposited into the Currency in which such Indenture Security becomes payable as
a result of such election or such cessation of usage based on the applicable
Market Exchange Rate (as defined in the Indenture or in the Prospectus
Supplement) for such Currency in effect on the second Business Day prior to each
payment date (with respect to such an election) or (as nearly as feasible) in
effect at the time of such a cessation of usage (with respect to such a
cessation of usage) (Section 1405).
In the event the Company effects covenant defeasance with respect to any
Indenture Securities and any related coupons and such Indenture Securities and
coupons are declared due and payable because of the occurrence of any Event of
Default other than (a) an Event of Default described in clause (3) under "Events
of Default" with respect to Sections 1008 and 1009 of the Indenture (which
Sections would no longer be applicable to such Indenture Securities or coupons)
or (b) an Event of Default described in clause (3) or (6) under "Events of
Default" with respect to any other covenant as to which there has been
defeasance, the realizable value of the money and Government Obligations on
deposit with the Trustee may not be sufficient to pay amounts due on such Debt
Securities and coupons at the time of the acceleration resulting from such Event
of Default, in that the required deposit with the Trustee is based upon
scheduled cash flows rather than market value, which will vary depending upon
interest rates and other factors. However, the Company and the Guarantor would
remain liable to make payment of such shortfall amounts due at the time of
acceleration.
The Prospectus Supplement may further describe the provisions, if any,
permitting such defeasance or covenant defeasance, including any modifications
to the provisions described above, with respect to the Indenture Securities of
or within a particular series, any related coupons and the related Guarantees.
CERTAIN COVENANTS
LIENS
The Indenture provides that each of the Company and the Guarantor will not
itself, and will not permit any of its Restricted Subsidiaries to, create,
incur, issue, assume or guarantee any Debt secured by a Lien on any Principal
Facility or on any Restricted Security without in any such case effectively
providing that the Indenture Securities issued thereunder (in the case of the
Company), the related Guarantees (in the case of the Guarantor) or the Indenture
Securities and Guarantees (in the case of a Restricted Subsidiary) (and, at the
option of the Company or the Guarantor, as the case may be, any other Debt of
the Company, the Guarantor or any such Restricted Subsidiary ranking equally
with the Indenture Securities or Guarantees or the senior Debt of such
Restricted Subsidiary, as the case may be) will be secured equally and ratably
with or prior to such secured Debt, except that the foregoing restriction will
not apply to:
(1) Liens existing as of the date of the first issuance by the Company
of any such Indenture Securities.
(2) Liens on property or assets of, or on any shares of stock or Debt
issued by, any corporation existing at the time such corporation becomes a
Restricted Subsidiary.
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(3) Liens in favor of the Company, the Guarantor or any Restricted
Subsidiary.
(4) Liens on any Principal Facility or Restricted Security existing at
the time of acquisition thereof or certain purchase money Liens.
(5) Liens on any Principal Facility to secure all or any part of the
cost of exploration, drilling, development, operation, construction,
alteration, repair or improvement of all or any part of such Principal
Facility or to secure certain Debt incurred for the purpose of financing all
or any part of such cost.
(6) Any extension, renewal, substitution or replacement (or successive
extensions, renewals, substitutions or replacements), in whole or in part,
of any Lien referred to in the foregoing clauses (1) through (5).
Notwithstanding the above, the Company, the Guarantor and any Restricted
Subsidiary may, without securing such Indenture Securities, Guarantees or senior
Debt, create, incur, issue, assume or guarantee Debt secured by a Lien that
would otherwise be subject to the foregoing restrictions, provided that, after
giving effect thereto, the aggregate principal amount of such secured Debt then
outstanding, whenever created, incurred, issued, assumed or guaranteed (not
including Debt secured by Liens permitted or excepted under the foregoing
exceptions) plus all Attributable Debt of the Company, the Guarantor and the
Restricted Subsidiaries in respect of sale and leaseback transactions involving
Principal Facilities, entered into after the date of the first issuance by the
Company of any such Indenture Securities (other than sale and leaseback
transactions described in clause (2) or (3) of the section entitled "Sale and
Leaseback Transactions"), would not exceed 10% of Consolidated Net Tangible
Assets (Section 1008).
SALE AND LEASEBACK TRANSACTIONS
The Indenture further provides that each of the Company and the Guarantor
will not itself, and will not permit any of its Restricted Subsidiaries to,
enter into any sale and leaseback transaction (except a lease for a temporary
period, including renewals, not exceeding three years and except leases with the
Company, the Guarantor or any such Restricted Subsidiary) covering any Principal
Facility that has been or is to be sold or transferred by the Company, the
Guarantor or such Restricted Subsidiary, unless (1) the Attributable Debt of the
Company, the Guarantor and the Restricted Subsidiaries in respect thereof and
all other sale and leaseback transactions covering Principal Facilities,
whenever entered into (other than such sale and leaseback transactions as are in
compliance with the provisions described in clause (2) or (3) of this
paragraph), plus the aggregate principal amount of Debt secured by Liens on
Principal Facilities or on Restricted Securities then outstanding (other than
Debt secured by Liens permitted or excepted without securing the Indenture
Securities outstanding thereunder and the related Guarantees and other than Debt
if such Indenture Securities are secured equally and ratably with or prior to
such Debt), would not exceed 10% of Consolidated Net Tangible Assets or (2) an
amount ("Designated Amount") equal to the greater of the net proceeds of such
sale or the fair market value of such Principal Facility (as determined by the
Company or the Guarantor, as the case may be) is applied within 120 days after
the transaction to the retirement of Funded Debt of the Company or the Guarantor
(other than at maturity or pursuant to any mandatory sinking fund payment or
mandatory prepayment provision), except that the amount to be applied to
retirement of Funded Debt of the Company or the Guarantor will be reduced by (a)
the aggregate principal amount of any such Indenture Securities called for
redemption by the Company within 120 days after such transaction or delivered
within such 120-day period to the Trustee for retirement and cancellation and
(b) the aggregate principal amount of Funded Debt, other than such Indenture
Securities, voluntarily retired by the Company or the Guarantor within 120 days
after such transaction, or (3) the Company, the Guarantor or such Restricted
Subsidiary, within a period commencing 12 months prior to and ending 12 months
after the date of the sale or transfer in respect of such sale and leaseback
transaction, has expended or reasonably expects to expend within such period
moneys to acquire or construct any Principal Facility or Facilities, in which
case the Company, the Guarantor or such Restricted Subsidiary may enter into
such sale and leaseback transaction, but only if the Designated Amount in
respect thereof is less than or equal to such moneys expended or to be expended
within such period (Section 1009).
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DEFINITIONS
"ATTRIBUTABLE DEBT" means, as to any particular lease under which any
person is at the time liable, at any date as of which the amount thereof is to
be determined, the total net amount of rent required to be paid by such person
under such lease during the remaining term thereof (excluding amounts required
to be paid on account of maintenance and repairs, services, insurance, taxes,
assessments, water rates and similar charges and contingent rents), discounted
from the respective due dates thereof at the weighted average of the rates of
interest (or Yields to Maturity, in the case of Original Issue Discount
Securities) borne by the Indenture Securities then outstanding under the
Indenture, compounded annually (Section 101).
"CONSOLIDATED NET TANGIBLE ASSETS" means the aggregate amount of assets of
the Guarantor and its consolidated Subsidiaries after deducting therefrom (1)
applicable reserves and other properly deductible items, (2) all current
liabilities of the Guarantor and its consolidated Subsidiaries (excluding any
current liabilities constituting Funded Debt by reason of being renewable or
extendable) and (3) all goodwill, trade names, trademarks, patents, organization
expenses and other like intangibles of the Guarantor and its consolidated
Subsidiaries, all as set forth on the latest available balance sheet of the
Guarantor and its consolidated Subsidiaries as of the last day of a calendar
quarter (but, in any event, within 150 days of the date of determination),
prepared in accordance with generally accepted accounting principles (Section
101).
"DEBT" means notes, bonds, debentures or other similar evidences of
indebtedness for money borrowed (Section 101).
"FUNDED DEBT" means all Debt having a maturity of more than 12 months from
the date such Debt was incurred or having a maturity of less than 12 months but
by its terms being renewable or extendable, at the option of the borrower,
beyond 12 months from the date such Debt was incurred (Section 101).
"LIEN" means any pledge, mortgage, lien, encumbrance or security interest
(Section 101).
"PRINCIPAL FACILITY" means any manufacturing plant or warehouse, together
with the land upon which it is erected and fixtures comprising a part thereof,
owned by the Company, the Guarantor or any Restricted Subsidiary and located in
the United States, the gross book value of which (without deduction of any
depreciation reserves) on the date as of which the determination is being made
exceeds 1% of Consolidated Net Tangible Assets, other than any such plant or
warehouse or any portion thereof (together with such land and fixtures) that, in
the opinion of the Board of Directors of the Guarantor, is not of material
importance to the business conducted by the Company, the Guarantor and the
Restricted Subsidiaries, taken as a whole (Section 101).
"RESTRICTED SECURITY" means any share of stock or Debt issued by any
Restricted Subsidiary (Section 1008).
"RESTRICTED SUBSIDIARY" means any Subsidiary of the Company and/or the
Guarantor, other than an Unrestricted Subsidiary (Section 101).
"SUBSIDIARY" means any corporation or other entity of which at the time of
determination the Company and/or the Guarantor, directly and/or indirectly
through one or more Subsidiaries, owns Voting Stock sufficient to elect a
majority of the directors or comparable officials thereof (Section 101).
"UNRESTRICTED SUBSIDIARY" means (1) any Subsidiary principally engaged in
(a)(i) owning, leasing, managing or otherwise operating, or franchising or
licensing (A) facilities engaged in the retail sale of goods or services to the
general public, or (B) fast food, coffee shop, restaurant or other retail
facilities principally engaged in providing food or beverages to the general
public, or (ii) providing services to the facilities described in clause (i);
(b) owning, leasing, dealing in or developing real property used or to be used
principally by persons other than the Company, the Guarantor or any Subsidiary
for residential, shopping center, industrial, warehouse or office building
purposes; or (c) purchasing or financing accounts receivable, making loans,
extending credit or other activities of a character conducted by a finance
company; (2) any Subsidiary, that is primarily engaged in the business of
developing, testing, manufacturing, marketing or providing products, facilities
or services used or useful in connection with, or constituting, the furnishing
of medical, dental or veterinary care,
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including kidney dialysis and other intravenous therapy products and services
and pharmaceutical products and services; (3) any Subsidiary, the major portion
of the assets of which consists of one or more general or limited partnership
interests, so long as no such interest represents more than 50% of the total
ownership interest in such partnership; and (4) any Subsidiary substantially all
of the assets of which consist of capital stock or securities of the
Subsidiaries described in clauses (1), (2) and/or (3) of this paragraph. If
there is a question as to whether a Subsidiary is an Unrestricted Subsidiary,
such matter will be determined by the Board of Directors of the Company or the
Guarantor, as the case may be (Section 101).
BOOK-ENTRY DEBT SECURITIES
Debt Securities of a series (and the related Guarantees) may be issued in
whole or in part in the form of one or more Global Securities that will be
deposited with, or on behalf of, a depository identified in the Prospectus
Supplement relating to such series. Global Securities may be issued in either
registered or bearer form and in either temporary or permanent form. Unless
otherwise provided in the Prospectus Supplement, Debt Securities of a series
(and the related Guarantees) that are represented by a Global Security may be
issued in any denomination, and will be issued in registered form only, without
coupons. Payments of principal of (and premium, if any, on) and interest, if
any, on Debt Securities of such series represented by a Global Security will be
made by the Company or the Trustee to the depository.
The Company anticipates that any Global Securities will be deposited with,
or on behalf of, The Depository Trust Company ("DTC"), New York, New York, that
such Global Securities will be registered in the name of DTC's nominee, and that
the following provisions will apply to the depository arrangements with respect
to any such Global Securities. Additional or differing terms of the depository
arrangement will be described in the Prospectus Supplement relating to Offered
Debt Securities issued in the form of Global Securities.
So long as DTC or its nominee is the registered owner of a Global Security,
DTC or its nominee, as the case may be, will be considered the sole holder of
the Debt Securities represented by such Global Security for all purposes under
the Indenture. Except as described below, owners of beneficial interests in a
Global Security will not be entitled to have Debt Securities represented by such
Global Security registered in their names, will not receive or be entitled to
receive physical delivery of Debt Securities in certificated form and will not
be considered the owners or holders of Debt Securities under the Indenture. The
laws of some states require that certain purchasers of securities take physical
delivery of such securities in certificated form; accordingly, such laws may
limit the transferability of beneficial interests in a Global Security.
If DTC is at any time unwilling or unable to continue as depository and a
successor depository is not appointed by the Company within 90 days following
notice to the Company, the Company will issue individual Debt Securities in
certificated form in exchange for the Global Securities. In addition, the
Company may at any time, and in its sole discretion, determine not to have any
Debt Securities of one or more series represented by Global Securities and, in
such event, will issue individual Debt Securities of such series in certificated
form in exchange for the relevant Global Securities. In any such instance, an
owner of a beneficial interest in a Global Security will be entitled to physical
delivery of individual Debt Securities in certificated form equal in principal
amount to such beneficial interest and to have such Debt Securities in
certificated form registered in its name.
The following is based on information furnished by DTC:
DTC will act as securities depository for the Debt Securities. The Debt
Securities will be issued as fully registered securities registered in the
name of Cede & Co. (DTC's partnership nominee). One fully registered Debt
Security certificate will be issued with respect to each $150 million of
principal amount of the Debt Securities of a series, and an additional
certificate will be issued with respect to any remaining principal amount of
such series.
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and
a "clearing agency" registered pursuant to the provisions of Section 17A of
the Exchange Act. DTC holds securities that its participants
("Participants") deposit with DTC.
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DTC also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Participants' accounts,
thereby eliminating the need for physical movement of securities
certificates. Direct Participants include securities brokers and dealers,
banks, trust companies, clearing corporations and certain other
organizations ("Direct Participants"). DTC is owned by a number of its
Direct Participants and by the New York Stock Exchange, Inc., the American
Stock Exchange, Inc. and the National Association of Securities Dealers,
Inc. Access to the DTC system is also available to others such as securities
brokers and dealers, banks and trust companies that clear through or
maintain a custodial relationship with a Direct Participant, either directly
or indirectly ("Indirect Participants"). The rules applicable to DTC and its
Participants are on file with the SEC.
Purchases of Debt Securities under the DTC system must be made by or
through Direct Participants, which will receive a credit for the Debt
Securities on DTC's records. The ownership interest of each actual purchaser
of each Debt Security ("Beneficial Owner") is in turn to be recorded on the
Participants' records. A Beneficial Owner will not receive written
confirmation from DTC of its purchase, but such Beneficial Owner is expected
to receive a written confirmation providing details of the transaction, as
well as periodic statements of its holdings, from the Participant through
which such Beneficial Owner entered into the transaction. Transfers of
ownership interests in Debt Securities are to be accomplished by entries
made on the books of Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership
interests in Debt Securities, except in the event that use of the book-entry
system for the Debt Securities is discontinued.
To facilitate subsequent transfers, the Debt Securities will be
registered in the name of DTC's partnership nominee, Cede & Co. The deposit
of the Debt Securities with DTC and their registration in the name of Cede &
Co. will effect no change in beneficial ownership. DTC will have no
knowledge of the actual Beneficial Owners of the Debt Securities; DTC
records will reflect only the identity of the Direct Participants to whose
accounts Debt Securities are credited, which may or may not be the
Beneficial Owners. The Participants will remain responsible for keeping
account of their holdings on behalf of their customers.
Delivery of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements
as may be in effect from time to time.
Neither DTC nor Cede & Co. will consent or vote with respect to the Debt
Securities. Under its usual procedures, DTC mails a proxy (an "Omnibus
Proxy") to the issuer as soon as possible after the record date. The Omnibus
Proxy assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts the Debt Securities are credited on the
record date (identified on a list attached to the Omnibus Proxy).
Principal, premium and interest payments on the Debt Securities will be
made to DTC. DTC's practice is to credit Direct Participants' accounts on
the payable date in accordance with their respective holdings as shown on
DTC's records unless DTC has reason to believe that it will not receive
payment on the payable date. Payments by Participants to Beneficial Owners
will be governed by standing instructions and customary practices, as is 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
Participant and not of DTC, the Paying Agent or the Company, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Payment of principal and interest to DTC is the responsibility of the
Company or the Paying Agent, disbursement of such payments to Direct
Participants will be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners will be the responsibility of Direct and
Indirect Participants.
DTC may discontinue providing its services as securities depository with
respect to the Debt Securities at any time by giving reasonable notice to
the Company or the Paying Agent. Under such circumstances, in the event that
a successor securities depository is not appointed, Debt Security
certificates are required to be printed and delivered.
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The Company may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depository). In that event,
Debt Security certificates will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources (including DTC) that the Company and the
Guarantor believe to be reliable, but the Company and the Guarantor take no
responsibility for the accuracy thereof.
Unless stated otherwise in the applicable Prospectus Supplement, the
underwriters or agents with respect to Offered Debt Securities issued as Global
Securities will be Direct Participants in DTC.
None of the Company, the Guarantor, any underwriter or agent, the Trustee or
any Paying Agent will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial interests in a
Global Security, or for maintaining, supervising or reviewing any records
relating to such beneficial interests.
CONCERNING THE TRUSTEE
NationsBank of Georgia, National Association, Atlanta, Georgia, is the
Trustee under the Indenture. The Trustee is expected to serve as warrant agent
(see "Description of Warrants"). Grace also maintains customary banking
relationships with the Trustee and its banking affiliates, one of which is a
party to a revolving credit agreement with Grace.
DESCRIPTION OF WARRANTS
The Company may issue Warrants either separately or together with Offered
Debt Securities. Each issue of Warrants will be made under a warrant agreement
(each a "Warrant Agreement") to be entered into between the Company and the bank
or trust company specified in the Prospectus Supplement ("Warrant Agent"). The
Warrant Agent is expected to be the Trustee. The form of the Warrant Agreement
has been filed with the SEC as an exhibit to the Registration Statement. The
following summary of the material provisions of the Warrant Agreement does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, the Warrant Agreement, including the definitions of certain terms
therein, and to the specific terms of the Warrants set forth in the Prospectus
Supplement.
GENERAL
Reference is made to the Prospectus Supplement for the specific terms of the
Warrants in respect of which this Prospectus and the Prospectus Supplement are
being delivered, including the following:
(1) The title and aggregate number of such Warrants.
(2) The offering price of such Warrants.
(3) The title, aggregate principal amount and terms of the Underlying
Debt Securities issuable upon exercise of such Warrants (as specified under
"Description of Debt Securities and Guarantees -- General").
(4) The principal amount of Underlying Debt Securities issuable upon
exercise of each such Warrant, and the price, or the manner of determining
the price, at which such principal amount may be purchased upon such
exercise.
(5) The time or times at which, or period or periods during which, such
Warrants may be exercised and the expiration date of such Warrants.
(6) The terms of any right of the Company to redeem such Warrants.
(7) Whether such Warrants are to be issued with any Offered Debt
Securities and, if so, the title, aggregate principal amount and terms of
such Offered Debt Securities (as specified under "Description of Debt
Securities and Guarantees -- General") and the number of such Warrants to be
issued with each $1,000 principal amount of such Offered Debt Securities (or
such other principal amount as may be established).
(8) The date, if any, on and after which such Warrants and such Offered
Debt Securities will be separately transferable.
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If applicable, the Prospectus Supplement will also set forth information
concerning any Offered Debt Securities offered thereby and a discussion of any
relevant federal income tax considerations.
Certificates representing Warrants ("Warrant Certificates") may be issued in
registered or bearer form, or both, as set forth in the Prospectus Supplement,
and will be exchangeable for new Warrant Certificates of different
denominations. No service charge will be made for any permitted transfer or
exchange of Warrant Certificates, but the Company may require payment of any tax
or other governmental charge payable in connection therewith. Warrants may be
exercised at the corporate trust office of the Warrant Agent or any other office
indicated in the Prospectus Supplement.
EXERCISE OF WARRANTS
Each Warrant will entitle the holder thereof to purchase such amount of
Underlying Debt Securities at the exercise price set forth in, or calculable
from, the Prospectus Supplement relating to such Warrants. After the close of
business on the applicable expiration date, unexercised Warrants will become
void.
Warrants may be exercised by payment to the Warrant Agent of the applicable
exercise price and by delivery to the Warrant Agent of the information specified
on the Warrant Certificate. Warrants will be deemed to have been exercised upon
receipt of the exercise price, subject to the receipt by the Warrant Agent,
within five business days thereafter, of the Warrant Certificate or Certificates
evidencing such Warrants. Upon receipt of such payment and properly completed
Warrant Certificates at the corporate trust office of the Warrant Agent or any
other office indicated in the applicable Prospectus Supplement, the Company
will, as soon as practicable, deliver the amount of Underlying Debt Securities
purchased upon such exercise. If fewer than all of the Warrants represented by
any Warrant Certificate are exercised, a new Warrant Certificate will be issued
for the unexercised Warrants. The holder of a Warrant will be required to pay
any tax or other governmental charge that may be imposed in connection with any
transfer involved in the issuance of Underlying Debt Securities purchased upon
such exercise.
MODIFICATIONS
The Warrant Agreement and the terms of the Warrants may be amended by the
Company and the Warrant Agent, without the consent of any holder, for the
purpose of curing any ambiguity, or of curing, correcting or supplementing any
defective or inconsistent provision contained therein, or in any other manner
that the Company deems necessary or desirable and that will not materially and
adversely affect the interests of the holders of the Warrants.
The Company and the Warrant Agent also may modify or amend the Warrant
Agreement and terms of the Warrants with the consent of the holders of not less
than a majority in number of the then outstanding unexercised Warrants affected
thereby; provided that no such modification or amendment that accelerates the
expiration date, increases the exercise price, reduces the number of outstanding
Warrants the consent of the holders of which is required for modification or
amendment of the Warrant Agreement or the terms of the Warrants, or otherwise
materially and adversely affects the rights of the holders of Warrants, may be
made without the consent of each holder affected thereby.
NO RIGHTS AS HOLDERS OF UNDERLYING DEBT SECURITIES
Holders of Warrants are not entitled, by virtue of being such holders, to
payment of principal of (or premium, if any, on) or interest, if any, on the
related Underlying Debt Securities or to exercise any other rights whatsoever as
holders of such Underlying Debt Securities.
PLAN OF DISTRIBUTION
Offered Securities may be sold directly to one or more purchasers or through
underwriters, dealers or agents.
If underwriters are used in an offering of Offered Securities, the name of
each managing underwriter and any other underwriters and the terms of the
transaction, including any underwriting discounts and other items constituting
compensation of the underwriters and dealers, if any, will be set forth in the
Prospectus Supplement relating to such offering, and the Offered Securities will
be acquired by the underwriters for their own accounts and may be resold from
time to time in one or
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more transactions, including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of sale. Any initial public
offering price and any discounts or concessions allowed or reallowed or paid to
dealers may be changed from time to time.
Only underwriters named in a Prospectus Supplement will be deemed to be
underwriters in connection with the Offered Securities described therein; a firm
not so named will have no direct or indirect participation in the underwriting
of such Offered Securities, although such firm may participate in the
distribution of such Offered Securities under circumstances entitling it to a
dealer's commission. It is anticipated that any underwriting agreement
pertaining to any Offered Securities will (1) entitle the underwriters to
indemnification by the Company against certain civil liabilities under the
Securities Act, (2) provide that the obligations of the underwriters will be
subject to certain conditions precedent and (3) provide that the underwriters
will be obligated to purchase all Offered Securities (other than any subject to
Delayed Delivery Contracts) if any are purchased.
If a dealer is used in an offering of Offered Securities, the Company will
sell such Offered Securities to the dealer, as principal. The dealer may then
resell such Offered Securities to the public at varying prices to be determined
by such dealer at the time of resale. The name of the dealer and the terms of
the transaction will be set forth in the Prospectus Supplement relating thereto.
If an agent is used in an offering of Offered Securities, the agent will be
named, and the terms of the agency will be set forth, in the Prospectus
Supplement relating thereto. Unless otherwise indicated in such Prospectus
Supplement, an agent will act on a best efforts basis for the period of its
appointment.
Dealers and agents named in a Prospectus Supplement may be deemed to be
underwriters (within the meaning of the Securities Act) of the Offered
Securities described therein and, under agreements that may be entered into, may
be entitled to indemnification by the Company and the Guarantor against certain
civil liabilities under the Securities Act. Underwriters, dealers and agents may
be customers of, engage in transactions with or perform services for Grace in
the ordinary course of business.
Offers to purchase Offered Securities may be solicited, and sales thereof
may be made, by the Company directly to institutional investors or others, who
may be deemed to be underwriters within the meaning of the Securities Act with
respect to any resales thereof. The terms of any such offers will be set forth
in the Prospectus Supplement relating thereto.
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters or other agents of the Company to solicit offers by certain
institutional investors to purchase Offered Securities from the Company pursuant
to contracts providing for payment and delivery at a future date. Institutional
investors with which such contracts may be made include commercial and savings
banks, insurance companies, pension funds, investment companies, educational and
charitable institutions and others, but in all cases such purchasers must be
approved by the Company. The obligations of any purchaser under any such
contract will not be subject to any conditions except that (1) the purchase of
the Offered Securities shall not at the time of delivery be prohibited under the
laws of any jurisdiction to which such purchaser is subject and which govern
such investment and (2) if the Offered Securities are also being sold to
underwriters, the Company shall have sold to such underwriters the Offered
Securities not subject to delayed delivery. Underwriters and other agents will
not have any responsibility in respect of the validity or performance of such
contracts.
The anticipated date of delivery of Offered Securities will be set forth in
the Prospectus Supplement relating to each offering.
LEGAL OPINIONS
The validity of the Securities and the Guarantees will be passed upon for
the Company and the Guarantor by Robert H. Beber, General Counsel of the Company
and the Guarantor, and for the underwriters, dealers and agents, if any, by
Shearman & Sterling, 599 Lexington Avenue, New York, New York 10022. Mr. Beber
is also an Executive Vice President of the Company and the Guarantor and
beneficially owns certain securities of the Guarantor. Shearman & Sterling
occasionally represents Grace in corporate transactions and antitrust matters.
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EXPERTS
The audited consolidated financial statements and schedules incorporated in
this Prospectus by reference to the Guarantor's filings pursuant to the Exchange
Act have been so incorporated in reliance on the reports of Price Waterhouse
LLP, independent accountants, given upon the authority of such firm as experts
in auditing and accounting.
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