<PAGE> 1
Filed Pursuant to Rule 424(b)(4)
Registration Statement No. 333-09185
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED SEPTEMBER 6, 1996)
$100,000,000
[ANIXTER LOGO]
8% NOTES DUE SEPTEMBER 15, 2003
PAYMENT OF PRINCIPAL AND INTEREST UNCONDITIONALLY GUARANTEED BY
ANIXTER INTERNATIONAL INC.
------------------------
Interest on the 8% Notes due September 15, 2003 (the "Notes") is
payable semiannually on March 15 and September 15 of each year, beginning March
15, 1997. The Notes will mature on September 15, 2003 and are not subject to
redemption by Anixter Inc. (the "Company") prior to maturity. Anixter
International Inc. (the "Guarantor"), the parent of the Company, will fully,
unconditionally and irrevocably guarantee (the "Guarantee"), on a senior
unsecured basis, the payment of principal of and interest on the Notes when and
as the same shall become due and payable.
Ownership of the Notes will be maintained in book-entry form by or through
the Depository Trust Company ("DTC"). Interests in the Notes will be shown on,
and transfers thereof will be effected only through, records maintained by DTC
and its participants. Beneficial owners of the Notes will not have the right to
receive physical certificates evidencing their ownership except under the
limited circumstances described herein. Settlement for the Notes will be made in
immediately available funds. The Notes will trade in the DTC's Same-Day Funds
Settlement System and secondary market trading activity for the Notes will
therefore settle in immediately available funds. All payments of principal and
interest on the Notes will be made by the Company in immediately available funds
so long as the Notes are maintained in book-entry form. Beneficial interests in
the Notes may be acquired, or subsequently transferred, only in denominations of
$1,000 and integral multiples thereof. See "Description of Notes" herein.
------------------------
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 TO WHICH IT RELATES. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO COMPANY
PUBLIC(1) DISCOUNT(2) (1)(3)
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
Per Note.................... 99.265% .85% 98.415%
- -------------------------------------------------------------------------------------------------
Total....................... $99,265,000 $850,000 $98,415,000
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
</TABLE>
(1) Plus accrued interest, if any, from September 17, 1996.
(2) The Company and the Guarantor have agreed to indemnify the Underwriters
against certain liabilities, including liabilities under the Securities Act
of 1933, as amended. See "Underwriting."
(3) Before deducting expenses payable by the Company estimated to be $255,000.
------------------------
The Notes are offered by the Underwriters, subject to prior sale, when, as
and if issued by the Company and accepted by the Underwriters, and subject to
certain conditions. The Underwriters reserve the right to reject orders in whole
or in part. It is expected that delivery of the Notes will be made through the
book-entry facilities of DTC on or about September 17, 1996.
------------------------
MERRILL LYNCH & CO. CHASE SECURITIES INC.
------------------------
The date of this Prospectus Supplement is September 12, 1996.
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
THE COMPANY
The Company is a leading supplier of wiring systems, networking and
internetworking products for voice, data and video networks and electrical power
applications in North America, Europe, Asia and Latin America. The Company
stocks and/or sells a full line of these products from a network of 85 locations
in the United States, 19 in Canada, 17 in the United Kingdom, 28 in Continental
Europe, 10 in Latin America, 6 in Australia, and 11 in Asia. The Company sells
approximately 80,000 products to over 60,000 active customers and works with
over 2,000 suppliers. Its customers include international, national, regional
and local companies that are end users of these products and engage in
manufacturing, communications, finance, education, health care, transportation,
utilities and government. Also, the Company sells products to resellers such as
contractors, installers, system integrators, value added resellers, architects,
engineers and wholesale distributors.
THE GUARANTOR
The Guarantor, formerly known as Itel Corporation, is primarily engaged in
providing networking and cabling solutions for network infrastructure
requirements through the Company, its sole operating subsidiary. See "The
Company." As of June 28, 1996, the Guarantor also owned approximately 31% of
ANTEC Corporation and its subsidiaries (collectively "ANTEC"), and certain
assets which are held for sale. As of June 28, 1996, the market value of the
Guarantor's 7,113,500 shares of ANTEC common stock was approximately $113
million compared with a carrying value of $75.4 million. ANTEC is a publicly
traded communications technology company, specializing in the design and
engineering of hybrid fiber/coax (HFC) broadband networks and the manufacturing,
materials management and distribution of products for these networks.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Notes offered by this
Prospectus Supplement will be used to repay outstanding borrowings under the
Company's credit facility, which at July 26, 1996 bore interest at the weighted
average rate of approximately 6.1% per annum, and for working capital and
general corporate purposes.
S-2
<PAGE> 3
SUMMARY FINANCIAL INFORMATION OF GUARANTOR
The following table sets forth in summary form certain consolidated
financial data of the Guarantor. This information is derived from, is qualified
in its entirety by reference to, and should be read in conjunction with, the
consolidated financial statements of the Guarantor and related notes and other
detailed information contained in the documents incorporated by reference
herein. The consolidated financial information for the six months ended June 28,
1996 and June 30, 1995 is derived from unaudited financial statements; however,
in the opinion of the Guarantor's management, all adjustments considered
necessary for a fair presentation of such information are reflected. The
Guarantor's six month results should not be considered as indicative of the
results to be expected for the entire year.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FISCAL YEARS ------------------------
------------------------ JUNE 30, JUNE 28,
1994 1995 1995 1996
---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Revenues...................................... $1,732,600 $2,194,800 $1,044,900 $1,179,200
Operating income............................ 69,800 99,600 49,500 43,700
Interest expense and other, net............. (27,100) (21,600) (10,300) (11,900)
Equity in income (loss) of ANTEC............ 7,900 (600) 2,100 1,700
Non-recurring items, net(a)................. 59,000 0 0 0
Marketable equity securities losses,
principally write-downs(b)............... (39,600) (3,000) (3,000) 0
Income from continuing operations........... 46,200 39,100 20,000 18,400
Income from discontinued operations(c)...... 200,700 0 0 0
Net income.................................. $ 246,900 $ 39,100 $ 20,000 $ 18,400
FINANCIAL POSITION:
Total assets................................ $1,110,900 $1,184,700 $1,158,700 $1,240,500
Total debt.................................. 280,500 333,700 312,400 442,100
Stockholders' equity........................ $ 543,900 $ 449,000 $ 518,100 $ 431,000
</TABLE>
- -------------------------
(a) The non-recurring items in 1994 include a $48.2 million pre-tax gain on the
Guarantor's May 1994 public offering of shares of common stock of ANTEC and
a $10.8 million pre-tax gain relating to ANTEC's issuance of common stock in
connection with an acquisition in November 1994.
(b) In 1994, the Guarantor wrote down the value of its investments in marketable
equity securities by $34.4 million; the remaining $5.2 million pre-tax
charge in 1994 relates to the loss on sale of the Guarantor's investment in
Catellus Development Corporation.
(c) Income from discontinued operations in 1994 reflects a $202.0 million
after-tax gain from the sale of the Guarantor's rail car leasing business.
S-3
<PAGE> 4
CAPITALIZATION OF
THE COMPANY
The following table sets forth the unaudited capitalization of the Company
and its consolidated subsidiaries at June 28, 1996, and as adjusted to reflect
the issuance of the Notes offered hereby and the application of the net proceeds
thereof as described under "Use of Proceeds."
<TABLE>
<CAPTION>
JUNE 28, 1996
-----------------------
ACTUAL AS ADJUSTED
-------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
LONG-TERM DEBT:
Bank credit facilities............................................ $442,099 $ 343,939(a)
Intercompany subordinated note payable to Guarantor............... 42,000 42,000
8% Notes due September 15, 2003 offered hereby.................... 0 100,000
-------- ---------
Total long-term debt........................................... $484,099 $ 485,939
STOCKHOLDERS' EQUITY:
Common stock ($.01 par value)..................................... $ 336 $ 336
Capital Surplus................................................... 297,501 297,501
Retained Earnings................................................. 29,190 29,190
Cumulative translation adjustment................................. (13,116) (13,116)
-------- ---------
Total stockholders' equity..................................... 313,911 313,911
-------- ---------
Total capitalization......................................... $798,010 $ 799,850
======== =========
</TABLE>
- -------------------------
(a) Reflects application of the estimated net proceeds of the Notes to the
repayment of borrowings under the Company's domestic credit facility.
S-4
<PAGE> 5
SUMMARIZED FINANCIAL
INFORMATION OF THE COMPANY
The following table sets forth certain summarized financial information of
the Company and its consolidated subsidiaries. This information is qualified in
its entirety by reference to, and should be read in conjunction with, the
consolidated financial statements of the Guarantor and related notes and other
detailed information contained in the documents incorporated by reference
herein. The Company's six month results should not be considered as indicative
of the results to be expected for the entire year.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FISCAL YEARS ----------------------
---------------------------------------------------------- JUNE 30, JUNE 28,
1991 1992 1993 1994 1995 1995 1996
---------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Revenues.................. $1,025,796 $1,163,630 $1,327,994 $1,732,416 $2,194,780 $1,044,913 $1,179,221
Cost of sales............. 749,170 854,760 979,634 1,298,201 1,641,074 781,711 881,797
---------- ---------- ---------- ---------- ---------- ---------- ----------
Gross profit.............. 276,626 308,870 348,360 434,215 553,706 263,202 297,424
Operating expenses........ 234,740 264,042 285,412 353,612 444,591 209,008 251,464
Amortization of
goodwill................ 5,637 5,637 5,977 5,977 5,977 2,989 3,052
---------- ---------- ---------- ---------- ---------- ---------- ----------
Operating Income.......... 36,249 39,191 56,971 74,626 103,138 51,205 42,908
Interest expense.......... (29,759) (22,231) (29,398) (20,465) (26,508) (12,761) (15,320)
Other income
(expenses) net.......... 478 (503) (536) 1,239 2,096 1,706 1,832
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before
income taxes............ 6,968 16,457 27,037 55,400 78,726 40,150 29,420
Income tax expense........ 11,618 12,401 17,522 25,578 39,318 19,995 15,310
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income................ $ (4,650) $ 4,056 $ 9,515 $ 29,822 $ 39,408 $ 20,155 $ 14,110
========== ========== ========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
AT
AT FISCAL YEAR END ----------------------
---------------------------------------------------------- JUNE 30, JUNE 28,
1991 1992 1993 1994 1995 1995 1996
---------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Current assets............ $ 391,315 $ 406,079 $ 494,449 $ 619,243 $ 777,907 $ 700,620 $ 839,276
Property, net............. 28,792 25,655 26,701 33,407 49,220 42,316 60,801
Goodwill.................. 198,530 198,346 193,906 187,929 182,967 184,941 184,798
Other assets.............. $ 22,093 $ 28,222 $ 30,592 $ 24,451 $ 28,713 $ 25,598 $ 29,340
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total assets............ $ 640,730 $ 658,302 $ 745,648 $ 865,030 $1,038,807 $ 953,475 $1,114,215
========== ========== ========== ========== ========== ========== ==========
LIABILITIES AND
STOCKHOLDERS' EQUITY:
Current liabilities(a).... $ 188,278 $ 154,754 $ 209,765 $ 255,395 $ 330,161 $ 294,289 $ 304,455
Intercompany subordinated
note payable to
Guarantor............... 0 138,100 73,250 60,000 85,000 60,000 42,000
Long-term debt............ 223,135 83,839 188,332 263,530 309,363 295,375 442,099
Other noncurrent
liabilities............. 9,974 21,229 20,307 15,941 12,947 16,721 11,750
Stockholders' equity...... 219,343 260,380 253,994 270,164 301,336 287,090 313,911
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total liabilities and
stockholders'
equity............... $ 640,730 $ 658,302 $ 745,648 $ 865,030 $1,038,807 $ 953,475 $1,114,215
========== ========== ========== ========== ========== ========== ==========
</TABLE>
- -------------------------
(a) 1991 includes $35.3 million current portion of long-term debt.
S-5
<PAGE> 6
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes offered
hereby supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of Debt Securities set forth
under the heading "Description of Debt Securities" in the accompanying
Prospectus, to which reference is hereby made.
GENERAL
The Notes offered by this Prospectus Supplement will be limited to
$100,000,000 aggregate principal amount. The Notes will be issued under an
Indenture, dated as of September 9, 1996, among the Company, the Guarantor and
The Bank of New York, as Trustee (the "Indenture"). The Indenture is further
described under "Description of Debt Securities" in the accompanying Prospectus.
The Notes constitute one series of Securities (as defined in the Indenture)
established by the Company pursuant to the Indenture. The statements herein
concerning the Notes and the Indenture do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, all the
provisions of the Indenture, including the definitions therein of certain terms.
Whenever particular defined terms are referred to, such defined terms are
incorporated herein by reference.
The Notes will be issued in fully registered form and in denominations of
$1,000 and integral multiples thereof. The Company does not intend to apply for
listing of the Notes on a national securities exchange.
The Notes will be unsecured and unsubordinated obligations of the Company.
See "Description of Debt Securities" in the accompanying Prospectus. The Notes
may not be redeemed by the Company, will not be subject to any sinking fund and
will not be redeemable at the option of a holder thereof, except in certain
circumstances if a Restructuring Event occurs, as described in the accompanying
Prospectus under the caption "Description of Debt Securities -- Redemption at
the Option of the Holders in Certain Circumstances." The Notes will be subject
to defeasance and covenant defeasance as described in the accompanying
Prospectus under the heading "Description of Debt Securities -- Defeasance and
Covenant Defeasance."
Interest on the Notes will be payable semiannually on March 15 and
September 15 of each year (the "Interest Payment Dates"), commencing March 15,
1997, to the persons in whose name the Notes are registered at the close of
business on the March 1 and September 1 respectively, immediately preceding such
Interest Payment Dates. Payments of principal and interest to owners of
book-entry interests (as described below) are expected to be made in accordance
with the procedures of DTC and its participants in effect from time to time.
Payments of principal and interest on any Notes in definitive form will be made
at the Corporate Trust Office of the Trustee, provided that, at the option of
the Company, payments of interest may be made by check mailed to the holder(s)
of Notes or wire transfer to an account maintained by the holder(s) of Notes at
the address or account of such holder(s) appearing on the security register of
the Company on the applicable March 1 and September 1 respectively, immediately
preceding such Interest Payment Dates. Any payment of principal or interest
required to be made on a day which is not a business day need not be made on
such day, but may be made on the next succeeding business day with the same
force and effect as if made on such day, and no additional interest shall accrue
as a result of such delayed payment. Interest on the Notes will be computed on
the basis of a 360-day year of twelve 30-day months.
GUARANTEE
The Guarantor irrevocably and unconditionally will guarantee to each Holder
and the Trustee the full and prompt performance of the Company's obligations
under the Indenture and the Notes, including the full payment of principal of
and interest on the Notes when and as the same shall become due and payable,
whether at maturity, upon redemption, or by declaration of acceleration or
otherwise. The Guarantee is a general unsecured obligation of the Guarantor, and
will rank pari passu in right of payment with all future unsecured and
unsubordinated indebtedness and obligations of the Guarantor. The Guarantor
currently has no indebtedness and has no current plan or intention to incur any
indebtedness. All indebtedness reflected on the Guarantor's consolidated
financial statements as of June 28, 1996 is indebtedness of its consolidated
subsidiaries, including the Company.
S-6
<PAGE> 7
The Guarantor conducts substantially all of its business through the
Company and its subsidiaries and does not own any material assets other than its
interests in the Company, ANTEC Corporation ("ANTEC") and Signal Capital
Corporation ("Signal Capital"). See "The Guarantor" in the accompanying
Prospectus. The Guarantor will be dependent on the receipt of dividends or other
payments from the Company, ANTEC and Signal Capital to make payments on the
Guarantee. Certain covenants contained in the respective credit facilities of
the Company and ANTEC limit their ability to declare dividends or make other
payments or distributions to the Guarantor. Under the Company's credit facility,
the aggregate of all dividends paid to the Guarantor since March 11, 1994 cannot
exceed fifty percent of the consolidated net income of the Company since January
1, 1994. To date, the Company has paid dividends totaling approximately $23.1
million since March 11, 1994. As of June 28, 1996, the Company's consolidated
net income since January 1, 1994 was approximately $83.3 million. Under ANTEC's
credit facility, the aggregate of all dividends paid to the Guarantor in any
fiscal year cannot exceed fifty percent of the consolidated net income of ANTEC
in such fiscal year. ANTEC has not paid any dividends during the current fiscal
year, and reported consolidated net income of approximately $5.6 million for the
six months ended June 30, 1996.
PRIORITY
The Notes offered hereby will rank equally with the Company's other general
unsecured senior indebtedness, including indebtedness from time to time
outstanding to banks and other unaffiliated lenders. The Notes will be
effectively subordinated to any future secured indebtedness of the Company and
to all existing and any future indebtedness (whether secured or not) of any
subsidiary of the Company. The Indenture limits the Company's incurrence of
secured debt and limits certain restricted subsidiaries of the Company from
incurring secured or unsecured senior debt. See "Description of Debt Securities
- -- Certain Covenants of the Company and the Guarantor" in the accompanying
Prospectus. As of June 28, 1996, after giving pro forma effect to the sale of
the Notes offered hereby and the use of proceeds described herein under the
caption "Use of Proceeds," the Company would have had an aggregate of
approximately $278 million of outstanding senior indebtedness, none of which, on
a pro forma basis, would have been secured indebtedness. As of June 28, 1996,
the Company's subsidiaries had a total of approximately $65 million of
outstanding indebtedness, all of which was secured, and the Company had
approximately $42 million of outstanding unsecured subordinated indebtedness.
See "Capitalization" herein.
The Indenture provides that additional Debt Securities may be issued
thereunder up to the aggregate principal amount, which is not limited by the
Indenture, authorized from time to time by the Company's Board of Directors. Any
such additional Debt Securities would rank pari passu in right of payment with
the Notes offered hereby. Further, the Indenture does not prohibit the Company
from entering into additional indentures and issuing thereunder additional
senior debt securities that may rank pari passu in the right of payment with the
Notes offered hereby, nor does the Indenture prevent certain of the Company's
unrestricted subsidiaries from incurring additional indebtedness, including
additional secured indebtedness.
Under the terms of the Indenture, certain events of bankruptcy, insolvency
or reorganization of the Company or the Guarantor result in an Event of Default
under the Indenture and the automatic acceleration of all Debt Securities that
may then be Outstanding, including the Notes. See "Description of Debt
Securities -- Events of Default" in the accompanying Prospectus.
BOOK-ENTRY SYSTEM
The certificates representing the Notes will be issued in the form of one
or more fully registered global securities without coupons ("Global
Securities"). It is expected that the Notes initially will be represented by a
single permanent global certificate in definitive fully registered form (the
"Global Note") and will be deposited with, or on behalf of, DTC and registered
in the name of DTC or a nominee thereof. Except under the circumstances
described below and in the accompanying Prospectus under the caption
"Description of Debt Securities -- Global Securities," the Notes will not be
issuable in definitive form to the beneficial owners thereof. Unless and until
it is exchanged in whole or in part for the individual Notes represented
thereby, interests in the Global Note may not be transferred except as a whole
by DTC to a nominee of DTC or by a
S-7
<PAGE> 8
nominee of DTC to DTC or another nominee of DTC or by DTC or any nominee of DTC
to a successor depository or any nominee of such successor.
DTC has advised the Company as follows: DTC is a limited-purpose trust
company organized under the Banking Law of the State of New York, a member of
the Federal Reserve System, a "clearing corporation" within the meaning of the
New York Uniform Commercial Code, and a "clearing agency" registered pursuant to
the provision of Section 17A of the Securities Exchange Act of 1934, as amended.
DTC was created to hold securities of its participants ("Participants") and to
facilitate the clearance and settlement of securities transactions among its
Participants in such securities through electronic book-entry changes in
accounts of the Participants, thereby eliminating the need for physical movement
of securities certificates. DTC's Participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations, including the Underwriters. DTC is owned by a number of
Participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the National Association of the Securities Dealers, Inc.
Access to DTC's book-entry system is also available to others, such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly ("Indirect
Participants").
Purchases of Notes must be made by or through Participants, which will
receive a credit on the records of DTC. The ownership interest of each actual
purchaser of each Note (the "Beneficial Owner") is in turn recorded on the
Participants' or Indirect Participants' records. Beneficial Owners will not
receive written confirmation from DTC of their purchase, but Beneficial Owners
are expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings from the
Participant or Indirect Participant through which the Beneficial Owner entered
into the transaction. Ownership of beneficial interests in Global Notes will be
shown on, and the transfer of such ownership interests will be effected only
through, records maintained by DTC (with respect to interests of Participants)
and on the records of Participants (with respect to interests of persons held
through Participants). The laws of some states may require that certain
purchasers of securities take physical delivery of such securities in definitive
form. Such limits and such laws may impair the ability to own, transfer or
pledge beneficial interests in Global Notes.
So long as DTC or its nominee is the registered owner of a Global Note, DTC
or its nominee, as the case may be, will be considered to be the sole owner or
holder of the Notes represented by such Global Note for all purposes under the
Indenture. Except as provided below, Beneficial Owners of a Global Note will not
be entitled to have the Notes represented by such Global Note registered in
their names, will not receive or be entitled to receive physical delivery of the
Notes in definitive form and will not be considered the owners or holders
thereof under the Indenture. Accordingly, each person owning a beneficial
interest in a Global Note must rely on the procedures of DTC and if such person
is not a Participant, on the procedures of the Participants through which such
person owns its interest, to exercise any rights of a holder under the
Indenture. The Company and the Guarantor understand that under existing industry
practices, in the event that the Company or the Guarantor requests any action of
holders or that an owner of a beneficial interest in such Global Note desires to
give or take any action which a holder is entitled to give or take under the
Indenture, DTC would authorize the Participants holding the relevant beneficial
interests to give or take such action, and such Participants would authorize
Beneficial Owners owning through such Participants to give or to take such
action or would otherwise act upon the instructions of Beneficial Owners.
Conveyance of notices and other communications by DTC to Participants, by
Participants to Indirect Participants, and by Participants 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.
Payment of the principal of, and interest on, Notes registered in the name
of DTC or its nominee will be made to DTC or its nominee, as the case may be, as
the holder of the Global Note or Notes representing such Notes. None of the
Company, the Guarantor, the Trustee or any other agent of the Company, the
Guarantor or the Trustee will have any responsibility or liability for any
aspect of the records relating to, or payments made on account of, beneficial
ownership interests or for supervising or reviewing any records relating to such
beneficial ownership interests. The Company expects that DTC, upon receipt of
any payment of principal or interest in respect of a Global Note, will credit
the accounts of the Participants with payments in amounts proportionate to their
respective holdings in principal amount of beneficial interest in such Global
Note as
S-8
<PAGE> 9
shown on the records of DTC. The Company also expects that payments by
Participants to Beneficial Owners will be governed by standing customer
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in "street name", and
will be the responsibility of such Participants.
If (i) DTC is at any time unwilling or unable to continue as depository and
a successor depository is not appointed by the Company or (ii) the Company
determines in its discretion not to have the Notes represented by the Global
Notes and delivers to the Trustee an order to such effect, then the Global Note
or Notes will be exchangeable for Notes in definitive form of like tenor and of
an equal aggregate principal amount, in denominations of $1,000 and integral
multiples thereof. Such definitive Notes shall be registered in such name or
names as DTC shall instruct the Trustee. It is expected that such instructions
may be based upon directions received by DTC from Participants with respect to
ownership of beneficial interests in Global Notes. See "Description of Debt
Securities -- Global Securities" in the accompanying Prospectus for further
information concerning Notes issued in the form of Global Securities.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made by the Underwriters in immediately
available funds. All payments of principal and interest in respect of Notes in
book-entry form will be made by the Company in immediately available funds.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearing house or next-day funds. In contrast, the Notes
will trade in DTC's Same-day Funds Settlement System until maturity or until the
Notes are issued in certificated form, and secondary market trading activity in
the Notes will therefore be required by DTC to settle in immediately available
funds. No assurance can be given as to the effect, if any, of settlement in
immediately available funds on trading activity in the Notes.
S-9
<PAGE> 10
UNDERWRITING
Subject to the terms and conditions set forth in the Terms Agreement, dated
September 12, 1996, which incorporates by reference the terms contained in the
Underwriting Agreement of the same date, the Company has agreed to sell to each
of the Underwriters named below (the "Underwriters") and each of the
Underwriters has severally agreed to purchase, the principal amount of the Notes
set forth opposite their respective names:
<TABLE>
<CAPTION>
PRINCIPAL
UNDERWRITER AMOUNT
------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated....................................... $ 50,000,000
Chase Securities Inc............................................ 50,000,000
------------
Total.............................................. $100,000,000
============
</TABLE>
The Underwriters have advised the Company that they propose initially to
offer the Notes 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 .45% of the principal amount of the Notes.
The Underwriters may allow, and such dealers may reallow, a discount 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, concession and
discount may be changed.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended,
or in certain circumstances, to contribute to payments which the Underwriters
may be required to make in respect thereof.
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
presently intend to make a market in the Notes, as permitted by applicable laws
and regulations. The Underwriters are not obligated, however, to make a market
in the Notes and any such market making may be discontinued at any time at the
sole discretion of the Underwriters. Accordingly, no assurance can be given as
to the liquidity of, or trading markets for, the Notes.
Certain affiliates of Chase Securities Inc. have engaged, and may in the
future engage, in transactions with and perform services for the Company and
certain of its subsidiaries and affiliates in the ordinary course of business.
An affiliate of Chase Securities Inc. is an agent on and a lender under the
Company's credit facility and will receive its proportionate share of any
repayment of such facility made by the Company with the proceeds of this
offering. See "Use of Proceeds."
S-10
<PAGE> 11
PROSPECTUS
$200,000,000
[ANIXTER LOGO]
DEBT SECURITIES
PAYMENT OF PRINCIPAL, PREMIUM (IF ANY) AND INTEREST
UNCONDITIONALLY GUARANTEED BY ANIXTER INTERNATIONAL INC.
------------------------
Anixter Inc. (the "Company") may from time to time offer up to $200 million
aggregate principal amount, or, if applicable, the equivalent thereof in one or
more foreign currencies or currency units, of its unsecured debt securities
consisting of notes or debentures (the "Debt Securities"). The Debt Securities
may be offered as separate series in amounts, at prices and on terms to be
determined at the time or times of sale. An accompanying supplement to this
Prospectus (the "Prospectus Supplement") will set forth the specific terms and
conditions of the Debt Securities offered thereby, including, where applicable,
the specific designation, aggregate principal amount, denominations, maturity,
rate or rates and time or times of payment of interest, any terms for
redemption, any terms for sinking or analogous fund payment(s), the initial
public offering price, the proceeds to the Company and any other specific terms
in connection with the offering and sale of such Debt Securities. In the event
of the issuance of Debt Securities at original issue discount, the aggregate
principal amount of Debt Securities offered hereby will be a higher amount,
provided that the total price at which Debt Securities are sold to the public
pursuant to this Prospectus will not exceed $200 million, or the equivalent
thereof in one or more foreign currencies or currency units.
The Debt Securities will be general unsecured obligations of the Company
ranking pari passu with all other senior indebtedness and obligations of the
Company and senior in right of payment to all subordinated indebtedness and
obligations of the Company. Pursuant to the terms of the Indenture (as defined
herein), the Debt Securities will be fully, unconditionally and irrevocably
guaranteed (the "Guarantee"), on a senior unsecured basis, by Anixter
International Inc., the parent corporation of the Company (the "Guarantor"). See
"The Guarantor" and "Description of Debt Securities -- Guarantee."
The Company may sell the Debt Securities to or through underwriters or
dealers, and may also sell Debt Securities directly to other purchasers or
through agents designated from time to time by the Company. See "Plan of
Distribution." The names of such underwriters, dealers or agents, any applicable
commissions or discounts and the net proceeds to the Company from the sale of
the Debt Securities will be set forth in the accompanying Prospectus Supplement.
The Company may make application to list one or more series of Debt
Securities on one or more national securities exchanges. Any such application to
list Debt Securities will be described in the accompanying Prospectus
Supplement.
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF DEBT SECURITIES
UNLESS ACCOMPANIED BY THE PROSPECTUS SUPPLEMENT APPLICABLE TO THE DEBT
SECURITIES BEING SOLD.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is September 6, 1996.
<PAGE> 12
AVAILABLE INFORMATION
The Guarantor is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports and other information with the Securities and
Exchange Commission (the "Commission"). Reports, proxy statements and other
information filed by the Guarantor can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the following Regional Offices of
the Commission: Midwest Regional Office, Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661; and Northeast Regional Office, 7
World Trade Center, Suite 1300, New York, New York 10048. Copies of such
material can be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates, and at the
Internet web site maintained by the Commission at http://www.sec.gov. In
addition, such reports, proxy statements and other information concerning the
Guarantor can be inspected at the offices of the New York Stock Exchange, 20
Broad Street, New York, New York 10005.
The Company and the Guarantor have filed with the Commission a Registration
Statement on Form S-3 (together with any amendments thereto, the "Registration
Statement") (of which this Prospectus is a part) under the Securities Act of
1933, as amended (the "Securities Act"), with respect to the Debt Securities.
This Prospectus does not contain all of the information set forth in such
Registration Statement, certain parts of which have been omitted in accordance
with the rules and regulations of the Commission. Statements contained in this
Prospectus as to the contents of any contract or other document are not
necessarily complete, and in each instance reference is made to the copy of such
contract or other document filed or incorporated by reference as an exhibit to
the Registration Statement, each such statement being qualified in all respects
by such reference and the exhibits and schedules thereto. For further
information regarding the Company and the Debt Securities, reference is hereby
made to the Registration Statement and such exhibits and schedules, which may be
inspected without charge at the office of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, and copies of which may be obtained from the
Commission upon payment of the fees prescribed by the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Guarantor with the
Commission pursuant to the Exchange Act are hereby incorporated herein by
reference:
1. The Guarantor's Annual Report on Form 10-K for the year ended
December 31, 1995.
2. The Guarantor's Quarterly Reports on Form 10-Q for the quarters
ended March 29, 1996 and June 28, 1996.
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 the offering made by this Prospectus shall be deemed to be
incorporated in this Prospectus by reference and to be a part hereof from the
respective dates of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference in this
Prospectus shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained in this Prospectus or in any
other subsequently filed document which also is or is deemed to be incorporated
by reference in this Prospectus modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Guarantor will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon written or oral
request of such person, a copy of any or all of the documents that have been or
may be incorporated in this Prospectus by reference (not including exhibits to
such documents unless such exhibits are specifically incorporated by reference
into such documents). Requests should be directed to James E. Knox, Senior Vice
President, General Counsel & Secretary, Anixter International Inc., 2 North
Riverside Plaza, Suite 1900, Chicago, Illinois 60606 (Telephone: (312)
902-1515).
-------------------------
Unless otherwise indicated, currency amounts in this Prospectus and any
Prospectus Supplement are stated in United States dollars ("$", "dollars", "U.S.
dollars" or "U.S. $").
2
<PAGE> 13
THE COMPANY
The Company is a leading supplier of wiring systems, networking and
internetworking products for voice, data and video networks and electrical power
applications in North America, Europe, Asia and Latin America. The Company
stocks and/or sells a full line of these products from a network of 85 locations
in the United States, 19 in Canada, 17 in the United Kingdom, 28 in Continental
Europe, 10 in Latin America, 6 in Australia, and 11 in Asia. The Company sells
approximately 80,000 products to over 60,000 active customers and works with
over 2,000 suppliers. Its customers include international, national, regional
and local companies that are end users of these products and engage in
manufacturing, communications, finance, education, health care, transportation,
utilities and government. Also, the Company sells products to resellers such as
contractors, installers, system integrators, value added resellers, architects,
engineers and wholesale distributors. The Company's average order size is
approximately $1,600.
The products sold by the Company include communication (voice, data and
video) products used to connect personal computers, peripheral equipment,
mainframe equipment and various networks to each other. The products include an
assortment of transmission media (copper and fiber optic cable) and components,
as well as active data components for networking applications. The Company sells
products that are incorporated in local area networks ("LANs"), and the
internetworking of LANs to form wide area networks ("WANs"). The Company's
products also include electrical wiring system products used for the
transmission of electrical energy and control/monitoring of industrial
processes.
Increasingly, the Company's end user customer base is seeking complete
solutions to their network infrastructure needs as opposed to just networking
products. Therefore, in some circumstances the Company is providing network
design advice through its sales engineers prior to major sales commitments as
well as project management, staging and configuration during customer project
implementation, and customer training. On a post sale basis the Company provides
network trouble shooting, maintenance and warranty services. The Company's
service offerings do not include cable system installation, application software
development or the provision of terminal devices. The Company has designed its
services to be compatible with and not competitive to the principal activities
of its reseller customer base.
Prior to 1989, the Company's operations were primarily limited to North
America and the United Kingdom. In 1989, the Company made a major commitment to
expand its operations into the international voice, data and video
communications market. Since then, the Company has opened businesses throughout
Western Europe and in significant markets in the Pacific Rim (other than Japan
and Korea) and Latin America.
An important element of the Company's business strategy is to develop and
maintain close relationships with its key suppliers, which include the world's
leading manufacturers of networking and electrical wiring systems products. Such
relationships stress joint product planning, inventory management, technical
support, advertising and marketing. In support of this strategy, the Company
does not compete with its suppliers in product design or manufacturing
activities. Approximately 47% of the Company's purchases in 1995 were from its
five largest suppliers.
The Company competes with distributors and manufacturers who sell products
directly or through existing distribution channels to end users or other
resellers. In addition, the Company's future performance could be subject to
economic downturns and possibly rapid changes in applicable technologies. To
guard against inventory obsolescence, the Company has negotiated various return
and price protection agreements with its key suppliers. Although the Company's
relationships with its suppliers are good, the loss of a major supplier could
have a temporary adverse effect on the Company's business but would not have a
lasting impact since comparable products are available from alternate sources.
The Company is incorporated in the State of Delaware and its principal
offices are located at 4711 Golf Road, Skokie, Illinois 60076. The Company's
telephone number is (847) 677-2600.
3
<PAGE> 14
THE GUARANTOR
The Guarantor, formerly known as Itel Corporation, is primarily engaged in
providing networking and cabling solutions for network infrastructure
requirements through the Company, its sole operating subsidiary. See "The
Company." As of June 28, 1996, the Guarantor also owned approximately 31% of
ANTEC Corporation and its subsidiaries (collectively "ANTEC"), and certain
assets which are held for sale. The Guarantor is incorporated in the State of
Delaware and its principal offices are located at 2 North Riverside Plaza, Suite
1900, Chicago, Illinois 60606.
As of June 28, 1996, the market value of the Guarantor's 7,113,500 shares
of ANTEC common stock was approximately $113 million compared with a carrying
value of $75.4 million. ANTEC is a publicly traded communications technology
company, specializing in the design and engineering of hybrid fiber/coax (HFC)
broadband networks and the manufacturing, materials management and distribution
of products for these networks.
The principal assets held for sale at June 28, 1996, are those of Signal
Capital Corporation ("Signal Capital"). The financial business of Signal Capital
has been classified as assets held for sale in the Guarantor's consolidated
financial statements since its acquisition in 1988. The approximately $27
million of Signal Capital assets at June 28, 1996, represents approximately 2%
of the original acquired Signal Capital assets. The Guarantor continues to
liquidate the acquired Signal Capital assets in an orderly manner that maximizes
their value to shareholders and no material amounts of new loans or investments
are being made by Signal Capital.
USE OF PROCEEDS
The Company currently intends to use the net proceeds from the sale of any
Debt Securities for general corporate purposes, which may include the reduction
of indebtedness, possible acquisitions and such other purposes as will be stated
in any Prospectus Supplement. Pending such use, the net proceeds may be
temporarily invested in short-term investment securities or deposited in
interest-bearing accounts. The precise amounts and timing of the application of
proceeds will depend upon the funding requirements of the Company and the
availability of other funds.
RATIOS OF EARNINGS TO FIXED CHARGES
Set forth below are the ratios of earnings to fixed charges (unaudited) for
the Company for the six months ended June 28, 1996 and for the last five years:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
SIX MONTHS ENDED ----------------------------------------
JUNE 28, 1996 1995 1994 1993 1992 1991
- ---------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
2.4 3.2 3.0 1.7 1.6 1.2
</TABLE>
For the purpose of computing the ratios of earnings to fixed charges,
earnings consist of income of the consolidated Company from continuing
operations before provision for income taxes and fixed charges, and fixed
charges consist of interest and financing fees on long-term debt and that
portion of rental expense deemed to represent interest.
4
<PAGE> 15
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will be issued under an Indenture (the "Indenture"),
dated as of September 9, 1996, by and among the Company, the Guarantor and The
Bank of New York, as Trustee (the "Trustee"). A copy of the Indenture is filed
as an exhibit to the Registration Statement of which this Prospectus forms a
part. The Indenture provides that Debt Securities may be issued from time to
time in one or more series pursuant to the terms of one or more Officer's
Certificates or supplemental indentures creating such series. The particular
terms of each series, or of Debt Securities forming a part of a series, which
are offered by a Prospectus Supplement ("Offered Debt Securities") will be
described in such Prospectus Supplement.
The following summaries of certain provisions of the Indenture and the Debt
Securities do not purport to be complete and are subject to, and are qualified
in their entirety by reference to, all the provisions of the Indenture and any
Officer's Certificates or any supplemental indentures relating thereto,
including the definitions therein of certain terms. Wherever particular Sections
or defined terms of the Indenture are referred to herein or in a Prospectus
Supplement, such Sections or defined terms are incorporated by reference herein
or therein, as the case may be.
GENERAL
The Indenture provides that Debt Securities in separate series may be
issued thereunder from time to time without limitation as to aggregate principal
amount. The Company may specify a maximum aggregate principal amount for the
Debt Securities of any series. (Section 301) The Debt Securities are to have
such terms and provisions which are not inconsistent with the Indenture,
including terms and provisions relating to maturity, principal and interest, as
the Company may determine. The Debt Securities will be unsecured unsubordinated
obligations of the Company and will rank on a parity with all other unsecured
and unsubordinated indebtedness of the Company.
The applicable Prospectus Supplement will set forth the price or prices at
which the Offered Debt Securities will be issued and will describe the following
terms of such Offered Debt Securities: (i) the title of such Offered Debt
Securities; (ii) any limit on the aggregate principal amount of such Offered
Debt Securities or the series of which they are a part; (iii) if other than the
Trustee, the identity of each Security Registrar and Paying Agent; (iv) the date
or dates, or the method by which such date or dates are determined or extended,
on which the principal and premium (if any) of any of such Offered Debt
Securities will be payable; (v) the rate or rates (which may be fixed or
variable) at which any of such Offered Debt Securities will bear interest, or
the method, if any, by which such rates will be determined, the date or dates
from which any such interest will accrue, the Interest Payment Dates on which
any such interest will be payable, or the method by which such date will be
determined, and the basis on which interest shall be calculated, if other than
that of a 360-day year of twelve thirty-day months; (vi) if other than the
fifteenth day next preceding an Interest Payment Date, the Regular Record Date
with respect to an Interest Payment Date; (vii) the place or places, if any,
other than or in addition to the Corporate Trust Office, where the principal of
and any premium and interest on any of such Offered Debt Securities will be
payable; (viii) the period or periods within which, the price or prices at which
and the terms and conditions on which any of such Offered Debt Securities may be
redeemed, in whole or in part, at the option of the Company; (ix) the
obligation, if any, of the Company to redeem, repay or purchase any of such
Offered Debt Securities pursuant to any sinking fund or analogous provision or
at the option of the Holder thereof, and the period or periods within which, the
price or prices at which and the terms and conditions on which any of such
Offered Debt Securities will be redeemed, repaid or purchased, in whole or in
part, pursuant to any such obligation; (x) the denominations in which any of
such Offered Debt Securities will be issuable, if other than denominations of
$1,000 and any integral multiple thereof; (xi) if other than the currency of the
United States of America, the currency, currencies or currency units in which
the principal of or any premium or interest on any of such Offered Debt
Securities will be payable (and the manner in which the equivalent of the
principal amount thereof in the currency of the United States of America is to
be determined for purposes of determining the principal amount deemed to be
Outstanding at any time); (xii) if the amount of principal of or any premium or
interest on any of such Offered Debt Securities may be determined with reference
to an index, the manner in which such amounts will be determined; (xiii) if the
principal of or any premium or interest on any of such Offered Debt Securities
5
<PAGE> 16
is to be payable, at the election of the Company or the Holder thereof, in one
or more currencies or currency units other than those in which such Offered Debt
Securities are stated to be payable, the currency, currencies or currency units
in which payment of any such amount as to which such election is made will be
payable, and the periods within which and the terms and conditions upon which
such election is to be made; (xiv) if other than the principal amount thereof,
the portion of the principal amount of any of such Offered Debt Securities which
will be payable upon declaration of acceleration of the Maturity thereof; (xv)
if applicable, that such Offered Debt Securities, in whole or any specified
part, are defeasible pursuant to the provisions of the Indenture described
herein under "Defeasance and Covenant Defeasance -- Defeasance and Discharge" or
"Defeasance and Covenant Defeasance -- Defeasance of Certain Covenants", or
under both such captions; (xvi) any addition to or change in the Events of
Default applicable to any of such Offered Debt Securities and any change in the
right of the Trustee or the Holders to declare the principal of and any premium
or interest on any of such Offered Debt Securities due and payable; (xvii) any
addition to or change in the covenants and definitions in the Indenture or in
the provisions of the Indenture described under "Consolidation, Merger, Sale or
Transfer" and under "Covenants"; (xviii) whether any of such Offered Debt
Securities will be issuable in whole or in part in the form of one or more
Global Securities and, if so, the respective Depositaries for such Global
Securities and, if different from those described under the Indenture caption
entitled "Registration, Registration of Transfer and Exchange," any
circumstances under which any such Global Security may be exchanged for Offered
Debt Securities registered, and any transfer of such Global Security may be
registered, in the names of Persons other than the Depositary for such Global
Security or its nominee; and (xix) any other terms of such Offered Debt
Securities not inconsistent with the provisions of the Indenture. (Section 301)
If specified in any applicable Prospectus Supplement, the Debt Securities of any
series may be issued in bearer form, and if so issued, the applicable Prospectus
Supplement will describe any additions to or changes in any of the provisions of
the Indenture which are necessary to permit or facilitate such issuance.
(Sections 301 and 901)
Debt Securities, including Original Issue Discount Securities, may be sold
at a substantial discount below their principal amount. Certain special United
States federal income tax considerations (if any) applicable to Debt Securities
sold at an original issue discount will be described in the applicable
Prospectus Supplement. In addition, certain special United States federal income
tax or other considerations (if any) applicable to any Debt Securities which are
denominated in a currency or currency unit other than United States dollars will
be described in the applicable Prospectus Supplement.
Except to the extent that the covenants described under the captions
"Certain Covenants of the Company and the Guarantor" and "Redemption at the
Option of the Holders in Certain Circumstances" may otherwise provide, neither
the Indenture nor the Debt Securities will contain any covenants or other
provisions designed to afford Holders of the Debt Securities protection in the
event of a highly leveraged transaction, change in credit rating or other
similar occurrence involving the Company, the Guarantor or any of their
respective Subsidiaries.
FORM, EXCHANGE AND TRANSFER
Unless otherwise specified in the applicable Prospectus Supplement, the
Debt Securities of each series will be issuable only in fully registered form,
without coupons, and only in denominations of $1,000 and integral multiples
thereof. (Section 302)
At the option of the Holder, subject to the terms of the Indenture and the
limitations applicable to Global Securities, Debt Securities of each series will
be exchangeable for other Debt Securities of the same series of any authorized
denomination and of a like tenor and aggregate principal amount. (Section 305)
Subject to the terms of the Indenture and the limitations applicable to
Global Securities, Debt Securities may be presented for exchange as provided
above or for registration of transfer (duly endorsed or with a written
instrument of transfer duly executed) at the office of the Security Registrar or
at one or more offices or agencies designated by the Company for such purpose.
No service charge will be made for any registration of transfer or exchange of
Debt Securities, but the Company or the Trustee will require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. Such transfer or exchange will be effected upon the Security
Registrar being satisfied with the documents of title and identity
6
<PAGE> 17
of the person making the request. Unless otherwise set forth in the applicable
Prospectus Supplement, the Company has appointed the Trustee as Security
Registrar for each series of Debt Securities for the purpose of registering Debt
Securities and transfers of Debt Securities at its Corporate Trust Office in New
York, New York. (Section 305) Any other office or agency (in addition to the
Security Registrar) initially designated by the Company for the registration and
transfer of any Debt Securities will be named in the applicable Prospectus
Supplement. The Company may at any time designate additional offices and
agencies for the registration and transfer or exchange of any Debt Securities or
rescind such designations, except that the Company will be required to maintain
an office or agency in each Place of Payment for the Debt Securities of each
series. (Section 1002)
If the Debt Securities of any series are to be redeemed in part, the
Company will not be required to (i) issue, register the transfer of or exchange
any Debt Security of that series during a period beginning at the opening of
business 15 days before the selection of such Debt Securities of that series to
be redeemed and ending at the close of business on the day of the mailing of a
notice of redemption; or (ii) register the transfer of or exchange any Debt
Security so selected for redemption, in whole or in part, except the unredeemed
portion of any such Debt Security being redeemed in part. (Section 305)
GLOBAL SECURITIES
Some or all of the Debt Securities of any series may be represented, in
whole or in part, by one or more Global Securities which will have an aggregate
principal amount equal to that the Debt Securities represented thereby. Each
Global Security will be registered in the name of a Depositary or a nominee
thereof identified in the applicable Prospectus Supplement, and will be
deposited with such Depositary or nominee or a custodian therefor.
Notwithstanding any provision of the Indenture or any Debt Security
described herein, no Global Security may be exchanged for Debt Securities
registered in the name of, and no transfer of a Global Security may be
registered to, any Person other than the Depositary for such Global Security or
any nominee of such Depositary unless (i) the Depositary notifies the Company
that it is unwilling or unable to continue as Depositary for such Global
Security or if the Company determines that the Depositary is unable to continue
as Depositary and the Company thereupon fails to appoint a successor Depositary;
(ii) the Company executes and delivers to the Trustee a Company Order that such
Global Security shall be so exchangeable and the transfer thereof so
registerable; (iii) the Company provides for such exchange in creating such
Global Security (which will be described in any applicable Prospectus
Supplement); (iv) there shall have occurred and be continuing an Event of
Default with respect to the Debt Securities evidenced by such Global Security;
or (v) there shall exist such circumstances, if any, in addition to or in lieu
of those described above as may be described in the applicable Prospectus
Supplement. All securities issued in exchange for a Global Security or any
portion thereof will be registered in such names as the Depositary may direct.
(Section 305)
As long as the Depositary, or its nominee, is the registered Holder of a
Global Security, the Depositary or such nominee, as the case may be, will be
considered the sole owner and Holder of such Global Security and the Debt
Securities represented thereby for all purposes under the Debt Securities and
the Indenture. Except in the limited circumstances referred to above, owners of
beneficial interests in a Global Security will not be entitled to have such
Global Security or any Debt Securities represented thereby registered in their
names, will not receive or be entitled to receive physical delivery of
certificates representing Debt Securities in exchange therefor and will not be
considered to be the owners or Holders of such Global Security or any Debt
Securities represented thereby for any purpose under the Debt Securities or the
Indenture. All payments of principal of and any premium and interest on a Global
Security will be made to the Depositary or its nominee, as the case may be, as
the Holder thereof. The laws of some jurisdictions require that certain
purchasers of securities take physical delivery of such securities in definitive
form. These laws may impair the ability to transfer beneficial interests in a
Global Security.
Ownership of beneficial interests in a Global Security will be limited to
institutions that have accounts with the Depositary or its nominee
("participants") and to persons that may hold beneficial interests through
participants. In connection with the issuance of any Global Security, the
Depositary will credit, on its book-entry registration and transfer system, the
respective principal amounts of Debt Securities represented by the
7
<PAGE> 18
Global Security to the accounts of its participants. Ownership of beneficial
interests in a Global Security will be shown only on, and the transfer of those
ownership interests will be effected only through, records maintained by the
Depositary (with respect to participants' interests) or any such participant
(with respect to interests of persons held by such participants on their
behalf). Payments, transfers, exchanges and other matters relating to beneficial
interests in a Global Security may be subject to various policies and procedures
adopted by the Depositary from time to time. None of the Company, the Guarantor,
the Trustee, the Security Registrar, the Paying Agent or any agent of the
Company, the Guarantor or the Trustee will have any responsibility or liability
for (i) any aspects of the Depositary's or any participant's records relating
to, or for payments made on account of, beneficial interests in a Global
Security, or for maintaining, supervising or reviewing any records relating to
such beneficial interests; (ii) the payments to the beneficial owners of the
Global Security of amounts paid to the Depositary or its nominee; or (iii) any
other matter related to the actions and practices of the Depositary. (Section
305)
Secondary trading of notes and debentures of corporate issuers is generally
settled in clearing-house or next-day funds. In contrast, beneficial interests
in a Global Security, in some cases, may trade in the Depositary's same-day
funds settlement system, in which secondary market trading activity in those
beneficial interests would be required by the Depositary to settle in
immediately available funds. There is no assurance as to the effect, if any,
that settlement in immediately available funds would have on trading activity in
such beneficial interests. Also, settlement for purchases of beneficial
interests in a Global Security upon the original issuance thereof may be
required to be made in immediately available funds.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of interest on a Debt Security on any Interest Payment Date will be made to the
Person in whose name such Debt Security (or one or more Predecessor Securities)
is registered at the close of business on the Regular Record Date for such
interest. (Section 307)
Principal and any premium and interest due on a Debt Security upon Maturity
or upon redemption or repurchase will be paid by wire transfer (if appropriate
instructions are received) against presentation and surrender of the Debt
Security by the Holder thereof at the office of the Paying Agent. Interest
payments on any Debt Security (other than interest due at Maturity or on
redemption or repurchase) will be made by check mailed to the address of the
Person entitled thereto as such address appears in the Security Register;
provided that a Holder of Debt Securities of any series which pay interest on
the same day and which are in an aggregate principal amount in excess of
$10,000,000 may elect to receive payments of interest with respect to such
series via wire transfer. (Section 307) The Paying Agent or Agents initially
designated by the Company for the Debt Securities of a particular series will be
named in the applicable Prospectus Supplement. The Company may at any time
designate additional Paying Agents or one or more other offices or agencies
where the Debt Securities may be presented or surrendered for payment and from
time to time rescind such designations, except that the Company will be required
to maintain an office or agency in each Place of Payment for the Debt Securities
of a particular series. (Section 1002)
All moneys paid by the Company to a Paying Agent or the Trustee for the
payment of the principal of or any premium or interest on any Debt Security
which remain unclaimed at the end of one year after such principal, premium or
interest has become due and payable will be repaid to the Company, and the
Holder of such Security thereafter may, as an unsecured creditor, look only to
the Company for payment thereof, and all liability of the Paying Agent and the
Trustee with respect thereto, and all liability of the Company as a trustee
thereof, shall thereupon cease. (Section 1003)
GUARANTEE
The Guarantor irrevocably and unconditionally will guarantee to each Holder
and the Trustee the full and prompt performance of the Company's obligations
under the Indenture and the Debt Securities, including the full payment of the
principal of, premium (if any) and interest on, the Debt Securities when and as
the same shall become due and payable, whether at maturity, upon redemption, or
by declaration of acceleration or
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otherwise. The Guarantee is a general unsecured obligation of the Guarantor, and
will rank pari passu in right of payment with all existing or future
unsubordinated indebtedness and obligations of the Guarantor.
The Guarantor conducts substantially all of its business through the
Company and its subsidiaries and does not own any material assets other than the
stock of the Company, ANTEC and Signal Capital. See "The Guarantor." The
Guarantor is dependent on the receipt of dividends or other payments from the
Company, ANTEC and Signal Capital to make payments on the Guarantee of the Debt
Securities. Certain provisions in the debt agreements of the Company and ANTEC
currently restrict and in the future may prohibit such dividends or other
payments. Such provisions and the restrictions they impose will be described in
the accompanying Prospectus Supplement.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Indenture provides that neither the Guarantor nor the Company may
consolidate with, or sell, lease or convey all or substantially all of their
respective assets to, or merge with or into any other person or entity unless
(i) either the Guarantor or the Company, as applicable, is the continuing
corporation, or the successor is a corporation organized and existing under the
laws of the United States or a state thereof and the successor corporation
expressly assumes by an indenture supplement the Guarantor's or the Company's
obligations, as applicable, on the Debt Securities and under the Indenture; (ii)
the Guarantor or the Company, as applicable, or the successor corporation, as
the case may be, is not immediately after the merger or consolidation, or the
sale, lease or conveyance, in default in the performance of any covenant or
condition under the Indenture; and (iii) after giving effect to the transaction,
no Event of Default, and no event which, after notice or lapse of time or both,
would become an Event of Default, shall have occurred or be continuing. (Section
801)
CERTAIN COVENANTS OF THE COMPANY AND THE GUARANTOR
The Indenture contains certain covenants, described below, with respect to
the incurrence of secured debt by the Guarantor, the Company and the Restricted
Subsidiaries (as hereinafter defined), sale and leaseback transactions on the
part of the Guarantor, the Company and the Restricted Subsidiaries, the transfer
of principal facilities to any party other than the Guarantor, the Company and
the Restricted Subsidiaries and the incurrence of funded debt by Restricted
Subsidiaries of the Company. These covenants do not, however, focus on the
amount of debt incurred in any transaction and do not otherwise afford
protection to holders of the Debt Securities in the event of a highly leveraged
transaction that is not in violation of the covenants. The Guarantor and the
Company do not currently intend to include any covenants or other provisions
affording such protection in the Debt Securities or any series thereof. If the
Guarantor and the Company determine in the future that it is desirable to
include covenants or other provisions of this type in any series of Debt
Securities, they will be described in the Prospectus Supplement for that series.
Limitations on Secured Debt
The Indenture provides that so long as any Debt Securities are outstanding
the Guarantor and the Company will not, and will not cause or permit a
Restricted Subsidiary to, create, incur, assume or guarantee any Secured Debt
(as hereinafter defined) or create any Security Interest (as hereinafter
defined) securing any indebtedness existing on the date of the Indenture that
would constitute Secured Debt if it were secured by a Security Interest, unless
the Debt Securities will be secured equally and ratably (subject to applicable
priorities of payment) by the Security Interest securing such Secured Debt or
indebtedness, except that the Guarantor, the Company and the Restricted
Subsidiaries may create, incur, assume or guarantee certain Secured Debt without
so securing the Debt Securities. Among such permitted Secured Debt is
indebtedness secured by (i) certain Security Interests to secure payment of the
cost of acquisition, construction, development or improvement of property; (ii)
Security Interests on property at the time of acquisition assumed by the
Guarantor, the Company or a Restricted Subsidiary, or on the property or on the
outstanding shares or indebtedness of a corporation or firm at the time it
becomes a Restricted Subsidiary or is merged into or consolidated with the
Guarantor, the Company or a Restricted Subsidiary, or on properties of a
corporation or firm acquired by the Guarantor, the Company or a Restricted
Subsidiary as an entirety or substantially as an entirety; (iii) Security
Interests arising from conditional sales agreements or title retention
agreements with
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respect to property acquired by the Guarantor, the Company or any Restricted
Subsidiary; (iv) Security Interests securing indebtedness of a Restricted
Subsidiary owing to the Guarantor, the Company or to another Restricted
Subsidiary; (v) mechanics, and other statutory liens, arising in the ordinary
course of business (including construction of facilities) in respect of
obligations that are not due or that are being contested in good faith; (vi)
liens for taxes, assessments or governmental charges not yet due or for taxes,
assessments or governmental charges that are being contested in good faith;
(vii) Security Interests (including judgment liens) arising in connection with
legal proceedings so long as such proceedings are being contested in good faith
and, in case of judgment liens, execution thereon is stayed; (viii) certain
landlords' liens on fixtures; (ix) Security Interests to secure partial,
progress, advance or other payments or indebtedness incurred for the purpose of
financing construction on or improvement of property subject to such Security
Interests; and (x) certain Security Interests in favor, or made at the request,
of governmental bodies. Additionally, such permitted Secured Debt includes (with
certain limitations) any extension, renewal or refunding, in whole or in part,
of any Secured Debt permitted at the time of the original incurrence thereof. In
addition to the foregoing, the Guarantor, the Company and the Restricted
Subsidiaries may incur Secured Debt, without equally and ratably securing the
Debt Securities, if the sum of (a) the amount of Secured Debt entered into after
the date of the Indenture and otherwise prohibited by the Indenture plus (b) the
aggregate value of Sale and Leaseback Transactions (as hereinafter defined)
entered into after the date of the Indenture, and otherwise prohibited by the
Indenture, does not exceed ten percent of Consolidated Net Tangible Assets (as
hereinafter defined). (Section 1005)
Limitations on Sale and Leaseback Transactions
The Indenture provides that so long as any Debt Securities are outstanding
the Guarantor and the Company will not, and will not permit any Restricted
Subsidiary to, enter into any Sale and Leaseback Transaction unless (a) the
Guarantor, the Company or such Restricted Subsidiary would be entitled to incur
Secured Debt permitted by the Indenture only by reason of the provision
described in the last sentence of the preceding paragraph equal in amount to the
net proceeds of the property sold, or transferred or to be sold or transferred
pursuant to such Sale and Leaseback Transaction and secured by a Security
Interest on the property to be leased without equally and ratably securing the
Debt Securities, or (b) the Guarantor, the Company or a Restricted Subsidiary
shall apply within 180 days after the effective date of such Sale and Leaseback
Transaction, an amount equal to such net proceeds (x) to the acquisition,
construction, development or improvement of properties, facilities or equipment
which are, or upon such acquisition, construction, development or improvement
will be, a Principal Facility or Facilities (as hereinafter defined) or a part
thereof or (y) to the redemption of Debt Securities or (z) to the repayment of
Senior Funded Debt (as hereinafter defined) of the Guarantor, the Company or of
any Restricted Subsidiary (other than the Senior Funded Debt owed to any
Restricted Subsidiary), or in part to such acquisition, construction,
development or improvement and in part to such redemption and/or repayment. In
lieu of applying an amount equal to such net proceeds to such redemption the
Guarantor or the Company may, within 180 days after such sale or transfer,
deliver to the Trustee Debt Securities (other than Debt Securities made the
basis of a reduction in a mandatory sinking fund payment) for cancellation and
thereby reduce the amount to be applied to the redemption of the Debt Securities
by an amount equivalent to the aggregate principal amount of the Debt Securities
so delivered. (Section 1006)
Limitations on Transfers of Principal Facilities
The Indenture provides that so long as any Debt Securities are outstanding
the Guarantor and the Company will not, and will not cause or permit any
Restricted Subsidiary to, transfer any Principal Facility to any party other
than the Guarantor, the Company or a Restricted Subsidiary unless within 180
days after the effective date of such transaction an amount equal to the fair
value of such Principal Facility at the time of such transfer is applied (i) to
the acquisition, construction, development or improvement of properties,
facilities or equipment which are, or upon such acquisition, construction,
development or improvement will be, a Principal Facility or Facilities or a part
thereof or (ii) to the redemption of the Debt Securities or (iii) to the
repayment of Senior Funded Debt of the Guarantor, the Company or any Restricted
Subsidiary (other than Senior Funded Debt owed to any Restricted Subsidiary), or
in part to such acquisition, construction,
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development or improvement and in part to such redemption and/or repayment. In
lieu of applying all or any part of such amount to such redemption, the
Guarantor or the Company may, within 180 days after such transfer, deliver to
the Trustee Debt Securities (other than Debt Securities made the basis of a
reduction in a mandatory sinking fund payment) for cancellation and thereby
reduce the amount to be applied to the redemption of the Debt Securities by an
amount equivalent to the aggregate principal amount of the Debt Securities so
delivered. (Section 1007)
Limitations on Senior Funded Debt by Restricted Subsidiaries of Company
The Indenture provides that so long as the Debt Securities are outstanding
the Company will not permit any of its Restricted Subsidiaries to (a) create,
assume or suffer to exist any Senior Funded Debt other than (i) Senior Funded
Debt which is permitted to such Restricted Subsidiary as Secured Debt under the
Indenture, (ii) Senior Funded Debt owed to the Guarantor, the Company or another
Restricted Subsidiary, (iii) Senior Funded Debt of a corporation or other entity
exiting at the time it becomes a Restricted Subsidiary or is merged with or into
a Restricted Subsidiary, (iv) Senior Funded Debt of a corporation or other
entity assumed by a Restricted Subsidiary in the acquisition of all or a portion
of the business of such corporation or other entity, and (v) Senior Funded Debt
existing as of the date of the Indenture, or (b) guarantee, directly or
indirectly through any arrangement which is substantially the equivalent of a
guarantee, any Senior Funded Debt of another Subsidiary except for (i)
guarantees existing on the date of the Indenture, and (ii) guarantees of Senior
Funded Debt permitted to a Restricted Subsidiary under the preceding clause (a).
(Section 1008)
CERTAIN DEFINITIONS
The following terms are defined substantially as follows in Section 101 of
the Indenture and are used herein as so defined.
"Consolidated Net Tangible Assets" means, in each case, with respect to the
Guarantor (a) the total amount of assets (less applicable reserves and other
properly deductible items) after deducting therefrom (i) all liabilities and
liability items, except for indebtedness payable by its terms more than one year
from the date of incurrence thereof (or renewable or extendable at the option of
the obligor for a period ending more than one year after such date of
incurrence), capitalized rent, capital stock (including redeemable preferred
stock) and surplus, surplus reserves and deferred income taxes and credits and
other non-current liabilities, and (ii) all goodwill, trade names, trademarks,
patents, unamortized debt discount, unamortized expenses incurred in the
issuance of debt, and other like intangibles which, in each case, under
generally accepted accounting principles in effect on the date of the Indenture
would be included on a consolidated balance sheet of the Guarantor and its
Restricted Subsidiaries, less (b) loans, advances, equity investments and
guarantees (other than accounts receivable arising from the sale of merchandise
in the ordinary course of business) at the time outstanding that were made or
incurred by the Guarantor and its Restricted Subsidiaries to, in or for
Unrestricted Subsidiaries or to, in or for corporations while they were
Restricted Subsidiaries and which at the time of computation are Unrestricted
Subsidiaries.
"Principal Facility" means any land, building, machinery or equipment, or
leasehold interests and improvements in respect of the foregoing, owned, on the
date of the Indenture or thereafter, by the Guarantor, the Company or a
Restricted Subsidiary, which has a gross book value (without deduction for any
depreciation reserves) at the date as of which the determination is being made
of in excess of one percent of the Consolidated Net Tangible Assets, other than
any such land, building, machinery or equipment, or leasehold interests and
improvements in respect of the foregoing which, in the opinion of the Board of
Directors of the Guarantor (evidenced by a Board Resolution), is not of material
importance to the business conducted by the Guarantor and its Subsidiaries taken
as a whole.
"Restricted Subsidiary" means (a) any Subsidiary other than an Unrestricted
Subsidiary and (b) any Subsidiary that was an Unrestricted Subsidiary but which,
subsequent to the date of the Indenture, is designated by the Guarantor and the
Company (evidenced by a resolution of their respective Boards of Directors) to
be a Restricted Subsidiary; provided, however, that the Guarantor and the
Company may not
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designate any such Subsidiary to be a Restricted Subsidiary if the Guarantor or
the Company would thereby breach any covenant or agreement contained in the
Indenture (on the assumption that any transaction to which such Subsidiary was a
party at the time of such designation and which would have given rise to Secured
Debt or constituted a Sale and Leaseback Transaction at the time it was entered
into had such Subsidiary then been a Restricted Subsidiary was entered into at
the time of such designation).
"Sale and Leaseback Transaction" means any sale or transfer made by the
Guarantor, the Company or one or more Restricted Subsidiaries (except a sale or
transfer made to the Guarantor, the Company or one or more Restricted
Subsidiaries) of any Principal Facility that (in the case of a Principal
Facility which is a building or equipment) has been in operation, use or
commercial production (exclusive of test and start-up periods) by the Guarantor,
the Company or any Restricted Subsidiary for more than 180 days prior to such
sale or transfer, or that (in the case of a Principal Facility that is a parcel
of real property not containing a building) has been owned by the Guarantor, the
Company or any Restricted Subsidiary for more than 180 days prior to such sale
or transfer, if such sale or transfer is made with the intention of leasing, or
as part of an arrangement involving the lease of such Principal Facility to the
Guarantor, the Company or a Restricted Subsidiary (except a lease for a period
not exceeding 36 months made with the intention that the use of the leased
Principal Facility by the Guarantor, the Company or such Restricted Subsidiary
will be discontinued on or before the expiration of such period). Any Secured
Debt permitted under the applicable section of the Indenture will not be deemed
to create or be defined to be a Sale and Leaseback Transaction.
"Secured Debt" means any indebtedness for money borrowed by, or evidenced
by a note or other similar instrument of, the Guarantor, the Company or a
Restricted Subsidiary, and any other indebtedness of the Guarantor, the Company
or a Restricted Subsidiary on which, by the terms of such indebtedness, interest
is paid or payable, including obligations evidenced or secured by leases,
installment sales agreements or other instruments (other than indebtedness owed
by a Restricted Subsidiary to the Guarantor or the Company, or by a Restricted
Subsidiary to another Restricted Subsidiary, or by the Guarantor or the Company
to a Restricted Subsidiary), which in any such case is secured by (a) a Security
Interest in any property or assets of the Guarantor, the Company or any
Restricted Subsidiary, or (b) a Security Interest in any shares of stock owned
directly or indirectly by the Guarantor or the Company in a Restricted
Subsidiary or in indebtedness for money borrowed by a Restricted Subsidiary from
the Guarantor, the Company or another Restricted Subsidiary. The securing in the
foregoing manner of any previously unsecured debt shall be deemed to be the
creation of Secured Debt at the time such security is given. The amount of
Secured Debt at any time outstanding shall be the aggregate amount then owing
thereon by the Guarantor, the Company and the Restricted Subsidiaries.
"Security Interest" means any mortgage, pledge, lien, encumbrance or other
security interest which secures payment or performance of an obligation.
"Senior Funded Debt" means any obligation of the Guarantor, the Company or
any Restricted Subsidiary which constituted funded debt as of the date of its
creation and that, in the case of such funded debt of the Guarantor and the
Company is not subordinate and junior in right of payment to the prior payment
of the Debt Securities. As used herein "funded debt" shall mean any obligation
payable by its terms more than one year from the date of incurrence thereof (or
renewable or extendable at the option of the obligor for a period ending more
than one year after such date of incurrence), which under generally accepted
accounting principles should be shown on the balance sheet as a liability.
"Subsidiary" means any corporation or other entity of which at the time of
determination the Guarantor, the Company and/or one or more Subsidiaries owns or
controls directly or indirectly more than 50 percent of the voting equity
securities.
"Unrestricted Subsidiary" means (a) any Subsidiary acquired or organized
after the date of the applicable Indenture, provided, however, that such
Subsidiary is not a successor, directly or indirectly, to, and does not directly
or indirectly own any equity interest in, any Restricted Subsidiary, (b) any
Subsidiary the principal business and assets of which are located outside the
United States of America (including its territories and possessions), (c) any
Subsidiary the principal business of which consists of financing the acquisition
or disposition of machinery, equipment, inventory, accounts receivable and other
real, personal and
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intangible property by Persons including the Guarantor, the Company or a
Subsidiary (including, without limitation, Signal Capital and its Subsidiaries),
(d) any Subsidiary the principal business of which is owning, leasing, dealing
in or developing real property for residential or office building purposes, and
(e) any Subsidiary substantially all the assets of which consist of stock or
other securities of an Unrestricted Subsidiary or Unrestricted Subsidiaries of
the character described in clauses (a) through (d) of this paragraph, unless and
until, in each of the cases specified in this paragraph, any such Subsidiary
shall have been designated to be a Restricted Subsidiary pursuant to clause (b)
of the definition of "Restricted Subsidiary."
REDEMPTION AT THE OPTION OF THE HOLDERS IN CERTAIN CIRCUMSTANCES
The Indenture provides that if, during the 180-day period beginning 90 days
before the date of first public announcement or disclosure by the Company, the
Guarantor or any other Person (including, without limitation, directors or
officers of the Company or the Guarantor) of an intention to effect or the
occurrence of (whichever is the first to occur) a Restructuring Event (as
hereinafter defined) and ending 90 days thereafter (or such longer period as the
rating of the Debt Securities of such series shall be under publicly announced
consideration by a National Rating Agency (as hereinafter defined)), two or more
National Rating Agencies, at least one of which is either Moody's Investors
Service, Inc. or Standard & Poor's Corporation, shall downgrade their respective
ratings of the Debt Securities of such series from the ratings in effect at the
beginning of such 180-day period (each a "Downgrading Agency") (except that if a
National Rating Agency shall have downgraded its rating of the Debt Securities
of such series during the 90-day period prior to such public announcement or
disclosure, such National Rating Agency shall not be deemed a Downgrading Agency
if it upgrades its rating of the Debt Securities of such series by the close of
business on the date of such public announcement or disclosure to at least the
rating (the "Threshold Rating") it had given to the Debt Securities of such
series as of the beginning of such 180-day period and shall not thereafter
downgrade such rating to below the Threshold Rating during such 180-day period)
(the occurrence of the conditions specified above being a "Put Event"), then
each holder of Debt Securities of such series shall have the right to require
the Company to repurchase all or any portion of such holder's Debt Securities of
such series at a purchase price equal to 100% of the principal amount thereof
plus accrued and unpaid interest, if any, to the date of purchase (or if the
Debt Securities of such series are Original Issue Discount Securities, 100% of
that portion of the principal amount specified in the terms of that series that
would be payable if the maturity thereof were accelerated pursuant to the
Indenture), all as provided in, and subject to the terms of, the Indenture, as
the Indenture may be supplemented in connection with the issuance of a series of
Debt Securities thereunder. Subsequent to the occurrence of a Put Event, the
Company will give a notice to each holder of Debt Securities of such series
setting forth, among other things, details regarding the right of such holder to
require the Company to repurchase such holder's Debt Securities of such series,
the purchase date, and the name and address of the Paying Agent (which for this
purpose will, in the case of Registered Securities, be the Trustee and, in the
case of Bearer Securities, will be a Paying Agent in a place of payment located
outside the United States) to which such Debt Securities are to be presented and
surrendered. The Company will not be obligated, with respect to the Debt
Securities of any series, to offer to purchase such Debt Securities or give
notice to the holders thereof more than once with respect to the same Put Event.
(Section 1010)
For the purposes of this provision, the following terms shall have the
following meanings:
(i) "Restructuring Event" means any of the following: (1) any persons
other than the Guarantor becoming the beneficial owners, in the aggregate,
of voting stock of the Company having more than 30 percent of the voting
power of all the then outstanding voting stock of the Company; (2) any
person becoming the beneficial owner of voting stock of the Guarantor
having more than 30 percent of the voting power of all of the then
outstanding voting stock of the Guarantor, other than affiliates of Samuel
Zell or Ann Lurie or their respective heirs or beneficiaries; (3)
individuals who are not (i) directors of the Guarantor on the date of the
Indenture, or (ii) nominated to be directors by the Board of Directors of
the Guarantor, constituting a majority of the Board of Directors of the
Guarantor; (4) the Company or the Guarantor consolidating with or merging
into any other person (other than the Company consolidating or merging with
the Guarantor), or any other person consolidating with or merging into the
Company or the Guarantor, pursuant to a transaction in which capital stock
of the Company or the Guarantor then
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outstanding (other than capital stock held by the Guarantor or capital
stock held by any person which is a party to such consolidation or merger)
is changed or exchanged, other than solely in connection with a change in
the state of incorporation of the Guarantor or the Company to another state
of the United States of America or the District of Columbia; (5) the
Company, in one transaction or a series or related transactions, conveying,
transferring or leasing, directly or indirectly, all or substantially all
of the assets of the Company and its Subsidiaries taken as a whole (other
than to a wholly owned Restricted Subsidiary of the Company); or (6) the
Guarantor or any of its Subsidiaries (including the Company) paying or
affecting a dividend or distribution (including by way of recapitalization
or reclassification) in respect of its capital stock (other than solely to
the Guarantor or any of its wholly owned Subsidiaries, or other than solely
for capital stock of the Guarantor), or purchasing, redeeming, retiring,
exchanging or otherwise acquiring for value any of its capital stock (other
than solely from the Guarantor or any of its wholly owned Subsidiaries, or
other than solely for capital stock of the Guarantor or the Company), if
the cash and fair market value of the securities and assets paid or
distributed (except to the Guarantor or any Subsidiary) in connection
therewith (determined on the record date for such dividend or distribution
or the effective date for such purchase, redemption, retirement, exchange
or other acquisition), together with the cash and fair market value of the
securities and assets paid or distributed in connection with all other such
dividends, distributions, purchases, redemptions, retirements, exchanges
and acquisitions effected (except as received by the Guarantor or any
Subsidiary) within the 12-month period preceding the record date for such
dividend or distribution or the effective date for such purchase,
redemption, retirement, exchange or other acquisition (any such fair market
value being determined on the respective record or effective dates for such
other dividends, distributions, purchases, redemptions, retirements,
exchanges and acquisitions), exceeds 30 percent of the aggregate fair
market value of all capital stock of the Guarantor outstanding on the
record date for such dividend or distribution or the effective date of such
purchase, redemption, retirement, exchange or other acquisition (determined
on such record or effective date);
(ii) "National Rating Agency" means any of the following nationally
recognized statistical rating organizations (and, in each case, any
successor thereto): Duff & Phelps Credit Rating Co.; Moody's Investors
Service, Inc.; Standard & Poor's Corporation; and Fitch Investors Service,
L.P.
The Company and the Guarantor have agreed that for so long as any of the
Debt Securities of such series are outstanding and the Put Option has not risen,
they shall provide such information, pay such customary rating service fees and
related expenses and take all other reasonable action as shall be necessary or
appropriate to enable the National Rating Agencies to provide ratings for the
Debt Securities of such series. There can be no assurance that the Company will
have available funds for redemption of Debt Securities on the Payment Date.
A Restructuring Event and other events similar to a Restructuring Event
involving the Company or the Guarantor could result in a default under the
Company's credit facility (the "Credit Facility"). If such a default occurs and
is not waived by the lenders under the Credit Facility, such a default would
cause the acceleration of all amounts outstanding under the Credit Facility and
thus would cause an Event of Default under the Indenture. See "Events of
Default" herein. In the event the Company becomes obligated to repurchase a
holder's Debt Securities, there can be no assurance that the Company will have
available funds for such repurchase.
The Company will comply with the Exchange Act, including Section 14(e)
thereof and the regulations promulgated thereunder, to the extent applicable,
and with any other applicable federal or state securities law, in connection
with any obligation of the Company to purchase Debt Securities at the option of
the holders thereof as described above or any other purchase of the Debt
Securities by the Company.
EVENTS OF DEFAULT
Each of the following will constitute an Event of Default under the
Indenture with respect to Debt Securities of any series: (i) default in the
payment of any interest upon any Debt Security of that series when it became due
and payable, and continuance of that default for a period of 30 days; (ii)
default in the payment of the principal of (or premium, if any, on) any Debt
Security of that series when it became due and payable
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at its Maturity; (iii) default in the deposit of any sinking fund payment, when
due by the terms of a Debt Security of that series; (iv) default in the
performance, or breach, of any covenant or warranty of the Company or the
Guarantor in the Indenture with respect to any Debt Security of that series
(other than a covenant or warranty a default in the performance of which or the
breach of which is specifically dealt with elsewhere or that has expressly been
included in the Indenture solely for the benefit of a series other than that
series), and continuance of that default or breach for a period of 30 days after
written notice has been given by the Trustee, or by the Holders of at least 25%
in principal amount of the Outstanding Securities of that series, as provided in
the Indenture; (v) default, after any applicable grace period, by the Guarantor
or the Company under any instrument evidencing indebtedness of the Guarantor or
the Company, as applicable, for borrowed money, if the effect of such default is
to cause more than $10,000,000 in principal amount of such indebtedness to
become due prior to its stated maturity and that acceleration shall not be
rescinded or annulled, or that indebtedness shall not have been discharged,
before written notice related thereto has been given by the Trustee or the
Holders of at least 25% in principal amount of the Outstanding Securities of
that series, as provided in the Indenture; (vi) certain events in bankruptcy,
insolvency or reorganization with respect to the Company or the Guarantor; and
(vii) any other default specified in the Prospectus Supplement relating to the
Debt Securities or such series. (Section 501)
If an Event of Default specified in clause (vi) above occurs, all unpaid
principal of, premium (if any) and accrued interest on all Debt Securities at
the time Outstanding will become immediately due and payable without any
declaration or other act on the part of the Trustee or any Holder, and if any
other Event of Default with respect to the Debt Securities of any series at the
time Outstanding shall occur and be continuing, either the Trustee or the
Holders of at least 25% in aggregate principal amount of the Outstanding
Securities of that series by notice as provided in the Indenture may declare the
principal amount of the Debt Securities of that series (or, in the case of any
Debt Security that is an Original Issue Discount Security, such portion of the
principal amount of such Debt Security, as may be specified in the terms of such
Debt Security), plus any interest accrued on the Debt Securities of that series
to the date of declaration, to be due and payable immediately. After any such
acceleration, but before a judgment or decree based on acceleration, the Holders
of a majority in aggregate principal amount of the Outstanding Securities of
that series may, under certain circumstances, rescind and annul such
acceleration if (i) the Company has paid or deposited with the Trustee a sum
sufficient to pay (a) all overdue interest on all Outstanding Securities of that
series, (b) the principal of (and premium, if any, on) any Debt Securities of
that series which have become due otherwise than by such acceleration and any
interest thereon at the rate or rates prescribed therefor in such Debt
Securities, (c) to the extent that payment of such interest is lawful, interest
upon overdue interest at the rate or rates prescribed therefore in such Debt
Securities, and (d) certain fees of the Trustee; and (ii) all Events of Default,
other than the non-payment of accelerated principal (or premium, if any) or
interest on Debt Securities of that series, have been cured or waived as
provided in the Indenture. (Section 502) For information as to waiver of
defaults, see "Modification and Waiver".
Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default shall occur and be continuing, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the Holders, unless such Holders
shall have offered to the Trustee reasonable security or indemnity. (Section
603) Subject to such provisions for the giving of security or the
indemnification of the Trustee, the Holders of a majority in aggregate principal
amount of the Outstanding Securities of any series will have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Trustee or exercising any trust or power conferred on the Trustee with
respect to the Debt Securities of that series. (Section 512)
No Holder of a Debt Security of any series will have any right to institute
any proceeding with respect to the Indenture, or for the appointment of a
receiver or a trustee, or for any other remedy thereunder, unless (i) such
Holder has previously given to the Trustee written notice of a continuing Event
of Default with respect to the Debt Securities of that series; (ii) the Holders
of at least 25% in aggregate principal amount of the Outstanding Securities of
that series have made written request, and such Holder or Holders have offered
reasonable indemnity, to the Trustee to institute such proceeding as Trustee;
and (iii) the Trustee has failed to institute such proceeding, and has not
received from the Holders of a majority in aggregate principal amount
15
<PAGE> 26
of the Outstanding Securities of that series a direction inconsistent with such
request, within 60 days after such notice, request and offer. (Section 507)
However, such limitations do not apply to a suit instituted by a Holder of a
Debt Security for the enforcement of payment of the principal of, premium (if
any) and interest on such Security on or after the applicable due date specified
in such Debt Security. (Section 508)
The Company and the Guarantor will be required to furnish to the Trustee
annually a statement by certain of their respective officers as to whether or
not the Company or the Guarantor, to their knowledge, is in default in the
performance or observance of any of the terms, provisions and conditions of the
Indenture and, if so, specifying all such known defaults. (Section 1004)
MODIFICATION AND WAIVER
Without the consent of any Holders of Outstanding Securities, the Company
and the Trustee may enter into one or more supplemental indentures for any of
the following purposes: (i) to evidence the succession of another Person to the
Company or the Guarantor and the assumption by any such successor of the
covenants of the Company or the Guarantor in the Indenture and in the Debt
Securities; (ii) to add to the covenants of the Company or the Guarantor for the
benefit of the Holders of all or any series of Debt Securities (and if such
covenants are to be for the benefit of less than all series of Debt Securities,
stating that such covenants are expressly being included solely for the benefit
of such series) or to surrender any right or power conferred upon the Company or
the Guarantor by the Indenture; (iii) to add to or change any of the provisions
of the Indenture to such extent as shall be necessary to permit or facilitate
the issuance of Debt Securities of any series in bearer form, registrable or not
registrable as to principal, and with or without interest coupons, or to permit
or facilitate the issuance of Debt Securities of any series in uncertificated
form; (iv) to add to, change or eliminate any of the provisions of the Indenture
in respect of one or more series of Debt Securities; provided, however, that any
such addition, change or elimination shall either (a) not adversely affect the
rights of the Holders of Outstanding Securities of any series in any material
respect, or (b) not apply to any Outstanding Securities of any series created
prior to the execution of such supplemental indenture where such addition,
change or elimination has an adverse effect on the rights of the Holders of such
Outstanding Securities in any material respect; (v) to secure the Debt
Securities of any series; (vi) to establish the form or terms of Debt Securities
of any series as permitted by the Indenture; (vii) to evidence and provide for
the acceptance of appointment of a successor Trustee under the Indenture with
respect to the Debt Securities of one or more series and to add to or change any
of the provisions of the Indenture as shall be necessary to provide for or
facilitate the administration of the trusts under the Indenture by more than one
Trustee; (viii) to cure any ambiguity or defect in and to correct or supplement
any provision in the Indenture or any Debt Security of any series that may be
inconsistent with any other provision in the Indenture or in the Debt Security
of such series, or to make any other provisions with respect to matters or
questions arising under the Indenture; provided, however, that any such action
shall not adversely affect the rights of the Holders of Outstanding Securities
of any series in any material respect; (ix) to modify, eliminate or add to the
provisions of the Indenture to such extent as shall be necessary to effect
qualification of the Indenture under the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act"), or under any similar federal statute hereafter
enacted, and to add to the Indenture such other provisions as may be expressly
permitted by the Trust Indenture Act; or (x) to amend or supplement the
restrictions on the procedures for resale, attempted resale and other transfers
of any series of Debt Securities (whether or not Outstanding) to reflect any
change in applicable law or regulation (or interpretation thereof) or in
practices relating to the resale or transfer of restricted securities generally.
(Section 901)
Except as described above, the consent of the Holders of a majority in
aggregate principal amount of the Outstanding Securities of each series affected
by a modification or amendment (voting as one class) is required for the purpose
of adding any provisions to, or changing in any manner or eliminating any of the
provisions of, the Indenture pursuant to a supplemental indenture; provided,
however, that no such modification or amendment may, without the consent of the
Holder of each Outstanding Security affected thereby, (i) extend the Stated
Maturity of the principal of, or any installment of principal of or interest on,
any Security, (ii) reduce the principal amount of, or any premium or interest
on, any Debt Security, (iii) reduce the amount of principal of an Original Issue
Discount Security payable upon acceleration of the Maturity
16
<PAGE> 27
thereof, (iv) change the place or currency of payment of principal of, or any
premium or interest on, any Debt Security, (v) impair the right to institute
suit for the enforcement of any payment on or with respect to any Debt Security,
(vi) modify or waive any provision relating to the Guarantee, (vii) reduce the
percentage in principal amount of Outstanding Securities of any series, the
consent of whose Holders is required for modification or amendment of the
Indenture, (viii) reduce the percentage in principal amount of Outstanding
Securities of any series necessary for waiver of compliance with certain
provisions of the Indenture or for waiver of certain defaults or (ix) modify
such provisions with respect to modification and waiver. (Section 902)
The Holders of a majority in principal amount of the Outstanding Securities
of any series may waive compliance by the Company or the Guarantor with certain
restrictive provisions of the Indenture. (Section 1009) The Holders of a
majority in principal amount of the Outstanding Securities of any series may
waive any past default under the Indenture, except a default in the payment of
principal, premium or interest and certain covenants and provisions of the
Indenture which cannot be amended without the consent of the Holder of each
Outstanding Security of such series affected. (Section 513)
In the event the Guarantee is modified or waived in any manner such that it
becomes less than a full and unconditional guarantee with respect to any series
of Outstanding Securities, the Company will comply with the applicable financial
reporting requirements of the Securities Act and the Exchange Act.
The Indenture provides that in determining whether the Holders of the
requisite principal amount of the Outstanding Securities have given or taken any
direction, notice, consent, waiver or other action under the Indenture as of any
date, (i) 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 such date upon acceleration of the Maturity
thereof to such date, and (ii) the principal amount of a Security denominated in
one or more foreign currencies or currency units that will be deemed to be
Outstanding will be the U.S. dollar equivalent, determined as of such date in
the manner prescribed for such Debt Security, of the principal amount of such
Debt Security (or, in the case of a Debt Security described in clause (i) above,
of the amount described in such clause). Certain Debt Securities, including
those for whose payment or redemption money has been deposited or set aside in
trust for the Holders and those that have been fully defeased pursuant to
Section 1302, will not be deemed to be Outstanding. (Section 101)
Except in certain limited circumstances, the Company will be entitled to
set any day as a record date for the purpose of determining the Holders of
Outstanding Securities of any series entitled to give or take any direction,
notice, consent, waiver or other action under the Indenture, in the manner and
subject to the limitations provided in the Indenture. In certain limited
circumstances, the Trustee also will be entitled to set a record date for action
by Holders. If a record date is set for any action to be taken by Holders of a
particular series, such action may be taken only by persons who are Holders of
Outstanding Securities of that series on that record date, whether or not such
Holders remain Holders after such record date. To be effective, such action must
be taken by Holders of the requisite principal amount of such Debt Securities
within a specific period following the record date. For any particular record
date, this period will be 90 days. (Section 104)
DEFEASANCE AND COVENANT DEFEASANCE
If and to the extent indicated in the applicable Prospectus Supplement, the
Company may elect, at its option at any time, to have the provisions of Section
1302 of the Indenture, relating to defeasance and discharge of indebtedness, or
Section 1303 of the Indenture, relating to defeasance of certain covenants in
the Indenture, applied to the Debt Securities of any series, or to any specified
part of the series. (Section 1301)
Defeasance and Discharge. The Indenture provides that, upon the Company's
exercise of its option (if any) to have Section 1302 applied to any Debt
Securities, the Company will be discharged from all its obligations with respect
to such Debt Securities (except for certain obligations to exchange or register
the transfer of Debt Securities, to replace stolen, lost or mutilated Debt
Securities, to maintain paying agencies and to hold moneys for payment in trust)
upon the deposit in trust for the sole benefit of the Holders of such Debt
Securities of money or U.S. Government Obligations, or both, which, through the
payment of principal and interest, if any, in respect thereof in accordance with
their terms, will provide money in an amount
17
<PAGE> 28
sufficient to pay the principal of and any premium and interest on such Debt
Securities on the respective Stated Maturities in accordance with the terms of
the Indenture and such Debt Securities. Such defeasance or discharge may occur
only if, among other things, the Company has delivered to the Trustee an Opinion
of Counsel to the effect that Holders of such Debt Securities will not recognize
income, gain or loss for federal income tax purposes as a result of such
deposit, defeasance and discharge and will be subject to federal income tax on
the same amount, in the same manner and at the same times as would have been the
case if such deposit, defeasance and discharge were not to occur. (Sections 1302
and 1304)
Defeasance of Certain Covenants. The Indenture provides that, upon the
Company's exercise of its option (if any) to have Section 1303 applied to any
Debt Securities, the Company may omit to comply with certain restrictive
covenants, including those described under "Certain Covenants of the Company and
the Guarantor" and in clause (v) of "Events of Default" and any that may be
described in the applicable Prospectus Supplement, and the occurrence of certain
Events of Default, which are described in clause (iv) (with respect to such
restrictive covenants) and clause (v) under "Events of Default" and any that may
be described in the applicable Prospectus Supplement, will be deemed not to be
or result in an Event of Default, in each case with respect to such Debt
Securities. The Company, in order to exercise such option, will be required to
deposit, in trust for the sole benefit of the Holders of such Debt Securities,
money or U.S. Government Obligations, or both, which, through the payment of
principal and interest, if any, in respect thereof in accordance with their
terms, will provide money in an amount sufficient to pay the principal of and
any premium and interest on such Debt Securities on the respective stated
maturities relating thereto or on redemption in accordance with the terms of the
Indenture and such Debt Securities. The Company will also be required, among
other things, to deliver to the Trustee an Opinion of Counsel to the effect that
Holders of such Debt Securities will not recognize income, gain or loss for
federal income tax purposes as a result of such deposit and defeasance of
certain obligations and will be subject to federal income tax on the same
amount, in the same manner and at the same times as would have been the case if
such deposit and defeasance were not to occur. (Sections 1303 and 1304)
NOTICES
Except as may be described in any Prospectus Supplement with respect to the
Holders of a particular series of Debt Securities, notices to Holders of Debt
Securities will be given by mail to the addresses of such Holders as they may
appear in the Security Register. (Sections 101 and 106)
TITLE
The Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name a Debt Security is registered as the owner
thereof (whether or not such Debt Security may be overdue) for the purpose of
making payment and for all other purposes. (Section 308)
GOVERNING LAW
The Indenture and the Debt Securities will be governed by, and construed in
accordance with, the law of the State of New York. (Section 113)
INFORMATION CONCERNING THE TRUSTEE
The Company maintains a banking relationship with the Trustee in the
ordinary course of its business, and the Trustee participates, along with
several other banks, in the Company's credit facility.
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<PAGE> 29
FOREIGN CURRENCY RISKS
GENERAL
The principal of, or any premium or interest on, Debt Securities of a
series may be denominated in such foreign currencies or currency units as may be
designated by the Company at the time of offering (the "Foreign Currency
Securities").
THE INFORMATION SET FORTH BELOW DOES NOT DESCRIBE ALL RISKS OF AN
INVESTMENT IN FOREIGN CURRENCY SECURITIES THAT RESULT FROM SUCH DEBT SECURITIES
BEING DENOMINATED IN A FOREIGN CURRENCY OR CURRENCY UNIT EITHER AS SUCH RISKS
EXIST AT THE DATE OF THIS PROSPECTUS OR AS SUCH RISKS MAY CHANGE FROM TIME TO
TIME. ANY ADDITIONAL MATERIAL FOREIGN CURRENCY RISKS PERTAINING TO A PARTICULAR
DEBT SECURITY DENOMINATED IN A FOREIGN CURRENCY WILL BE DISCLOSED IN THE
PROSPECTUS SUPPLEMENT REGARDING SUCH DEBT SECURITY. PROSPECTIVE PURCHASERS
SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL ADVISORS AS TO THE RISKS ENTAILED
BY AN INVESTMENT IN FOREIGN CURRENCY SECURITIES. FOREIGN CURRENCY SECURITIES ARE
NOT AN APPROPRIATE INVESTMENT FOR INVESTORS WHO ARE UNSOPHISTICATED WITH RESPECT
TO FOREIGN CURRENCY TRANSACTIONS.
Unless otherwise indicated in the applicable Prospectus Supplement, a
Foreign Currency Security will not be sold in, or to a resident of, the country
of the Specified Currency (as defined below) in which such Debt Security is
denominated. The information set forth below is by necessity incomplete and
prospective purchasers of Foreign Currency Securities should consult their own
financial and legal advisors with respect to any matters that may affect the
purchase or holding of a Foreign Currency Security or the receipt of payments of
principal of and any premium and interest on a Foreign Currency Security in a
Specified Currency.
EXCHANGE RATES AND EXCHANGE CONTROLS
An investment in Foreign Currency Securities entails significant risks that
are not associated with a similar investment in a security denominated in U.S.
dollars. Such risks include, without limitation, the possibility of significant
changes in the rate of exchange between the U.S. dollar and the currency or
currency unit designated by the Company at the time of offering for payments of
principal or any premium or interest on the Foreign Currency Securities (the
"Specified Currency") and the possibility of the imposition or modification of
foreign exchange controls by either the United States or foreign governments.
Such risks generally depend on economic and political events and the supply of
and demand for the relevant currencies over which the Company has no control. In
recent years, rates of exchange between the U.S. dollar and certain foreign
currencies have been highly volatile and such volatility may be expected in the
future. Fluctuations in any particular exchange rate that have occurred in the
past are not necessarily indicative, however, of fluctuations in the rate that
may occur during the term of any Foreign Currency Security. Depreciation of the
Specified Currency applicable to a Foreign Currency Security against the U.S.
dollar would result in a decrease in the U.S. dollar-equivalent yield of such
Debt Security, in the U.S. dollar-equivalent value of the principal repayable at
Maturity or any premium or interest on such Debt Security and, generally, in the
U.S. dollar-equivalent market value of such Debt Security.
Governments have imposed from time to time exchange controls and may in the
future impose or revise exchange controls at or prior to a Foreign Currency
Security's Maturity. Even if there are not exchange controls, it is possible
that the Specified Currency for any particular Foreign Currency Security would
not be available at the time or times of payment on such Debt Security due to
circumstances beyond the control of the Company.
JUDGMENTS
In the event an action based on Foreign Currency Securities were commenced
in a court of the United States, it is likely that such court would grant
judgment relating to such Debt Securities only in U.S. dollars. It
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<PAGE> 30
is not clear, however, whether, in granting such judgment, the rate of
conversion into U.S. dollars would be determined with reference to the date of
default, the date judgment is rendered or some other date. Holders of Foreign
Currency Securities would bear the risk of exchange rate fluctuations between
the time the amount of the judgment is calculated and the time the Trustee
converts U.S. dollars into the Specified Currency for payment of the judgment.
PLAN OF DISTRIBUTION
The Company may sell Debt Securities being offered hereby: (i) directly to
purchasers, (ii) through agents, (iii) through underwriters and (iv) through
dealers.
Offers to purchase Debt Securities may be solicited by agents designated by
the Company from time to time. Any such agent, who may be deemed to be an
underwriter as that term is defined in the Securities Act, involved in the offer
or sale of the Debt Securities in respect of which this Prospectus is delivered
will be named, and any commissions payable by the Company to such agent will be
set forth, in the Prospectus Supplement. Unless otherwise indicated in the
Prospectus Supplement, any such agent will be acting on a best efforts basis for
the period of its appointment.
If underwriters are utilized in the sale, the Company and the Guarantor
will execute an underwriting agreement with such underwriters at the time of
sale to such underwriters and the names of the underwriters and the terms of the
transaction will be set forth in the Prospectus Supplement which will be used by
the underwriters to make resales of the Debt Securities in respect of which this
Prospectus is delivered to the public. Any underwriters will acquire Debt
Securities for their own account and may resell such Debt Securities from time
to time in one or more transactions, including negotiated transactions, at fixed
public offering prices or at varying prices determined at the time of sale. Debt
Securities may be offered to the public either through underwriting syndicates
represented by managing underwriters, or directly by the managing underwriters.
Only underwriters named in the Prospectus Supplement are deemed to be
underwriters in connection with the Debt Securities offered thereby. If any
underwriters are utilized in the sale of the Debt Securities, the underwriting
agreement will provide that the obligations of the underwriters are subject to
certain conditions precedent and that the underwriters with respect to a sale of
Debt Securities will be obligated to purchase all such Debt Securities, if any
are purchased.
If a dealer is utilized in the sale of the Debt Securities in respect of
which this Prospectus is delivered, the Company will sell such Debt Securities
to the dealer, as principal, and the terms of the transaction will be set forth
in the Prospectus Supplement. The dealer may then resell such Debt Securities to
the public at varying prices to be determined by such dealer at the time of
resale.
Agents, underwriters and dealers may be entitled under agreements entered
into with the Company and the Guarantor to indemnification by the Company and
the Guarantor against certain civil liabilities, including liabilities under the
Securities Act, or to contribution with respect to payments which the agents,
underwriters or dealers may be required to make in respect thereof. Agents,
underwriters and dealers may be customers of, engage in transactions with, or
perform services for the Company or the Guarantor in the ordinary course of
business.
Offers to purchase Debt Securities may be solicited directly by the Company
and sales thereof may be made by the Company directly to institutional investors
or others. The terms of any such sales will be described in the Prospectus
Supplement relating thereto.
The place, time of delivery, specific terms and manner of sale for the Debt
Securities in respect of which this Prospectus is delivered are set forth in the
accompanying Prospectus Supplement.
All Debt Securities will be a new issue of securities with no established
trading market. Any underwriters to whom Debt Securities are sold by the Company
for public offering and sale may make a market in such Debt Securities, but such
underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. No assurance can be given as to the liquidity
of or the trading markets for any Debt Securities.
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<PAGE> 31
LEGAL MATTERS
The validity of the Debt Securities and the Guarantee will be passed upon
for the Company and the Guarantor, as applicable, by James E. Knox, Senior Vice
President, General Counsel and Secretary of the Guarantor. Mr. Knox owns a total
of 464,244 shares and options to acquire shares of the Guarantor's common stock.
Certain legal matters will be passed upon for the underwriters, dealers,
purchasers or agents by Foley & Lardner, Milwaukee, Wisconsin.
EXPERTS
The consolidated financial statements and schedules included in the Annual
Report on Form 10-K of Anixter International Inc. for the year ended December
31, 1995, incorporated by reference in this Prospectus, have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
included therein and incorporated herein by reference. Such consolidated
financial statements and schedules are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE 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 THE
UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS NOR ANY SALE MADE HEREUNDER OR 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. THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED
OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO
SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
The Company........................... S-2
The Guarantor......................... S-2
Use of Proceeds....................... S-2
Summary Financial Information of
Guarantor........................... S-3
Capitalization of the Company......... S-4
Summarized Financial Information of
the Company......................... S-5
Description of Notes.................. S-6
Underwriting.......................... S-10
PROSPECTUS
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
The Company........................... 3
The Guarantor......................... 4
Use of Proceeds....................... 4
Ratios of Earnings to Fixed Charges... 4
Description of Debt Securities........ 5
Foreign Currency Risks................ 19
Plan of Distribution.................. 20
Legal Matters......................... 21
Experts............................... 21
</TABLE>
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$100,000,000
ANIXTER LOGO
8% NOTES
DUE SEPTEMBER 15, 2003
------------------------
PROSPECTUS SUPPLEMENT
------------------------
MERRILL LYNCH & CO.
CHASE SECURITIES INC.
SEPTEMBER 12, 1996
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