<PAGE> 1
PROSPECTUS SUPPLEMENT
(To Prospectus dated February 17, 1995)
$125,000,000
JOHNSON CONTROLS, INC.
7.70% DEBENTURES DUE MARCH 1, 2015
Interest on the 7.70% Debentures due March 1, 2015 (the "Debentures") is payable
semiannually on March 1 and September 1, beginning September 1, 1995. The
Debentures will not be redeemable prior to maturity at the option of the
Company. The Debentures are redeemable, at the option of the registered holders
thereof, in whole or in part, on March 1, 2005 (the "Redemption Date"), at a
price equal to the principal amount plus accrued and unpaid interest thereon to
the Redemption Date. Notice of such election must be made no earlier than
January 1, 2005 and no later than January 31, 2005, and, once given, such notice
will be irrevocable. See "Description of the Debentures -- Redemption at the
Option of the Holder." The Debentures are not entitled to any sinking fund.
The Debentures will be represented by Global Securities registered in the name
of the nominee of The Depository Trust Company, which will act as the
Depository. Beneficial interests in the Global Securities will be shown on, and
transfers thereof will be effected only through, records maintained by the
Depository (with respect to participants' interests) and its participants.
Except as described herein, Debentures in definitive form will not be issued.
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
PUBLIC(1) DISCOUNT COMPANY(1)(2)
<S> <C> <C> <C>
Per Debenture....................... 99.794% .650% 99.144%
Total............................... $124,742,500 $812,500 $123,930,000
- -------------------------------------------------------------------------------------------------
</TABLE>
(1) Plus accrued interest, if any, from March 2, 1995 to date of delivery.
(2) Before deduction of expenses payable by the Company, estimated at $100,000.
The Debentures are offered subject to receipt and acceptance by the
Underwriters, to prior sale and to the Underwriters' right to reject any order
in whole or in part and to withdraw, cancel or modify the offer without notice.
It is expected that delivery of the Debentures will be made through the
facilities of The Depository Trust Company on or about March 2, 1995.
SALOMON BROTHERS INC J.P. MORGAN SECURITIES INC.
The date of this Prospectus Supplement is February 23, 1995.
<PAGE> 2
THE COMPANY
The Company has four business segments: automotive, controls, plastics and
battery. The automotive segment is the world's largest independent supplier of
automotive seating systems and a leading supplier of automotive seating
components. The controls segment is a leading worldwide supplier of facility
services and control systems to education, health care, office, government,
industrial and retail buildings. The plastics segment is the world's largest
producer of polyethylene terepthalate plastic containers with manufacturing
plants in the United States and Europe, and also is the leading worldwide
supplier of plastic blowmolding machinery, injection mold tooling and parts. The
battery segment is a leading supplier to the North American automotive battery
market, serving both the original equipment and replacement battery markets.
Johnson Controls was founded in 1885 as the Johnson Electric Service
Company. Johnson Controls' principal executive offices are located at 5757 North
Green Bay Avenue, Milwaukee, Wisconsin 53209 and its phone number is (414)
228-1200.
USE OF PROCEEDS
The Company intends to use the net proceeds from the sale of the
Debentures, together with available cash, to redeem all $150,000,000 of the
Company's 8.875% Notes due in 1998.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
------------------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges(a)........................... 5.4 x 4.4 x 3.9 x 3.1 x 3.2 x
</TABLE>
- -------------------------
(a) For the purpose of computing this ratio, "earnings" consist of (a) income
before income taxes (adjusted for undistributed earnings or recognized
losses of partially owned affiliates which are less than 50% owned, minority
interests in earnings or losses of subsidiaries, and amortization of
previously capitalized interest), plus, (b) fixed charges, minus (c)
interest capitalized during the period. "Fixed charges" consist of (a)
interest incurred and amortization of debt expense plus (b) the portion of
rent expense representative of the interest factor.
DESCRIPTION OF THE DEBENTURES
The following description of the particular terms of the Debentures offered
hereby supplements the description of the general terms and provisions of the
Debt Securities set forth in the Prospectus under "Description of the Debt
Securities," to which description reference is hereby made. The following brief
summaries of certain provisions contained in the Indenture dated as of February
22, 1995 (the "Indenture"), between the Company and Chemical Bank Delaware, as
Trustee, do not purport to be complete, use certain terms defined in the
Indenture, and are qualified in their entirety by express reference to the
provisions of the Indenture.
GENERAL
Interest on the Debentures at the annual rate set forth on the cover page
of this Prospectus Supplement will accrue from March 2, 1995 and is to be
payable semiannually on March 1 and September 1 beginning September 1, 1995 to
the persons in whose names the Debentures are registered at the close of
business on the preceding February 15 and August 15, respectively.
The Debentures will be limited to $125,000,000 aggregate principal amount
and will mature on March 1, 2015. The Indenture does not limit the aggregate
principal amount of Debt Securities that may be issued and provides that Debt
Securities may be issued from time to time in one or more series. Currently, the
Company has outstanding no indebtedness pursuant to the Indenture.
S-2
<PAGE> 3
The Debentures are not entitled to the benefits of any sinking fund. The
defeasance provisions of Section 13.02 of the Indenture will apply to the
Debentures.
REDEMPTION AT THE OPTION OF THE HOLDER
The Debentures will not be redeemable prior to maturity at the option of
the Company. The Debentures are redeemable, in whole or in part, at the option
of the registered holders thereof, on March 1, 2005 (the "Redemption Date"), at
a price equal to their principal amount plus accrued and unpaid interest thereon
to the Redemption Date.
In order for a holder to exercise this option, the Company must receive at
the office of its paying agent in New York, New York, during the period
beginning on January 1, 2005 and ending at 5:00 P.M. (New York City time) on
January 31, 2005 (or, if January 31, 2005 is not a Business Day, the next
succeeding Business Day), the Debenture with the form entitled "Option to
Require Redemption on March 1, 2005" on the reverse of the Debenture duly
completed. Any such notice received by the Company during the period beginning
on January 1, 2005 and ending at 5:00 P.M. (New York City time) on January 31,
2005 shall be irrevocable. The redemption option may be exercised by the holder
of a Debenture, for less than the entire principal amount of the Debentures held
by such holder, so long as the principal amount that is to be redeemed is equal
to $1,000 or an integral multiple of $1,000.
Failure by the Company to repurchase the Debentures when required as
described in the preceding paragraph will result in an Event of Default under
the Indenture.
Because the Debentures will be represented by Global Securities, the
Depository's (as defined below) nominee will be the holder thereof entitled to
exercise a right to redemption. In order to ensure that the Depository's nominee
will exercise in a timely manner a right to repayment with respect to a
particular Debenture, the beneficial owner of an interest therein must instruct
the broker or other direct or indirect participant through which it holds an
interest in such Debenture to notify the Depository of its desire to exercise a
redemption option. Different firms have different cut-off times for accepting
instructions from their customers and, accordingly, each such beneficial owner
should consult the broker or other direct or indirect participant through which
it holds an interest in a Global Security in order to ascertain the cut-off time
by which such an instruction must be given in order for timely notice to be
delivered to the Depository.
All questions regarding the validity, form, eligibility (including time of
receipt) and acceptance of any Debenture for redemption will be determined by
the Company, whose determination will be final and binding.
BOOK-ENTRY, DELIVERY AND FORM
The Debentures will be issued in the form of fully registered Global
Securities. The Global Securities will be deposited with, or on behalf of, The
Depository Trust Company, New York, New York (the "Depository") and registered
in the name of the Depository's nominee.
The Depository has advised the Company and the Underwriters as follows: It
is a limited-purpose trust company which was created to hold securities for its
participating organizations (the "Participants") and to facilitate the clearance
and settlement of transactions in such securities between Participants through
electronic book-entry changes in accounts of its Participants. Participants
include securities brokers and dealers (including the Underwriters), banks,
trust companies, clearing corporations and certain other organizations. Access
to the Depository's book-entry system is also available to others, such as bank,
brokers, dealers and trust companies that clear through or maintain a custodian
relationship with a Participant, either directly or indirectly ("indirect
participants"). Persons who are not Participants may beneficially own securities
held by the Depository only through Participants or indirect participants.
A further description of the Depository's procedures with respect to Global
Securities representing Book-Entry Debentures is set forth in the Prospectus
under "Description of the Debt Securities -- Global Securities." The Depository
has confirmed to the Company, the Underwriters and the Trustee that it intends
to follow such procedures.
S-3
<PAGE> 4
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, the Company has agreed to sell to each of the Underwriters named
below, and each of the Underwriters has severally agreed to purchase, the
principal amount of Debentures set forth opposite its name.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
UNDERWRITER DEBENTURES
---------------------------------------------------------------- ------------
<S> <C>
Salomon Brothers Inc............................................ $ 57,500,000
J.P. Morgan Securities Inc. .................................... 57,500,000
BA Securities, Inc. ............................................ 5,000,000
Robert W. Baird & Co. Incorporated.............................. 5,000,000
------------
Total...................................................... $125,000,000
===========
</TABLE>
In the Underwriting Agreement, the several Underwriters have agreed,
subject to the terms and conditions set forth therein, to purchase all the
Debentures offered hereby if any Debentures are purchased.
The Underwriters propose to offer the Debentures directly to the public at
the public offering price set forth on the cover page and to dealers at such
price less a concession not in excess of .40% of the principal amount per
Debenture. Underwriters may allow and such dealers may reallow a concession not
in excess of .25% to certain other dealers. After the initial public offering,
the public offering price and concessions may from time to time be changed by
the Underwriters.
The Debentures are a new issue of securities with no established trading
market. The Company has been advised by the Underwriters that they intend to
make a market in the Debentures but are not obligated to do so and may
discontinue any market making at any time without notice. There can be no
assurance of a secondary market for any Debenture.
The Underwriting Agreement provides that the Company will indemnify the
several Underwriters against certain liabilities, including liabilities under
the Securities Act of 1933, as amended, or contribute to payments which the
Underwriters may be required to make in respect thereof.
In the ordinary course of their respective businesses, Salomon Brothers
Inc, J.P. Morgan Securities Inc., BA Securities, Inc. and certain of their
respective affiliates have engaged, and may in the future engage, in investment
banking and commercial banking transactions with the Company.
LEGAL OPINIONS
The legality of the Debentures is being passed upon for the Company by John
P. Kennedy, Esq., Vice President, Secretary and General Counsel of the Company,
and for the Underwriters by Mayer, Brown & Platt, 190 South LaSalle Street,
Chicago, Illinois 60603.
S-4
<PAGE> 5
PROSPECTUS
U.S. $350,000,000
JOHNSON CONTROLS, INC.
DEBT SECURITIES AND
WARRANTS TO PURCHASE DEBT SECURITIES
Johnson Controls, Inc. (the "Company") intends to offer from time to time up to
U.S. $350,000,000 aggregate principal amount of its debt securities (the "Debt
Securities"), or warrants to purchase the Debt Securities (the "Debt Warrants").
The Debt Securities and Debt Warrants (collectively, the "Securities") will be
offered in one or more separate series or issues in amounts, at prices, in
currencies or currency units and on terms to be determined at the time of
offering. The Debt Warrants may be offered with the Debt Securities or
separately. See "Plan of Distribution." If so provided in the accompanying
supplement to this Prospectus (the "Prospectus Supplement"), the Debt Securities
of any series may be represented by a single global note registered in the name
of a depositary's nominee and, if so represented, beneficial interests in the
global note will be shown on, and transfers thereof will be effected only
through, records maintained by the depositary and its participants.
The terms of the Debt Securities, including, where applicable, the specific
designations, aggregate principal amount, authorized denominations, maturity,
rate (or manner of calculation thereof) and time of payment of interest, if any,
and any redemption or repayment terms (and similar information with respect to
the Debt Securities purchasable upon exercise of each Debt Warrant), the
currency, currencies, or currency unit or units in which the Debt Securities
shall be payable, the terms of the Debt Warrants, including the exercise price,
detachability, expiration date and other terms, the net proceeds to the Company,
the names of, and the principal amount of Debt Securities or number of Debt
Warrants to be purchased by or through, underwriters, dealers or agents, if any,
the compensation of such persons and other special terms in connection with the
offering and sale of the applicable series of the Debt Securities and the Debt
Warrants, as the case may be, in respect of which this Prospectus is being
delivered are set forth in the accompanying Prospectus Supplement (the
"Prospectus Supplement").
The Company may sell the Debt Securities to or through underwriters, and also
may sell the Debt Securities directly to other purchasers or through agents or
dealers. See "Plan of Distribution."
-------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------------
The date of this Prospectus is February 17, 1995.
<PAGE> 6
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS OR THE PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY AGENT, UNDERWRITER OR DEALER. THIS PROSPECTUS
AND THE PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE DEBT SECURITIES OR DEBT WARRANTS IN
ANY JURISDICTION TO ANY PERSON TO WHOM SUCH OFFER WOULD BE UNLAWFUL. THE
DELIVERY OF THIS PROSPECTUS OR THE PROSPECTUS SUPPLEMENT AT ANY TIME DOES NOT
IMPLY THAT THE INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.
AVAILABLE INFORMATION
Johnson Controls, Inc., a Wisconsin corporation ("Johnson Controls" or the
"Company"), is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Proxy statements, reports and other information
concerning the Company can be inspected and copied at the Commission's Office at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and
at the Commission's Regional Offices located at Citicorp Center, 500 West
Madison Street, Chicago, Illinois 60661; and Seven World Trade Center, 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. Such reports, proxy statements and other information
concerning the Company may also be inspected at the offices of the New York
Stock Exchange, 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission a registration statement on Form
S-3 (together with all amendments and exhibits, the "Registration Statement")
under the Securities Act of 1933, as amended (the "1933 Act"), with respect to
the Debt Securities and Debt Warrants offered hereby. This Prospectus does not
contain all the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. For further information pertaining to the Debt Securities, Debt
Warrants and the Company, reference is made to the Registration Statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed by the Company with the Commission
pursuant to the Exchange Act (File No. 1-5097) and are hereby incorporated
herein by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1994.
2. The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended December 31, 1994.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Debt Securities and Debt Warrants shall
be deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM A COPY OF
THIS PROSPECTUS IS DELIVERED, UPON THE WRITTEN OR ORAL REQUEST OF SUCH PERSON, A
COPY OF ANY AND ALL OF THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE (NOT
INCLUDING THE EXHIBITS TO SUCH DOCUMENTS, UNLESS SUCH EXHIBITS ARE SPECIFICALLY
INCORPORATED BY REFERENCE IN SUCH DOCUMENTS). REQUESTS FOR SUCH COPIES SHOULD BE
DIRECTED TO SECRETARY, JOHNSON CONTROLS, INC., 5757 NORTH GREEN BAY AVENUE,
MILWAUKEE, WISCONSIN 53209, TELEPHONE (414) 228-1200.
2
<PAGE> 7
THE COMPANY
The Company has four business segments: automotive, controls, plastics and
battery. The automotive segment is the world's largest independent supplier of
automotive seating systems and a leading supplier of automotive seating
components. The controls segment is a leading worldwide supplier of facility
services and control systems to education, health care, office, government,
industrial and retail buildings. The plastics segment is the world's largest
producer of polyethylene terepthalate plastic containers with manufacturing
plants in the United States and Europe, and also is the leading worldwide
supplier of plastic blowmolding machinery, injection mold tooling and parts. The
battery segment is a leading supplier to the North American automotive battery
market, serving both the original equipment and replacement battery markets.
Johnson Controls was founded in 1885 as the Johnson Electric Service
Company. Johnson Controls' principal executive offices are located at 5757 North
Green Bay Avenue, Milwaukee, Wisconsin 53209 and its phone number is (414)
228-1200.
CERTAIN FACTORS RELATING TO FOREIGN CURRENCIES
Debt Securities denominated or payable in foreign currencies or currency
units may entail significant risks. These risks include, without limitation, the
possibility of significant fluctuations in the foreign currency markets, the
imposition or modification of foreign exchange controls and potential
illiquidity in the secondary market. These risks will vary depending upon the
currency or currencies involved. These risks will be more fully described in the
Prospectus Supplement relating thereto.
USE OF PROCEEDS
Except as may be set forth in the Prospectus Supplement, the net proceeds
from the sale of the Debt Securities and the proceeds, if any, from the exercise
of Debt Warrants will be used for general corporate purposes.
DESCRIPTION OF THE DEBT SECURITIES
The following description of the Debt Securities sets forth the material
terms and provisions of the Debt Securities to which any Prospectus Supplement
may relate. The Debt Securities are to be issued under an Indenture, dated as of
February 22, 1995 (the "Indenture"), between the Company and Chemical Bank
Delaware, as Trustee (the "Trustee"), a copy of the form of which is filed as an
exhibit to the Registration Statement of which this Prospectus is a part. The
particular terms of the Debt Securities offered by any Prospectus Supplement
(the "Offered Debt Securities") and the extent, if any, to which such general
provisions may apply to the Offered Debt Securities, will be described in the
Prospectus Supplement relating to such Offered Debt Securities.
The following summaries of the material provisions of the Indenture do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all of the provisions of the Indenture, including the
definitions therein of certain terms. Wherever particular articles, sections or
defined terms of the Indenture are referred to, it is intended that such
articles, sections or defined terms shall be incorporated herein by reference,
and the statement in connection with which such reference is made is qualified
in its entirety by such reference.
GENERAL
The Debt Securities will rank equally with all other unsecured and
unsubordinated debt of the Company. The Indenture does not limit the amount of
debt, either secured or unsecured, which may be issued by the Company under the
Indenture or otherwise. The Debt Securities may be issued in one or more series
with the same of various maturities and may be sold at par, a premium or an
original issue discount. Debt Securities sold at an original issue discount may
bear no interest or interest at a rate which is below market rates.
3
<PAGE> 8
Since the Company is a holding company, the right of the Company, and hence
the rights of creditors and shareholders of the Company, to participate in any
distribution of assets of any subsidiary upon its liquidation or reorganization
or otherwise is accordingly subject to prior claims of creditors of the
subsidiary, except to the extent that claims of the Company as a creditor of the
subsidiary may be recognized.
The Prospectus Supplement relating to the particular Debt Securities
offered thereby will describe the following terms of the Offered Debt
Securities: (1) the title of the Offered Debt Securities; (2) any limit on the
aggregate principal amount of the Offered Debt Securities; (3) the price
(expressed as a percentage of the aggregate principal amount thereof) at which
the Offered Debt Securities will be issued; (4) the date or dates on which the
Offered Debt Securities will mature; (5) the rate or rates (which may be fixed
or variable) per annum at which the Offered Debt Securities will bear interest,
if any, or the method by which such rate or rates will be determined; (6) the
date from which such interest will accrue, the dates on which such interest, if
any, will be payable, the date on which payment of such interest will commence
and any Regular Record Dates applicable to the dates on which interest will be
so payable; (7) the place or places where the principal of (and premium, if any)
and interest, if any, on the series will be payable and each office or agency
where the Offered Debt Securities may be presented for transfer or exchange; (8)
the dates on which and the price or prices at which the Offered Debt Securities
will, pursuant to any mandatory sinking fund provisions, or may, pursuant to any
optional sinking fund provisions, be redeemed by the Company, and the other
terms and provisions of such sinking fund; (9) the currency in which payment of
the principal of, premium, if any, and interest on, the Offered Debt Securities
will be payable, if other than the currency of the United States; (10) the
period or periods within which, and the terms and conditions upon which, an
election may be made by the Company or a holder, as the case may be, for payment
of the principal (and premium, if any) and interest, if any, on the series in
the currency, other than that in which the series is stated to be payable; (11)
whether such Offered Debt Securities are to be issued in the form of one or more
permanent Global Securities and, if so, the identity of the Depositary for such
Global Security or Securities; (12) the date after which and the price or prices
at which and the currency in which the Offered Debt Securities may, pursuant to
any optional redemption provisions, be redeemed at the option of the Company or
of the Holder thereof and the other terms and provisions of such optional
redemption; (13) the inapplicability of certain provisions relating to discharge
and defeasance described below under "Defeasance, Satisfaction and Discharge
Prior to Maturity or Redemption"; (14) if other than denominations of $1,000 and
any integral multiple thereof, the denominations in which the Offered Debt
Securities will be issuable; (15) information with respect to book-entry
procedures, if any; (16) any deletions from, modifications of or additions to
the Events of Default or covenants with respect to the Offered Debt Securities;
and (17) any other terms of the Offered Debt Securities (which terms shall not
be inconsistent with the provisions of the Indenture). Unless otherwise
indicated in the Prospectus Supplement, principal of (and premium, if any) and
interest, if any, on the Offered Debt Securities will be payable, and transfers
of the Offered Debt Securities will be registrable, at the Corporate Trust
Office of the Trustee, provided that at the option of the Company payment of
interest may be made by check mailed to the address of the person entitled
thereto as it appears in the Debt Security Register. (Sections 3.01 and 3.03)
Unless otherwise indicated in the Prospectus Supplement, the Offered Debt
Securities will be issued only in fully registered form without coupons in
denominations of U.S. $1,000 or any integral multiple thereof, or the equivalent
thereof in Foreign Currency. (Section 3.02) No service charge will be made for
any registration of transfer or exchange of Offered Debt Securities, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. (Section 3.06)
If the purchase price of any of the Offered Debt Securities is denominated
in a foreign currency or currencies or foreign currency unit or units or if the
principal of (and premium, if any) or interest, if any, on any series of Offered
Debt Securities is payable in a foreign currency or currencies or foreign
currency unit or units, the restrictions, elections, tax consequences, specific
terms and other information with respect to such issue of Offered Debt
Securities and such foreign currency or currencies or foreign currency unit or
units will be set forth in the applicable Prospectus Supplement relating
thereto.
The Company shall not be required to (i) issue, register the transfer of,
or exchange Debt Securities of any series during the period from 15 days prior
to the mailing of notice of redemption of Debt Securities of
4
<PAGE> 9
that series to the date of such mailing or (ii) register the transfer of or
exchange any Debt Security so selected for redemption, except the unredeemed
portion of any Debt Security being redeemed in part. (Section 3.06)
Some of the Debt Securities may be issued under the Indenture as Original
Issue Discount Securities to be sold at a substantial discount below their
principal amount. Federal income tax and other considerations applicable to any
such Original Issue Discount Securities will be described in the Prospectus
Supplement relating thereto.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Securities that will be deposited with, or on behalf
of, a Depositary identified in the Prospectus Supplement relating to such
series.
The specific terms of the depositary arrangement with respect to a series
of Debt Securities will be described in the Prospectus Supplement relating to
such series. The Company anticipates that the following provisions will apply to
all depositary arrangements.
Upon the issuance of a Global Security, the Depositary for such Global
Security or its nominee will credit, on its book-entry registration and transfer
system, the respective principal amounts of the Debt Securities represented by
such Global Security. Such accounts shall be designated by the underwriters or
agents with respect to such Debt Securities or by the Company if such Debt
Securities are offered and sold directly by the Company. Ownership of beneficial
interests in a Global Security will be limited to persons that have accounts
with the Depositary for such Global Security or its nominee ("participants") or
persons that may hold interests through participants. Ownership of beneficial
interests in such Global Security will be shown on, and the transfer of that
ownership will be effected only through, records maintained by the Depositary or
its nominee (with respect to interests of participants) for such Global Security
and on the records of participants (with respect to interests of persons other
than participants). The laws of some states 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 transfer beneficial interests in
a Global Security.
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or Holder of the Debt
Securities represented by such Global Security for all purposes under the
Indenture governing such Debt Securities. Except as provided below, owners of
beneficial interests in a Global Security will not be entitled to have Debt
Securities of the series represented by such Global Security registered in their
names, will not receive or be entitled to receive physical delivery of Debt
Securities of such series in definitive form and will not be considered the
owners or holders thereof under the Indenture governing Debt Securities.
Principal of, premium, if any, and interest payments on Debt Securities
registered in the name of a Depositary or its nominee will be made to the
Depositary or its nominee, as the case may be, as the registered owner of the
Global Security representing such Debt Securities. Neither the Company, the
Trustee for such Debt Securities, any Paying Agent nor the Security Registrar
for such Debt Securities will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests of the Global Security for such Debt Securities or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
The Company expects that the Depositary for a series of Debt Securities or
its nominee, upon receipt of any payment of principal of, premium, if any, or
interest thereon, will credit immediately participants' accounts with payments
in amounts proportionate to their respective beneficial interest in the
principal amount of the Global Security for such Debt Securities as shown on the
records of such Depositary or its nominee. The Company also expects that
payments by participants to owners of beneficial interests in such Global
Security held through such participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers registered in "street name," and will be the
responsibility of such participants.
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If a Depositary for a series of Debt Securities is at any time unwilling or
unable to continue as depositary and a successor depositary is not appointed by
the Company within 90 days, the Company will issue Debt Securities of such
series in definitive form in exchange for the Global Security representing such
series of Debt Securities. Further, if the Company so specifies with respect to
the Debt Securities of a series, an owner of a beneficial interest in a Global
Security representing Debt Securities of such series may, on terms acceptable to
the Company and the Depositary for such Global Security, receive Debt Securities
of such series in definitive form. In any such instance, an owner of a
beneficial interest in a Global Security will be entitled to physical delivery
in definitive form of Debt Securities of the series represented by such Global
Security equal in principal amount to such beneficial interest and to have such
Debt Securities registered in its name. Debt Securities of such series so issued
in definitive form will be issued in denominations, unless otherwise specified
by the Company, of U.S. $1,000 and integral multiples thereof.
CERTAIN DEFINITIONS
The following terms are defined substantially as follows in Section 1.01 of
the Indenture and are used herein as so defined.
The term "Consolidated Current Liabilities" means the aggregate of the
current liabilities of the Company and its Restricted Subsidiaries (excluding
liabilities of Unrestricted Subsidiaries and excluding billings on uncompleted
contracts in excess of related costs and profits) appearing on the most recent
available consolidated balance sheet of the Company and its Restricted
Subsidiaries, all in accordance with generally accepted accounting principles.
In no event shall Consolidated Current Liabilities include any obligation of the
Company and its Restricted Subsidiaries issued under a revolving credit or
similar agreement if the obligation issued under such agreement matures by its
terms within 12 months from the date thereof but by the terms of such agreement
such obligation may be renewed or extended or the amount thereof reborrowed or
refunded at the option of the Company or any Restricted Subsidiary for a term in
excess of 12 months from the date of determination. (Section 1.01)
The term "Consolidated Net Tangible Assets" means Consolidated Tangible
Assets after deduction of Consolidated Current Liabilities. (Section 1.01)
The term "Consolidated Tangible Assets" means the aggregate of all assets
of the Company and its Restricted Subsidiaries (including the value of all
existing Sale and Leaseback Transactions (as defined) and any assets resulting
from the capitalization of other long-term lease obligations in accordance with
generally accepted accounting principles, but excluding the value of assets of
or investments in any Unrestricted Subsidiary or any non-majority owned
Subsidiary) appearing on the most recent available consolidated balance sheet of
the Company and its Restricted Subsidiaries at their net book values, after
deducting related depreciation, amortization and other valuation reserves and
excluding (a) any capital write-ups resulting from reappraisals of assets or of
other investments after December 31, 1994 (other than a write-up of any assets
constituting part of the assets and business of another corporation made in
connection with the acquisition, direct or indirect, of the assets and business
of such other corporation) except as permitted in accordance with generally
accepted accounting principles, (b) treasury stock, (c) patent and trademark
rights, goodwill, unamortized discounts and expenses and any other intangible
items, all prepared in accordance with generally accepted accounting principles.
(Section 1.01)
The term "Funded Debt" means all indebtedness for money borrowed having a
maturity of more than twelve months from the date of the most recent
consolidated balance sheet of the Company and its Restricted Subsidiaries
(excluding indebtedness of Unrestricted Subsidiaries) or renewable and
extendable beyond twelve months at the option of the borrower and all
obligations in respect of lease rentals which under generally accepted
accounting principles would be shown on the consolidated balance sheet of the
Company as a liability item other than a current liability; provided, however,
that Funded Debt shall not include any of the foregoing to the extent that such
indebtedness or obligations are not required by generally accepted accounting
principles to be shown on the balance sheet of the Company.
The term "Principal Property" means any manufacturing plant, warehouse,
office building or parcel of real property (including fixtures but excluding
leases and other contract rights which might otherwise be
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deemed real property) owned by the Company or any Restricted Subsidiary, whether
owned on the date of the Indenture or thereafter, provided each such plant,
warehouse, office building or parcel of real property 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 two percent of the Consolidated Net
Tangible Assets of the Company and the Restricted Subsidiaries, other than any
such plant, warehouse, office building or parcel of real property or portion
thereof which, in the opinion of the Board of Directors of the Company
(evidenced by a certified Board Resolution delivered to the Trustee), is not of
material importance to the business conducted by the Company and its Restricted
Subsidiaries taken as a whole. (Section 1.01)
The term "Restricted Subsidiary" means (a) any Subsidiary other than an
Unrestricted Subsidiary and (b) any Subsidiary which was an Unrestricted
Subsidiary but which, subsequent to December 31, 1994, is designated by the
Company (by Board Resolution) to be a Restricted Subsidiary; provided, however,
that the Company may not designate any such Subsidiary to be a Restricted
Subsidiary if the Company would thereby breach any covenant or agreement
contained in the Indenture (on the assumption that any Secured Debt of such
Subsidiary was incurred at the time of such designation and that any Sale and
Leaseback Transaction (as defined) to which such Subsidiary is then a party was
entered into at the time of such designation). (Section 1.01)
The term "Secured Debt" means indebtedness for borrowed money and any
Funded Debt which is secured by a Security Interest in (a) any Principal
Property or (b) any shares of capital stock or indebtedness of any Restricted
Subsidiary.
The term "Subsidiary" means any corporation of which the Company, or the
Company and one or more Subsidiaries, or any one or more Subsidiaries, directly
or indirectly own more than 50% of the Voting Stock (as defined). (Section 1.01)
The term "Unrestricted Subsidiary" means (a) any Subsidiary acquired or
organized after March 31, 1989; provided, however, that such Subsidiary shall
not be a successor, directly or indirectly, to any Restricted Subsidiary; (b)
any Subsidiary whose principal business or assets are located outside the United
States of America, its territories and possessions, Puerto Rico or Canada; (c)
any Subsidiary the principal business of which consists of financing or
assisting in financing of customer construction projects or the acquisition or
disposition of products of dealers, distributors or other customers; (d) any
Subsidiary engaged in the insurance business or whose principal business is the
ownership, leasing, purchasing, selling or development of real property; and (e)
any Subsidiary substantially all the assets of which consist of stock or other
securities of a Subsidiary or Subsidiaries referred to above in this sentence,
unless and until any such Subsidiary is designated to be a Restricted
Subsidiary, as referred to above. (Section 1.01)
LIMITATION ON SECURED DEBT
The Company will not, and will not permit any Restricted Subsidiary to,
create, assume, or guarantee any Secured Debt without making effective provision
for securing the Debt Securities equally and ratably with such Secured Debt
(Section 5.05). This covenant does not apply to debt secured by (i) certain
purchase money mortgages created to secure payment for the acquisition or
construction of any property including, but not limited to, any indebtedness
incurred by the Company or a Restricted Subsidiary prior to, at the time of, or
within 180 days after the later of the acquisition, the completion of
construction (including any improvements on an existing property) or the
commencement of commercial operation of such property, which indebtedness is
incurred for the purpose of financing all or any part of the purchase price of
such property or construction or improvements on such property, (ii) mortgages,
pledges, liens, security interests or encumbrances (collectively referred to
herein as "security interests") on property, or any conditional sales agreement
or any title retention with respect to property, existing at the time of
acquisition thereof, whether or not assumed by the Company or a Restricted
Subsidiary, (iii) security interests on property or shares of capital stock or
indebtedness of any corporation or firm existing at the time such corporation or
firm becomes a Restricted Subsidiary, (iv) security interests in property or
shares of capital stock or indebtedness of a corporation existing at the time
such corporation is merged into or consolidated with the Company or a Restricted
Subsidiary or at the time of a sale, lease, or other disposition of the
properties of a corporation or firm as an
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<PAGE> 12
entirety or substantially as an entirety to the Company or a Restricted
Subsidiary, provided that no such security interests shall extend to any other
Principal Property of the Company or such Restricted Subsidiary prior to such
acquisition or to other Principal Property thereafter acquired other than
additions to such acquired property, (v) security interests on property of the
Company or a Restricted Subsidiary in favor of the United States of America or
any state thereof, or in favor of any other country, or any department, agency,
instrumentality or political subdivision thereof (including, without limitation,
security interests to secure indebtedness of the pollution control or industrial
revenue type) in order to permit the Company or any Restricted Subsidiary to
perform a contract or to secure indebtedness incurred for the purpose of
financing all or any part of the purchase price for the cost of constructing or
improving the property subject to such security interests or which is required
by law or regulation as a condition to the transaction of any business or the
exercise of any privilege, franchise or license, (vi) security interests on any
property or assets of any Restricted Subsidiary to secure indebtedness owing by
it to the Company or to another Restricted Subsidiary, (vii) any mechanics',
materialmen's, carriers' or other similar lien arising in the ordinary course of
business (including construction of facilities) in respect of obligations which
are not yet due or which are being contested in good faith; (viii) any security
interest for taxes, assessments or government charges or levies not yet
delinquent, or already delinquent, but the validity of which is being contested
in good faith; (ix) any security interest arising in connection with legal
proceedings being contested in good faith, including any judgment lien so long
as execution thereof is being stayed; (x) landlords' liens on fixtures located
on premises leased by the Company or a Restricted Subsidiary in the ordinary
course of business; or (xi) any extension, renewal or replacement (or successive
extensions, renewals or replacements), in whole or in part, of any security
interest referred to in the foregoing clauses (i) to (x) inclusive. (Section
5.05)
LIMITATION ON SALE AND LEASEBACK TRANSACTIONS
Sale and Leaseback Transactions (which are defined to include, among other
things, certain leases of more than three years) by the Company or any
Restricted Subsidiary of any Principal Property, completion of construction of
which and commencement of full operation of which have occurred more than 180
days prior to such sale or transfer, will be prohibited unless either (a) the
Company or such Restricted Subsidiary would be entitled to incur Secured Debt
equal in amount to the amount realized or to be realized upon such sale or
transfer secured by a lien on the Principal Property to be leased without
equally and ratably securing the Securities, or (b) an amount equal to the value
(as defined) of the Principal Property so leased is applied (subject to credits
for certain voluntary retirements of the Debt Securities) to the retirement,
within 120 days of the effective date of such arrangement, of indebtedness for
borrowed money incurred or assumed by the Company or a Restricted Subsidiary
which is recorded as Funded Debt (defined to include the Debt Securities and
other long-term indebtedness of the Company or any Restricted Subsidiary) as
shown on the most recent consolidated balance sheet of the Company and which in
the case of such indebtedness of the Company, is not subordinate and junior in
right of payment to the prior payment of the Debt Securities. (Section 5.06)
EXEMPTED INDEBTEDNESS
Notwithstanding the limitations on Secured Debt and Sale and Leaseback
Transactions described above, the Company and any one or more Restricted
Subsidiaries may, without securing the Debt Securities, issue, assume, or
guarantee Secured Debt which would otherwise be subject to the foregoing
restrictions, provided that, after giving effect thereto, the aggregate amount
of such Secured Debt then outstanding (not including Secured Debt permitted
under the foregoing exceptions) and the aggregate value of Sale and Leaseback
Transactions (other than Sale and Leaseback Transactions in connection with
which indebtedness has been, or will be, retired in accordance with clause (b)
of the preceding paragraph) at such time does not exceed 10% of Consolidated Net
Tangible Assets. (Section 5.05(b))
RESTRICTIONS ON TRANSFER OF PRINCIPAL PROPERTY TO CERTAIN SUBSIDIARIES
The Indenture provides that, so long as the Debt Securities of any series
are outstanding, the Company will not, and will not cause or permit any
Restricted Subsidiary to, transfer any Principal Property to any Subsidiary
which was not a Restricted Subsidiary at the time of such transfer unless it
shall apply within one
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year after the effective date of such transaction, or shall have committed
within one year of such effective date to apply, an amount equal to the fair
value of such Principal Property at the time of such transfer (as determined by
the Board of Directors of the Company) (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 Property or Properties or a part thereof or (ii) to the redemption of
Securities or (iii) to the repayment of Funded Debt of the Company or any
Restricted Subsidiary (other than 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
all or any part of such amount to such redemption the Company may, within one
year of such transfer, deliver to the Trustee Debt Securities of any series
(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 Debt Securities by an amount equivalent to the aggregate
principal amount of the Debt Securities so delivered. (Section 5.07)
MERGER
The Indenture provides that the Company may, without the consent of the
Holders, consolidate with, or sell, lease or convey all or substantially all of
its assets to, or merge into any other corporation, provided that in any such
case, (i) the successor corporation shall be a corporation organized and
existing under the laws of the United States or a State thereof and such
corporation shall expressly assume the due and punctual payment of the principal
of (and premium, if any) and interest on all the Debt Securities, according to
their tenor, and the due and punctual performance and observance of all the
covenants and conditions of the Indenture to be performed by the Company by
supplemental indenture satisfactory to the Trustee, executed and delivered to
the Trustee by such corporation; and (ii) immediately after giving effect to
such transaction, no Default shall have occurred and be continuing. (Article
Twelve)
Other than the covenants described above, or as set forth in any
accompanying Prospectus Supplement, the Indenture does not contain any covenants
or other provisions designed to afford holders of the Debt Securities protection
in the event of a takeover, recapitalization or a highly leveraged transaction
involving the Company.
MODIFICATION OF THE INDENTURE
With the consent of the holders ("Holders") of more than 50% in aggregate
principal amount of any series of Debt Securities then outstanding, waivers,
modifications and alterations of the terms of the Indenture may be made which
affect the rights of the Holders of such series of Debt Securities, except that
no such modification or alteration may be made which will (a) extend the time or
terms of payment of the principal at maturity of, or the interest on, any such
series of Debt Securities, or reduce principal or premium or the rate of
interest, without the consent of the Holder thereof, or (b) without the consent
of all of the Holders of any series of Debt Securities then outstanding, reduce
the percentage of Debt Securities of any such series, the Holders of which are
required to consent (i) to any such supplemental indenture, (ii) to rescind and
annul a declaration that the Debt Securities of any series are due and payable
as a result of the occurrence of an Event of Default, (iii) to waive any past
Event of Default under the Indenture and its consequences and (iv) to waive
compliance with certain other provisions contained in the Indenture. (Sections
5.09, 11.01 and 11.02) In addition, as indicated under "Events of Default"
below, Holders of more than 50% in aggregate principal amount of the Debt
Securities of any series then outstanding may waive past Events of Default in
certain circumstances and may direct the Trustee in enforcement of remedies.
(Section 7.07) The Company and the Trustee may, without the consent of any
Holders, modify and supplement the Indenture (i) to evidence the succession of
another corporation to the Company under the Indenture; (ii) to evidence and
provide for the replacement of the Trustee; (iii) with the Company's
concurrence, to add to the covenants of the Company for the benefit of the
Holders; (iv) to modify the Indenture to permit the qualification of any
supplemental indenture under the Trust Indenture Act of 1939; and for certain
other purposes. (Section 11.01)
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DEFEASANCE, SATISFACTION AND DISCHARGE PRIOR TO MATURITY OR REDEMPTION
Defeasance of any Series. If the Company shall deposit with the Trustee, in
trust, at or before maturity or redemption, lawful money or direct obligations
of the United States (or of any other government which issued the currency in
which the Debt Securities of a series are denominated) or obligations the
principal of and interest on which are guaranteed by the United States (or by
such other government) in such amounts and maturing at such times that the
proceeds of such obligations to be received upon the respective maturities and
interest payment dates of such obligations will provide funds sufficient, in the
opinion of a nationally-recognized firm of independent public accountants, to
pay when due the principal (and premium, if any) and interest to maturity or to
the redemption date, as the case may be, with respect to any series of Debt
Securities then outstanding, then the Company may cease to comply with the terms
of the Indenture, including the restrictive covenants described under
"Limitation on Secured Debt," "Limitation on Sale and Leaseback Transactions"
and "Restrictions on Transfer of Principal Property to Certain Subsidiaries"
above and the Events of Default described in clauses (d) and (e) under "Events
of Default" below, except for (1) the Company's obligation to duly and
punctually pay the principal of (and premium, if any) and interest on such
series of Debt Securities if the Debt Securities are not paid from the money or
securities held by the Trustee, (2) the Events of Default described in clauses
(a), (b), (c), (f) and (g) under "Events of Default" below, and (3) certain
other provisions of the Indenture including, among others, those relating to
registration, transfer and exchange, lost or stolen securities, maintenance of
place of payment and, to the extent applicable to such series, the redemption
and sinking fund provisions of the Indenture. Defeasance of Debt Securities of
any series is subject to the satisfaction of certain specified conditions,
including, among others, (i) the absence of an Event of Default at the date of
the deposit, and (ii) the perfection of the Holders' security interest in such
deposit. (Section 13.02)
Satisfaction and Discharge of any Series. Upon the deposit of money or
securities contemplated above and the satisfaction of certain conditions, the
Company may also cease to comply with its obligation duly and punctually to pay
the principal of (and premium, if any) and interest on a particular series of
Debt Securities, or with any Events of Default with respect thereto, and
thereafter the Holders of such series of Debt Securities shall be entitled only
to payment out of the money or securities deposited with the Trustee. Such
conditions include, among others, except in certain limited circumstances
involving a deposit made within one year of maturity or redemption, (i) the
absence of an Event of Default at the date of deposit or on the 91st day
thereafter, (ii) the delivery to the Trustee by the Company of an opinion of
nationally-recognized tax counsel, or receipt by the Company from, or
publication of a ruling by the United States Internal Revenue Service, to the
effect that Holders of the Debt Securities of such series will not recognize
income, gain or loss for Federal income tax purposes as a result of such deposit
and discharge and will be subject to Federal income tax on the same amounts and
in the same manner and at the same times as would have been the case if such
deposit and discharge had not occurred, and (iii) that such satisfaction and
discharge will not result in the delisting of the Debt Securities of that series
from any nationally-recognized exchange on which they are listed. (Section
13.01)
Federal Income Tax Consequences. Under current Federal income tax law, the
deposit and defeasance described above under "Defeasance of any Series" will not
result in a taxable event to any Holder of Debt Securities or otherwise affect
the Federal income tax consequences of an investment in the Debt Securities of
any series.
The Federal income tax treatment of the deposit and discharge described
above under "Satisfaction and Discharge of any Series" is not clear. A deposit
and discharge may be treated as a taxable exchange of such Debt Securities for
beneficial interests in the trust consisting of the deposited money or
securities. In that event, a Holder of Debt Securities may be required to
recognize gain or loss equal to the difference between the Holder's adjusted
basis for the Debt Securities and the amount realized in such exchange (which
generally will be the fair market value of the Holder's beneficial interest in
such trust). Thereafter, such Holder may be required to include in income a
share of the income, gain and loss of the trust. As described above, it is
generally a condition to such a deposit and discharge to obtain an opinion of
tax counsel, or receipt by the Company from, or publication of a ruling by the
United States Internal Revenue Service, to the effect that such deposit and
discharge will not alter the Holders' tax consequences that would have been
applicable in the
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absence of the deposit and discharge. Purchasers of the Debt Securities should
consult their own advisors with respect to the tax consequences to them of such
deposit and discharge, including the applicability and effect of tax laws other
than Federal income tax law.
EVENTS OF DEFAULT
As to any series of Debt Securities, an Event of Default is defined in the
Indenture as being: (a) default for 30 days in payment of any interest on the
Debt Securities of such series; (b) failure to pay principal or premium with
respect to the Debt Securities of such series, if any, when due; (c) failure in
the deposit of any sinking fund installment with respect to any series of Debt
Securities when due; (d) failure to observe or perform any other covenant in the
Indenture or Debt Securities of any series (other than a covenant or warranty, a
default in whose performance or whose breach is specifically dealt with in the
section of the Indenture governing Events of Default), if such failure continues
for 60 days after written notice by the Trustee or the Holders of at least 25%
in aggregate principal amount of the Debt Securities of such series then
outstanding; (e) uncured or unwaived failure to pay principal of or interest on
any other obligation for borrowed money of the Company (including default under
any other series of Debt Securities and including default by the Company on any
guaranty of an obligation for borrowed money of a Restricted Subsidiary) beyond
any period of grace with respect thereto if (i) the aggregate principal amount
of any such obligation is in excess of $25,000,000 and (ii) the default in such
payment is not being contested by the Company in good faith and by appropriate
proceedings; (f) certain events of bankruptcy, insolvency, receivership or
reorganization; or (g) any other Event of Default provided with respect to Debt
Securities of that series. (Section 7.01) The Trustee or the Holders of 25% in
aggregate principal amount of the outstanding Debt Securities of any series may
declare the Debt Securities of such series immediately due and payable upon the
occurrence of any Event of Default (after expiration of any applicable grace
period); in certain cases, the Holders of a majority in principal amount of the
Debt Securities of any series then outstanding may waive any past default and
its consequences, except a default in the payment of principal, premium, if any,
or interest (including sinking fund payments). (Sections 7.01 and 7.07)
The Indenture provides that the Trustee shall, within 90 days after the
occurrence of a default with respect to any such series for which there are Debt
Securities outstanding which is continuing, give to the Holders of such Debt
Securities notice of all uncured defaults known to it (the term default to
include the events specified above without grace periods); provided that, except
in the case of default in the payment of principal (or premium, if any) or
interest on any of the Debt Securities of any series or the payment of any
sinking fund installment on the Debt Securities of any series, the Trustee shall
be protected in withholding such notice if it in good faith determines that the
withholding notice is in the interest of the Debt Security Holders. (Section
7.08)
Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default with respect to any series of such Debt
Securities shall occur and be continuing, the Indenture provides that the
Trustee shall be under no obligation to exercise any of its rights or powers
under the Indenture at the request, order or direction of any of the Holders of
Debt Securities outstanding of any series unless such Holders shall have offered
to the Trustee reasonable indemnity. (Sections 8.01 and 8.02) The right of a
Holder to institute a proceeding with respect to the Indenture is subject to
certain conditions precedent including notice and indemnity to the Trustee, but
the Holder has a right to receipt of principal, premium, if any, and interest
(subject to certain limitations with respect to defaulted interest) on their due
dates or to institute suit for the enforcement thereof. (Sections 7.04 and 7.10)
So long as the Debt Securities of any series remain outstanding the Company
will be required to furnish annually to the Trustee an Officers' Certificate
stating whether, to the best of the knowledge of the signers, the Company is in
default under any of the provisions of the Indenture, and specifying all such
defaults, and the nature thereof, of which they have knowledge. (Section 5.08)
The Company will also be required to furnish to the Trustee copies of certain
reports filed by the Company with the Securities and Exchange Commission.
(Section 6.03)
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The Holders of a majority in principal amount of the Debt Securities
outstanding of such series will have the right to direct the time, method and
place for conducting any proceeding for any remedy available to the Trustee, or
exercising any power or trust conferred on the Trustee, provided that such
direction shall be in accordance with law and the provisions of the Indenture,
provided that the Trustee may decline to follow any such direction if the
Trustee shall determine on the advice of counsel that the proceeding may not be
lawfully taken or would be materially or unjustly prejudicial to Holders not
joining in such direction. (Section 7.07) The Trustee will be under no
obligation to act in accordance with such direction unless such Holders shall
have offered the Trustee reasonable security or indemnity against costs,
expenses and liabilities which may be incurred thereby. (Section 8.02)
INFORMATION CONCERNING THE TRUSTEE
The Company from time to time borrows from an affiliate of the Trustee, and
maintains deposit accounts and conducts other banking transactions with such
affiliate in the ordinary course of business.
Under the Indenture, the Trustee is required to transmit annual reports to
all Holders regarding its eligibility and qualifications as Trustee under the
Indenture and certain related matters. (Section 7.06)
DESCRIPTION OF DEBT WARRANTS
The Company may issue Debt Warrants in registered certificated form for the
purchase of Debt Securities. Debt Warrants may be issued together with or
separately from any Debt Securities offered by any Prospectus Supplement and, if
issued together with any Debt Securities, may be attached to or separate from
such Debt Securities. Debt Warrants are to be issued under Debt Warrant
Agreements to be entered into between the Company and a bank or trust company,
as Debt Warrant Agent, all as set forth in the Prospectus Supplement relating to
the particular issue of Debt Warrants. Copies of the forms of Debt Warrant
Agreements and Debt Warrant Certificates are filed as exhibits to the
Registration Statement. The following summaries of certain provisions of the
forms of Debt Warrant Agreements and Debt Warrant Certificates do not purport to
be complete and are subject to, and are qualified in their entirety by reference
to, all the provisions of the Debt Warrant Agreements and the Debt Warrant
Certificates. Section references herein are references to particular provisions
of the Debt Warrant Agreements. Capitalized terms used in this Description of
Debt Warrants but not defined herein have the meanings ascribed to such terms in
the Debt Warrant Agreements.
GENERAL
The Prospectus Supplement will describe the terms of the Debt Warrants
offered thereby, the Debt Warrant Agreement relating to such Debt Warrants and
the Debt Warrant Certificates representing such Debt Warrants, including the
following: (1) the offering price; (2) the designation, aggregate principal
amount and terms of the Debt Securities purchasable upon exercise of the Debt
Warrants; (3) if applicable, the designation and terms of the Debt Securities
with which the Debt Warrants are issued and the number of Debt Warrants issued
with each such Debt Security; (4) if applicable, the date on and after which the
Debt Warrants and the related Debt Securities will be separately transferable;
(5) the principal amount of Debt Securities purchasable upon exercise of one
Debt Warrant and the price at which such principal amount of Debt Securities may
be purchased upon such exercise; (6) the date on which the right to exercise the
Debt Warrants shall commence and the date (the "Debt Warrant Expiration Date")
on which such right shall expire; (7) federal income tax consequences; (8) the
identity of the Debt Warrant Agent; and (9) any other terms of the Debt
Warrants.
Debt Warrant Certificates may be exchanged for new Debt Warrant
Certificates of different denominations, may be presented for registration of
transfer, and may be exercised at the corporate trust office of the Debt Warrant
Agent or any other office indicated in the Prospectus Supplement. (Section 4.01)
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EXERCISE OF DEBT WARRANTS
Each Debt Warrant will entitle its holder to purchase such principal amount
of Debt Securities at such exercise price as shall in each case be set forth in,
or calculable from, the Prospectus Supplement relating to the Debt Warrants.
(Section 1.01) Debt Warrants may be exercised at any time up to 5:00 p.m., New
York City time, on the Debt Warrant Expiration Date set forth in the Prospectus
Supplement relating to such Debt Warrants. After such time on the Debt Warrant
Expiration Date (or such later date to which such Debt Warrant Expiration Date
may be extended by the Company), unexercised Debt Warrants will be void.
(Section 2.02)
Debt Warrants may be exercised by delivery to the Debt Warrant Agent of
payment as provided in the Prospectus Supplement of the amount required to
purchase the Debt Securities purchasable upon such exercise together with
certain information set forth on the reverse side of the Debt Warrant
Certificate. Debt Warrants will be deemed to have been exercised upon receipt of
the exercise price, subject to the receipt within five business days of the Debt
Warrant Certificate evidencing such Debt Warrants. Upon receipt of such payment
and the Debt Warrant Certificate properly completed and duly executed at the
corporate trust office of the Debt Warrant Agent or any other office indicated
in the Prospectus Supplement, the Company will, as soon as practicable, issue
and deliver the Debt Securities purchasable upon such exercise. If fewer than
all of the Debt Warrants represented by such Debt Warrant Certificate are
exercised, a new Debt Warrant Certificate will be issued for the remaining
amount of Debt Warrants. (Section 2.03)
MODIFICATIONS
The Debt Warrant Agreement and the terms of the Debt Warrants may be
amended by the Company and the Debt Warrant Agent, without the consent of the
holders, for the purpose of curing any ambiguity, or curing, correcting or
supplementing any defective provision contained therein, or in any other manner
which the Company and the Debt Warrant Agent may deem necessary or desirable and
which will not adversely affect the interests of the holders. (Section 6.01)
ENFORCEABILITY OF RIGHTS BY HOLDERS; GOVERNING LAW
The Debt Warrant Agent will act solely as an agent of the Company in
connection with the Debt Warrant Certificates and will not assume any obligation
or relationship of agency or trust for or with any holders of Debt Warrant
Certificates. (Section 5.02) Holders may, without the consent of the Debt
Warrant Agent or the Trustee for the applicable series of Debt Securities,
enforce by appropriate legal action, on their own behalf, their right to
exercise their Debt Warrants in the manner provided in their Debt Warrant
Certificates and the Debt Warrant Agreement. (Section 3.03) Prior to the
exercise of their Debt Warrants, holders of Debt Warrants will not have any of
the rights of Holders of the Debt Securities purchasable upon such exercise,
including the right to receive payments of principal of (and premium, if any) or
interest, if any, on the Debt Securities purchasable upon such exercise or to
enforce covenants in the Indenture. (Section 3.01) Except as may otherwise be
provided in the Prospectus Supplement relating thereto, each issue of Debt
Warrants and the applicable Debt Warrant Agreement will be governed by and
construed in accordance with the laws of the State of New York. (Section 6.04)
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities and the Debt Warrants (i) through
underwriters or dealers, (ii) directly to one or more institutional purchasers
or (iii) through agents. The Prospectus Supplement with respect to the Debt
Securities or the Debt Warrants being offered thereby sets forth the terms of
the offering thereof, including the name or names of any underwriters, their
purchase price and the proceeds to the Company from such sale, any underwriting
discounts and other items constituting underwriters' compensation, any initial
public offering price, any discounts or concessions allowed or reallowed or paid
to dealers and any securities exchanges on which they may be listed. Only
underwriters so named in the Prospectus Supplement are deemed to be underwriters
in connection with the Debt Securities or the Debt Warrants offered thereby.
13
<PAGE> 18
If underwriters are used in the sale, the Debt Securities or the Debt
Warrants will be acquired by the underwriters for their own account and may be
resold from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. The obligations of the underwriters to purchase such Debt
Securities or Debt Warrants will be subject to certain conditions precedent, and
the underwriters will be obligated to purchase all the Debt Securities or the
Debt Warrants offered by the Prospectus Supplement relating to such series if
any are purchased. Any initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers may be changed from time to
time.
Debt Securities or Debt Warrants may also be sold directly by the Company
or through agents designated by the Company from time to time. Any agent
involved in the offering and sale thereof in respect of which this Prospectus is
delivered is named and any commissions payable by the Company to such agent are
set forth in the Prospectus Supplement relating to such series. Unless otherwise
indicated in such Prospectus Supplement, any such agent is acting on a best
efforts basis for the period of its appointment.
If so indicated in a Prospectus Supplement, the Company will authorize
agents, underwriters or dealers to solicit offers by certain institutional
investors to purchase Debt Securities or Debt Warrants, as the case may be, to
which such Prospectus Supplement relates providing for payment and delivery on a
future date specified in such Prospectus Supplement. There may be limitations on
the minimum amount which may be purchased by any such institutional investor or
on the portion of the aggregate amount of the particular Debt Securities or Debt
Warrants which may be sold pursuant to such arrangements. Institutional
investors to which such offers may be made, when authorized, include commercial
and savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and such other institutions as may be
approved by the Company. The obligations of any such purchasers pursuant to such
delayed delivery and payment arrangements will not be subject to any conditions
except that (i) such purchase shall not at the time of delivery be prohibited
under the laws of any jurisdiction in the United States to which such
institution is subject, and (ii) if the particular Debt Securities or Debt
Warrants are being sold to underwriters, the Company shall have sold to such
underwriters the total amount of such Debt Securities or Debt Warrants less the
amount thereof covered by such arrangements. Underwriters will not have any
responsibility in respect of the validity of such arrangements or the
performance of the Company or such institutional investors thereunder.
Agents and underwriters may be entitled under agreements entered into with
the Company to indemnification by the Company against certain civil liabilities,
including liabilities under the 1933 Act, or to contribution with respect to
payments which the agents or underwriters may be required to make in respect
thereof. Agents and underwriters may engage in transactions with, or perform
services for, the Company in the ordinary course of business.
The Company has not determined whether or not it will list any Securities
on a national securities exchange. Additionally, the Company has not been
advised by any underwriters that, in the event the Company determines not to
list any Securities on a national securities exchange, such underwriters intend
to make a market in such Securities. No assurances can be given as to the
liquidity of, or trading markets for, any Securities.
LEGAL OPINIONS
The legality of the Securities will be passed upon for the Company by John
P. Kennedy, Esq., Vice President, Secretary and General Counsel of the Company.
Certain legal matters will be passed upon for any underwriters by Mayer, Brown &
Platt, New York, New York 10019.
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference to the Company's Annual Report on Form 10-K for the year ended
September 30, 1994 have been so incorporated in reliance on the report of Price
Waterhouse LLP, independent accountants, given on the authority of said firm as
experts in accounting and auditing.
14
<PAGE> 19
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS IN CONNECTION WITH THE
OFFER CONTAINED IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY UNDERWRITER. THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS IS NOT AN OFFER TO SELL OR
A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
STATE TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN
SUCH STATE. THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
The Company........................... S-2
Use of Proceeds....................... S-2
Ratio of Earnings to Fixed Charges.... S-2
Description of the Debentures......... S-2
Underwriting.......................... S-4
Legal Opinions........................ S-4
PROSPECTUS
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
The Company........................... 3
Certain Factors Relating to Foreign
Currencies.......................... 3
Use of Proceeds....................... 3
Description of the Debt Securities.... 3
Description of Debt Warrants.......... 12
Plan of Distribution.................. 13
Legal Opinions........................ 14
Experts............................... 14
</TABLE>
$125,000,000
JOHNSON CONTROLS, INC.
7.70% DEBENTURES
DUE MARCH 1, 2015
SALOMON BROTHERS INC
J.P. MORGAN SECURITIES INC.
PROSPECTUS SUPPLEMENT
DATED FEBRUARY 23, 1995
