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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 2, 1997
REGISTRATION NO. 333-13525
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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JOHNSON CONTROLS, INC.
(Exact name of registrant as specified in its charter)
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<S> <C>
WISCONSIN 39-0380018
(State or other jurisdiction of incorporation or (I.R.S. Employer Identification Number)
organization)
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5757 GREEN BAY AVENUE
MILWAUKEE, WISCONSIN 53209
(414) 228-1200
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
JOHN P. KENNEDY
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
5757 GREEN BAY AVENUE
MILWAUKEE, WISCONSIN 53209
(414) 228-1200
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
Copy to:
PHILIP J. NIEHOFF
MAYER, BROWN & PLATT
190 SOUTH LASALLE STREET
CHICAGO, ILLINOIS 60603
(312) 782-0600
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Approximate date of commencement of proposed sale to the public: From time
to time after the Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] ____
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ____
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED(1) TO BE REGISTERED PER UNIT(2) OFFERING PRICE FEE
- ---------------------------------------------------------------------------------------------------------------------------------
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Common Stock, $.16 2/3 par value per
share (including common stock
purchase rights).....................
Preferred Stock, $1.00 par value per
share................................
Debt Securities........................ (3) (3) $1,500,000,000(3)(4) $456,677(4)
Warrants to Purchase Common Stock......
Warrants to Purchase Preferred Stock...
Warrants to Purchase Debt Securities...
=================================================================================================================================
</TABLE>
(1) Securities registered hereunder (the "Offered Securities") may be sold
separately, together or as units with other Offered Securities registered
hereunder.
(2) Estimated in accordance with Rule 457 under the Securities Act of 1933, as
amended (the "Securities Act"), solely for the purpose of computing the
registration fee.
(3) Pursuant to Rule 457(o) under the Securities Act, which permits the
registration fee to be calculated on the basis of the maximum offering price
of all the securities listed, the table does not specify by each class
information as to the amount to be registered, proposed maximum offering
price per unit or proposed maximum aggregate offering price.
(4) Of the $1,500,000,000 of Offered Securities registered hereby, $51,000,000
aggregate principal amount of debt securities and warrants to purchase debt
securities were registered pursuant to Registration Statement No. 33-57685,
are unissued as of the date hereof and will remain designated for debt
securities and warrants to purchase debt securities. A registration fee of
$17,586 was previously paid with respect to such securities and is not
included in the amount stated above. The remaining fee was previously paid
in connection with this Registration Statement.
Pursuant to Rule 429 under the Securities Act, the Prospectus filed as part
of this Registration Statement relates to the securities registered hereby,
including the remaining unsold $51,000,000 principal amount of debt securities
and warrants to purchase debt securities previously registered by the Registrant
under its Registration Statement on Form S-3 (File No. 33-57685). Such
Registration Statement is amended to reflect the information contained herein.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED MAY 2, 1997
PROSPECTUS
$1,500,000,000
JOHNSON CONTROLS, INC.
COMMON STOCK, PREFERRED STOCK, DEBT SECURITIES,
WARRANTS TO PURCHASE COMMON STOCK,
WARRANTS TO PURCHASE PREFERRED STOCK AND
WARRANTS TO PURCHASE DEBT SECURITIES
------------------------
Johnson Controls, Inc., a Wisconsin corporation (the "Company"), may from
time to time offer in one or more series (i) shares of Common Stock, $.16 2/3
par value per share (the "Common Stock"), (ii) shares of Preferred Stock, $1.00
par value per share (the "Preferred Stock"), (iii) unsecured debt securities
("Debt Securities"), which may be senior debt securities ("Senior Debt
Securities") or subordinated debt securities ("Subordinated Debt Securities"),
(iv) warrants to purchase Common Stock ("Common Stock Warrants"), (v) warrants
to purchase Preferred Stock ("Preferred Stock Warrants") and (vi) warrants to
purchase Debt Securities ("Debt Warrants"), with an aggregate public offering
price of up to $1,500,000,000, on terms to be determined at the time or times of
offering. The Common Stock, Preferred Stock, Debt Securities, Common Stock
Warrants, Preferred Stock Warrants and Debt Warrants (collectively referred to
herein as the "Offered Securities") may be offered, separately or together, in
separate classes or series, in amounts, at prices and on terms to be set forth
in one or more supplements to this Prospectus (each, a "Prospectus Supplement").
All specific terms of the offering and sale of the Offered Securities in
respect of which this Prospectus is being delivered will be set forth in the
applicable Prospectus Supplement and will include, when applicable: (i) in the
case of Common Stock, any public offering price and the aggregate number of
shares offered; (ii) in the case of Preferred Stock, the specific class, series,
title, any dividend, liquidation, redemption, conversion, voting and other
rights, any dividend payment dates, any sinking fund provisions, the aggregate
number of shares offered and any public offering price; (iii) in the case of
Debt Securities, the specific title, aggregate principal amount, ranking as
Senior Debt Securities or Subordinated Debt Securities, currency, form (which
may be registered or bearer or certificated or global), authorized
denominations, maturity, rate (or manner of calculation thereof) and time of
payment of interest, if any, terms for redemption at the option of the Company
or repayment at the option of the holder thereof, terms for sinking fund
payments, terms for conversion into Common Stock or Preferred Stock and any
public offering price; (iv) in the case of Common Stock Warrants, the duration,
offering price, exercise price and detachability features; (v) in the case of
Preferred Stock Warrants, description of the Preferred Stock for which each
warrant will be exercisable and the duration, offering price, exercise price and
detachability features; and (vi) in the case of Debt Warrants, description of
the Debt Securities for which each warrant will be exercisable and the duration,
offering price, exercise price and detachability features.
The applicable Prospectus Supplement will also contain information, when
applicable, about certain United States Federal income tax considerations
relating to, and any listing on a securities exchange of, the Offered Securities
covered by that Prospectus Supplement.
The Offered Securities may be offered directly, through agents designated
from time to time by the Company, or to or through underwriters or dealers. If
any agents or underwriters are involved in the sale of any of the Offered
Securities, their names and any applicable purchase price, fee, commission or
discount arrangement between or among them will be set forth in or will be
calculable from the information set forth in the applicable Prospectus
Supplement. No Offered Securities may be sold without delivery of the applicable
Prospectus Supplement describing the method and terms of the offering of those
Offered Securities. See "Plan of Distribution" for possible indemnification
arrangements with underwriters, dealers and agents.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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This Prospectus may not be used to consummate sales of the Offered Securities
unless accompanied by a Prospectus Supplement.
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, 1997
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR AN APPLICABLE PROSPECTUS
SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER,
DEALER OR AGENT. THIS PROSPECTUS AND ANY APPLICABLE PROSPECTUS SUPPLEMENT DO NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES
OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER SHALL UNDER
ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THEREOF.
IN CONNECTION WITH THIS OFFERING, UNDERWRITERS, IF ANY, MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE OFFERED
SECURITIES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
The Company 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 Company can be inspected and copied at the public reference
facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the Commission's Regional Offices at Seven
World Trade Center, 13th Floor, New York, New York 10048 and Citicorp Center,
Suite 1400, 500 West Madison Street, Chicago, Illinois 60661. 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, or at the
Commission's worldwide web site at http://www.sec.gov. Such reports, proxy
statements and other information concerning the Company may also be inspected
and copied at the offices of the New York Stock Exchange, Inc., 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 "Securities Act"), relating to
the Offered Securities. This Prospectus does not contain all of the information
set forth in the Registration Statement as permitted by the rules and
regulations of the Commission. For information with respect to the Company and
the Offered Securities, reference is hereby made to such Registration Statement.
The Registration Statement may be inspected without charge by anyone at the
office of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and
copies of all or any part thereof may be obtained from the Commission upon
payment of the prescribed fees, or at the Commission's worldwide web site.
Statements contained in this Prospectus as to the contents of any contract or
other document referred to are not necessarily complete, and in each instance
reference is made to the copy of such document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission. Each such
statement is qualified in all respects by such reference.
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DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed with the Commission (File No. 1-5097) are
incorporated herein by reference:
(i) the Company's Annual Report on Form 10-K for the fiscal year
ended September 30, 1996;
(ii) the Company's Quarterly Report on Form 10-Q for the quarter
ended December 31, 1996;
(iii) the Company's Current Reports on Form 8-K filed October 4, 1996,
December 10, 1996 and March 10, 1997 (two reports) (which
financial statements have been restated to give effect to the
reclassification of the Plastic Container division as a
discontinued operation and for the stock split distributed on
March 31, 1997 to shareholders of record on March 7, 1997) (see
"Recent Developments"); and
(iv) Item 1 of the Company's Registration Statement on Form 8-A, dated
November 30, 1994, relating to a description of the Company's
Common Stock Purchase Rights.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Offered Securities shall be deemed to be
incorporated in this Prospectus by reference and to be a part hereof from the
date of filing of such documents. Any statement contained herein or in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein (or in the applicable Prospectus
Supplement) 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 any person to whom a copy of
this Prospectus is delivered, upon the written or oral request of such person, a
copy of any document incorporated by reference herein other than exhibits to
such document unless such exhibits are specifically incorporated by reference in
such document. Requests should be directed to Secretary, Johnson Controls, Inc.,
5757 North Green Bay Avenue, Milwaukee, Wisconsin 53209, telephone (414)
228-1200.
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THE COMPANY
The Company operates in two business segments, automotive and controls. The
automotive segment is primarily engaged in the design and manufacture of
complete seat systems, seating components and interior systems for cars, light
trucks and vans and the manufacture of automotive batteries for the replacement
and original equipment markets. The controls segment is primarily engaged in the
installation and service of control systems, the retrofit and service of
mechanical equipment and other systems in non-residential buildings, and for
on-site integrated facility management services.
The Company was founded in 1885 as the Johnson Electric Service Company.
The Company's principal executive offices are located at 5757 North Green Bay
Avenue, Milwaukee, Wisconsin 53209 and its phone number is (414) 228-1200.
RECENT DEVELOPMENTS
On October 1, 1996, the Company acquired Prince Holding Corporation
("Prince"), a privately held automotive interiors supplier based in Holland,
Michigan. Prince is a major supplier of interior systems and components,
including overhead systems and consoles, door panels, floor consoles, visors and
armrests. Its products are included in 80 vehicle platforms, primarily for
domestic sales. The stated purchase price of the acquisition was $1.35 billion,
less assumed debt and other liability adjustments.
On December 6, 1996, the Company and Schmalbach-Lubeca AG/Continental Can
Europe (a member of the VIAG Group "Schmalbach-Lubeca") signed a definitive
agreement pursuant to which Schmalbach-Lubeca would purchase the Plastic
Container division of the Company. The transaction was completed on February 28,
1997. The Company recorded a gain on the sale of the Plastic Container division
of $135 million before tax ($69 million or $.76 per fully diluted share,
after-tax).
On January 22, 1997, the Company's Board of Directors authorized a
two-for-one stock split of the Common Stock distributed on March 31, 1997 to
shareholders of record on March 7, 1997. All share and per share information
presented in this Prospectus gives effect to the stock split.
In the second quarter of 1997, the Company recorded a restructuring charge,
including related asset writedowns, of $70.0 million ($40.3 million or $.48 per
primary share and $.44 per fully diluted share, after-tax). Details of the
restructuring charge are as follows (in millions):
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Writedown of long-lived assets.............................. $43.6
Employee severance and termination benefits................. 10.7
Other....................................................... 15.7
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$70.0
=====
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The restructuring initiatives involve the Company's automotive and controls
groups and include four plant closings and the elimination of certain
underperforming business lines which will result in workforce reductions of
approximately 650 employees and the writedown of certain long-lived assets,
including goodwill. These actions, which will take place in both the United
States and Europe, resulted in restructuring charges of $37.0 million and $33.0
million for the automotive and controls groups, respectively. The automotive
group charges primarily relate to its European business where certain
manufacturing capacity is being eliminated or realigned with future customer
sourcing requirements, and product development resources are being consolidated.
Most significantly, the Company has decided to close a complete seat
manufacturing facility located in Belgium due to the announcement by Renault of
the closure of its automobile manufacturing operations in that country. In
addition, the Company is converting a facility in Portugal from a specialized
seat cushion to a new foam operation as a result of the loss of certain General
Motors business in Spain. Within the controls group, the Company is divesting of
a business which provides low-end maintenance services as it no longer provides
a means of penetrating more lucrative markets. In addition, the Company has
exited a domestic cable installation activity.
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For plants to be closed and business lines eliminated, the tangible assets
to be disposed of have been written down to their estimated fair value, less
cost of disposal. All intangible asset carrying values associated with the plant
closings and elimination of business lines have been eliminated. The write-down
of long-lived assets of $43.6 million approximates the carrying value of those
assets as fair value of the tangible assets less costs to sell is negligible.
Considerable management judgment is necessary to estimate fair value,
accordingly, actual results could vary significantly from such estimates.
The cash and noncash elements of the restructuring charge approximate $15.6
million and $54.4 million, respectively. It is expected that these restructuring
actions will be substantially completed by the end of fiscal 1997.
USE OF PROCEEDS
Except as may be otherwise described in the applicable Prospectus
Supplement, the Company intends to use the net proceeds from the sale of the
Offered Securities for general corporate purposes, which may include repurchases
of outstanding long-term debt, capital expenditures, investments in
subsidiaries, working capital, repayment of borrowings under bank credit
agreements and financing of acquisitions. The Company currently has no
commitments or agreements to make any acquisitions.
GENERAL DESCRIPTION OF THE OFFERED SECURITIES
The Company may offer under this Prospectus Common Stock, Preferred Stock,
Debt Securities, Common Stock Warrants, Preferred Stock Warrants, or Debt
Warrants or any combination of the foregoing, either individually or as units
consisting of two or more Offered Securities. The aggregate offering price of
Offered Securities offered by the Company by a Prospectus Supplement will not
exceed $1,500,000,000. If Offered Securities are offered as units, the terms of
the units will be set forth in a Prospectus Supplement.
DESCRIPTION OF THE COMMON STOCK
GENERAL
The Company's Restated Articles of Incorporation (the "Articles of
Incorporation") authorize the Company to issue up to 300,000,000 shares of
Common Stock. As of March 7, 1997, there were 83,703,952 shares of Common Stock
issued and outstanding. In addition, up to 8,383,504 shares have been reserved
as of March 7, 1997 for issuance upon the exercise of options and awards under
the Company's incentive compensation plans. The shares of Common Stock are
listed on the New York Stock Exchange under the symbol "JCI." Firstar Trust
Company, Milwaukee, Wisconsin is the transfer agent and registrar of the shares
of Common Stock. The shares of Common Stock currently outstanding are fully paid
and nonassessable, except as provided by Section 180.0622(2)(b) of the Wisconsin
Business Corporation Law (the "WBCL") regarding personal liability of
shareholders for all debts owing to employees of the Company for services
performed, but not exceeding six months' service in any one case. The shares of
Common Stock offered by a Prospectus Supplement, upon issuance against full
consideration therefor, will be fully paid and nonassessable, except as provided
by Section 180.0622(2)(b) of the WBCL regarding personal liability of
shareholders for all debts owing to employees of the Company for services
performed, but not exceeding six months' service in any one case.
DIVIDENDS
After all dividends on all series of Preferred Stock have been paid or
declared and set apart for payment, the holders of the Common Stock are entitled
to receive such dividends as may be declared from time to time by the Board of
Directors of the Company (the "Board of Directors"), in its discretion, out of
funds legally available therefor.
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DISSOLUTION
In the event of the dissolution of the Company, after distribution to the
holders of all shares of Preferred Stock which are entitled to a preference over
the holders of Common Stock of the full preferential amounts to which they are
entitled, the holders of Common Stock are entitled to share ratably in the
distribution of the remaining assets of the Company.
VOTING RIGHTS OF COMMON STOCK
Holders of Common Stock are entitled to one vote for each share of Common
Stock held on all questions on which shareholders of the Company are entitled to
vote, and vote together share for share with the holders of Preferred Stock as
one class, except as provided under Wisconsin law or in the Articles of
Incorporation.
PRE-EMPTIVE RIGHTS
No holder of any class of stock of the Company has any pre-emptive or
preferential rights to subscribe for or purchase any of the unissued shares of
stock of the Company, or any stock of the Company purchased by the Company, or
any bonds, certificates of indebtedness, debentures or other securities
convertible into stock of the Company or any right to subscribe for any of the
foregoing, other than such, if any, as the Board of Directors in its discretion
may from time to time determine.
CERTAIN PROVISIONS OF ARTICLES OF INCORPORATION, BY-LAWS AND WISCONSIN LAW
General
Certain provisions adopted by the Company in its Articles of Incorporation
and By-laws and certain provisions of the WBCL might discourage certain types of
transactions that involve an actual or threatened change of control of the
Company.
Voting Requirement in Connection with Certain Transactions; Voting Power
The Articles of Incorporation provide that, except as set forth below, the
affirmative vote or consent of the holders of four-fifths of all classes of
stock of the Company entitled to vote in elections of directors, considered as
one class, is required (i) for the adoption of any agreement for the merger or
consolidation of the Company with or into any other corporation or (ii) to
authorize any sale, lease, exchange, mortgage, pledge or other disposition of
all or any substantial part of the assets of the Company to, or any sale, lease,
exchange, mortgage, pledge, other disposition to the Company or any subsidiary
thereof in exchange for securities of the Company of any assets of, any other
corporation, person or other entity, if, in either case, as of the record date
for the determination of shareholders entitled to notice thereof and to vote
thereon or consent thereto such other corporation, person or entity is the
beneficial owner, directly or indirectly, of more than 10% of the outstanding
shares of stock of the Company entitled to vote in elections of directors
considered as one class. Such affirmative vote or consent is in addition to the
vote or consent of the holders of stock of the Company otherwise required by
law, the Articles of Incorporation or any agreement between the Company and any
national securities exchange.
Any corporation, person or other entity will be deemed to be the beneficial
owner of any shares of stock of the Company (A) which it has the right to
acquire pursuant to any agreement, or upon exercise of conversion rights,
warrants or options, or otherwise or (B) which are beneficially owned, directly
or indirectly (including shares deemed owned through application of clause (A)
above), by any other corporation, person or entity with which it or its
"affiliate" or "associate,"as those terms are defined in Rule 12b-2 under the
Exchange Act, has any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of stock of the Company, or which is its
"affiliate" or "associate." The outstanding shares of any class of stock of the
Company will include shares deemed owned through application of clauses (A) and
(B) above but will not include any other shares which may be issuable pursuant
to any agreement, or upon exercise of conversion rights, warrants or options, or
otherwise.
The Board of Directors has the power to determine, on the basis of
information known to it, whether (i) such other corporation, person or other
entity beneficially owns more than 10% of the outstanding shares of stock of the
Company entitled to vote in elections of directors, (ii) a corporation, person
or entity is an
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"affiliate" or "associate" of another and (iii) the memorandum of understanding
referred to below is substantially consistent with the transaction covered
thereby. Any such determination will be conclusive and binding.
The foregoing provisions are not applicable to (i) any merger or
consolidation of the Company with or into any other corporation, or any sale,
lease, exchange, mortgage, pledge or other disposition of all or any substantial
part of the assets of the Company to, or any sale, lease, mortgage, pledge or
other disposition to the Company or any subsidiary thereof in exchange for
securities of the Company of any assets of, any other corporation, person or
other entity, if the Board of Directors of the Company by resolution has
approved a memorandum of understanding with such other corporation, person or
other entity, with respect to and substantially consistent with such transaction
prior to the time such other corporation, person or other entity has become a
beneficial owner of more than 10% of the shares of stock of the Company entitled
to vote in elections of directors or (ii) any merger or consolidation of the
Company with, or any sale, lease, exchange, mortgage, pledge or other
disposition to the Company or any subsidiary thereof of any assets of any
corporation of which a majority of the outstanding shares of all classes of
stock entitled to vote in elections of directors is owned of record or
beneficially by the Company and its subsidiaries.
No amendment to the Articles of Incorporation may amend, alter, change or
repeal any of the foregoing provisions, unless the amendment effecting such
amendment, alteration, change or repeal receives the affirmative vote or consent
of the holders of four-fifths of all classes of stock of the Company entitled to
vote in elections of directors, considered as one class.
Sections 180.1140 to 180.1144 of the WBCL contain certain limitations and
special voting provisions applicable to specified business combinations
involving Wisconsin corporations, including the Company, and a significant
shareholder, unless the board of directors of the corporation approves the
business combination or the shareholder's acquisition of shares before such
shares are acquired. Similarly, Sections 180.1130 to 180.1133 of the WBCL
contain special voting provisions applicable to certain business combinations,
unless specified minimum price and procedural requirements are met. Following
commencement of a takeover offer, Section 180.1134 of the WBCL imposes special
voting requirements on certain share repurchases effected at a premium to the
market and on certain asset sales by the corporation, unless, as it relates to
the potential sale of assets, the corporation has at least three independent
directors and a majority of the independent directors vote not to have such
provision apply to the corporation.
Section 180.1150 of the WBCL provides that the voting power of shares of
Wisconsin corporations, including the Company, held by any person or persons
acting as a group in excess of 20% of the voting power in the election of
directors is limited to 10% of the full voting power of those shares. This
restriction does not apply to shares acquired directly from the Company or in
certain specified transactions or shares for which full voting power has been
restored pursuant to a vote of shareholders.
Number and Tenure of Board of Directors; Special Meetings
The By-laws provide that the Board of Directors is composed of thirteen
directors divided into three classes, consisting of four members in two classes
and five members in one class. A director may be removed from office by
shareholders prior to the expiration of his or her term but only (i) at a
special meeting called for the purpose of removing the director, (ii) by the
affirmative vote of two-thirds of the outstanding shares entitled to vote for
the election of such director and (iii) for cause; provided, however, that if
the Board of Directors, by resolution adopted by the affirmative vote of at
least two-thirds of the directors then in office plus one director recommends
removal of a director, then the shareholders may remove such director without
cause by the vote described above. A special meeting of shareholders may be
called only by the Chairman of the Board of Directors, the President or the
Board of Directors, and shall be called by the Chairman of the Board of
Directors or the President upon the demand of the holders of record of shares
representing at least 10% of all of the votes entitled to be cast at the special
meeting.
The affirmative vote of (i) shareholders possessing at least four-fifths of
the voting power of the outstanding shares of all classes of stock of the
Company generally possessing voting rights in elections for directors,
considered as one class (subject to the rights of holders of any class or series
of stock having a
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preference over the Common Stock as to dividends or upon liquidation) or (ii) at
least two-thirds of the directors then in office plus one director, is required
to amend, alter, change or repeal the provisions of the By-laws described under
"Number and Tenure of Board of Directors."
COMMON STOCK PURCHASE RIGHTS
The Company entered into a Rights Agreement (the "Rights Agreement") with
Firstar Trust Company and, effective as of November 30, 1994 (the "Record
Date"), declared a dividend of one common share purchase right (a "Right") for
each share of Common Stock outstanding. The Company also authorized and directed
the issuance of one Right with respect to each share of Common Stock outstanding
between the Record Date and the earliest of the Distribution Date (as defined
below), the time at which the Rights are redeemed as provided in the Rights
Agreement and November 30, 2004. Each share of Common Stock offered by a
Prospectus Supplement will have attached thereto one Right. Unless the context
otherwise requires, all references to the Common Stock in this Prospectus
include the accompanying Rights.
Until the earlier to occur of (i) 10 days following a public announcement
that a person or group of affiliated or associated persons (an "Acquiring
Person") has acquired beneficial ownership of 20% or more of the outstanding
shares of Common Stock or (ii) 10 business days (or such later date as may be
determined by action of the Board of Directors prior to such time as any person
or group of affiliated persons becomes an Acquiring Person) following the
commencement of, or public announcement of an intention to make, a tender offer
or exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 20% or more of the outstanding shares of
Common Stock (the earlier of such dates being called the "Distribution Date"),
the Rights will be evidenced by certificates for shares of Common Stock.
Until the Distribution Date (or earlier redemption or expiration of the
Rights), the Rights are transferable only with the Common Stock. The Rights are
not exercisable until the Distribution Date. As soon as practicable following
the Distribution Date, separate certificates evidencing the Rights will be
mailed to holders of record of the Common Stock. Each Right entitles the
registered holder to purchase from the Company one share of Common Stock from
the Company at a price of $87.50 per share (the "Purchase Price"), subject to
adjustment. The Rights will expire on November 30, 2004, unless such date is
extended or the Rights are earlier redeemed or exchanged by the Company.
In the event that the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold after a person or group has become an Acquiring Person, each
holder of a Right will thereafter have the right to receive, upon the exercise
thereof at the then current exercise price of the Right, that number of shares
of common stock of the acquiring company which at the time of such transaction
having a market value of two times the exercise price of the Right. In the event
that any person or group of affiliated or associated persons becomes an
Acquiring Person, each holder of a Right, other than Rights beneficially owned
by the Acquiring Person (which will thereafter be void), will thereafter have
the right to receive upon exercise that number of shares of Common Stock having
a market value of two times the exercise price of the Right.
At any time after any person or group becomes an Acquiring Person and prior
to the acquisition by such person or group of 50% or more of the outstanding
shares of Common Stock, the Board of Directors may exchange the Rights (other
than Rights owned by such person or group which will have become void), in whole
or in part, at an exchange ratio of one share of Common Stock per Right (subject
to adjustment).
At any time prior to the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 20% or more of the outstanding
shares of Common Stock, the Board of Directors may redeem the Rights in whole,
but not in part, at a price of $.005 per Right (the "Redemption Price").
The terms of the Rights may be amended by the Board of Directors without
the consent of the holders of the Rights, including an amendment to lower
certain thresholds described herein to not less than the greater of (i) the sum
of .001% and the largest percentage of the outstanding shares of Common Stock
then known to the Company to be beneficially owned by any person or group of
affiliated or associated persons and (ii) 10%,
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except that from and after such time as any person or group of affiliated or
associated persons becomes an Acquiring Person no such amendment may adversely
affect the interests of the holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will not have any
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends.
DESCRIPTION OF THE PREFERRED STOCK
The Articles of Incorporation authorize the Board of Directors to direct
the issuance of up to 2,000,000 shares of Preferred Stock in one or more series
and with such rights, preferences, privileges and restrictions, including
dividend rights, voting rights, conversion rights, terms of redemption and
liquidation preferences, that may be fixed or designated by the Board of
Directors pursuant to articles of amendment to the Articles of Incorporation
without any further vote or action by the Company's shareholders, provided that
the aggregate liquidation preference of all shares of Preferred Stock
outstanding may not exceed $100,000,000. As of March 7, 1997, the Board of
Directors had designated 2,000 shares of the Preferred Stock as Series D
Convertible Preferred Stock, with an aggregate liquidation preference of $2,000
(the "Series D Preferred Stock"). As of March 7, 1997, 296.471 shares of Series
D Preferred Stock were issued and outstanding. The issuance of Preferred Stock
may have the effect of delaying, deferring or preventing a change in control of
the Company.
The shares of Preferred Stock offered by a Prospectus Supplement, upon
issuance against full consideration therefor, will be fully paid and
nonassessable, except as provided by Section 180.0622(2)(b) of the WBCL
regarding personal liability of shareholders for all debts owing to employees of
the Company for services performed, but not exceeding six months' service in any
one case. The specific terms of a particular series of Preferred Stock will be
described in the Prospectus Supplement relating to that series. The description
of Preferred Stock set forth below and the description of the terms of a
particular series of Preferred Stock set forth in the related Prospectus
Supplement do not purport to be complete and are qualified in their entirety by
reference to the articles of amendment to the Articles of Incorporation relating
to that series. The related Prospectus Supplement will contain a description of
certain United States Federal income tax consequences relating to the purchase
and ownership of the series of Preferred Stock described in such Prospectus
Supplement.
The rights, preferences, privileges and restrictions of the Preferred Stock
of each series will be fixed by articles of amendment to the Articles of
Incorporation relating to such series. A Prospectus Supplement, relating to each
series, will specify the terms of the Preferred Stock as follows:
(a) The maximum number of shares to constitute the series and the
distinctive designation thereof;
(b) The annual dividend rate, if any, on shares of the series, whether
such rate is fixed or variable or both, the date or dates from which
dividends will begin to accrue or accumulate;
(c) The price at and the terms and conditions on which the shares of
the series may be redeemed;
(d) The liquidation preference, if any, that the holders of shares of
the series shall be entitled to receive upon the liquidation, dissolution
or winding up of the affairs of the Company;
(e) Whether or not the shares of the series will be subject to
operation of a retirement or sinking fund, and, if so, the extent and
manner in which any such fund shall be applied to the purchase or
redemption of the shares of the series for retirement or for other
corporate purposes, and the terms and provisions relating to the operation
of such fund;
(f) The terms and conditions, if any, on which the shares of the
series shall be convertible into, or exchangeable for, shares of Common
Stock, including the price or prices or the rate or rates of conversion or
exchange and the method, if any, of adjusting the same and whether such
conversion is mandatory or optional; and
(g) The voting rights, if any, of the shares of the series.
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DIVIDENDS
The holders of Preferred Stock shall be entitled to receive dividends at
the rate per annum set by the Board of Directors, payable quarterly on the last
day of March, June, September, and December in each year for the respective
calendar quarter ending on such dates ("Dividend Periods"), when and as declared
by the Board of Directors. Such dividends shall accrue on each share of
Preferred Stock from the first day of the Dividend Period in which such share is
issued or from such other date as the Board of Directors may fix for such
purpose. All dividends on Preferred Stock shall be cumulative so that if the
Company shall not pay or set apart for payment the dividend, or any part
thereof, for any Dividend Period, on the Preferred Stock then issued and
outstanding, such deficiency in the dividend on the Preferred Stock shall
thereafter be fully paid or declared and set apart for payment, but without
interest, before any dividend shall be paid or declared and set apart for
payment on the Common Stock. The holders of Preferred Stock shall not be
entitled to participate in any other or additional earnings or profits of the
Company, except for such premiums, if any, as may be payable in case of
redemption, liquidation, dissolution or winding up of the Company.
Any dividend paid upon the Preferred Stock at a time when any accrued
dividends for any prior Dividend Period are delinquent shall be expressly
declared to be in whole or partial payment of the accrued dividends to the
extent thereof, beginning with the earliest Dividend Period for which dividends
are then wholly or partly delinquent, and shall be so designated to each
shareholder to whom payment is made. No dividends shall be paid upon any shares
of any series of Preferred Stock for a current Dividend Period unless there
shall have been paid or declared and set apart for payment dividends required to
be paid to the holders of each other series of Preferred Stock for all past
Dividend Periods of such other series. If any dividends are paid on any of the
Preferred Stock with respect to any past Dividend Period at any time when less
than the total dividends then accumulated and payable for all past Dividend
Periods on all of the Preferred Stock then outstanding are to be paid or
declared and set apart for payment, then the dividends being paid shall be paid
on each series of Preferred Stock in the proportions that the dividends then
accumulated and payable on each series for all past Dividend Periods bear to the
total dividends then accumulated and payable for all such past Dividend Periods
on all outstanding Preferred Stock.
LIQUIDATION, DISSOLUTION OR WINDING UP
In case of voluntary or involuntary liquidation, dissolution or winding up
of the Company, the holders of each series of Preferred Stock shall be entitled
to receive out of the assets of the Company in money or money's worth the
liquidation preference with respect to that series of Preferred Stock, together
with all accrued but unpaid dividends thereon (whether or not earned or
declared), before any of such assets shall be paid or distributed to holders of
Common Stock. In case of voluntary or involuntary liquidation, dissolution or
winding up of the Company, if the assets shall be insufficient to pay the
holders of all of the series of Preferred Stock then outstanding the full
amounts to which they may be entitled, the holders of each outstanding series
shall share ratably in such assets in proportion to the amounts which would be
payable with respect to such series if all amounts payable thereon were paid in
full. The consolidation or merger of the Company with or into any other
corporation, or a sale of all or any part of its assets, shall not be deemed a
liquidation, dissolution or winding up of the Company within the meaning of this
paragraph.
REDEMPTION
Except as otherwise provided with respect to a particular series of
Preferred Stock, the following general redemption provisions shall apply to each
series of Preferred Stock.
On or prior to the date fixed for redemption of a particular series of
Preferred Stock or any part thereof as specified in the notice of redemption for
such series, the Company shall deposit adequate funds for such redemption, in
trust for the account of holders of such series, with a bank having trust powers
or a trust company in good standing, organized under the laws of the United
States or the State of Wisconsin doing business in the State of Wisconsin and
having capital, surplus and undivided profits aggregating at least $1,000,000,
and if the name and address of such bank or trust company and the deposit of or
intent to deposit the redemption funds in such trust account shall have been
stated in such notice of redemption, then from and
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<PAGE> 12
after the mailing of such notice and the making of such deposit the shares of
such series called for redemption shall no longer be deemed to be outstanding
for any purpose whatsoever, and all rights of the holders of such shares in or
with respect to the Company shall cease and terminate except only the right of
the holders of such shares (i) to transfer such shares prior to the date fixed
for redemption, (ii) to receive the redemption price of such shares, including
accrued but unpaid dividends to the date fixed for redemption, without interest,
upon surrender of the certificate or certificates representing the shares to be
redeemed, and (iii) on or before the close of business on the fifth day
preceding the date fixed for redemption to exercise privileges of conversion, if
any, not previously expired. Any moneys so deposited by the Company which shall
remain unclaimed by the holders of the shares called for redemption and not
converted shall, at the end of six years after the date fixed for redemption, be
paid to the Company upon its request, after which repayment the holders of the
shares called for redemption shall no longer look to such bank or trust company
for the payment of the redemption price but shall look only to the Company or to
others, as the case may be, for the payment of any lawful claim for such moneys
which holders of such shares may still have. After such six-year period, the
right of any shareholder or other person to receive such payment may be
forfeited in the manner and with the effect provided under Wisconsin law. Any
portion of the moneys so deposited by the Company, in respect of shares of
Preferred Stock called for redemption that are converted into Common Stock,
shall be repaid to the Company upon its request.
In case of redemption of only a part of a series of Preferred Stock, the
Company shall designate by lot, in such manner as the Board of Directors may
determine, the shares to be redeemed, or shall effect such redemption pro rata.
CONVERSION RIGHTS
Except as otherwise provided with respect to a particular series of
Preferred Stock, the following general conversion provisions shall apply to each
series of Preferred Stock that is convertible into Common Stock.
All shares of Common Stock issued upon conversion shall be fully paid and
nonassessable, and shall be free of all taxes, liens and charges with respect to
the issue thereof except taxes, if any, payable by reason of issuance in a name
other than that of the holder of the share or shares converted and except as
otherwise provided by applicable Wisconsin law.
The number of shares of Common Stock issuable upon conversion of a
particular series of Preferred Stock at any time shall be the quotient obtained
by dividing the aggregate conversion value of the shares of such series
surrendered for conversion, by the conversion price per share of Common Stock
then in effect for such series. The Company shall not be required, however, upon
any such conversion, to issue any fractional share of Common Stock, but in lieu
thereof the Company shall pay to the holder who would otherwise be entitled to
receive such fractional share if issued, a sum in cash equal to the value of
such fractional share at the rate of the then market value per share of Common
Stock which for such purposes shall mean the last reported sale price of Common
Stock on the New York Stock Exchange. Shares of Preferred Stock shall be deemed
to have been converted as of the close of business on the date of receipt at the
office of the transfer agent of the certificates therefor, duly endorsed,
together with written notice by the holder of his election to convert the same.
The basic conversion price per share of Common Stock for a series of
Preferred Stock, as fixed by the Board of Directors, shall be subject to
adjustment from time to time as follows:
(i) In case the Company shall (A) pay a dividend or make a
distribution to all holders of outstanding shares of Common Stock as a
class in shares of Common Stock, (B) subdivide or split the outstanding
shares of Common Stock into a larger number of shares, or (C) combine the
outstanding shares of Common Stock into a smaller number of shares, the
basic conversion price per share of Common Stock in effect immediately
prior thereto shall be adjusted retroactively so that the holder of each
outstanding share of each series of Preferred Stock which by its terms is
convertible into Common Stock shall thereafter be entitled to receive upon
the conversion of such share the number of shares of Common Stock which
such holder would have owned and been entitled to receive after the
happening of any of the events described above had such share of such
series been converted immediately prior to the
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happening of such event. An adjustment made pursuant to this clause (i)
shall become effective retroactively immediately after such record date in
the case of a dividend or distribution and immediately after the effective
date in the case of a subdivision, split or combination. Such adjustments
shall be made successively whenever any event described in this clause (i)
shall occur.
(ii) In case the Company shall issue to all holders of Common Stock as
a class any rights or warrants enabling them to subscribe for or purchase
shares of Common Stock at a price per share less than the current market
price per share of Common Stock at the record date for determination of
shareholders entitled to receive such rights or warrants, the basic
conversion price per share of Common Stock in effect immediately prior
thereto for each series of Preferred Stock which by its terms is
convertible into Common Stock shall be adjusted retroactively by
multiplying such basic conversion price by a fraction, of which the
numerator shall be the sum of number of shares of Common Stock outstanding
at such record date and the number of shares of Common Stock which the
aggregate exercise price (before deduction of underwriting discounts or
commissions and other expenses of the Company in connection with the issue)
of the total number of shares so offered for subscription or purchase would
purchase at such current market price per share and of which the
denominator shall be the sum of the number of shares of Common Stock
outstanding at such record date and the number of additional shares of
Common Stock so offered for subscription or purchase. An adjustment made
pursuant to this clause (ii) shall become effective retroactively
immediately after the record date for determination of shareholders
entitled to receive such rights or warrants. Such adjustments shall be made
successively whenever any event described in this clause (ii) shall occur.
(iii) In case the Company shall distribute to all holders of Common
Stock as a class evidences of its indebtedness or assets (other than cash
dividends), the basic conversion price per share of Common Stock in effect
immediately prior thereto for each series of Preferred Stock which by its
terms is convertible into Common Stock shall be adjusted retroactively by
multiplying such basic conversion price by a fraction, of which the
numerator shall be the difference between the current market price per
share of Common Stock at the record date for determination of shareholders
entitled to receive such distribution and the fair value (as determined by
the Board of Directors) of the portion of the evidences of indebtedness or
assets (other than cash dividends) so distributed applicable to one share
of Common Stock and of which the denominator shall be the current market
price per share of Common Stock. An adjustment made pursuant to this clause
(iii) shall become effective retroactively immediately after such record
date. Such adjustments shall be made successively whenever any event
described in this clause (iii) shall occur.
For the purpose of any computation under clause (iii) above, the current
market price per share of Common Stock on any date shall be deemed to be the
average of the high and low sales prices of the Common Stock, as reported in the
New York Stock Exchange -- Composite Transactions (or such other principal
market quotation as may then be applicable to such Common Stock) for each of the
30 consecutive trading days commencing 45 trading days before such date.
No adjustment shall be made in the basic conversion price for any series of
Preferred Stock in effect immediately prior to such computation if the amount of
such adjustment would be less than fifty cents; provided, however, that any
adjustments which by reason of this paragraph are not required to be made shall
be carried forward and taken into account in any subsequent adjustment; and
provided further that anything to the contrary in the foregoing notwithstanding
any adjustment required for purposes of making the computations described above
shall be made not later than the earlier of (x) 3 years after the effective date
described above for such adjustment or (y) the date as of which such adjustment
would require an increase or decrease of at least 3% in the aggregate number of
shares of Common Stock issued and outstanding on the first date on which an
event occurred which required the making of a computation described above. All
calculations shall be made to the nearest cent or to the nearest 1/100th of a
share, as the case may be.
In the case of any capital reorganization or reclassification of Common
Stock, or if the Company shall consolidate with or merge into, or sell or
dispose of all or substantially all of its property and assets, to any other
corporation, proper provisions shall be made as part of the terms of such
capital reorganization,
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reclassification, consolidation, merger or sale that any shares of a particular
series of Preferred Stock at the time outstanding shall thereafter be
convertible into the number of shares of stock or other securities or property
to which a holder of the number of shares of Common Stock deliverable upon
conversion of such shares of a particular series would have been entitled upon
such capital reorganization, reclassification, consolidation or merger.
No adjustment with respect to dividends upon any series of Preferred Stock
or with respect to dividends upon Common Stock shall be made in connection with
any conversion.
Whenever there is an issue of additional shares of Common Stock requiring a
change in the conversion price as provided above, and whenever there occurs any
other event which results in a change in the existing conversion rights of the
holders of shares of a series of Preferred Stock, the Company shall file with
its transfer agent or agents and at its principal office in Milwaukee,
Wisconsin, a statement signed by the President or a Vice President and by the
Treasurer or Assistant Treasurer of the Company, describing specifically such
issue of additional shares of Common Stock or such other event (and, in the case
of a capital reorganization, reclassification, consolidation or merger, the
terms thereof) and the actual conversion prices or basis of conversion as
changed by such issue or event and the change, if any, in the securities
issuable upon conversion. Whenever there are issued by the Company to all
holders of Common Stock as a class any rights or warrants enabling them to
subscribe for or purchase shares of Common Stock, the Company shall also file in
like manner a statement describing the same and the consideration receivable by
the Company therefrom. The statement so filed shall be open to inspection by any
holder of record of shares of any series of Preferred Stock.
The Company shall at all times have authorized and shall at all times
reserve and set aside a sufficient number of duly authorized shares of Common
Stock for the conversion of all stock of all then outstanding series of
Preferred Stock which are convertible into Common Stock.
REISSUANCE OF SHARES
Any shares of Preferred Stock retired by purchase, redemption, through
conversion, or through the operation of any sinking fund or redemption or
purchase account, shall thereafter have the status of authorized but unissued
shares of Preferred Stock, and may thereafter be reissued as part of the same
series or may be reclassified and reissued by the Board of Directors in the same
manner as any other authorized and unissued shares of Preferred Stock.
VOTING RIGHTS
Holders of Preferred Stock shall be entitled to one vote for each share
held on all questions on which shareholders of the Company are entitled to vote
and shall vote together share for share with the holders of Common Stock as one
class, except as otherwise provided by law or as described below or as otherwise
determined by the Board of Directors at the time of the establishment of such
series of Preferred Stock.
Whenever dividends payable on any series of Preferred Stock shall be in
arrears in an aggregate amount equivalent to six full quarterly dividends on the
shares of all of the Preferred Stock of that series then outstanding, the
holders of Preferred Stock of that series shall have the exclusive and special
right, voting separately as a class, to elect two directors of the Company, and
the number of directors constituting the Board of Directors shall be increased
to the extent necessary to effectuate such right. Whenever such right of the
holders of any series of the Preferred Stock shall have vested, such right may
be exercised initially either at a special meeting of the holders of such series
of the Preferred Stock, or at any annual meeting of shareholders, and thereafter
at annual meetings of shareholders. The right of the holders of any series of
the Preferred Stock voting separately as a class to elect members of the Board
of Directors of the Company shall continue until such time as all dividends
accumulated on such series of the Preferred Stock shall have been paid in full,
at which time the special right of the holders of such series of the Preferred
Stock to vote separately as a class for the election of directors shall
terminate, subject to revesting in the event of each and every subsequent
default in an aggregate amount equivalent to six full quarterly dividends.
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At any time when such special voting power shall have vested in the holders
of any series of the Preferred Stock as described in the preceding paragraph, a
proper officer of the Company shall, upon the written request of the holders of
record of at least 10% of such series of the Preferred Stock then outstanding
addressed to the Secretary of the Company, call a special meeting of the holders
of such series of the Preferred Stock for the purpose of electing directors.
Such meeting shall be held at the earliest practicable date in such place as may
be designated pursuant to the By-laws (or if there be no designation, at the
principal office of the Company in Milwaukee, Wisconsin). If such meeting shall
not be called by the proper officers of the Company within 20 days after
personal service of such written request upon the Secretary of the Company, or
within 30 days after mailing the same within the United States by registered or
certified mail addressed to the Secretary of the Company at its principal
office, then the holders of record of at least 10% of such series of the
Preferred Stock then outstanding may designate in writing one of their number to
call such meeting at the expense of the Company, and such meeting may be called
by such person so designated upon the notice required for annual meetings of
shareholders and shall be held in Milwaukee, Wisconsin. Notwithstanding the
foregoing, no such special meeting shall be called during the period within 90
days immediately preceding the date fixed for the next annual meeting of
shareholders.
At any annual or special meeting at which the holders of any series of the
Preferred Stock shall have the special right, voting separately as a class, to
elect directors as described above, the presence, in person or by proxy, of the
holders of 33 1/3% of such series of the Preferred Stock shall be required to
constitute a quorum of such series for the election of any director by the
holders of such series as a class. At any such meeting or adjournment thereof,
(A) the absence of a quorum of such series of the Preferred Stock shall not
prevent the election of directors other than those to be elected by such series
of the Preferred Stock voting as a class, and the absence of a quorum for the
election of such other directors shall not prevent the election of the directors
to be elected by such series of the Preferred Stock voting as a class and (B) in
the absence of either or both such quorums, a majority of the holders present in
person or by proxy of the stock or stocks which lack a quorum shall have power
to adjourn the meeting for the election of directors which they are entitled to
elect, from time to time until a quorum shall be present, without notice other
than announcement at the meeting.
During any period in which the holders of any series of the Preferred Stock
have the right to vote as a class for directors as described above, any
vacancies in the Board of Directors shall be filled only by vote of a majority
(even if that be only a single director) of the remaining directors theretofore
elected by the holders of the series or class of stock which elected the
directors whose office shall have become vacant. During such period the
directors so elected by the holders of any series of the Preferred Stock shall
continue in office (A) until the next succeeding annual meeting or until their
successors, if any, are elected by such holders and qualify, or (B) unless
required by applicable law to continue in office for a longer period, until
termination of the right of the holders of such series of the Preferred Stock to
vote as a class for directors, if earlier. If and to the extent permitted by
applicable law, immediately upon any termination of the right of the holders of
any series of the Preferred Stock to vote as a class for directors as provided
herein, the term of office of the directors then in office so elected by the
holders of such series shall terminate.
The affirmative vote or written consent of the holders of record of at
least two-thirds of the outstanding shares of a series of the Preferred Stock
shall be a prerequisite of the right of the Company:
(A) To create any shares or any securities convertible into or
evidencing the right to purchase shares ranking prior to such series of the
Preferred Stock with respect to the payment of dividends or of assets upon
liquidation, dissolution or winding up; or
(B) To change the designations, preferences, limitations, or relative
rights of the outstanding shares of such series of Preferred Stock in any
manner prejudicial to the holders thereof.
The affirmative vote or written consent of the holders of a majority of the
outstanding shares of each series of Preferred Stock shall be a prerequisite to
the right of the Company to authorize any shares of Preferred Stock in excess of
2,000,000 shares or any other shares ranking on a parity with Preferred Stock
with respect to the payment of dividends or of assets upon liquidation,
dissolution or winding up.
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RESTRICTIONS IN EVENT OF DEFAULT IN DIVIDENDS ON PREFERRED STOCK
If at any time the Company shall have failed to pay dividends in full on
the Preferred Stock, thereafter and until dividends in full, including all
accrued and unpaid dividends for all past quarterly dividend periods on the
Preferred Stock outstanding, shall have been declared and set apart in trust for
payment or paid, or if at any time the Company shall have failed to pay in full
amounts payable with respect to any obligations to retire shares of the
Preferred Stock, thereafter and until such amounts shall have been paid in full
or set apart in trust for payment (a) the Company, without the affirmative vote
or consent of the holders of at least 66 2/3% of the Preferred Stock at the time
outstanding given in person or by proxy, either in writing or by resolution
adopted at a special meeting called for the purpose, at which the holders of the
Preferred Stock shall vote separately as a class, regardless of series, shall
not redeem less than all of the Preferred Stock at such time outstanding; (b)
the Company shall not purchase any Preferred Stock except in accordance with a
purchase offer made in writing to all holders of Preferred Stock of all series
upon such terms as the Board of Directors in its sole discretion after
consideration of the respective annual dividend rate and other relative rights
and preferences of the respective series, shall determine (which determination
shall be final and conclusive) will result in fair and equitable treatment among
the respective series; provided that (i) the Company, to meet the requirements
of any purchase, retirement or sinking fund provisions with respect to any
series, may use shares of such series acquired by it prior to such failure and
then held by it as treasury stock and (ii) nothing shall prevent the Company
from completing the purchase or redemption of shares of Preferred Stock for
which a purchase contract was entered into for any purchase, retirement or
sinking fund purposes, or the notice of redemption of which was initially
mailed, prior to such failure; and (c) the Company shall not redeem, purchase or
otherwise acquire, or permit any subsidiary to purchase or acquire any shares of
any other class of stock of the Company ranking junior to the Preferred Stock as
to dividends and upon liquidation.
SERIES D PREFERRED STOCK
General
The shares of Series D Preferred Stock have a stated value ("Stated Value")
of $512,000 per share.
Shares of Series D Preferred Stock may be issued only to a trustee acting
on behalf of an employee stock ownership plan or other employee benefit plan of
the Company. In the event of any transfer of shares of Series D Preferred Stock,
including a distribution to participants of an employee benefit plan, to any
person other than the Company or the trustee of any such plan, the shares of
Series D Preferred Stock so transferred, upon such transfer and without any
further action by the Company or the holder, shall be automatically converted
into shares of Common Stock, as described below; provided, however, that the
pledge of Series D Preferred Stock as collateral under any credit agreement for
the financing or refinancing of the initial purchase of the Series D Preferred
Stock by such employee stock ownership plan or other employee benefit plan of
the Company shall not constitute a transfer for purposes of this paragraph.
See "Description of the Common Stock -- Certain Provisions of Articles of
Incorporation, By-laws and Wisconsin Law."
Dividends and Distributions
The holders of shares of Series D Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds legally
available therefor, cash dividends ("Preferred Dividends") in an amount per
share equal to $39,680 per share per annum (subject to adjustment), and no more,
payable quarterly in arrears on the last day of March, June, September and
December of each year (each a "Dividend Payment Date"). Accumulated but unpaid
Preferred Dividends shall cumulate as of the Dividend Payment Date on which they
first become payable, but no interest shall accrue on accumulated but unpaid
Preferred Dividends.
So long as any Series D Preferred Stock shall be outstanding, no dividend
shall be declared or paid or set apart for payment on any other series of stock
ranking on a parity with the Series D Preferred Stock as to dividends ("Parity
Stock"), unless there shall also be or have been declared and paid or set apart
for payment
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on the Series D Preferred Stock dividends for all dividend payment periods of
the Series D Preferred Stock ending on or before the dividend payment date of
such Parity Stock, ratably in proportion to the respective amounts of dividends
accumulated and unpaid through such dividend payment period on the Series D
Preferred Stock, and accumulated and unpaid on such Parity Stock through the
dividend payment period on such Parity Stock next preceding such dividend
payment period. So long as any Series D Preferred Stock shall be outstanding, in
the event that full cumulative dividends on the Series D Preferred Stock have
not been declared and paid or set apart for payment when due, the Company shall
not declare or pay or set apart for payment any dividends or make any other
distributions on, or make any payment on account of the purchase, redemption or
other retirement of any other class of stock or series thereof of the Company
ranking, as to dividends or as to distributions in the event of a liquidation,
dissolution or winding-up of the Company, junior to the Series D Preferred Stock
("Junior Stock") until full cumulative and unpaid dividends on the Series D
Preferred Stock shall have been paid or declared and set apart for payment;
provided, however, that the foregoing shall not apply to (i) any dividend
payable solely in any shares of any Junior Stock, or (ii) the acquisition of
shares of any Junior Stock either (x) pursuant to any employee or director
incentive or benefit plan or arrangement (including any employment, severance or
consulting agreement) of the Company or any subsidiary of the Company or (y) in
exchange solely for shares of any other Junior Stock. Subject to the foregoing
provisions, the Board of Directors may declare and the Company may pay or set
apart for payment dividends and other distributions on any other Junior Stock or
Parity Stock, and may purchase or otherwise redeem any of the Junior Stock or
Parity Stock or any warrants, rights, or options or other securities exercisable
for or convertible into any of the Junior Stock or Parity Stock and the holders
of shares of the Series D Preferred Stock shall not be entitled to share
therein.
Voting Rights
The holders of Series D Preferred Stock shall be entitled to vote on all
matters submitted to a vote of the holders of Common Stock, voting together with
the holders of Common Stock as one class. Each share of the Series D Preferred
Stock shall be entitled to a number of votes equal to the number of shares of
Common Stock into which such share of Series D Preferred Stock could be
converted on the record date for determining the stockholders entitled to vote,
rounded to the nearest one-tenth of a vote. Whenever the "Conversion Ratio" (as
defined below) is adjusted, the voting rights of the Series D Preferred Stock
shall also be similarly adjusted.
Liquidation, Dissolution or Winding-Up
Upon any voluntary or involuntary liquidation, dissolution or winding-up of
the Company, the holders of Series D Preferred Stock shall be entitled to
receive out of assets of the Company which remain after satisfaction in full of
all valid claims of creditors of the Company and which are available for payment
to stockholders, and subject to the rights of the holders of any stock of the
Company ranking senior to or on a parity with the Series D Preferred Stock in
respect of distributions upon liquidation, dissolution or winding-up of the
Company, before any amount shall be paid or distributed among the holders of
Common Stock or any other shares ranking junior to the Series D Preferred Stock
in respect of distributions upon liquidation, dissolution or winding-up of the
Company, liquidating distributions in an amount per share equal to the par value
of a share of Series D Preferred Stock ($1.00) plus an amount equal to all
accrued and unpaid dividends thereon to the date fixed for distribution, and no
more. After payment of the full amount to which they are entitled as described
by the foregoing provisions, the holders of shares of Series D Preferred Stock
shall not be entitled to any further right or claim to any of the remaining
assets of the Company.
Conversion into Common Stock
A holder of shares of Series D Preferred Stock shall be entitled at any
time, but not later than the close of business on the date fixed for redemption
of such shares, to cause any or all of such shares to be converted into shares
of Common Stock, at a conversion rate equal to twenty thousand (20,000) shares
of Common Stock for each one share of Series D Preferred Stock, subject to
adjustment (and, as so adjusted, rounded to the nearest ten-thousandth, is
hereinafter sometimes referred to as the "Conversion Ratio"); provided, however,
that, in
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no event shall the Conversion Ratio be greater than the Stated Value divided by
the par value of one share of Common Stock.
Redemption At the Option of the Company
The Series D Preferred Stock shall be redeemable, in whole or in part, at
the option of the Company beginning on June 1, 1996 at a price of 103.10% of the
Stated Value of such shares, declining to a price of 100% of the Stated Value
after June 1, 2000, plus, in each case, an amount equal to all accrued and
unpaid dividends thereon to the date fixed for redemption. Payment of the
redemption price shall be made at the option of the Company in cash or shares of
Common Stock, or a combination thereof.
In the event (i) there is a change in the federal income tax laws of the
United States or a determination by a court of competent jurisdiction, in either
case, which has the effect of precluding the Company from claiming any of the
tax deductions for dividends paid on the Series D Preferred Stock when such
dividends are used as provided under Section 404(k)(2) of the Internal Revenue
Code of 1986, as amended (the "Code"), as in effect on the date shares of Series
D Preferred Stock are initially issued, or (ii) the Johnson Controls, Inc.
Savings and Investment Plan, as the same may be amended, or any successor plan
(the "Plan") is determined by the Internal Revenue Service not to be qualified
within the meaning of Sections 401(a) and 4975(e)(7) of the Code, the Company
may, in its sole discretion, elect to redeem any or all of the shares of Series
D Preferred Stock for the Stated Value thereof plus accrued and unpaid
dividends.
Redemption at the Option of the Holder
Subject to the restrictions of the WBCL, shares of Series D Preferred Stock
shall be redeemed by the Company for cash or, if the Company so elects, in
shares of Common Stock, or a combination of such shares and cash (any such
shares of Common Stock to be valued for such purpose in accordance with the
formula described above), at a redemption price equal to the Stated Value plus
accrued and unpaid dividends thereon to the date fixed for redemption, at the
option of the holder, at any time and from time to time upon notice to the
Company given not less than five (5) business days prior to the date fixed by
the holder in such notice for such redemption, (i) when and to the extent
necessary for such holder to provide for distributions required to be made
under, or to satisfy an investment election provided to participants in
accordance with, the Plan to participants in the Plan or (ii) in the event that
the Plan is not determined by the Internal Revenue Service to be qualified
within the meaning of Sections 401(a) and 4975(e)(7) of the Code.
Ranking; Attributable Capital and Adequacy of Surplus; Retirement of Shares
The Series D Preferred Stock shall rank senior to the Common Stock as to
the payment of dividends and the distribution of assets on liquidation,
dissolution and winding-up of the Company, and, unless otherwise provided in the
Articles of Incorporation, as the same may be amended, or articles of amendment
relating to a subsequent series of Preferred Stock, par value $1.00 per share,
of the Company, the Series D Preferred Stock shall rank on a parity with all
other series of the Company's Preferred Stock, par value $1.00, as to payment of
dividends and the distribution of assets on liquidation, dissolution or
winding-up.
In addition to any vote of stockholders required by law, the Articles of
Incorporation or the provisions described herein, the vote of the holders of a
majority of the outstanding shares of Series D Preferred Stock shall be required
to increase the par value of the Common Stock or otherwise increase the capital
of the Company allocable to the Common Stock for the purpose of the WBCL if, as
a result thereof, the surplus of the Company for purposes of the WBCL would be
less than the amount of preferred dividends that would accrue on the then
outstanding shares of Series D Preferred Stock during the following three years.
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 Senior Debt Securities are to be issued under an Indenture,
dated as of February 22, 1995, as amended (the "Senior Indenture"), between the
Company
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and Chase Manhattan Bank Delaware, as Trustee (the "Trustee"), a copy of which
is incorporated by reference as an exhibit to the Registration Statement of
which this Prospectus is a part. The Subordinated Debt Securities are to be
issued under an Indenture between the Company and the Trustee (the "Subordinated
Indenture"), a copy of the form of which is filed as an exhibit to the
Registration Statement of which this Prospectus is a part. The Senior Indenture
and the Subordinated Indenture are sometimes referred to herein collectively as
the "Indentures" and each individually as an "Indenture." 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 Indentures and
the Debt Securities 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
Indentures, including the definitions therein of certain terms, and such Debt
Securities. Wherever particular articles, sections or defined terms of an
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 Indentures do not limit the amount of debt, either secured or
unsecured, which may be issued by the Company under the Indentures or otherwise.
The Debt Securities may be issued in one or more series with the same or 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.
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: (i) the title of the Offered Debt Securities; (ii) any limit on the
aggregate principal amount of the Offered Debt Securities; (iii) the price
(expressed as a percentage of the aggregate principal amount thereof) at which
the Offered Debt Securities will be issued; (iv) the date or dates on which the
Offered Debt Securities mature and any provisions for the extension of any
maturity date or dates; (v) 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 including, if
applicable, any remarketing option or similar methods; (vi) 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; (vii) 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;
(viii) 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; (ix) 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; (x) 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; (xi) 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; (xii) 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; (xiii) the inapplicability of certain
provisions relating to discharge and defeasance described below under
"Defeasance, Satisfaction and Discharge Prior to Maturity or Redemption;" (xiv)
if other than denominations
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of $1,000 and any integral multiple thereof, the denominations in which the
Offered Debt Securities will be issuable; (xv) information with respect to
book-entry procedures, if any; (xvi) any deletions from, modifications of or
additions to the Events of Default or covenants with respect to the Offered Debt
Securities; and (xvii) any other terms of the Offered Debt Securities (which
terms shall not be inconsistent with the provisions of the applicable
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 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 applicable 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.
CONVERSION AND EXCHANGE
The terms, if any, on which Debt Securities of any series are convertible
into or exchangeable for Common Stock or Preferred Stock, property or cash, or a
combination of any of the foregoing, will be set forth in the Prospectus
Supplement relating thereto. Such terms may include provisions for conversion or
exchange, either mandatory, at the option of the holder, or at the option of the
Company, in which the number of shares of Common Stock or Preferred Stock to be
received by the holders of the Debt Securities would be calculated according to
the factors and at such time as set forth in the related Prospectus Supplement.
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
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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.
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.
COVENANTS APPLICABLE TO SENIOR DEBT SECURITIES
Certain Definitions
The following terms are defined substantially as follows in Section 1.01 of
the Senior 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
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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.
The term "Consolidated Net Tangible Assets" means Consolidated Tangible
Assets after deduction of Consolidated Current Liabilities.
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.
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 deemed real property)
owned by the Company or any Restricted Subsidiary, whether owned on the date of
the Senior 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.
The term "Restricted Subsidiary" means (a) any Subsidiary other than an
Unrestricted Subsidiary and (b) any Subsidiary which is 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 Senior 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).
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.
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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).
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.
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 Senior 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 interest 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 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)
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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 Senior Debt 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 Senior 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
Senior 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 Senior 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 Senior Indenture provides that, so long as the Senior 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 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 Senior Debt 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 under the Senior Indenture Senior Debt Securities of any series (other
than Senior 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 Senior Debt Securities by an amount equivalent to the
aggregate principal amount of the Senior Debt Securities so delivered. (Section
5.07)
MERGER
Each 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 applicable Debt Securities,
according to their tenor, and the due and punctual performance and observance of
all the covenants and conditions of the
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applicable Indenture to be performed by the Company by supplemental indenture
satisfactory to the applicable Trustee, executed and delivered to the applicable
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, neither Indenture contains 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 INDENTURES
With the consent of the holders ("Holders") of more than 50% in aggregate
principal amount of any series of Debt Securities then outstanding under the
applicable Indenture, waivers, modifications and alterations of the terms of
either 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 applicable
Indenture and its consequences, and (iv) to waive compliance with certain other
provisions contained in the applicable 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 applicable Indenture (i) to evidence the succession of another corporation
to the Company under the applicable 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
applicable Indenture to permit the qualification of any supplemental indenture
under the Trust Indenture Act of 1939; and (v) for certain other purposes.
(Section 11.01)
DEFEASANCE, SATISFACTION AND DISCHARGE 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 applicable 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 (i) 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, and (ii) the Events of Default described in
clauses (a), (b), (c), (f) and (g) under "Events of Default" below, and (iii)
certain other provisions of the applicable 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 applicable
Indenture. Defeasance of Debt Securities of any series is subject to the
satisfaction of certain specified conditions, including, among others, (i) the
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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 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
Indentures 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
applicable 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 applicable Indenture governing Events of Default), if
such failure continues for 75 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
$50,000,000 and (ii) the default in such payment is not being contested by the
Company in good
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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)
Each 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 applicable 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 applicable Indenture
provides that the Trustee shall be under no obligation to exercise any of its
rights or powers under the applicable 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 applicable 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 applicable 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 Commission. (Section
6.03)
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 applicable
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)
SUBORDINATION OF SUBORDINATED DEBT SECURITIES
The Senior Debt Securities will constitute part of the Senior Indebtedness
(as defined below) of the Company and will rank pari passu with all outstanding
senior debt. Except as set forth in the related Prospectus Supplement, the
Subordinated Debt Securities will be subordinated, in right of payment, to the
prior payment in full of the Senior Indebtedness, including the Senior Debt
Securities, whether outstanding at the date of the Subordinated Indenture or
thereafter incurred, assumed or guaranteed. The term "Senior Indebtedness" means
(1) the principal of and premium, if any, and unpaid interest on indebtedness
for money borrowed, (2) purchase money and similar obligations, (3) obligations
under capital leases, (4) guarantees, assumptions or purchase commitments
relating to, or other transactions as a result of which the Company is
responsible for the payment of, such indebtedness of others, (5) renewals,
extensions and refunding of any
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such indebtedness, (6) interest or obligations in respect of any such
indebtedness accruing after the commencement of any insolvency or bankruptcy
proceedings and (7) obligations associated with derivative products such as
interest rate and currency exchange contracts, foreign exchange contracts,
commodity contracts, and similar arrangements, unless, in each case, the
instrument by which the Company incurred, assumed or guaranteed the indebtedness
or obligations described in clauses (1) through (7) hereof expressly provides
that such indebtedness or obligation is not senior in right of payment to the
Subordinated Debt Securities.
Upon any distribution of assets of the Company in connection with any
dissolution, winding up, liquidation or reorganization of the Company, whether
in a bankruptcy, insolvency, reorganization or receivership proceeding or upon
an assignment for the benefit of creditors or any other marshalling of the
assets and liabilities of the Company or otherwise, except a distribution in
connection with a merger or consolidation or a conveyance or transfer of all or
substantially all of the properties of the Company in accordance with the
Subordinated Indenture, the holders of all Senior Indebtedness shall first be
entitled to receive payment of the full amount due thereon, or provision shall
be made for such payment in money or money's worth, before the holders of any of
the Subordinated Debt Securities are entitled to receive any payment in respect
of the Subordinated Debt Securities. In the event that a payment default shall
have occurred and be continuing with respect to the Senior Indebtedness, the
holders of all Senior Indebtedness shall first be entitled to receive payment of
the full amount due thereon, or provision shall be made for such payment in
money or money's worth, before the holders of any of the Subordinated Debt
Securities are entitled to receive any payment in respect of the Subordinated
Debt Securities. In the event that the principal of the Subordinated Debt
Securities of any series shall have been declared due and payable pursuant to
the Subordinated Indenture and such declaration shall not have been rescinded
and annulled, the holders of all Senior Indebtedness outstanding at the time of
such declaration shall first be entitled to receive payment of the full amount
due thereon, or provision shall be made for such payment in money or money's
worth, before the holders of any of the Subordinated Debt Securities are
entitled to receive any payment in respect of the Subordinated Debt Securities.
This subordination will not prevent the occurrence of any event of default
with respect to the Subordinated Debt Securities. There is no limitation on the
issuance of additional Senior Indebtedness in the Subordinated Indenture.
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 each Indenture, the Trustee is required to transmit annual reports to
all Holders regarding its eligibility and qualifications as Trustee under the
applicable Indenture and certain related matters. (Section 7.06)
DESCRIPTION OF THE WARRANTS TO PURCHASE
COMMON STOCK OR PREFERRED STOCK
The following statements with respect to the Common Stock Warrants and
Preferred Stock Warrants (collectively, the "Stock Warrants") are summaries of,
and subject to, the detailed provisions of a warrant agreement ("Stock Warrant
Agreement") to be entered into by the Company and a warrant agent to be selected
at the time of issue (the "Stock Warrant Agent"), which Stock Warrant Agreement
may include or incorporate by reference standard warrant provisions
substantially in the form of the Standard Stock Warrant Provisions (the "Stock
Warrant Provisions") filed as an exhibit to the Registration Statement.
GENERAL
The Stock Warrants, evidenced by warrant certificates (the "Stock Warrant
Certificates"), may be issued under the Stock Warrant Agreement independently or
together with any Offered Securities offered by
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any Prospectus Supplement and may be attached to or separate from such Offered
Securities. If Stock Warrants are offered, the related Prospectus Supplement
will describe the designation and terms of the Stock Warrants, including without
limitation the following: (i) the offering price, if any; (ii) the designation
and terms of the Common Stock or Preferred Stock purchasable upon exercise of
the Stock Warrants; (iii) if applicable, the date on and after which the Stock
Warrants and the related Offered Securities will be separately transferable;
(iv) the number of shares of Common Stock or Preferred Stock purchasable upon
exercise of one Stock Warrant and the initial price at which such shares may be
purchased upon exercise; (v) the date on which the right to exercise the Stock
Warrants shall commence and the date on which such right shall expire; (vi) a
discussion of certain Federal income tax considerations; (vii) the call
provisions, if any; (viii) the currency, currencies or currency units in which
the offering price, if any, and exercise price are payable; (ix) the
antidilution provisions of the Stock Warrants; and (x) any other terms of the
Stock Warrants. The shares of Common Stock or Preferred Stock issuable upon
exercise of the Stock Warrants will, when issued in accordance with the Stock
Warrant Agreement, be fully paid and nonassessable, except as provided by
Section 180.0622(2)(b) of the WBCL regarding personal liability of shareholders
for all debts owing to employees of the Company for services performed but not
exceeding six months' service in any one case.
EXERCISE OF STOCK WARRANTS
Stock Warrants may be exercised by surrendering to the Stock Warrant Agent
the Stock Warrant certificate with the form of election to purchase on the
reverse thereof duly completed and signed by the warrantholder, or its duly
authorized agent (such signature to be guaranteed by a bank or trust company, by
a broker or dealer which is a member of the National Association of Securities
Dealers, Inc. or by a member of a national securities exchange), indicating the
warrantholder's election to exercise all or a portion of the Stock Warrants
evidenced by the certificate. Surrendered Stock Warrant certificates shall be
accompanied by payment of the aggregate exercise price of the Stock Warrants to
be exercised, as set forth in the related Prospectus Supplement, in lawful money
of the United States, unless otherwise provided in the related Prospectus
Supplement. Upon receipt thereof by the Stock Warrant Agent, the Stock Warrant
Agent will requisition from the transfer agent for the Common Stock or the
Preferred Stock, as the case may be, for issuance and delivery to or upon the
written order of the exercising warrantholder, a certificate representing the
number of shares of Common Stock or Preferred Stock purchased. If less than all
of the Stock Warrants evidenced by any Stock Warrant Certificate are exercised,
the Stock Warrant Agent shall deliver to the exercising warrantholder a new
Stock Warrant Certificate representing the unexercised Stock Warrants.
ANTIDILUTION AND OTHER PROVISIONS
The exercise price payable and the number of shares of Common Stock or
Preferred Stock purchasable upon the exercise of each Stock Warrant and the
number of Stock Warrants outstanding will be subject to adjustment in certain
events, including the issuance of a stock dividend to holders of Common Stock or
Preferred Stock, respectively, or a combination, subdivision or reclassification
of Common Stock or Preferred Stock, respectively. In lieu of adjusting the
number of shares of Common Stock or Preferred Stock purchasable upon exercise of
each Stock Warrant, the Company may elect to adjust the number of Stock
Warrants. No adjustment in the number of shares purchasable upon exercise of the
Stock Warrants will be required until cumulative adjustments require an
adjustment of at least 1% thereof. The Company may, at its option, reduce the
exercise price at any time. No fractional shares will be issued upon exercise of
Stock Warrants, but the Company will pay the cash value of any fractional shares
otherwise issuable. Notwithstanding the foregoing, in case of any consolidation,
merger, or sale or conveyance of the property of the Company as an entirety or
substantially as an entirety, the holder of each outstanding Stock Warrant shall
have the right to the kind and amount of shares of stock and other securities
and property (including cash) receivable by a holder of the number of shares of
Common Stock or Preferred Stock into which such Stock Warrants were exercisable
immediately prior thereto.
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NO RIGHTS AS SHAREHOLDERS
Holders of Stock Warrants will not be entitled, by virtue of being such
holders, to vote, to consent, to receive dividends, to receive notice as
shareholders with respect to any meeting of shareholders for the election of
directors of the Company or any other matter, or to exercise any rights
whatsoever as shareholders of the Company.
DESCRIPTION OF THE WARRANTS TO PURCHASE DEBT SECURITIES
The following statements with respect to the Debt Warrants are summaries
of, and subject to, the detailed provisions of a warrant agreement (the "Debt
Warrant Agreement") to be entered into by the Company and a warrant agent to be
selected at the time of issue (the "Debt Warrant Agent"), which Debt Warrant
Agreement may include or incorporate by reference standard warrant provisions
substantially in the form of the Standard Debt Securities Warrant Provisions
(the "Debt Warrant Provisions") filed as an exhibit to the Registration
Statement.
GENERAL
The Debt Warrants, evidenced by warrant certificates (the "Debt Warrant
Certificates"), may be issued under the Debt Warrant Agreement independently or
together with any Offered Securities offered by any Prospectus Supplement and
may be attached to or separate from such Offered Securities. If Debt Warrants
are offered, the related Prospectus Supplement will describe the designation and
terms of the Debt Warrants, including without limitation the following: (i) the
offering price, if any; (ii) the designation, aggregate principal amount and
terms of the Debt Securities purchasable upon exercise of the Debt Warrants;
(iii) if applicable, the date on and after which the Debt Warrants and the
related Offered Securities will be separately transferable; (iv) 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
exercise; (v) the date on which the right to exercise the Debt Warrants shall
commence and the date on which such right shall expire; (vi) a discussion of
certain Federal income tax considerations; (vii) whether the warrants
represented by the Debt Warrant Certificates will be issued in registered or
bearer form; (viii) the currency, currencies or currency units in which the
offering price, if any, and exercise price are payable; (ix) the antidilution
provisions of the Debt Warrants; and (x) any other terms of the Debt Warrants.
Warrantholders do not have any of the rights of holders of Debt Securities,
including the right to receive the payment of principal of, or interest on, the
Debt Securities or to enforce any of the covenants of the Debt Securities or the
applicable Indenture except as otherwise provided in the applicable Indenture.
EXERCISE OF DEBT WARRANTS
Debt Warrants may be exercised by surrendering the Debt Warrant Certificate
at the warrant agent office of the Debt Warrant Agent, with the form of election
to purchase on the reverse side of the Debt Warrant Certificate properly
completed and executed (with signature(s) guaranteed by a bank or trust company,
by a broker or dealer which is a member of the National Association of
Securities Dealers, Inc. or by a member of a national securities exchange), and
by payment in full of the exercise price, as set forth in the Prospectus
Supplement. Upon the exercise of Debt Warrants, the Company will issue the Debt
Securities in authorized denominations in accordance with the instructions of
the exercising warrantholder. If less than all of the Debt Warrants evidenced by
the Debt Warrant Certificate are exercised, a new Debt Warrant Certificate will
be issued for the remaining number of Debt Warrants.
PLAN OF DISTRIBUTION
The Company may sell Offered Securities (i) through underwriters or
dealers, (ii) directly to one or more purchasers, or (iii) through agents. A
Prospectus Supplement will set forth the terms of the offering of the Offered
Securities offered thereby, including the name or names of any underwriters, the
purchase price of the Offered Securities, and the proceeds to the Company from
the sale, any underwriting discounts and other
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items constituting underwriters' compensation, any public offering price, any
discounts or concessions allowed or reallowed or paid to dealers, and any
securities exchange or market on which the Offered Securities may be listed.
Only underwriters so named in such Prospectus Supplement are deemed to be
underwriters in connection with the Offered Securities offered thereby.
If underwriters are used in the sale, the Offered Securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
The obligations of the underwriters to purchase the Offered Securities will be
subject to certain conditions precedent, and the underwriters will be obligated
to purchase all the Offered Securities of the series offered by the Prospectus
Supplement if any of the Offered Securities are purchased. Any public offering
price and any discounts or concessions allowed or reallowed or paid to dealers
may be changed from time to time.
Offered Securities 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 of Offered 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 related Prospectus Supplement, any such agent will be acting on
a best efforts basis for the period of its appointment.
All Offered Securities offered other than Common Stock will be a new issue
of securities with no established trading market. Any underwriters to whom such
Offered Securities are sold by the Company for public offering and sale may make
a market in such Offered Securities, but such underwriters will not be obligated
to do so and may discontinue any market making at any time without notice. No
assurance can be given as to the liquidity of or the trading markets for any
such Offered Securities.
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 Securities Act that may arise from any untrue
statement or alleged untrue statement of a material fact or any omission or
alleged omission to state a material fact in this Prospectus, any supplement or
amendment hereto, or in the Registration Statement of which this Prospectus
forms a part, 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.
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 or agents by
Mayer, Brown & Platt, Chicago, Illinois.
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference to the Annual Report on Form 10-K of the Company, for the year ended
September 30, 1996 (which financial statements have not been restated to give
effect to the reclassification of the Plastic Container division as a
discontinued operation and for the stock split distributed on March 31, 1997 to
shareholders of record on March 7, 1997) and the audited historical financial
statements appearing in the Company's Current Report on Form 8-K filed March 10,
1997 (which financial statements have been restated to give effect to the
reclassification of the Plastic Container division as a discontinued operation
and for the stock split distributed on March 31, 1997 to shareholders of record
on March 7, 1997) have been so incorporated in reliance on the reports of Price
Waterhouse LLP, independent accountants, given on the authority of said firm as
experts in auditing and accounting.
The combined financial statements of Prince incorporated in this Prospectus
by reference to the Company's Current Reports on Form 8-K dated October 4, 1996
and March 10, 1997 have been audited by Ernst & Young LLP, independent certified
public accountants, as set forth in their report therein, are so incorporated in
reliance upon such report given upon the authority of such firm as experts in
auditing and accounting.
30
<PAGE> 32
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Milwaukee, State of Wisconsin on the 1st day of May,
1997.
JOHNSON CONTROLS, INC.
By: /s/ JAMES H. KEYES*
------------------------------------
James H. Keyes
Chairman of the Board and
Chief Executive Officer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on the 1st day of May, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ JAMES H. KEYES* Chairman of the Board and Chief Executive
- --------------------------------------------------- Officer
James H. Keyes
/s/ ROBERT W. SMITH* Assistant Corporate Controller
- --------------------------------------------------- (Principal Accounting Officer)
Robert W. Smith
/s/ STEPHEN A. ROELL* Vice President and Chief Financial Officer
- ---------------------------------------------------
Stephen A. Roell
/s/ WILLIAM F. ANDREWS* Director
- ---------------------------------------------------
William F. Andrews
/s/ ROBERT L. BARNETT* Director
- ---------------------------------------------------
Robert L. Barnett
/s/ FRED L. BRENGEL* Director
- ---------------------------------------------------
Fred L. Brengel
/s/ PAUL A. BRUNNER* Director
- ---------------------------------------------------
Paul A. Brunner
/s/ ROBERT A. CORNOG* Director
- ---------------------------------------------------
Robert A. Cornog
/s/ WILLIE D. DAVIS* Director
- ---------------------------------------------------
Willie D. Davis
</TABLE>
<PAGE> 33
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ SOUTHWOOD J. MORCOTT* Director
- ---------------------------------------------------
Southwood J. Morcott
/s/ MARTHA R. SEGER* Director
- ---------------------------------------------------
Martha R. Seger
/s/ DONALD TAYLOR* Director
- ---------------------------------------------------
Donald Taylor
/s/ RICHARD F. TEERLINK* Director
- ---------------------------------------------------
Richard F. Teerlink
/s/ GILBERT R. WHITAKER, JR.* Director
- ---------------------------------------------------
Gilbert R. Whitaker, Jr.
/s/ R. DOUGLAS ZIEGLER* Director
- ---------------------------------------------------
R. Douglas Ziegler
* By: /s/ JOHN P. KENNEDY
- ---------------------------------------------------
as attorney in fact
</TABLE>
<PAGE> 34
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
4.1 Senior Indenture, dated as of February 22, 1995, between the
Registrant and Chase Manhattan Bank Delaware (formerly known
as Chemical Bank Delaware) (incorporated by reference to
Exhibit 4.1 to the Registrant's Current Report on Form 8-K,
dated March 16, 1995)*
4.2 Form of First Supplemental Indenture between the Registrant
and Chase Manhattan Bank Delaware*
4.3 Form of Subordinated Indenture between the Registrant and
Chase Manhattan Bank Delaware*
4.4 Form of Standard Stock Warrant Provisions*
4.5 Form of Standard Debt Warrant Provisions*
5 Opinion of John P. Kennedy*
23.1 Consent of John P. Kennedy (included in the opinion filed as
Exhibit 5 to this Registration Statement)
23.2 Consent of Price Waterhouse LLP
23.3 Consent of Ernst & Young LLP
24 Powers of Attorney (included on the signature page of this
Registration Statement)*
25.1 Statement of Eligibility of Chase Manhattan Bank Delaware on
Form T-1*
25.2 Statement of Eligibility of Chase Manhattan Bank Delaware on
Form T-1*
</TABLE>
- -------------------------
* Previously filed
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement (No. 333-13525) on Form S-3 of
our report dated October 21, 1996, which appears on page 43 of the 1996 Annual
Report to Shareholders of Johnson Controls, Inc. (which financial statements
have not been restated to give effect to the reclassification of the Plastic
Container division as a discontinued operation and for the stock split
distributed on March 31, 1997 to shareholders of record on March 7, 1997),
which is incorporated by reference in Johnson Controls, Inc.'s Annual Report on
Form 10-K for the year ended September 30, 1996. We also consent to the
incorporation by reference of our report on the Financial Statement Schedule,
which appears on page 37 of such Annual Report on Form 10-K. We also consent
to the incorporation by reference of our report dated October 21, 1996, except
as to Note 13 which is as of December 6, 1996 and Note 14 which is as of March
7, 1997, which appears on page 4 of the Current Report on Form 8-K filed March
10, 1997 (which financial statements have been restated to give effect to the
reclassification of the Plastic Container division as a discontinued operation
and for the stock split distributed on March 31, 1997 to shareholders of record
on March 7, 1997). We also consent to the reference to us under the heading
"Experts" in such Prospectus.
PRICE WATERHOUSE LLP
Milwaukee, WI
May 1, 1997
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in Amendment
No. 2 to the Registration Statement (Form S-3 No. 333-13525) and related
Prospectus of Johnson Controls Inc. for the registration of up to $1,500,000,000
of securities on terms to be determined at the time of offering, and to the
incorporation by reference therein of our report dated October 30, 1995 (except
Notes A and C, as to which the date is September 26, 1996) with respect to the
combined financial statements of Prince Holding Corporation for the fiscal year
ended October 1, 1994, and our report dated October 25, 1996 with respect to the
combined financial statements of Prince Holding Corporation for the years ended
September 30, 1996 and 1995, included in the Current Reports on Form 8-K of
Johnson Controls, Inc. filed with the Securities and Exchange Commission on
October 4, 1996 and March 10, 1997, respectively.
ERNST & YOUNG LLP
Grand Rapids, Michigan
May 1, 1997
