<PAGE>
Filed Pursuant to Rule 424(b)(2)
Registration File No.: 33-53741
<PAGE>
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MAY 23, 1994)
$150,000,000
[LORAL CORPORATION LOGO]
7 5/8% SENIOR DEBENTURES DUE JUNE 15, 2025
Interest Payable June 15 and December 15
The 7 5/8% Senior Debentures due 2025 (the "Debentures") will mature on
June 15, 2025. The Debentures are not redeemable prior to maturity and are
not entitled to the benefit of a sinking fund.
The Debentures will be represented by one or more Global Securities
("Global Securities") registered in the name of The Depository Trust Company
(the "Depositary"), as Depositary, or its nominee. Beneficial interests in
Global Securities will be shown on, and transfers thereof will be effected
only through, records maintained by the Depositary and its participants.
Except as described in this Prospectus Supplement, Debentures in definitive
form will not be issued in exchange for Global Securities. The Debentures
will be listed on the New York Stock Exchange.
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC (1) DISCOUNT (2) COMPANY (1)(3)
- -------------- -------------- ---------------- ----------------
<S> <C> <C> <C>
Per Debenture 99.102% .875% 98.227%
- -------------- -------------- ---------------- ----------------
Total ......... $148,653,000 $1,312,500 $147,340,500
- -------------- -------------- ---------------- ----------------
</TABLE>
- -----------------------------------------------------------------------------
(1) Plus accrued interest, if any, from June 12, 1995 to date of delivery.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(3) Before deducting expenses payable by the Company estimated at $200,000.
--------------------
The Debentures offered by this Prospectus Supplement are offered by the
Underwriters subject to prior sale, withdrawal, cancellation or modification
of the offer without notice, to delivery to and acceptance by the
Underwriters and to certain further conditions. It is expected that the
Global Securities will be ready for delivery through the facilities of the
Depositary in New York, New York, on or about June 12, 1995.
--------------------
BEAR, STEARNS & CO. INC. LEHMAN BROTHERS
JUNE 2, 1995
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE DEBENTURES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE
OR OTHERWISE. SUCH STABILIZATION, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
--------------------
THE COMPANY
Loral is a leading supplier of advanced electronic systems, components and
services to U.S. and foreign governments for defense and non-defense
applications. The Company's principal business areas are: electronic combat;
training and simulation; tactical weapons; command, control, communications
and intelligence (C(3)I)/reconnaissance; systems integration; and
telecommunications and space systems. The Company has achieved an incumbent
position on a wide range of existing programs through internal growth and
development and a series of acquisitions focused on its core technologies.
Loral's business strategy is to emphasize upgrades of existing weapons
systems, concentrate on further developing its core of advanced technologies,
generate an increasing proportion of its sales from foreign customers and
selectively extend the Company's proprietary technologies into non-military
applications, such as systems integration, satellite-based
telecommunications, air traffic control, postal systems automation, medical
and dental imaging systems, data archiving and information systems and
services.
On May 5, 1995, Loral acquired the Defense Systems operations of Unisys
Corporation. Unisys Defense Systems is a leading systems integrator and
supplier of advanced information technology products and services to defense
and other government agencies worldwide. See the Company's Current Report on
Form 8-K, filed on May 22, 1995, for further information.
Loral was incorporated in the State of New York in 1948. Its principal
executive offices are located at 600 Third Avenue, New York, New York 10016,
and its telephone number is (212) 697-1105. Unless the context otherwise
indicates, the terms "Company" and "Loral" refer to Loral and its
consolidated subsidiaries.
USE OF PROCEEDS
The estimated net proceeds of this offering are $147,140,500. Such
proceeds will be used by the Company for general corporate purposes, which
may include reductions in outstanding commercial paper.
CAPITALIZATION
The following table presents the consolidated capitalization of the
Company as of March 31, 1995, and as adjusted to give effect to the issuance
and sale of the Debentures offered hereby, and assumes that the net proceeds
from the issuance and sale will be used to reduce the Company's outstanding
commercial paper borrowings. See "Use of Proceeds."
<TABLE>
<CAPTION>
ACTUAL AS ADJUSTED
------------ -------------
(IN THOUSANDS)
<S> <C> <C>
CURRENT PORTION OF DEBT ....................................... $ 958 $ 958
------------ -------------
LONG-TERM DEBT:
7 5/8% Senior Notes due 2004 ................................. 250,000 250,000
9 1/8% Senior Debentures due 2022 ............................ 100,000 100,000
8 3/8% Senior Debentures due 2023 ............................ 100,000 100,000
7% Senior Debentures due 2023 ................................ 200,000 200,000
8 3/8% Senior Debentures due 2024 ............................ 400,000 400,000
Commercial paper ............................................. 241,811 94,671
Other ........................................................ 23,719 23,719
Debentures offered hereby .................................... -- 150,000
------------ -------------
Total long-term debt ........................................ 1,315,530 1,318,390
------------ -------------
Total debt ................................................. 1,316,488 1,319,348
SHAREHOLDERS' EQUITY .......................................... 1,687,540 1,687,540
------------ -------------
Total capitalization, including current portion of debt ... $3,004,028 $3,006,888
============ =============
</TABLE>
The Company has a $1,200,000,000 revolving credit facility, expiring
November 1999. This facility serves to support the Company's commercial paper
borrowings.
S-2
<PAGE>
SELECTED FINANCIAL DATA
The selected financial data should be read in conjunction with the related
Consolidated Financial Statements contained in the Company's Annual Report on
Form 10-K for the fiscal year ended March 31, 1995.
<TABLE>
<CAPTION>
1995 1994(A) 1993(B) 1992 1991(C)
---------- ---------- ---------- ---------- ----------
(IN MILLIONS, EXCEPT PER SHARE AND RATIO AMOUNTS)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Sales ...................................... $5,484.4 $4,008.7 $3,335.4 $2,881.8 $2,126.8
Operating income ........................... 564.5 401.4 296.3 292.2 215.5
Income before extraordinary item and
cumulative effect of changes in accounting 288.4 228.3 159.1 121.8 90.4
Net income (loss) .......................... 288.4 228.3 (92.1) 121.8 90.4
Earnings per share (primary):
Income before extraordinary item and
cumulative effect of changes in
accounting ............................... 3.38 2.72 2.06 2.00 1.78
Net income (loss) ......................... 3.38 2.72 (1.20) 2.00 1.78
BALANCE SHEET DATA:
Total assets ............................... $4,810.3 $5,176.2 $3,228.1 $2,685.5 $2,532.2
Working capital ............................ 536.6 554.4 610.5 630.0 457.7
Total debt ................................. 1,316.5 1,798.0 534.0 577.4 821.2
Shareholders' equity ....................... 1,687.5 1,381.3 1,187.9 997.3 672.0
Book value per common share ................ 19.86 16.60 14.44 15.72 13.14
CASH FLOW DATA:
Cash dividends paid per common share ...... $.59 $.545 $.495 $.47 $.43
Depreciation and amortization .............. 250.1 178.2 154.0 128.6 104.6
Capital expenditures, net .................. 85.3 96.5 89.0 74.1 86.1
RATIO OF EARNINGS TO FIXED CHARGES (d) ..... 4.58x 6.52x 4.79x 4.22x 3.30x
<FN>
- ----------------
(a) Reflects the acquisition of IBM Federal Systems Company effective January
1, 1994.
(b) Reflects (i) the acquisition of the missile business of LTV Aerospace and
Defense Company effective August 31, 1992 and (ii) the acquisition of the
minority partners' equity interest in Loral Aerospace Holdings, Inc.
("LAH"), effective June 1, 1992, through the issuance of 12,313,810
shares of the Company's common stock and 627.3 shares of Series S
Preferred Stock of LAH.
Effective April 1, 1992, the Company adopted Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions" and Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes." Prior years' results
have not been restated to reflect these accounting changes.
Net income (loss) includes (i) a non-operating extraordinary charge (loss
on extinguishment of debt) of $28.2 million pre-tax, $17.8 million
after-tax, or $.23 per share, and (ii) a non-recurring charge of $330.5
million pre-tax, $233.4 million after-tax, or $3.03 per share, as the
cumulative effect of the accounting change for SFAS 106.
(c) Reflects the acquisition of Ford Aerospace Corporation effective
October 1, 1990.
(d) The fiscal 1995 ratio of earnings to fixed charges would be 3.46x, after
giving pro forma effect to the acquisition of Unisys Defense Systems as
if it occurred on April 1, 1994. See the Company's Current Report on Form
8-K filed on May 22, 1995.
S-3
<PAGE>
DESCRIPTION OF DEBENTURES
The following description of the particular terms of the Debentures
offered hereby (referred to in the Prospectus as the "Offered Debt
Securities") supplements and, to the extent inconsistent therewith, replaces,
insofar as such description relates to the Debentures, the description of the
Debt Securities set forth in the Prospectus, to which description reference
is hereby made.
GENERAL
The Debentures are senior, unsecured general obligations of the Company,
will rank pari passu with all other unsecured and unsubordinated indebtedness
of the Company and will be limited to $150,000,000 aggregate principal
amount. The Debentures will mature on June 15, 2025. The Debentures will bear
interest at the rate per annum shown on the cover page of this Prospectus
Supplement (computed on the basis of a 360-day year of twelve 30-day months)
from June 12, 1995, payable semi-annually on June 15 and December 15 of each
year (each an "Interest Payment Date"), commencing December 15, 1995, to the
person in whose name such securities (or any predecessor security) are
registered at the close of business on June 1 and December 1, as the case may
be, next preceding such Interest Payment Date. The Debentures will not be
redeemable by the Company prior to their stated maturity and will not be
entitled to the benefit of a sinking fund.
DEFEASANCE AND DISCHARGE AND COVENANT DEFEASANCE
The provisions of the Indenture relating to defeasance thereof and
discharge and defeasance of certain covenants as described under "Description
of Debt Securities--Defeasance" set forth in the Prospectus will apply to the
Debentures.
THE TRUSTEE
Bank of America Illinois (formerly known as Continental Bank, National
Association) is the Senior Trustee under the Senior Indenture.
GLOBAL SECURITIES
The Debentures will be issued in the form of one or more Global
Securities. The Global Securities will be deposited with, or on behalf of,
the Depositary, and registered in the name of the Depositary or a nominee
thereof. Unless and until they are exchanged in whole or in part for
Debentures in definitive form, no Global Securities may be transferred except
as a whole by the Depositary to a nominee of such Depositary or by a nominee
of such Depositary to such Depositary or another nominee of such Depositary
or by such Depositary or any such nominee to a successor of such Depositary
or a nominee of such successor.
The Depositary has advised the Company and the Underwriters as follows:
The Depositary is a limited purpose trust company organized under the Banking
Law of the State of New York, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial
Code, and a "clearing agency" registered pursuant to the provisions of
section 17A of the Securities Exchange Act of 1934, as amended. The
Depositary was created to hold securities of its participants and to
facilitate the clearance and settlement of securities transactions among its
participants in such securities through electronic book-entry changes in
accounts of the participants, thereby eliminating the need for physical
movement of securities certificates. The Depositary's participants include
securities brokers and dealers, banks, trust companies, clearing
corporations, and certain other organizations, some of whom (and/or their
representatives) own the Depositary. Access to the Depositary's book-entry
system is also available to others, such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly.
A further description of the Depositary's procedures with respect to
Global Securities is set forth in the Prospectus under "Description of Debt
Securities--Global Securities."
S-4
<PAGE>
The Depositary has confirmed to the Company, the Underwriter and the
Senior Trustee that it intends to follow such procedures.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement among the Company and the Underwriters named below (the
"Underwriters"), the Company has agreed to sell to the Underwriters, and each
of the Underwriters has severally agreed to purchase from the Company, the
aggregate principal amount of Debentures set forth opposite its name below:
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
OF DEBENTURES
----------------
<S> <C>
Bear, Stearns & Co. Inc. .......................... $ 75,000,000
Lehman Brothers Inc. .............................. 75,000,000
----------------
Total ....................................... $150,000,000
================
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters thereunder are subject to approval of certain legal matters by
counsel and to various other conditions.
The Underwriters propose to offer the Debentures in part directly to the
public initially at the public offering price set forth on the cover of this
Prospectus Supplement and in part to certain securities dealers at such price
less a concession of 0.50% of the principal amount of the Debentures. The
Underwriters may allow, and such dealers may reallow, a concession not to
exceed 0.25% of the principal amount of the Debentures to certain brokers and
dealers. After the Debentures are released for sale to the public, the
offering price and other selling terms may from time to time be varied by the
Underwriters.
The Underwriting Agreement provides that the Company will indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act, and contribute to payments the Underwriters may be required
to make in respect thereof.
The Debentures will be listed on the New York Stock Exchange. The Company
has been advised by the Underwriters that they intend to make a market in the
Debentures, but they are not obligated to do so and may discontinue such
market making at any time without notice. No assurance can be given, however,
as to whether a trading market in the Debentures will develop or as to
liquidity of any trading market for the Debentures.
The Underwriters and their affiliates have engaged and may engage in
transactions with and perform services for the Company and its affiliates in
the ordinary course of their respective businesses, including, without
limitation, investment banking services.
Merchant banking partnerships affiliated with Lehman Brothers Holdings
Inc. (the "Lehman Partnerships") own 3,314,960 shares of the Company's common
stock, representing approximately 3.9% of the Company's common stock
outstanding as of May 1, 1995. The Lehman Partnerships also own 731.85 shares
of Series S Preferred Stock of Loral Aerospace Holdings, Inc. ("LAH"), the
Company's wholly-owned subsidiary, which represent an indirect 18.3%
beneficial interest in the equity of Space Systems/Loral, Inc. ("SS/L"),
LAH's 51%-owned affiliate. If the Lehman Partnerships continue to hold Series
S Preferred Stock after January 1, 1998, or after a change in control of
Loral, they will have the right to request that the Company purchase their
Series S Preferred Stock at an appraised fair market value ("Appraised
Value"). In such event, the Company may elect to purchase such Series S
Preferred Stock at Appraised Value or, if the Company elects not to purchase
the stock, the Lehman Partnerships may require the combined interests of the
Company and the Lehman Partnerships in SS/L to be sold to a third party. The
Lehman Partnerships also have an aggregate equity interest of approximately
48% in K&F Industries, Inc., a corporation of which Bernard L. Schwartz,
Chairman of the Board of Directors and Chief Executive Officer of the
Company, is a 27% stockholder and the Company is a 22.5% stockholder and
which acquired the Company's Aircraft Braking Systems and Engineered Fabrics
divisions in April 1989.
S-5
<PAGE>
PROSPECTUS
$800,000,000
[LORAL CORPORATION LOGO]
DEBT SECURITIES PREFERRED STOCK
COMMON STOCK DEPOSITARY SHARES
WARRANTS TO PURCHASE DEBT AND/OR EQUITY SECURITIES
Loral Corporation (the "Company") may offer and issue from time to time,
together or separately, (1) its unsecured debt securities ("Debt
Securities"), which may be either senior ("Senior Securities") or
subordinated ("Subordinated Securities"), (2) its preferred stock, par value
$1.00 per share ("Preferred Stock"), (3) its common stock, par value $0.25
per share ("Common Stock"), (4) depositary shares ("Depositary Shares")
representing entitlement to all rights and preferences of a fraction of a
share of Preferred Stock of a specified series, (5) warrants to purchase Debt
Securities ("Debt Warrants") and (6) warrants to purchase its Common Stock or
Preferred Stock ("Equity Warrants"), all on terms to be determined at the
time of the offering. The Debt Warrants and the Equity Warrants are sometimes
collectively referred to herein as the "Warrants," and the Debt Securities,
Warrants, Preferred Stock, Depositary Shares and Common Stock are sometimes
collectively referred to herein as the "Securities." Securities with an
aggregate issue price of up to $800,000,000 (or the equivalent in foreign
denominated currency or units based on or relating to foreign currencies,
including European Currency Units) may be issued, in one or more series,
under this Prospectus and a separate Prospectus Supplement.
The Senior Securities will be unsecured and will rank equally with all
other unsecured and unsubordinated indebtedness of the Company. The
Subordinated Securities will be unsecured and will be subordinated in right
of payment to the prior payment in full of the Senior Indebtedness of the
Company.
The accompanying Prospectus Supplement sets forth, with respect to each
series or issue of Securities for which this Prospectus and the Prospectus
Supplement are being delivered ("Offered Securities"): (1) the terms of any
Debt Securities offered (and, if Debt Warrants are being offered, similar
information with respect to the Debt Securities that may be purchased upon
exercise of each Debt Warrant) including, where applicable, their title,
ranking, aggregate principal amount, purchase price, maturity, rate of any
interest (or manner of calculation and time of payment thereof), any
redemption or repayment terms, the currency or currencies, currency unit or
units or composite currency or currencies in which such Debt Securities will
be denominated or payable, any index, formula or other method pursuant to
which principal, premium or interest may be determined, terms of
subordination of Subordinated Securities, any terms for the conversion or
exchange thereof and the form of such Debt Securities (which may be in
registered, bearer or global form); (2) the terms of any Debt Warrants or
Equity Warrants offered, including the exercise price, detachability,
expiration date and other terms; (3) the terms of any Preferred Stock or
Depositary Shares offered, including the specific designations and dividend,
redemption, voting and other rights not described in this Prospectus, and any
terms for the conversion or exchange thereof; and (4) any initial public
offering price, the purchase price and net proceeds to the Company, the
listing (if any) on a securities exchange, the name of and compensation to
each dealer, underwriter or agent (if any) involved in the sale of the
Offered Securities and the other specific terms of such offering. The
managing underwriters with respect to each series sold to or through
underwriters will be named in the accompanying Prospectus Supplement.
-----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-----------------
Offered Securities may be offered through dealers, underwriters or agents
designated from time to time, as set forth in the accompanying Prospectus
Supplement. Net proceeds to the Company will be the purchase price in the
case of a dealer, the public offering price less discount in the case of an
underwriter or the purchase price less commission in the case of an agent--in
each case, less other expenses attributable to the issuance and distribution
of the Offered Securities. The Company may also sell Offered Securities
directly to investors on its own behalf. In the case of sales made directly
by the Company, no commission will be payable. See "Plan of Distribution" for
possible indemnification arrangements for dealers, underwriters and agents.
May 23, 1994
<PAGE>
AVAILABLE INFORMATION
Loral Corporation ("Loral" or 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, proxy
statements and other information with the Securities and Exchange Commission
(the "SEC"). Such reports, proxy statements and other information filed by
the Company with the SEC can be inspected and copied at public reference
facilities maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549; 7 World Trade Center, New York, New York 10048; and Northwestern
Atrium Center, 500 West Madison Street, Chicago, Illinois 60661. Copies of
such material can be obtained from the Public Reference Section of the SEC at
450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. The
Company's Common Stock and certain of its Debt Securities are listed on the
New York Stock Exchange. Reports, proxy statements and other information
concerning the Company can be inspected and copied at the Library of the New
York Stock Exchange at 20 Broad Street, New York, New York 10005.
This Prospectus constitutes a part of two registration statements on Form
S-3 (herein, together with all exhibits thereto, referred to as the
"Registration Statements") filed by the Company with the SEC under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to
the Securities offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statements, certain parts of which
are omitted in accordance with the rules and regulations of the SEC.
Reference is hereby made to the Registration Statements and related exhibits
for further information with respect to the Company and the Securities
offered hereby. Statements contained herein concerning the provisions of
documents are necessarily summaries of such documents, and each statement is
qualified in its entirety by reference to the copy of the applicable document
filed with the SEC.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents, each of which was previously filed by the Company
with the SEC, are incorporated herein by reference: (a) the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 1994; (b) the
Company's Proxy Statement for its 1993 Annual Meeting of Stockholders; and
(c) the Company's Form 8-K/A, dated May 12, 1994.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of any series of Securities shall be
deemed to be incorporated by reference herein and to be a part hereof from
the date of the filing of such reports and documents. Any statement contained
in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus
to the extent that a statement contained herein or in any other subsequently
filed document which also is or is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement so modified
or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a
Prospectus is delivered upon written or oral request of such person, a copy
of any documents incorporated herein by reference (other than exhibits to
such documents unless such exhibits are specifically incorporated by
reference into the documents that this Prospectus incorporates). Requests for
such copies should be directed to Loral Corporation, Attention: Secretary,
600 Third Avenue, New York, New York 10016 (telephone: (212) 697-1105).
2
<PAGE>
THE COMPANY
Loral is a leading supplier of defense electronics systems, components and
services to U.S. and allied defense departments. The Company's principal
business areas are: electronic combat; training and simulation; command,
control, communications and intelligence ("C(3)I")/reconnaissance; tactical
weapons; systems integration; and space systems. The Company has achieved an
incumbent position on a wide range of existing programs through internal
growth and development and a series of acquisitions focused on its core
technologies. Loral's business strategy is to emphasize upgrades of existing
weapons systems, concentrate on further developing its core of advanced
technologies, generate an increasing proportion of its sales from foreign
customers and selectively extend the Company's proprietary technologies into
non-military applications, such as systems integration, satellite-based
telecommunications, medical diagnostic imaging systems, network management,
data archiving, and information systems and services.
Loral was incorporated in the State of New York in 1948. Its principal
executive offices are located at 600 Third Avenue, New York, New York 10016,
and its telephone number is (212) 697-1105. Unless the context otherwise
indicates, the terms "Company" and "Loral" refer to Loral and its
subsidiaries.
USE OF PROCEEDS
Except as otherwise described in the applicable Prospectus Supplement, the
Company intends to use the net proceeds from the sale of the Securities for
general corporate purposes.
RATIO OF EARNINGS TO FIXED CHARGES
In computing the ratio of earnings to fixed charges, earnings consist of:
income from continuing operations before income taxes, minority interest and
equity in net income (loss) of affiliate; fixed charges excluding capitalized
interest; and amortization of capitalized interest. Fixed charges consist of:
interest expense; capitalized interest; amortization of debt expense and that
portion of rent expense (30%) deemed representative of the interest factor.
<TABLE>
<CAPTION>
FOR THE FISCAL YEARS ENDED MARCH 31,
------------------------------------------
1994 1993 1992 1991 1990
------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
Ratio of earnings to
fixed charges
(unaudited) ............. 6.42x 4.74x 4.22x 3.30x 3.49x
</TABLE>
DESCRIPTION OF SECURITIES
DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and provisions
of the Debt Securities to which any Prospectus Supplement may relate. The
particular terms of the Debt Securities offered by any Prospectus Supplement
and the extent to which such general provisions may apply will be described
in a Prospectus Supplement relating to such Debt Securities. The Senior
Securities will be issued under an Indenture dated as of September 1, 1993,
as amended (the "Senior Indenture"), between the Company and Continental
Bank, National Association, as trustee (the "Senior Trustee"). The
Subordinated Securities will be issued under an Indenture dated as of
(the "Subordinated Indenture"), between the Company and The Bank of New York,
as trustee (the "Subordinated Trustee"). The term "Trustee" as used herein
refers to either the Senior Trustee or the Subordinated Trustee, as
appropriate. The forms of the Senior Indenture and the Subordinated Indenture
(sometimes referred to herein collectively as the "Indentures" and
individually as an "Indenture") have been filed as exhibits to the
Registration Statements of which this Prospectus is a part. The following
summaries of certain provisions of the Indentures and the Debt Securities do
not purport to be complete and such summaries are subject to the detailed
provisions of the Indentures to which reference is hereby made for a full
description of such provisions, including the definition of certain terms
used herein, and for other information regarding the Debt Securities.
Numerical references in parentheses below are to sections in the Indentures.
Wherever particular sections or defined terms of the Indentures are referred
to, such sections or defined
3
<PAGE>
terms are incorporated herein by reference as part of the statement made, and
the statement is qualified in its entirety by such reference. The Debt
Securities offered by this Prospectus and the accompanying Prospectus
Supplement are referred to herein as the "Offered Debt Securities."
Provisions Applicable to Both Indentures
General. The Indentures provide that Debt Securities may be issued from
time to time in one or more series and may be denominated and payable in
foreign currencies or units based on or relating to foreign currencies,
including European Currency Units ("ECUs"). Special United States federal
income tax considerations applicable to any Debt Securities so denominated
are described in the relevant Prospectus Supplement.
Reference is made to the Prospectus Supplements for the following terms of
and information relating to the Offered Debt Securities (to the extent such
terms are applicable to such Debt Securities): (i) the specific designation
of such Debt Securities and whether such Debt Securities will be Senior
Securities or Subordinated Securities, aggregate principal amount, purchase
price and denomination; (ii) the currency in which such Offered Debt
Securities are denominated and/or in which principal (and premium, if any)
and/or any interest will or may be payable; (iii) the date or dates of
maturity; (iv) the interest rate or rates or the method by which such rate
will be determined, if any; (v) the dates on which any such interest, if any,
will be payable; (vi) the place or places where the principal of, premium, if
any, and interest, if any, on the Offered Debt Securities will be payable;
(vii) any redemption, repayment or sinking fund provisions; (viii) whether
the Offered Debt Securities will be issuable in registered form or bearer
form ("Bearer Debt Securities") or both and, if Bearer Debt Securities are
issuable, any restrictions applicable to the exchange of one form for another
and to the offer, sale and delivery of Bearer Debt Securities; (ix) in the
case of Subordinated Securities, any provisions in modification of, in
addition to or in lieu of the provisions concerning subordination contained
in Article Thirteen of the Subordinated Indenture that will be applicable to
such Debt Securities; (x) whether such Debt Securities will be convertible
into or exchangeable for shares of Common Stock or other Securities and, if
so, the terms and conditions upon which such Debt Securities will be so
convertible or exchangeable, including the conversion price or exchange
ratio, the conversion or exchange period (or the method of determining the
same) and the provisions for adjustment of the conversion price or the
exchange ratio; (xi) any applicable United States federal income tax
consequences, including whether and under what circumstances the Company will
pay additional amounts on Offered Debt Securities held by a person (as
defined in the Indentures) who is not a citizen of, or organized under the
laws of, the United States in respect of any tax, assessment or governmental
charge withheld or deducted and, if so, whether the Company will have the
option to redeem such Offered Debt Securities rather than pay such additional
amounts; and (xii) any other specific terms of the Offered Debt Securities,
including any additional events of default or covenants provided for with
respect to such Offered Debt Securities, and any terms which may be required
by or advisable under applicable laws or regulations.
The Debt Securities will be unsecured obligations of the Company. The
Senior Securities will be unsubordinated and will rank pari passu with all
other unsecured and unsubordinated indebtedness of the Company. The
Subordinated Securities will be subordinated in right of payment to the prior
payment in full of the Senior Indebtedness of the Company, as described under
"Subordinated Indenture Provisions-- Subordination."
Debt Securities may be presented for exchange and registered Debt
Securities may be presented for transfer in the manner, at the places and
subject to the restrictions set forth in the Debt Securities, the applicable
Indenture and the Prospectus Supplement. Such services will be provided
without charge, other than any tax or other governmental charge payable in
connection therewith, but subject to the limitations provided in the
applicable Indenture. Bearer Debt Securities and the coupons, if any,
appertaining thereto will be transferable by delivery.
Debt Securities may bear interest at a fixed rate or a floating rate. Debt
Securities bearing no interest or interest at a rate that at the time of
issuance is below the prevailing market rate will be sold at a
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discount below their stated principal amount. Special United States federal
income tax considerations applicable to any such discounted Debt Securities,
or to certain Debt Securities issued at par which are treated as having been
issued at a discount for United States federal income tax purposes, are
described in the relevant Prospectus Supplement.
Debt Securities may be issued, from time to time, with the principal
amount payable on any principal payment date, or the amount of interest
payable on any interest payment date, to be determined by reference to one or
more currency exchange rates, commodity prices, equity indices or other
factors. Holders of such Debt Securities may receive a principal amount on
any principal payment date, or a payment of interest on any interest payment
date, that is greater than or less than the amount of principal or interest
otherwise payable on such dates, depending upon the value on such dates of
the applicable currency, commodity, equity index or other factor. Information
as to the methods for determining the amount of principal or interest payable
on any date, the currencies, commodities, equity indices or other factors to
which the amount payable on such date is linked and certain additional tax
considerations is set forth in the Prospectus Supplement.
The provisions of the Indentures do not limit the ability of the Company
to incur additional indebtedness and do not afford holders of the Debt
Securities protection in the event of a highly leveraged or other transaction
involving the Company that may adversely affect holders of the Debt
Securities.
Global Securities. The registered Debt Securities of a series may be
issued in the form of one or more fully registered global securities (a
"Registered Global Security") that will be deposited with a depositary (a
"Depositary") or with a nominee for a Depositary identified in the Prospectus
Supplement relating to such series and registered in the name of the
Depositary or a nominee thereof. In such case, one or more Registered Global
Securities will be issued in a denomination or aggregate denominations equal
to the portion of the aggregate principal amount of registered Debt
Securities of the series to be represented by such Registered Global Security
or Securities. Unless and until it is exchanged in whole for Debt Securities
in definitive registered form, a Registered Global Security may not be
transferred except as a whole by the Depositary for such Registered Global
Security to a nominee of such Depositary or by a nominee of such Depositary
to such Depositary or another nominee of such Depositary or by such
Depositary or any such nominee to a successor of such Depositary or a nominee
of such successor.
The specific terms of the depositary arrangement with respect to any
portion of a series of Debt Securities to be represented by a Registered
Global Security will be described in the Prospectus Supplement relating to
such series. The Company anticipates that the following provisions will apply
to all depositary arrangements.
Ownership of beneficial interests in a Registered Global Security will be
limited to persons that have accounts with the Depositary for such Registered
Global Security ("participants") or persons that may hold interests through
participants. Upon the issuance of a beneficial interest in a Registered
Global Security, the Depositary for such Registered Global Security will
credit, on its book-entry registration and transfer system, the participants'
accounts with the respective principal amounts of the Debt Securities
represented by such Registered Global Security beneficially owned by such
participants. The accounts to be credited shall be designated by any dealers,
underwriters or agents participating in the distribution of such Debt
Securities. Ownership of beneficial interests in such Registered Global
Security will be shown on, and the transfer of such ownership interests will
be effected only through, records maintained by the Depositary for such
Registered Global Security (with respect to interests of participants) and on
the records of participants (with respect to interests of persons holding
through participants). The laws of some states may require that certain
purchasers of securities take physical delivery of such securities in
definitive form. Such laws may impair the ability to own, transfer or pledge
beneficial interests in Registered Global Securities.
So long as the Depositary for a Registered Global Security, or its
nominee, is the registered owner of such Registered 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 Registered Global
Security for all purposes under the applicable Indenture. Except as set forth
below, owners of beneficial interests in a Registered Global Security will
not be entitled to have their beneficial interests in such
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Registered Global Security registered in their names, will not receive or be
entitled to receive physical delivery of such beneficial interests in
definitive form and will not be considered the owners or holders of Debt
Securities under the applicable Indenture. Accordingly, each person owning a
beneficial interest in a Registered Global Security must rely on the
procedures of the Depositary for such Registered Global Security and, if such
person is not a participant, on the procedures of the participant through
which such person owns its interest, to exercise any rights of a holder under
the applicable Indenture. The Company understands that under existing
industry practices, if the Company requests any action of holders or if an
owner of a beneficial interest in a Registered Global Security desires to
give or to take any action which a holder is entitled to give or to take
under the applicable Indenture, the Depositary for such Registered Global
Security would authorize the participants holding the relevant beneficial
interests to give or to take such action, and such participants would
authorize beneficial owners owning through such participants to give or to
take such action or would otherwise act upon the instructions of beneficial
owners holding through them.
Principal, premium, if any, and interest payments on Debt Securities
represented by a Registered Global Security registered in the name of a
Depositary or its nominee will be made to such Depositary or its nominee, as
the case may be, as the registered owner of such Registered Global Security.
None of the Company, the Trustee or any other agent of the Company or agent
of the Trustee will have any responsibility or liability for any aspect of
the records relating to or payments made on account of beneficial ownership
interests in such Registered Global Security or for maintaining, supervising
or reviewing any record relating to such beneficial ownership interests.
The Company expects that the Depositary for any Debt Securities
represented by a Registered Global Security, upon receipt of any payment of
principal, premium or interest in respect of such Registered Global Security,
will immediately credit participants' accounts with payments in amounts
proportionate to their respective beneficial interests in such Registered
Global Security as shown on the records of such Depositary. The Company also
expects that payments by participants to owners of beneficial interests in
such Registered Global Security held through such participants will be
governed by standing customer instructions and customary practices, as is now
the case with the securities held for the accounts of customers in bearer
form or registered in "street name," and will be the responsibility of such
participants.
If the Depositary for any Debt Securities represented by a Registered
Global Security is at any time unwilling or unable to continue as Depositary
or ceases to be a clearing agency registered under the Exchange Act, and a
successor Depositary registered as a clearing agency under the Exchange Act
is not appointed by the Company within 90 days, the Company will issue such
Debt Securities in definitive form in exchange for such Registered Global
Security. In addition, the Company may at any time and in its sole discretion
determine not to have any of the Debt Securities of a series represented by
one or more Registered Global Securities and, in such event, will issue Debt
Securities of such series in definitive form in exchange for all of the
Registered Global Security or Securities representing such Debt Securities.
Any Debt Securities issued in definitive form in exchange for a Registered
Global Security will be registered in such name or names as the Depositary
shall instruct the Trustee. It is expected that such instructions will be
based upon directions received by the Depositary from participants with
respect to ownership of beneficial interests in such Registered Global
Security.
The Debt Securities of a series may also be issued in the form of one or
more bearer global debt securities (a "Bearer Global Security") that will be
deposited with a common depositary for Euro-clear and CEDEL, or with a
nominee for such depositary identified in the Prospectus Supplement relating
to such series. The specific terms and procedures, including the specific
terms of the depositary arrangement, with respect to any portion of a series
of Debt Securities to be represented by a Bearer Global Security will be
described in the Prospectus Supplement relating to such series.
Ranking. There are no limitations in either Indenture on the amount of
indebtedness which may rank pari passu with the Debt Securities or on the
amount of indebtedness that may be incurred, or capital stock that may be
issued, by any of the Company's Subsidiaries; provided, that the incurrence
of secured indebtedness by the Company and its Subsidiaries is subject to the
limitations set forth in the "Limitations on Liens" covenant of the Senior
Indenture. (Section 3.6 of the Senior Indenture)
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Merger and Consolidation. The Company may not consolidate with, merge
into, or transfer or lease all or substantially all of its assets to, any
person unless (i) that person is a corporation organized and existing under
the laws of the United States, any state thereof or the District of Columbia,
(ii) the person, if a transferee or lessee, assumes by supplemental indenture
all the Company's obligations under the Debt Securities and the applicable
Indenture, (iii) immediately after the transaction, no Event of Default
exists under the applicable Indenture and no circumstance exists which, after
notice or lapse of time (other than any time period applicable to limitations
on liens and limitations on sales and leasebacks) or both, would become an
Event of Default under the applicable Indenture; and (iv) the Company has
delivered to the Trustee an Opinion of Counsel stating that such
consolidation, merger, transfer or lease complies with the applicable
Indenture. (Section 9.1 of the Senior and Subordinated Indentures)
Events of Default. Each Indenture provides that an Event of Default, with
respect to the Debt Securities of any series outstanding under such
Indenture, shall have occurred and be continuing in the event of: (a) default
in the payment of any installment of interest upon any of such series of Debt
Securities as and when the same shall become due and payable, and continuance
of such default for a period of 30 days; (b) default in the payment of all or
any part of the principal on any of such series of Debt Securities as and
when the same shall become due and payable either at maturity, upon any
redemption, by declaration or otherwise; (c) failure on the part of the
Company to observe or perform any other covenant or agreement relating to
such series of Debt Securities (other than a covenant or warranty in respect
of such Debt Securities, a default in the performance or breach of which is
specifically dealt with elsewhere in the applicable Indenture) for a period
of 90 days after the date on which the Company received written notice
specifying such failure from the Trustee or the holders of at least 25% of
the aggregate principal amount of Outstanding Debt Securities of all series
affected thereby; (d) certain events of bankruptcy, insolvency or
reorganization; or (e) any other Event of Default provided in the
supplemental indenture under which such series of Debt Securities is issued
or in the form of Debt Security for such series.
Each Indenture provides that (i) if an Event of Default described in the
foregoing clauses (a), (b), (c) or (e) (if the Event of Default under clause
(c) or (e) is with respect to less than all series of Debt Securities then
Outstanding) shall have occurred and be continuing, either the applicable
Trustee or the holders of not less than 25% in principal amount of the Debt
Securities of all affected series (treated as one class) then Outstanding may
then declare the principal of all Debt Securities of all such affected series
and interest accrued thereon to be due and payable immediately; and (ii) if
an Event of Default described in the foregoing clauses (c), (d) or (e) (if
the Event of Default under clause (c) or (e) is with respect to all series of
Debt Securities then Outstanding) shall have occurred and be continuing,
either the applicable Trustee or the holders of not less than 25% in
principal amount of all Debt Securities then outstanding (treated as one
class) may declare the principal of all Debt Securities and interest accrued
thereon to be due and payable immediately. (Section 5.1 of the Senior and
Subordinated Indentures)
Upon certain conditions the foregoing declarations may be annulled and
past defaults may be waived (except a continuing default in payment of
principal of, or interest on, such Debt Securities) by the holders of a
majority in principal amount of the Debt Securities of all such affected
series then outstanding. (Section 5.1 of the Senior and Subordinated
Indentures)
Subject to certain limitations, the holders of a majority in principal
amount of the Outstanding Debt Securities (treated as one class) may direct
the time, method and place of conducting any proceeding for any remedy
available to the applicable Trustee, or exercising any trust or power
conferred on the applicable Trustee. (Section 5.9 of the Senior and
Subordinated Indentures)
Each Indenture provides that no holder of Debt Securities may institute
any action under the applicable Indenture (except actions for payment of
overdue principal or interest) unless such holder previously shall have given
to the applicable Trustee written notice of default and continuance thereof
and unless the holders of not less than 25% in principal amount of the Debt
Securities of each affected series (treated as one class) then Outstanding
shall have requested the applicable Trustee to institute such action and
shall have offered the applicable Trustee reasonable indemnity, the
applicable Trustee shall not have
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instituted such action within 60 days of such request and the applicable
Trustee shall not have received direction inconsistent with such written
request by the holders of a majority in principal amount of the Debt
Securities of each affected series (treated as one class). (Section 5.6 of
the Senior and Subordinated Indentures)
Each Indenture contains a covenant that the Company will file annually
with the applicable Trustee a certificate of no default or a certificate
describing any default that exists. (Section 3.5 of the Senior and
Subordinated Indentures)
Defeasance. Each Indenture provides for the defeasance of the Debt
Securities and of the covenants applicable thereto under certain prescribed
conditions.
Modification of the Indenture. Each Indenture provides that the Company
and the Trustee may enter into supplemental indentures without the consent of
the holders of Debt Securities to: (a) in the case of Senior Securities,
secure any Senior Securities, (b) evidence the assumption by a successor
corporation of the obligations of the Company, (c) add covenants for the
protection of the holders of Debt Securities, (d) cure any ambiguity or
correct any inconsistency in the Indenture, (e) establish the forms or terms
of Debt Securities of any series and (f) evidence the acceptance of
appointment by a successor trustee. (Section 8.1 of the Senior and
Subordinated Indentures)
Each Indenture also contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority in
principal amount of Debt Securities of all series (voting as one class) then
Outstanding and affected, to add any provisions to, or change in any manner,
or eliminate any of the provisions of the applicable Indenture or modify in
any manner the rights of the holders of the Debt Securities of each series so
affected; provided that the Company and the Trustee may not, without the
consent of the holder of each Outstanding Debt Security affected thereby, (a)
extend the final maturity of the prinicipal of any Debt Security or reduce
the principal amount thereof or reduce the rate or extend the time of payment
of interest thereon or reduce any amount payable on the redemption thereof or
change the currency in which the principal thereof (including any amount in
respect of original issue discount) or interest thereon is payable or reduce
the amount of any original issue discount security payable upon acceleration
or provable in bankruptcy or alter certain provisions of the applicable
Indenture relating to Debt Securities not denominated in U.S. dollars or
impair the right to institute suit for the enforcement of any payment on any
Debt Security when due, (b) reduce the aforesaid percentage in principal
amount of Debt Securities of any series, the consent of the holders of which
is required for any such modification, (c) in the case of Subordinated
Securities, modify any of the provisions of the Subordinated Indenture
relating to the subordination of the Debt Securities issued thereunder in a
manner adverse to the holders thereof or (d) modify any of the foregoing
provisions except to increase the aforesaid percentage or to provide that
other provisions of the applicable Indenture may not be amended or waived
without the consent of the holder of each Debt Security affected thereby.
(Section 8.2 of the Senior and Subordinated Indentures)
In addition, unless otherwise specified in the applicable Prospectus
Supplement, no supplement to the Subordinated Indenture may amend, modify or
otherwise change the terms of any outstanding Subordinated Securities in a
manner that adversely affects the rights of any holder of Senior Indebtedness
under Article Thirteen of the Subordinated Indenture (described below under
the caption "Subordinated Indenture Provisions--Subordination"), without the
consent of such holder of Senior Indebtedness. (Section 8.2 of the
Subordinated Indenture)
The Trustees. Continental Bank, National Association is the Senior
Trustee under the Senior Indenture and The Bank of New York is the
Subordinated Trustee under the Subordinated Indenture. Each Trustee may from
time to time provide commercial banking services to the Company in the
ordinary course of its business.
Senior Indenture Provisions
The following restrictions apply to the Senior Securities unless the terms
of the Offered Senior Securities provide otherwise. Capitalized terms used
herein but not otherwise defined herein shall have the respective meanings
ascribed to such terms in the Senior Indenture.
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Certain Definitions. The terms set forth below are defined in Section 1.1
of the Senior Indenture as follows:
"Attributable Debt" means the present value (discounted at the Composite
Rate) of the obligation of the lessee in a Sale and Leaseback Transaction for
rental payments (excluding from such rental payments, however, amounts
payable with respect to income and property taxes, insurance, maintenance,
and other similar charges and contingent rents, such as those based on sales)
during the remaining term of the lease (including any period for which such
lease has been extended).
"Composite Rate" means, at any time, the rate of interest, per annum,
compounded semiannually, equal to the sum of the products obtained by
multiplying (a) the respective rates of interest borne by each of the Debt
Securities Outstanding under the applicable Indenture by (b) the percentage
of the aggregate principal amount of all the Debt Securities then Outstanding
under the applicable Indenture represented by such Debt Security. Such rates
of interest shall be the rate specified on the face of each of the Debt
Securities, provided that, in the case of the Debt Securities with variable
rates of interest, the interest rate to be used in calculating the Composite
Rate shall be the interest rate applicable to such Debt Securities at the
beginning of the year in which the Composite Rate is being determined and,
provided, further, that, in the case of Debt Securities which do not bear
interest, the interest rate to be used in calculating the Composite Rate
shall be a rate equal to the yield to maturity on such Debt Securities,
calculated at the time of issuance of such Debt Securities. For the purposes
of this calculation, the aggregate principal amounts of Outstanding Debt
Securities that are denominated in a Foreign Currency or ECU shall be
calculated in accordance with the terms of the applicable Indenture.
"Consolidated Net Tangible Assets" means the total of all the assets
appearing on the consolidated balance sheet of the Company and its
Subsidiaries, less the following: (a) liabilities, (b) intangible assets,
including, but without limitation, such items as goodwill, trademarks, trade
names, patents and unamortized debt discount and expense carried as an asset
on said balance sheet, and (c) appropriate adjustment on account of minority
interests of other persons holding stock in any Subsidiary. Consolidated Net
Tangible Assets shall be determined in accordance with generally accepted
accounting principles applied on a consistent basis and shall be determined
by reference to the most recent publicly available quarterly or annual, as
the case may be, consolidated balance sheet of the Company.
"Mortgage" means any mortgage, pledge, lien, encumbrance, charge or
security interest of any kind.
"Principal Property" means any manufacturing plant or facility or any
research facility or corporate offices owned or leased by the Company or any
Subsidiary, or any interest of the Company or any Subsidiary in such property
(in each case including the real estate related thereto) located within the
United States of America, except any such property or interest which, in the
opinion of the Company's Board of Directors, is not a principal property or
interest in relation to the activities of the Company and its Subsidiaries as
a whole.
"Restricted Subsidiary" means a corporation which is a Subsidiary and
which owns or leases a Principal Property.
"Subsidiary" means any corporation more than 50% of the outstanding Voting
Securities of which shall at the time be owned, directly or indirectly, by
the Company that the Company actually consolidates for financial reporting
purposes.
Limitation on Liens. The Senior Securities are unsecured general
obligations of the Company. The Senior Indenture, however, imposes certain
restrictions on the Company's ability to secure its or another's Debt by
giving Mortgages on certain types of property owned by (or leased by) the
Company or any Subsidiary. Except as generally described below, neither the
Company nor any Subsidiary may create, assume, incur or suffer to exist any
Mortgage upon (a) any capital stock of any Restricted Subsidiary which is
owned by the Company or any other Subsidiary, (b) any indebtedness of any
Restricted Subsidiary owing to the Company or any other Subsidiary or (c) any
Principal Property, without securing the Senior Securities equally and
ratably with, or prior to, such secured Debt.
The restrictions referred to in (a) and (b) above do not apply to any
Mortgage (or certain extensions, renewals or replacements thereof) upon
capital stock or indebtedness: (i) of any corporation, if such
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Mortgage existed at the time of acquisition of such stock or indebtedness;
(ii) of or owned by any corporation, if such Mortgage existed at the time
such corporation became a Restricted Subsidiary; (iii) of a Restricted
Subsidiary to secure the payment of all or part of the purchase price thereof
or to secure any Debt incurred at any time through the 180th day after the
acquisition thereof for the purpose of financing all or part of the purchase
price thereof or to secure any indebtedness incurred for the purpose of
financing all or part of the purchase price or the cost of construction or
improvement of any property to be purchased, constructed or improved in whole
or in part by or for the Company, the Restricted Subsidiary or any other
Subsidiary; (iv) of a Restricted Subsidiary in favor of the United States of
America or any State thereof, or any other country, or any instrumentality of
any of them, arising in connection with contracts or subcontracts with any
such entity, or contracts with any person relating to a prime contract or
subcontract of such person with any such entity, including Mortgages to
secure partial, progress, advance or other like payments pursuant to any
contract on statute; (v) of a Restricted Subsidiary securing Debt of a
Subsidiary owing to the Company or to one or more other Subsidiaries; (vi) of
a Restricted Subsidiary existing at the date of the Senior Indenture; or
(vii) of any corporation assumed in connection with a consolidation or merger
with, or an acquisition of all or substantially all of the capital stock or
indebtedness of, a corporation, if any such Mortgage existed before such
consolidation, merger or acquisition and did not apply to any capital stock
or indebtedness owned by the Company immediately prior to such consolidation,
merger or acquisition. The restriction referred to in (c) above does not
apply to any Mortgage (or certain extensions, renewals or replacements
thereof): (i) upon property owned or leased by any corporation, if such
Mortgage existed at the time such corporation becomes a Restricted
Subsidiary; (ii) upon property existing at the time of acquisition thereof or
to secure the payment of all or part of the purchase price or the cost of
construction or improvement thereof or to secure any Debt incurred at any
time through the 180th day after the acquisition of such property for the
purpose of financing all or part of the purchase price or the cost of
construction or improvement thereof; (iii) on property of the Company or any
Subsidiary in favor of the United States of America or any State thereof, or
any other country, or any instrumentality of any of them, arising in
connection with contracts or subcontracts with any such entity, or contracts
with any person relating to a prime contract or subcontract of such person
with any such entity, including Mortgages to secure partial, progress,
advance or other like payments pursuant to any contract or statute; (iv)
securing Debt of a Subsidiary owing to the Company or to one or more other
Subsidiaries; (v) existing at the date of the Senior Indenture; or (vi)
assumed in connection with a consolidation or merger with, or an acquisition
of all or substantially all the properties of, a corporation, if any such
Mortgage existed before such consolidation, merger or acquisition and did not
apply to any property owned by the Company immediately before such
consolidation, merger or acquisition. Notwithstanding the foregoing
restrictions, the Company and any Subsidiary may, without securing the Senior
Securities, create, assume or incur Mortgages that would otherwise be subject
to the restrictions, provided that, after giving effect thereto, the
aggregate amount of all Debt secured by such Mortgages ("Excess Secured
Debt") plus all Attributable Debt of the Company and its Subsidiaries in
respect of Sale and Leaseback Transactions (other than Sale and Leaseback
Transactions in connection with which an amount has been or is to be applied
to the retirement of Funded Debt as described under "Restrictions on Sale and
Leaseback" below) would not exceed the greater of $300,000,000 or 10% of
Consolidated Net Tangible Assets, and may suffer the same to exist. (Section
3.6 of the Senior Indenture)
Restrictions on Sale and Leaseback. The Senior Indenture provides that
neither the Company nor any Subsidiary may sell and lease back any Principal
Property owned by the Company or any Subsidiary unless an amount equal to the
Attributable Debt in respect of such transaction is applied within 120 days
to the retirement of Funded Debt which is not subordinated in right of
payment to the Senior Securities, provided that the amount of such required
retirement shall be reduced by the principal amount of any instruments
evidencing Funded Debt (which may include the Senior Securities) delivered
within 120 days after such sale to the applicable trustee for retirement and
cancellation, other than instruments retired by payment on maturity or
pursuant to mandatory sinking fund or prepayment provisions. Notwithstanding
the foregoing limitations, the Company and any Subsidiary may, without
applying any funds to the retirement of Funded Debt, enter into a Sale and
Leaseback Transaction, provided that, after giving effect thereto, the
aggregate amount of all Attributable Debt of the Company and its Subsidiaries
in respect of
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Sale and Leaseback Transactions (other than Sale and Leaseback Transactions
in connection with which an amount has been or is to be applied to the
retirement of Funded Debt) plus Excess Secured Debt would not exceed the
greater of $300,000,000 or 10% of Consolidated Net Tangible Assets. (Section
3.7 of the Senior Indenture)
Subordinated Indenture Provisions
Subordination. The Subordinated Securities will be subordinate and junior
in right of payment to the prior payment in full of all Senior Indebtedness
of the Company. "Senior Indebtedness" means the principal of (and premium, if
any) and interest (including, without limitation, any post-petition interest)
on any indebtedness, whether outstanding at the date of the Subordinated
Indenture or thereafter created or incurred, which is for (a) money borrowed
by the Company, including, without limitation, the Company's (i) five year
$1.2 billion revolving credit facility, (ii) 364-day $500 million revolving
credit facility, (iii) 9 1/8 % Senior Debentures due 2022, (iv) 8 3/8 %
Senior Debentures due 2023, (v) 7% Senior Debentures due 2023 and (vi)
commercial paper borrowings, (b) obligations of the Company evidencing the
purchase price for acquisitions by the Company or a subsidiary other than in
the ordinary course of business, (c) money borrowed by others and assumed or
guaranteed by the Company, (d) capitalized lease obligations of the Company,
(e) obligations under performance guarantees, support agreements and other
agreements in the nature thereof and (f) renewals, extensions, refundings,
amendments and modifications of any indebtedness, of the kind described in
the foregoing clauses (a), (b), (c), (d) and (e) or of the instruments
creating or evidencing such indebtedness, unless, in each case, by the terms
of the instrument creating or evidencing such indebtedness or such renewal,
extension, refunding, amendment and modification, it is provided that such
indebtedness is not senior in right of payment to the Securities.
In the event of any distribution of assets of the Company upon its
dissolution, winding up, liquidation or reorganization, the holders of Senior
Indebtedness shall first be paid in full in respect of principal, premium (if
any) and interest before any such payments are made on account of the
Subordinated Securities. In addition, in the event that (a) the Subordinated
Securities are declared due and payable because of an Event of Default (other
than under the circumstances described in the preceding sentence) or (b) any
default by the Company has occurred and is continuing in the payment of
principal, premium (if any), sinking funds or interest on any Senior
Indebtedness, then no payment shall be made on account of such Subordinated
Securities until all such payments due in respect of such Senior Indebtedness
has been paid in full; provided, however, that if the maturity of such Senior
Indebtedness shall not have been accelerated within a period of 180 days
after the date on which the holders of such Senior Indebtedness (or such
trustee) shall have first obtained written notice of such an event of default
from the Company, and subject to the preceding sentence, any such payment in
respect of the Subordinated Securities which shall have become, or shall
become, due and payable otherwise than by reason of acceleration of the
maturity of the Subordinated Securities following an Event of Default under
the Subordinated Indenture may be made so long as the maturity of such Senior
Indebtedness shall not have been accelerated. Failure to pay principal (and
premium, if any) or interest on the Subordinated Securities pursuant to the
prohibitions of Article Thirteen of the Subordinated Indenture shall
nevertheless constitute an Event of Default thereunder if not paid within the
periods specified therein.
The Company is a party to two Revolving Credit Loan Agreements which
provide for the making of revolving credit loans to the Company of $1.2
billion and $500 million, respectively, and other agreements (relating to
Senior Indebtedness of the Company or its subsidiaries) that contain
provisions that could, indirectly, limit the payment of principal of, premium
(if any) and interest on the Subordinated Securities in the event the Company
should no longer satisfy certain financial tests set forth in such loan or
other agreements.
If this Prospectus is being delivered in connection with the offering of a
series of Subordinated Securities, the applicable Prospectus Supplement or
the information incorporated by reference therein will set forth the
approximate amount of Senior Indebtedness outstanding as of a recent date.
Conversion and Exchange. If the Subordinated Securities will be
convertible into or exchangeable for Common Stock or other Securities, the
Prospectus Supplement relating thereto will set forth the terms and
conditions of such conversion or exchange, including the conversion price or
exchange ratio (or the
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method of calculating the same), the conversion or exchange period (or the
method of determining the same), whether conversion or exchange will be
mandatory or at the option of the holder or the Company, the events requiring
an adjustment of the conversion price or the exchange ratio and provisions
affecting conversion or exchange in the event of the redemption of such
Subordinated Securities. Such terms may also include provisions under which
the number of shares of Common Stock or the number of other Securities to be
received by the holders of such Subordinated Securities upon such conversion
or exchange would be calculated according to the market price of the Common
Stock or such other Securities as of a time stated in such Prospectus
Supplement.
DESCRIPTION OF DEBT WARRANTS
The Company may issue Debt Warrants to purchase Debt Securities
("Underlying Debt Securities"). Debt Warrants may be issued, either
separately or together with other Offered Securities, and will be issued
under a warrant agreement (each a "Debt Warrant Agreement") to be entered
into between the Company and the bank or trust company specified in the
applicable Prospectus Supplement ("Debt Warrant Agent"). Each Trustee is
expected to serve as Debt Warrant Agent with respect to any Debt Warrants to
purchase Underlying Debt Securities issued under its Indenture. The form of
the Debt Warrant Agreement has been filed with the SEC as an exhibit to the
Registration Statements. The following summary of the Debt Warrant Agreement
does not purport to be complete and is subject to, and qualified in its
entirety by reference to, the Debt Warrant Agreement, including the
definitions of certain terms therein.
General. Reference is made to the Prospectus Supplement for the specific
terms of the Debt Warrants in respect of which this Prospectus and the
Prospectus Supplement are being delivered ("Offered Debt Warrants"),
including the following:
(1) The title and aggregate number of such Offered Debt Warrants;
(2) The offering price of such Offered Debt Warrants;
(3) The title, aggregate principal amount and terms of the Underlying
Debt Securities that may be purchased upon exercise of such Offered Debt
Warrants (as specified under "Description of Debt Securities");
(4) The principal amount of Underlying Debt Securities that may be
purchased upon exercise of each such Offered Debt Warrant, and the price,
or the manner of determining the price, at which such principal amount may
be purchased upon such exercise;
(5) The time or times at which, or period or periods during which,
such Offered Debt Warrants may be exercised and the expiration date of
such Offered Debt Warrants;
(6) The terms of any right of the Company to redeem such Offered Debt
Warrants;
(7) Whether such Offered Debt Warrants are to be issued with (a) any
Offered Debt Securities and, if so, the title, aggregate principal amount
and terms of such Offered Debt Securities (as specified under "Description
of Debt Securities") and the number of such Offered Debt Warrants issued
with each $1,000 principal amount of such Offered Debt Securities (or such
other principal amount as may be established) or (b) any other Offered
Securities and, if so, the number and terms thereof;
(8) The date, if any, on and after which such Offered Debt Warrants
and such Offered Debt Securities or other Offered Securities will be
separately transferable; and
(9) A discussion of the federal income tax considerations applicable
to such Offered Debt Warrants and Underlying Debt Securities.
Certificates representing Debt Warrants ("Debt Warrant Certificates") may
be issued in registered or bearer form, or both, as set forth in the
applicable Prospectus Supplement, and will be exchangeable for new Debt
Warrant Certificates of different denominations. No service charge will be
made for any permitted transfer or exchange of Debt Warrant Certificates, but
the Company may require payment of
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any tax or other governmental charge payable in connection therewith. Debt
Warrants may be exercised at the corporate trust office of the Debt Warrant
Agent or any other office indicated in the Prospectus Supplement.
Exercise of Debt Warrants. Each Offered Debt Warrant will entitle the
holder thereof to purchase such amount of Underlying Debt Securities at the
exercise price set forth in, or calculable from, the Prospectus Supplement
relating to such Offered Debt Warrants. After the close of business on the
applicable expiration date, unexercised Offered Debt Warrants will become
void.
Offered Debt Warrants may be exercised by payment to the Debt Warrant
Agent of the applicable exercise price and by delivery to the Debt Warrant
Agent of the information specified on the Debt Warrant Certificate. Offered
Debt Warrants will be deemed to have been exercised upon receipt of the
exercise price, subject to the receipt by the Debt Warrant Agent, within five
business days thereafter, of the Debt Warrant Certificate or Certificates
evidencing such Offered Debt Warrants. Upon receipt of such payment and the
properly completed Debt Warrant Certificates at the corporate trust office of
the Debt Warrant Agent or any other office indicated in the applicable
Prospectus Supplement, the Company will, as soon as practicable, deliver the
amount of Underlying Debt Securities purchased upon such exercise. If fewer
than all of the Offered Debt Warrants represented by any Debt Warrant
Certificate are exercised, a New Debt Warrant Certificate will be issued for
the unexercised Offered Debt Warrants. The holder of a Debt Warrant will be
required to pay any tax or other governmental charge that may be imposed in
connection with any transfer involved in the issuance of Underlying Debt
Securities purchased upon such exercise.
Modifications. The Debt Warrant Agreement and the terms of the Offered
Debt Warrants may be amended by the Company and the Debt Warrant Agent,
without the consent of any holder, for the purpose of curing any ambiguity,
or of curing, correcting or supplementing any defective or inconsistent
provision contained therein, or in any other manner that the Company deems
necessary or desirable and that will not materially and adversely affect the
interests of the holders of the Offered Debt Warrants.
The Company and the Debt Warrant Agent also may modify or amend the Debt
Warrant Agreement and the terms of the Offered Debt Warrants with the consent
of the holders of not less than a majority in number of the then outstanding
unexercised Debt Warrants affected thereby; provided that no such
modification or amendment that accelerates the expiration date, increases the
exercise price, reduces the number of outstanding Debt Warrants the consent
of the holders of which is required for modification or amendment of the Debt
Warrant Agreement or the terms of the Debt Warrants, or otherwise materially
and adversely affects the rights of the holders of the Debt Warrants, may be
made without the consent of each holder affected thereby.
Debt Warrant Adjustments. The terms and conditions on which the exercise
price of and/or the number of shares of Common Stock or other Securities
covered by an Offered Debt Warrant are subject to adjustment will be set
forth in the Debt Warrant Agreement and the related Prospectus Supplement.
Such terms will include provisions for adjusting the exercise price and/or
the number of shares of Common Stock or other Securities covered by such
Offered Debt Warrant; the events requiring such adjustment; the events upon
which the Company may, in lieu of making such adjustment, make proper
provision so that the holder of such Offered Debt Warrant, upon exercise
thereof, would be treated as if such holder had exercised such Offered Debt
Warrant prior to the occurrence of such events; and provisions affecting
exercise in the event of certain events affecting the Common Stock or other
Securities.
No Rights as Holders of Underlying Debt Securities. Holders of Debt
Warrants are not entitled, by virtue of being such holders, to payments of
principal of (or premium, if any, on) or interest, if any, on the related
Underlying Debt Securities or to exercise any other rights whatsoever as
holders of Underlying Debt Securities.
DESCRIPTION OF EQUITY SECURITIES
Rights Applicable to Preferred and Common Stockholders
The following description of the capital stock of the Company is a summary
of certain provisions of the Company's Restated Certificate of Incorporation.
The authorized capital stock of the Company consists of 2,000,000 shares of
Preferred Stock, par value $1.00 per share, and 150,000,000 shares of Common
Stock, par value $0.25 per share.
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Dividend Rights; Share Purchases. New York law provides that (1) a
corporation may pay dividends on its outstanding shares in cash or property
(except when the corporation is insolvent or when such payment would render
the corporation insolvent) or in its own shares; (2) dividends payable in
cash or property may be paid to the extent of the corporation's earned
surplus or, subject to certain conditions, to the extent of its capital
surplus; and (3) a corporation may purchase its shares to the extent of
earned surplus or otherwise for specified purposes (such as eliminating
fractional share interests), except when the corporation is insolvent or when
such purchase would render the corporation insolvent. New York law does not
restrict the repurchase of shares when there is an arrearage in the payment
of dividends or sinking fund installments.
After all preferential dividend rights of any outstanding shares of
Preferred Stock have been satisfied, the holders of the Common Stock are
entitled to receive dividends, when, as and if declared by the Company's
Board of Directors.
The Company is a party to two Revolving Credit Loan Agreements which
provide for the making of revolving credit loans to the Company of $1.2
billion and $500 million, respectively, and other agreements (relating to
senior indebtedness of the Company or its subsidiaries) that contain
provisions that could, indirectly, limit the payment of dividends on the
Common Stock in the event the Company should no longer satisfy certain
financial tests set forth in such loan or other agreements.
Liquidation Rights. In the event of the liquidation, dissolution or
winding up of the Company (whether voluntary or involuntary), the holders of
any outstanding Preferred Stock will be entitled to be paid in full the
amount set forth in the Certificate of Designations therefor, plus all
accrued and unpaid dividends before any amount may be paid to the holders of
any other class of stock; and, after such payments, any remaining assets of
the Company will be distributed pro rata to the holders of the Common Stock.
Voting Rights; Approval of Certain Matters; Shareholder Action. The
Common Stock has one vote per share on all matters submitted to shareholders.
The Common Stock does not have cumulative voting rights and generally votes
together as a single class and acts by a majority of the votes cast at a
meeting of shareholders (however, see "Election and Removal of Directors;
Filling of Vacancies" below). The voting rights of each series of Preferred
Stock, if issued, will be set forth in the Certificate of Designations
relating to such series and in the related Prospectus Supplement.
The New York Business Corporation Law ("BCL") requires the affirmative
vote of at least two-thirds of the voting power of the outstanding shares
entitled to vote thereon to approve mergers or consolidations in which the
Company would be merged or consolidated or the sale of all or substantially
all the assets of the Company. New York law provides that mergers,
consolidations and amendments of the Restated Certificate of Incorporation
must also be approved by a majority of each class of outstanding shares,
voting separately as a class, if the merger, consolidation or amendment would
(1) eliminate or limit the voting rights of the class, (2) subordinate the
rights of the class or (3) change such shares or result in their conversion
or in the modification of the terms on which they may be converted, but only
if any such actions would adversely affect the holders thereof. Other
amendments of the Restated Certificate of Incorporation require the
affirmative vote of a majority of the voting power of the outstanding shares.
In addition, Section 912 of the BCL provides that no "resident domestic
corporation" (or any subsidiary) shall engage in a "business combination"
with any "interested shareholder" (generally, a beneficial owner of 20% or
more of the outstanding voting stock) unless (1) the business combination or
the purchase of stock by the interested shareholder is approved by the board
of directors prior to such shareholder's "stock acquisition date", (2) the
business combination is approved by a majority of the voting power of the
corporation's outstanding stock (excluding any stock owned by the interested
shareholder) at a meeting called no earlier than five years after the stock
acquisition date or (3) the consideration paid to shareholders in the
business combination (which may not occur until the expiration of five years
from the stock acquisition date) is at least equal to the highest of certain
specified amounts. As defined, a "resident domestic corporation" is a
corporation incorporated in New York that either has its principal executive
offices and significant business operations in New York, or that, alone or in
combination with one or more subsidiaries of which it owns 80% or more of the
voting stock, has at least
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250 employees or 25% of the total number of employees of itself and such
subsidiaries employed within New York, and that has 10% of its voting stock
beneficially owned by residents of New York; a "business combination"
includes a merger or consolidation, a sale of assets representing 10% or more
of the corporation's consolidated earning power or market value, the issuance
of stock amounting to 5% or more of the corporation's outstanding stock and a
liquidation proposal made by the interested shareholder; and the "stock
acquisition date" is the date on which a shareholder first becomes an
interested shareholder.
Pursuant to the BCL, (1) the Company's By-laws do not permit shareholders
to call special meetings unless there is a failure to hold an annual meeting
or elect directors for specified periods of time and (2) an action requiring
shareholder approval may be taken without a meeting only by the written
consent of the holders of all outstanding shares entitled to vote thereon.
Election and Removal of Directors; Filling of Vacancies. The Restated
Certificate of Incorporation provides for (1) three classes of directors,
each class consisting of approximately one-third of the total number of
directorships and serving for a term of three years, and (2) the election of
directors by a plurality vote of the shares voting at the annual meeting of
shareholders. The Restated Certificate of Incorporation provides that a
director may be removed for cause by the directors or by the affirmative vote
of at least 80% of the voting power of all of the then-outstanding shares of
stock eligible to vote, voting together as a single class.
A vacancy on the Company's Board of Directors resulting from an increase
in the size of such Board may be filled by the directors holding a majority
of the directorships prior to such increase; other vacancies may be filled by
a majority of the directors then in office, even if less than a quorum, or by
the sole remaining director. A director so elected may only serve until the
next annual meeting of shareholders, at which time he is subject to election
by the shareholders.
Preemptive Rights. Holders of Common Stock do not (and holders of
Preferred Stock, if issued, will not) have preemptive rights.
Description of Preferred Stock
Under its Restated Certificate of Incorporation, the Company is authorized
to issue, in one or more series, up to 2,000,000 shares of its Preferred
Stock, with such rights, preferences, privileges and restrictions, including
dividend rights and rates, conversion rights, voting rights, redemption
rights and terms and liquidation preferences, as the Company's Board of
Directors or a duly authorized committee thereof may determine, all without
action by the Company's shareholders. At the date of this Prospectus, the
Company had no outstanding shares of Preferred Stock.
The Company may issue shares of its Preferred Stock, either separately or
together with other Offered Securities. The description below sets forth
certain general terms and provisions of the Preferred Stock covered by this
Prospectus. The specific terms of the Preferred Stock in respect of which
this Prospectus and the Prospectus Supplement are being delivered ("Offered
Preferred Stock") will be described in the Prospectus Supplement relating to
such Offered Preferred Stock and may differ from the terms set forth below.
The following summary of certain provisions of the Preferred Stock does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, the Restated Certificate of Incorporation and the Certificate
of Designations relating to the Offered Preferred Stock.
General. The Offered Preferred Stock will, when issued, be fully paid and
nonassessable, and the holders of Offered Preferred Stock will have no
preemptive rights. Unless otherwise specified in the Prospectus Supplement
relating to the Offered Preferred Stock, each series of Preferred Stock will
rank on a parity as to dividends, upon liquidation and in all other respects
with all other Preferred Stock and will have the dividend, liquidation,
redemption, conversion, exchange, voting and other rights and terms set forth
below.
Reference is made to the Prospectus Supplement relating to the Offered
Preferred Stock for specific terms, including:
(1) The title and number of shares of such Offered Preferred Stock;
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(2) The offering price per share of such Offered Preferred Stock;
(3) The dividend rate, periods and payment dates, or the method of
calculation thereof, applicable to such Offered Preferred Stock;
(4) The date from which dividends on such Offered Preferred Stock will
accumulate, if applicable;
(5) The liquidation preference of such Offered Preferred Stock;
(6) The voting rights of such Offered Preferred Stock;
(7) Procedures for the auction and remarketing, if any, of such
Offered Preferred Stock;
(8) Provisions for a sinking fund, if any, for such Offered Preferred
Stock;
(9) Provisions for redemption, if any, of such Offered Preferred
Stock;
(10) Whether such Offered Preferred Stock will be convertible into or
exchangeable for shares of Common Stock or other Securities and, if so,
the terms and conditions upon which such Offered Preferred Stock will be
so convertible or exchangeable, including the conversion price or exchange
ratio and the conversion or exchange period (or the method of determining
the same);
(11) Any other specific terms, preferences or rights of, or
limitations or restrictions on, such Offered Preferred Stock;
(12) Whether such Offered Preferred Stock will be listed on any
securities exchange;
(13) Whether such Offered Preferred Stock is to be issued with any
other Offered Securities and, if so, the amount and terms thereof; and
(14) A discussion of the federal income tax considerations applicable
to such Offered Preferred Stock.
Subject to the terms of the Offered Preferred Stock, the remaining authorized
shares of Preferred Stock may be issued by the Company in one or more series
at any time and from time to time.
As used herein, (1) the term "Pari Passu Preferred" means the Offered
Preferred Stock and any shares of stock issued by the Company ranking on a
parity with the Offered Preferred Stock as to payment of dividends and
distribution of assets and (2) the term "Junior Stock" means the Common Stock
and any other stock issued by the Company ranking junior to the Pari Passu
Preferred.
Dividends. Holders of the Offered Preferred Stock will be entitled to
receive cash dividends, when, as and if declared by the Board of Directors of
the Company, out of assets of the Company legally available for payment, at
such rate and on such dates as will be set forth in the applicable Prospectus
Supplement. Each dividend will be payable to holders of record as they appear
on the stock books of the Company on the record dates fixed by the Board of
Directors of the Company. Dividends, if cumulative, will be cumulative from
and after the date set forth in the applicable Prospectus Supplement.
Dividends in full may be paid (or declared and set apart) on any series of
Pari Passu Preferred for any dividend period if, but only if, (a) there are
no arrearages in dividends for any past dividend periods on any series of
Pari Passu Preferred that has cumulative dividend rights and (b) dividends in
full for the current dividend period have been paid (or declared and set
apart) on all Pari Passu Preferred. Dividends may be paid (or declared and
set apart) on any series of Pari Passu Preferred (in a case when dividends
are not paid (or declared and set apart) in full on all Pari Passu Preferred)
if, but only if, such dividends are shared ratably by the holders of all
series of Pari Passu Preferred in proportion to the respective arrearages and
undeclared and unpaid current cumulative dividends. No interest, or sum of
money in lieu of interest, will be payable in respect of any dividend payment
or payments that may be in arrears.
If, for any dividend period or periods, dividends on any Pari Passu
Preferred have not been paid (or declared and set apart), the Company may not
declare any dividends or make any distributions on Junior Stock (except a
dividend payable in Junior Stock or in options, rights or warrants to
purchase or acquire Junior Stock), or make any payment on account of the
purchase, redemption or other retirement of Junior Stock (except out of the
proceeds of the sale of Junior Stock).
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Conversion and Exchange. If the Offered Preferred Stock will be
convertible into or exchangeable for Common Stock or other Securities, the
Prospectus Supplement relating thereto will set forth the terms and
conditions of such conversion or exchange, including the conversion price or
exchange ratio (or the method of calculating the same), the conversion or
exchange period (or the method of determining the same), whether conversion
or exchange will be mandatory or at the option of the holder or the Company,
the events requiring an adjustment of the conversion price or the exchange
ratio and provisions affecting conversion or exchange in the event of the
redemption of such Offered Preferred Stock. Such terms may also include
provisions under which the number of shares of Common Stock or the number of
other Securities to be received by the holders of such Offered Preferred
Stock upon such conversion or exchange would be calculated according to the
market price of the Common Stock or such other Securities as of a time stated
in such Prospectus Supplement.
Liquidation Rights. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company, the holders of the
Pari Passu Preferred will be entitled to receive, out of assets of the
Company available for distribution to shareholders, before any distribution
of assets is made to holders of any Junior Stock, a liquidating distribution
in the amount set forth in the applicable Prospectus Supplement plus all
accrued and unpaid dividends. If, upon any voluntary or involuntary
liquidation, dissolution or winding up of the Company, the amounts payable
with respect to the Pari Passu Preferred are not paid in full, the holders of
Pari Passu Preferred will share ratably in the distribution of any assets of
the Company, in proportion to the full respective preferential amounts and
accrued but unpaid dividends to which they are entitled. After payment of the
full amount of the liquidating distributions to which they are entitled, the
holders of the Pari Passu Preferred will not be entitled to any further
participation in any distribution of assets by the Company. A consolidation
or merger of the Company with or into any other corporation or corporations
or a sale of all or substantially all of the assets of the Company will not
be deemed for this purpose to be a liquidation, dissolution or winding up of
the Company.
Redemption. If so provided in the applicable Prospectus Supplement, the
Offered Preferred Stock will be redeemable in whole or in part at the option
of the Company, at the times and at the redemption prices set forth in the
applicable Prospectus Supplement.
If dividends on any series of Pari Passu Preferred have not been paid in
full (or declared and set apart), no shares of Pari Passu Preferred of any
series may be redeemed, in whole or in part, unless all shares of Pari Passu
Preferred of all series are simultaneously redeemed, and the Company may not
purchase or acquire any shares of Pari Passu Preferred otherwise than
pursuant to a tender or exchange offer made on the same terms to all holders
of Pari Passu Preferred, without in either case the consent of the holders of
at least two-thirds of all shares of Pari Passu Preferred of all series
voting together as a single class without regard to series; provided, that to
meet its purchase or sinking fund obligations with respect to any series of
Pari Passu Preferred, the Company may apply shares of such Pari Passu
Preferred then held as treasury stock.
Voting Rights. Except as indicated below or in the applicable Prospectus
Supplement, or except as expressly required by applicable law, the holders of
Preferred Stock will not be entitled to vote. If the equivalent of six
quarterly dividends on the Offered Preferred Stock or any series of Pari
Passu Preferred that has comparable voting rights is in default (whether or
not such dividends have been declared or such defaulted dividends are
consecutive), the number of directors of the Company will be increased by two
and the holders of all outstanding series of such Pari Passu Preferred
(whether or not dividends thereon are in default), voting as a single class
without regard to series, will be entitled to elect such additional directors
until all dividends in default have been paid (or declared and set apart).
The holders of such Pari Passu Preferred may exercise such special class
voting rights at meetings of the Company's shareholders for the election of
directors or, under certain circumstances, at special meetings for the
purpose of electing such directors, in either case so long as the holders of
not less than one-third of the aggregate number of outstanding shares of such
Pari Passu Preferred are present in person or by proxy.
The affirmative vote of the holders of at least two-thirds of the
outstanding Pari Passu Preferred, voting as a single class without regard to
series, will be required (1) for any amendment of the Restated
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Certificate of Incorporation that will adversely affect the preferences,
rights or voting powers of the Pari Passu Preferred, provided that, in any
case in which one or more, but not all, series of Pari Passu Preferred then
outstanding would be so affected as to their preferences, rights or voting
powers, only the consent of the holders of at least two-thirds of the shares
of each series that would be so affected, voting separately as a class, shall
be required or (2) to issue any series of Preferred Stock or other class of
stock that has preference as to dividends or distribution of assets over any
outstanding Pari Passu Preferred.
DESCRIPTION OF DEPOSITARY SHARES
The Company may offer Depositary Shares representing interests in shares
of its Preferred Stock of one or more series. The Depositary Shares may be
issued, either separately or together with other Offered Securities, and will
be issued under a Deposit Agreement (each a "Deposit Agreement") to be
entered into between the Company and the bank or trust company specified in
the applicable Prospectus Supplement ("Preferred Stock Depositary"). The form
of the Deposit Agreement has been filed with the SEC as an exhibit to the
Registration Statements. The following summary of certain provisions of the
Depositary Shares does not purport to be complete and is subject to, and
qualified in its entirety by reference to, the Deposit Agreement and the
Depositary Receipts referred to below, including the definitions of certain
terms therein.
The Prospectus Supplement relating to an offering of Depositary Shares
will describe the specific terms of the Depositary Shares offered thereby
("Offered Depositary Shares"), including the terms of the series of Preferred
Stock deposited by the Company under the Deposit Agreement, the number of
Offered Depositary Shares, the fraction of one share of such Preferred Stock
represented by one Offered Depositary Share, the initial offering price and a
discussion of the federal income tax considerations applicable to such
Offered Depositary Shares, as well as, if applicable, information on any
other Offered Securities with which such Offered Depositary Shares will be
sold. If so indicated in the Prospectus Supplement, the terms of the Offered
Depositary Shares may differ from the terms set forth below.
General. The Company will provide for the issuance by the Preferred Stock
Depositary to the public of receipts ("Depositary Receipts") for the
Depositary Shares, each of which will represent a fractional interest (to be
specified in the applicable Prospectus Supplement) in one share of the
related Preferred Stock, as described below.
The shares of any series of Preferred Stock represented by the Depositary
Shares will be deposited by the Company under the Deposit Agreement. The
Prospectus Supplement will set forth the name and address of the Preferred
Stock Depositary. Subject to the terms of the Deposit Agreement, each owner
of a Depositary Share will be entitled, in proportion to the applicable
fractional interest in a share of such series of Preferred Stock represented
by such Depositary Share, to all the rights and preferences of the Preferred
Stock represented by such Depositary Share (including dividend, voting and
liquidation rights and any redemption, conversion or exchange rights).
Dividends and Other Distributions. The Preferred Stock Depositary will
distribute all cash dividends and other cash distributions received in
respect of the related series of Preferred Stock to the record holders of the
Depositary Shares in proportion to the number of such Depositary Shares owned
by such holders on the relevant record date. The Preferred Stock Depositary
will distribute only such amount, however, as can be distributed without
attributing to any holder of Depositary Shares a fraction of one cent, and
any balance not so distributed shall be added to and treated as part of the
next sum, if any, received by the Preferred Stock Depositary for distribution
to record holders of Depositary Shares.
In the event of a distribution other than in cash, the Preferred Stock
Depositary will distribute property received by it to the record holders of
Depositary Shares entitled thereto, unless the Preferred Stock Depositary
determines that it is not feasible to make such distribution, in which case
the Preferred Stock Depositary may, with the approval of the Company, sell
such property and distribute the net proceeds from such sale to such holders.
In the event of the liquidation, dissolution or winding up of the affairs
of the Company, whether voluntary or involuntary, the holders of each
Depositary Share will be entitled to the fraction of the liquidation
preference accorded each share of the applicable series of Preferred Stock,
as set forth in the Prospectus Supplement.
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<PAGE>
The Deposit Agreement will also contain provisions relating to the manner
in which any subscription or similar rights offered by the Company to holders
of the related series of Preferred Stock will be made available to holders of
Depositary Shares.
Withdrawal of Preferred Stock. Upon surrender of Depositary Receipts at
the corporate trust office of the Preferred Stock Depositary (unless the
related shares of Preferred Stock have previously been called for
redemption), the holder of the Depositary Shares evidenced thereby will be
entitled to receive at such office, to or upon such holder's order, the
number of whole shares of the related series of Preferred Stock and any money
or other property represented by such Depositary Shares. However, shares of
Preferred Stock so withdrawn may not be redeposited. If the holder requests
withdrawal of less than all the shares of Preferred Stock to which such
holder is entitled, or if such holder would otherwise be entitled to a
fractional share of Preferred Stock, the Preferred Stock Depositary will
deliver to such holder a new Depositary Receipt evidencing such balance or
fractional share.
Redemption of Depositary Shares Whenever the Company redeems Preferred
Stock held by the Preferred Stock Depositary, the Preferred Stock Depositary
will redeem as of the same redemption date the number of Depositary Shares
representing the Preferred Stock so redeemed; provided that the Company has
paid in full to the Preferred Stock Depositary the redemption price of such
Preferred Stock plus accrued and unpaid dividends thereon to the date fixed
for redemption. The redemption price per Depositary Share will be equal to
the applicable fraction of the redemption price per share and accrued and
unpaid dividends payable with respect to such Preferred Stock. If less than
all the Depositary Shares are to be redeemed, the Depositary Shares to be
redeemed will be selected by lot or pro rata or by another equitable method,
in each case as may be determined by the Company.
After the date fixed for redemption, the Depositary Shares so called for
redemption will no longer be deemed to be outstanding, and all rights of the
holders of the Depositary Shares so called for redemption will cease, except
the right to receive the moneys payable upon such redemption and any money or
other property to which the holders of such Depositary Shares were entitled
upon such redemption and surrender to the Preferred Stock Depositary of the
Depositary Receipts evidencing such Depositary Shares.
Conversion and Exchange. The Depositary Shares, as such, are not
convertible into or exchangeable for Common Stock or other Securities.
Nevertheless, if the Preferred Stock represented by the Depositary Shares is
convertible into or exchangeable for Common Stock or other Securities, the
Depositary Receipts may be surrendered by the holder thereof to the Preferred
Stock Depositary with written instructions to convert or exchange such
Preferred Stock into whole shares of Common Stock or other Securities, as
specified in the related Prospectus Supplement. The Company, upon receipt of
such instructions and any amounts payable in respect thereof, will cause the
conversion or exchange thereof and will deliver to the holder such whole
shares of Common Stock or such whole number of other Securities (and cash in
lieu of any fractional share or Security). In the case of a partial
conversion or exchange, the holder will receive a new Depositary Receipt
evidencing the unconverted or unexchanged balance.
Voting the Preferred Stock. Upon receipt of notice of any meeting at which
holders of one or more series of Preferred Stock are entitled to vote, the
Preferred Stock Depositary will mail the information contained in such notice
of meeting to the holders of the Depositary Shares relating to such Preferred
Stock. Each record holder of such Depositary Shares on the record date (which
will be the same date as the record date for such meeting) will be entitled
to instruct the Preferred Stock Depositary as to the manner in which to vote
the number of shares of Preferred Stock represented by such Depositary
Shares. The Company will agree to take all reasonable action that may be
deemed necessary by the Preferred Stock Depositary to enable the Preferred
Stock Depositary to vote in accordance with each holder's instructions. The
Preferred Stock Depositary will abstain from voting Preferred Stock to the
extent it does not receive instructions from the holders of Depositary Shares
representing such Preferred Stock.
Amendment and Termination of the Deposit Agreement. The form of Depositary
Receipt evidencing the Depositary Shares and any provision of the Deposit
Agreement may at any time be amended by agreement between the Company and the
Preferred Stock Depositary. However, no amendment that
19
<PAGE>
materially and adversely alters the rights of the holders of Depositary
Shares will be effective unless such amendment has been approved by the
holders of at least a majority of the Depositary Shares then outstanding;
provided that any amendment that prejudices any substantial right of the
holders of Depositary Shares will not become effective until the expiration
of 90 days after notice of such amendment has been given to such holders. A
holder that continues to hold one or more Depositary Receipts at the
expiration of such 90-day period will be deemed to consent to, and will be
bound by, such amendment. No amendment may impair the right of any holder to
surrender such holder's Depositary Receipt and receive the related Preferred
Stock, as discussed above under "Withdrawal of Preferred Stock".
The Deposit Agreement may be terminated by the Company at any time upon
not less than 60 days' prior written notice to the Preferred Stock
Depositary. In any such case, the Preferred Stock Depositary will deliver to
each holder of Depositary Shares, upon surrender of the related Depositary
Receipts, the number of whole shares of the related series of Preferred Stock
to which such holder is entitled, together with cash in lieu of any
fractional share. The Deposit Agreement will terminate automatically after
all the related Preferred Stock has been redeemed, withdrawn, converted or
exchanged or there has been a final distribution in respect of the Preferred
Stock represented by such Depositary Shares in connection with any
liquidation, dissolution or winding up of the Company.
Charges of Preferred Stock Depositary. Except as provided in the
Prospectus Supplement, the Company will pay the fees and expenses of the
Preferred Stock Depositary, and holders of Depositary Receipts will be
required to pay any tax or other governmental charge that may be imposed in
connection with the transfer, exercise, surrender or split-up of Depositary
Receipts.
Miscellaneous. The Preferred Stock Depositary will forward to the holders
of Depositary Shares all reports and communications from the Company that are
delivered to the Preferred Stock Depositary and that the Company is required
to furnish to the holders of the relevant series of Preferred Stock.
Neither the Preferred Stock Depositary nor the Company will be liable if
it is prevented or delayed by law or any circumstance beyond its control in
performing its obligations under the Deposit Agreement. The obligations of
the Company and the Preferred Stock Depositary under the Deposit Agreement
will be limited to performance in good faith of their respective duties
thereunder, and neither entity will be obligated to prosecute or defend any
legal proceeding in respect of any Depositary Shares or related shares of
Preferred Stock unless satisfactory indemnity is furnished.
Resignation and Removal of Preferred Stock Depositary. The Preferred Stock
Depositary may resign at any time by delivering to the Company notice of its
election to do so, and the Company may at any time remove the Preferred Stock
Depositary, any such resignation or removal to take effect upon the
appointment of a successor Preferred Stock Depositary. Such successor
Preferred Stock Depositary must be appointed within 60 days after delivery of
a notice of resignation or removal and must be a bank or trust company having
its principal office in the United States and having a combined capital and
surplus of at least $50,000,000.
DESCRIPTION OF EQUITY WARRANTS
The Company may issue Warrants to purchase Common Stock and/or Preferred
Stock. Equity Warrants may be issued, either separately or together with
other Offered Securities, and will be issued under a Warrant Agreement (each
an "Equity Warrant Agreement") to be entered into between the Company and the
bank or trust company specified in the applicable Prospectus Supplement
("Equity Warrant Agent"). The form of Equity Warrant Agreement has been filed
with the SEC as an exhibit to the Registration Statements. The following
summary of the Equity Warrant Agreement does not purport to be complete and
is subject to, and qualified in its entirety by reference to, the Equity
Warrant Agreement, including the definitions of certain terms therein.
General. Reference is made to the Prospectus Supplement for the specific
terms of the Equity Warrants in respect of which this Prospectus and the
Prospectus Supplement are being delivered ("Offered Common Warrants"),
including the following:
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<PAGE>
(1) The title and aggregate number of such Offered Equity Warrants;
(2) The offering price of such Offered Equity Warrants;
(3) The number of shares of Common Stock and/or Preferred Stock that
may be purchased upon exercise of each such Offered Equity Warrant; the
price, or the manner of determining the price, at which such shares may be
purchased upon such exercise; if other than cash, the property and manner
in which the exercise price may be paid; and any minimum number of such
Offered Equity Warrants that are exercisable at any one time;
(4) The time or times at which, or period or periods during which,
such Offered Equity Warrants may be exercised and the expiration date of
such Offered Equity Warrants;
(5) The terms of any right of the Company to redeem such Offered
Equity Warrants;
(6) Whether such Offered Equity Warrants are to be issued with any
other Offered Securities and, if so, the amount and terms thereof;
(7) The date, if any, on and after which such Offered Equity Warrants
and such other Offered Securities will be separately transferable;
(8) The terms of any right of the Company to accelerate the exercise
of such Offered Equity Warrants upon the occurrence of certain events; and
(9) A discussion of the federal income tax considerations applicable
to such Offered Equity Warrants and Common Stock and Preferred Stock.
Certificates representing Equity Warrants ("Equity Warrant Certificates")
may be issued in registered or bearer form, or both, as set forth in the
applicable Prospectus Supplement, and will be exchangeable for new Equity
Warrant Certificates of different denominations. No service charge will be
made for any permitted transfer or exchange of Equity Warrant Certificates,
but the Company may require payment of any tax or other governmental charge
payable in connection therewith. Equity Warrants may be exercised at the
corporate trust office of the Equity Warrant Agent or any other office
indicated in the applicable Prospectus Supplement.
Exercise of Equity Warrants. Each Offered Equity Warrant will entitle the
holder thereof to purchase such number of shares of Common Stock or Preferred
Stock at the exercise price set forth in, or calculable from, the Prospectus
Supplement relating to the Offered Equity Warrants. After the close of
business on the applicable expiration date, unexercised Equity Warrants will
become void.
Offered Equity Warrants may be exercised by payment to the Equity Warrant
Agent of the applicable exercise price and by delivery to the Equity Warrant
Agent of the information specified on the Equity Warrant Certificate. Offered
Equity Warrants will be deemed to have been exercised upon receipt of the
exercise price, subject to the receipt by the Equity Warrant Agent, within
five business days thereafter, of the Equity Warrant Certificate or
Certificates evidencing such Offered Equity Warrants. Upon receipt of such
payment and the properly completed Equity Warrant Certificates at the
corporate trust office of the Equity Warrant Agent or any other office
indicated in the applicable Prospectus Supplement, the Company will, as soon
as practicable, deliver the shares of Common Stock or Preferred Stock, as
applicable, purchased upon such exercise. If fewer than all of the Offered
Equity Warrants represented by any Equity Warrant Certificate are exercised,
a new Equity Warrant Certificate will be issued for the unexercised Offered
Equity Warrants. The holder of an Equity Warrant will be required to pay any
tax or other governmental charge that may be imposed in connection with any
transfer involved in the issuance of Common Stock or Preferred Stock
purchased upon such exercise.
Modifications. The Equity Warrant Agreement and the terms of the Equity
Warrants may be amended by the Company and the Equity Warrant Agent, without
the consent of any holder, for the purpose of curing any ambiguity, or of
curing, correcting or supplementing any defective or inconsistent provision
contained therein, or in any other manner that the Company deems necessary or
desirable and that will not materially and adversely affect the interests of
the holders of the Offered Equity Warrants.
21
<PAGE>
The Company and the Equity Warrant Agent also may modify or amend the
Equity Warrant Agreement and the terms of the Offered Equity Warrants with
the consent of the holders of not less than a majority in number of the then
outstanding unexercised Equity Warrants affected thereby; provided that no
such modification or amendment that accelerates the expiration date,
increases the exercise price, reduces the number of outstanding Equity
Warrants the consent of the holders of which is required for modification or
amendment of the Equity Warrant Agreement or the terms of the Equity
Warrants, or otherwise materially and adversely affects the rights of the
holders of the Equity Warrants may be made, without the consent of each
holder affected thereby.
Equity Warrant Adjustments. The terms and conditions on which the exercise
price of and/or the number of shares of Common Stock and/or Preferred Stock
covered by an Offered Equity Warrant are subject to adjustment will be set
forth in the Equity Warrant Agreement and the related Prospectus Supplement.
Such terms will include provisions for adjusting the exercise price and/or
the number of shares of Common Stock and/or Preferred Stock covered by such
Offered Equity Warrant; the events requiring such adjustment; the events upon
which the Company may, in lieu of making such adjustment, make proper
provision so that the holder of such Offered Equity Warrant, upon exercise
thereof, would be treated as if such holder had exercised such Offered Equity
Warrant prior to the occurrence of such events; and provisions affecting
exercise in the event of certain events affecting the Common Stock or
Preferred Stock.
No Rights as Shareholders. Holders of Equity Warrants are not entitled, by
virtue of being such holders, to vote, consent or receive notice as
shareholders of the Company in respect of any meeting of shareholders for the
election of directors of the Company or any other matter, or exercise any
other rights whatsoever as shareholders of the Company.
PLAN OF DISTRIBUTION
The Company may sell the Securities being offered hereby in four ways: (i)
through underwriters, (ii) through dealers, (iii) directly to purchasers and
(iv) through agents.
The distribution of Securities may be effected from time to time in one or
more transactions at a fixed price or prices, which may be changed, or at
market prices prevailing at the time of the sale, or at prices related to
such prevailing market prices or at negotiated prices. The Prospectus
Supplement will describe the method of distribution of the Offered
Securities.
If any underwriters are utilized in the sale of Securities, the Company
will enter into an underwriting agreement with such underwriters at the time
of such sale to them and the names of the underwriters and the terms of the
transaction will be set forth in the Prospectus Supplement, which will be
used by the underwriters to make resales of the Securities in respect of
which this Prospectus is delivered to the public. The underwriters may be
entitled, under the relevant underwriting agreement, to indemnification by
the Company against certain liabilities, including liabilities under the
Securities Act, and may be customers of, engage in transactions with, or
perform services for, the Company in the ordinary course of business.
If a dealer is utilized in the sale of the Securities in respect of which
this Prospectus is delivered, the Company will sell such Securities to the
dealer, as principal. The dealer may then resell such Securities to the
public at varying prices to be determined by such dealer at the time of
resale. Dealers may be entitled to indemnification by the Company against
certain liabilities, including liabilities under the Securities Act, and may
be customers of, engage in transactions with, or perform services for, the
Company in the ordinary course of business.
Offers to purchase Securities may be solicited by agents designated by the
Company from time to time. Any such agent, who may be deemed to be an
underwriter as that term is defined in the Securities Act, involved in the
offer or sale of the Securities in respect of which this Prospectus is
delivered will be named, and any commissions payable by the Company to such
agent set forth, in the Prospectus Supplement. Unless otherwise indicated in
the Prospectus Supplement, any such agent will be acting on a best efforts
basis for the period of its appointment. Agents may be entitled under
agreements which may
22
<PAGE>
be entered into with the Company to indemnification by the Company against
certain liabilities, including liabilities under the Securities Act, and may
be customers of, engage in transactions with, or perform services for, the
Company in the ordinary course of business.
In connection with the sale of the Securities, underwriters or agents may
receive compensation from the Company or from purchasers of Securities for
whom they may act as agents in the form of discounts, concessions or
commissions. Underwriters, agents and dealers participating in the
distribution of the Securities may be deemed to be underwriters, and any
discounts or commissions received by them from the Company and any profit on
the resale of the Securities by them may be deemed to be underwriting
discounts and commissions under the Securities Act.
If so indicated in the Prospectus Supplement, the Company will authorize
agents and underwriters or dealers to solicit offers by certain purchasers to
purchase the relevant Offered Securities from the Company at the public
offering price set forth in the Prospectus Supplement pursuant to delayed
delivery contracts providing for payment and delivery on a specified date in
the future. Such contracts will be subject to only those conditions set forth
in the Prospectus Supplement, and the Prospectus Supplement will set forth
the commission payable for solicitation of such offers.
Lehman Brothers Inc. may participate as an underwriter in one or more
offerings of the Securities. Merchant banking partnerships affiliated with
Lehman Brothers Holdings Inc. (the "Lehman Partnerships") own 6,314,960
shares of the Company's Common Stock, representing approximately 7.6% of the
Company's Common Stock outstanding as of May 1, 1994. The Lehman Partnerships
also own 731.85 shares of Series S Preferred Stock of Loral Aerospace
Holdings, Inc. ("LAH"), the Company's wholly-owned subsidiary, which
represent an indirect 18.3% beneficial interest in the equity of Space
Systems/Loral, Inc. ("SS/L"), LAH's 51%-owned affiliate. If the Lehman
Partnerships continue to hold Series S Preferred Stock after January 1, 1998,
or after a change in control of Loral, they will have the right to request
that the Company purchase their Series S Preferred Stock at an appraised fair
market value ("Appraised Value"). In such event, the Company may elect to
purchase such Series S Preferred Stock at Appraised Value or, if the Company
elects not to purchase the stock, the Lehman Partnerships may require the
combined interests of the Company and the Lehman Partnerships in SS/L to be
sold to a third party. The Lehman Partnerships also have an aggregate equity
interest of approximately 62% in K&F Industries, Inc., a corporation of which
Bernard L. Schwartz, Chairman of the Board of Directors and Chief Executive
Officer of the Company, is a 35% stockholder, which acquired the Company's
Aircraft Braking Systems and Engineered Fabrics divisions in April 1989.
LEGAL OPINIONS
The validity of the Securities offered hereby will be passed upon for the
Company by Willkie Farr & Gallagher, New York, New York, counsel to the
Company. Certain legal matters will be passed upon for the underwriters by
Cravath, Swaine & Moore, New York, New York. Mr. Robert B. Hodes, a Director
and member of the Company's Executive, Audit and Government Compliance and
Compensation and Stock Option Committees, is a partner in the law firm of
Willkie Farr & Gallagher. As of May 1, 1994, Mr. Hodes beneficially owned in
the aggregate 4,200 shares of Common Stock and options to purchase 10,000
shares of Common Stock.
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<PAGE>
EXPERTS
The consolidated balance sheets of the Company as of March 31, 1994 and
1993 and related consolidated statements of operations, shareholders' equity
and cash flows for each of the three years in the period ended March 31, 1994
are incorporated by reference herein in reliance on the report, which
includes an explanatory paragraph regarding the Company's changes in methods
of accounting for income taxes and post retirement benefits other than
pensions, as discussed in Notes 6 and 9 of the consolidated financial
statements of Loral and its subsidiaries, of Coopers & Lybrand, independent
auditors, given on the authority of said firm as experts in accounting and
auditing.
The audited historical financial statements of Federal Systems as of
December 31, 1993 and 1992 and for each of the three years in the period
ended December 31, 1993 incorporated in this Prospectus by reference to the
Loral Corporation Report on Form 8-K/A dated May 12, 1994, have been so
incorporated in reliance on the report of Price Waterhouse, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
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<PAGE>
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No dealer, salesperson, or any other person has been authorized to give
any information or to make any representations other than those contained in
this Prospectus Supplement or in the Prospectus, and, if given or made, such
information or representation must not be relied upon as having been
authorized by the Company or any underwriter, dealer or agent. This
Prospectus Supplement and the Prospectus do not constitute an offer to sell
or the solicitation of an offer to buy any securities other than the
securities to which they relate or an offer to sell or the solicitation of an
offer to buy such securities in any circumstances in which such offer or
solicitation is unlawful. Neither the delivery of this Prospectus Supplement
and the Prospectus nor any sale made hereunder and thereunder 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 or that
information contained herein or therein is correct as of any time subsequent
to its date.
--------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
The Company ............................. S-2
Use of Proceeds ......................... S-2
Capitalization .......................... S-2
Selected Financial Data ................. S-3
Description of Debentures ............... S-4
Underwriting ............................ S-5
PROSPECTUS
Available Information ................... 2
Incorporation of Certain Information by
Reference .............................. 2
The Company ............................. 3
Use of Proceeds ......................... 3
Ratio of Earnings to Fixed Charges ..... 3
Description of Securities ............... 3
Plan of Distribution .................... 22
Legal Opinions .......................... 23
Experts ................................. 24
</TABLE>
===============================================================================
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$150,000,000
[LORAL CORPORATION LOGO]
7 5/8% SENIOR DEBENTURES
DUE JUNE 15, 2025
- -------------------------------------------------------------------------------
PROSPECTUS SUPPLEMENT
AND PROSPECTUS
- -------------------------------------------------------------------------------
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS
JUNE 2, 1995
===============================================================================
