PROSPECTUS Reg. No. 333-36013
424(b)(5)
MARK IV INDUSTRIES, INC.
OFFER TO EXCHANGE
7 1/2% Senior Subordinated Notes due
2007 FOR ANY AND ALL OUTSTANDING 7 1/2% Senior
Subordinated Notes due 2007
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
DECEMBER 15, 1997 UNLESS EXTENDED BY MARK IV INDUSTRIES, INC. As more fully
described herein under "The Exchange Offer--Expiration Date; Extensions;
Amendment," the time the Exchange Offer expires (including extensions, if any,
by the Company) is referred to as the "Expiration Date."
Mark IV Industries, Inc., a Delaware corporation ("Mark IV" or the
"Company"), is hereby offering (the "Exchange Offer"), upon the terms and
subject to the conditions set forth in this prospectus (the "Prospectus") and
the accompanying letter of transmittal (the "Letter of Transmittal"), to
exchange $250,000,000 aggregate principal amount of its 71/2% Senior
Subordinated Notes due 2007 (the "Exchange Notes"), which exchange has been
registered under the Securities Act of 1933, as amended (the "Securities
Act"), pursuant to a registration statement of which this Prospectus is a part
(the "Registration Statement"), for $250,000,000 aggregate principal amount of
its 71/2% Senior Subordinated Notes due 2007 (the "Private Notes" and,
collectively with the Exchange Notes, the "Notes") which were sold on August
11, 1997 in a transaction exempt from registration under the Securities Act
and are outstanding on the date hereof.
The form and terms of the Exchange Notes are substantially identical in
all respects (including principal amount, interest rate, maturity and ranking)
to the form and terms of the Private Notes, except that (i) the Exchange Notes
will have been registered under the Securities Act and, therefore, will not
bear legends restricting the transfer thereof and (ii) holders of the Exchange
Notes will not be entitled to certain rights of holders of the Private Notes
under the Registration Rights Agreement (as defined), which rights will
terminate upon consummation of the Exchange Offer. The Exchange Notes will
evidence the same obligations as the Private Notes and will be issued pursuant
to, and entitled to the benefits of, the Indenture (as defined) governing the
Private Notes. The Exchange Offer is being made to satisfy the obligations of
the Company under the Registration Rights Agreement relating to the Private
Notes. See "The Exchange Offer" and "Description of the Exchange Notes."
The Exchange Notes will bear interest at a rate equal to 71/2% per annum.
Interest on the Exchange Notes will be payable semi-annually in arrears on
each March 1 and September 1, commencing March 1, 1998. Holders of Exchange
Notes will receive interest on March 1, 1998 from the date of initial issuance
of the Exchange Notes, plus an amount equal to the accrued interest on the
Private Notes from August 11, 1997, the date of initial issuance of the
Private Notes, to the date of exchange thereof for Exchange Notes. Holders of
Private Notes that are accepted for exchange will be deemed to have waived the
right to receive any interest accrued on the Private Notes.
The Exchange Notes will be general unsecured obligations of the Company,
will be subordinated in right of payment to the prior payment in full of all
existing and future Senior Indebtedness (as defined) of the Company, will be
senior in right of payment to, or PARI PASSU in right of payment with, any
existing and future Senior Subordinated Indebtedness (as defined) of the
Company, and will be effectively subordinated to the indebtedness of the
Company's subsidiaries. At August 31, 1997, Senior Indebtedness of the Company
and its subsidiaries was approximately $79,700,000 and Senior Subordinated
Indebtedness of the Company (including, the Private Notes) was approximately
$755,300,000. The Indenture pursuant to which the Notes will be issued will
not restrict the Company or its subsidiaries from incurring additional
indebtedness. See "Description of the Exchange Notes--Subordination."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this Prospectus is November 13, 1997
<PAGE>
The Private Notes were originally issued and sold in reliance upon the
exemption provided in Section 4(2) of the Securities Act and Rule 144A of the
Securities Act. Accordingly, the Private Notes may not be reoffered, resold or
otherwise pledged, hypothecated or transferred in the United States or to a
U.S. person unless registered under the Securities Act or unless an applicable
exemption from the registration requirements of the Securities Act is
available. Based on an interpretation by the staff of the Commission set forth
in no-action letters issued to third parties, the Company believes that the
Exchange Notes issued pursuant to the Exchange Offer in exchange for Private
Notes may be offered for resale, resold and otherwise transferred by a holder
thereof (other than (i) an "affiliate" of the Company within the meaning of
Rule 405 under the Securities Act, (ii) a broker-dealer who acquired Private
Notes directly from the Company to resell pursuant to Rule 144A or any other
available exemption under the Securities Act or (iii) a broker-dealer who
acquired Private Notes as a result of market making or other trading
activities), without compliance with the registration and prospectus delivery
requirements of the Securities Act; PROVIDED that the holder is acquiring
Exchange Notes in the ordinary course of its business and is not
participating, and has no arrangement or understanding with any person to
participate, in the distribution of the Exchange Notes. Holders of Private
Notes wishing to accept the Exchange Offer must represent to the Company, as
required by the Registration Rights Agreement, that such conditions have been
met. The Company believes that none of the registered holders of the Private
Notes is an affiliate (as such term is defined in Rule 405 under the
Securities Act) of the Company.
Each broker-dealer that receives Exchange Notes for its own account in
exchange for Private Notes must acknowledge that it will deliver a prospectus
in connection with any resale of such Exchange Notes. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of Exchange Notes received in exchange for Private Notes, where
such Private Notes were acquired by such broker-dealer as a result of
market-making or other trading activities. The Company has agreed to make this
Prospectus (as it may be amended or supplemented) available to any
broker-dealer, upon request, for use in connection with any such resale, for a
period of one year after the Registration Statement is declared effective by
the Commission or until such earlier date on which all the Exchange Notes are
freely tradeable. However, any broker-dealer who acquired the Private Notes
directly from the Company may not fulfill its prospectus delivery requirements
with this Prospectus, but must comply with the registration and prospectus
delivery requirements of the Securities Act. See "The Exchange Offer--Resale
of the Exchange Notes" and "Plan of Distribution."
The Company will not receive any proceeds from, and will bear the
expenses of, the Exchange Offer. No underwriter is being used in connection
with the Exchange Offer. See "The Exchange Offer--Resale of the Exchange
Notes."
Prior to the Exchange Offer, there has been no public market for the
Notes. The Company has not determined whether the Exchange Notes will be
listed on any securities exchange, but the Private Notes are eligible for
trading in the Private Offerings, Resales and Trading through Automated
Linkages ("PORTAL") Market of the National Association of Securities Dealers,
Inc. There can be no assurance that an active market for the Exchange Notes
will develop. To the extent that a market for the Exchange Notes does develop
the market value of the Exchange Notes will depend on market conditions (such
as yields on alternative investments), general economic conditions, the
Company's financial condition and certain other factors. Such conditions might
cause the Exchange Notes, to the extent they are traded, to trade at a
significant discount from face value. In addition, any Private Notes not
tendered and accepted in the Exchange Offer will remain outstanding. To the
extent that the Private Notes are tendered and accepted in the Exchange Offer,
a holder's ability to sell untendered, and tendered but unaccepted, Private
Notes could be adversely affected. Following consummation of the Exchange
Offer, the holders of Private Notes will continue to be subject to the
existing restrictions on transfer thereof. The Company, except under certain
limited circumstances, will not have any further obligation to such holders to
provide for the registration of the Private Notes under the Securities Act.
See "The Exchange Offer--Termination of Certain Rights."
AS USED HEREIN, THE "INDENTURE" MEANS THE INDENTURE, DATED AS OF AUGUST
11, 1997, AS AMENDED AND SUPPLEMENTED FROM TIME TO TIME, BETWEEN THE COMPANY
AND MARINE MIDLAND BANK, AS TRUSTEE (THE "DEBENTURE TRUSTEE"), RELATING TO THE
PRIVATE NOTES AND THE EXCHANGE NOTES.
The Company will accept for exchange any and all validly tendered Private
Notes not withdrawn prior to 5:00 p.m., New York City time, on the Expiration
Date. Tenders of Private Notes may be withdrawn at any time prior to 5:00 p.m.
on the Expiration Date. The Exchange Offer is not conditioned on any minimum
aggregate principal amount of Private Notes being tendered or accepted for
exchange; PROVIDED, HOWEVER, Private Notes may be tendered only in integral
multiples of $1,000. The Exchange Offer is subject to certain customary
conditions. See "The Exchange Offer--Conditions."
<PAGE>
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF PRIVATE NOTES IN ANY JURISDICTION IN
WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE
WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
NO PERSON IS AUTHORIZED IN CONNECTION WITH THE EXCHANGE OFFER TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR
THE ACCOMPANYING LETTER OF TRANSMITTAL, AND, IF GIVEN OR MADE, SUCH OTHER
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THE INFORMATION CONTAINED HEREIN IS AS OF THE DATE
HEREOF AND SUBJECT TO CHANGE, COMPLETION OR AMENDMENT WITHOUT NOTICE. NEITHER
THE DELIVERY OF THIS PROSPECTUS OR THE ACCOMPANYING LETTER OF TRANSMITTAL AT
ANY TIME NOR ANY EXCHANGE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE
ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN OR THEREIN IS CORRECT AS
OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
IN MAKING AN INVESTMENT DECISION REGARDING THE SECURITIES OFFERED HEREBY,
PROSPECTIVE INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE COMPANY AND
THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THE
OFFERING IS BEING MADE ON THE BASIS OF THIS PROSPECTUS. ANY DECISION TO
EXCHANGE SECURITIES IN THE EXCHANGE OFFER MUST BE BASED ON THE INFORMATION
CONTAINED HEREIN.
The Exchange Notes will be available initially to qualified institutional
buyers only in book-entry form. Except as described herein, the Exchange Notes
will be represented by a Global Note (as defined) in fully registered form,
deposited with a custodian for and registered in the name of a nominee of The
Depository Trust Company ("DTC"). Beneficial interests in the Global Note
representing such Exchange Notes will be shown on, and transfers thereof will
be effected through, records maintained by DTC and its participants.
Beneficial interests in such Exchange Notes will trade in DTC's Same-Day Funds
Settlement System and secondary market trading activity in such interests will
therefore settle in immediately available funds.
TABLE OF CONTENTS
PAGE
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AVAILABLE INFORMATION................................... 4
INCORPORATION OF CERTAIN DOCUMENTS BY 4
REFERENCE...............................................
FORWARD LOOKING STATEMENTS.............................. 5
PROSPECTUS SUMMARY...................................... 6
CAPITALIZATION.......................................... 12
SELECTED FINANCIAL DATA................................. 13
BUSINESS................................................ 14
USE OF PROCEEDS......................................... 15
THE EXCHANGE OFFER...................................... 16
DESCRIPTION OF THE EXCHANGE NOTES....................... 24
DESCRIPTION OF PRIVATE NOTES............................ 31
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS............... 32
PLAN OF DISTRIBUTION.................................... 34
LEGAL MATTERS........................................... 35
EXPERTS................................................. 35
<PAGE>
AVAILABLE INFORMATION
Mark IV Industries, Inc. ("Mark IV" 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 "Commission"). Reports, proxy statements and other information filed by
the Company with the Commission can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the Commission's regional offices
located at Seven World Trade Center, New York, New York 10048, and Suite 1400,
Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois 60661.
Copies of such materials can be obtained from the Public Reference Section of
the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates. Such materials can also be inspected at the New York
Stock Exchange, 20 Broad Street, New York, New York 10005. The Commission
maintains an Internet web site that contains reports, proxy and information
statements and other information regarding Issuers who file electronically
with the Commission. The address of that site is http://www.sec.gov.
The Company has filed with the Commission a Registration Statement on
Form S-4 (together with all amendments, exhibits, annexes and schedules
thereto, the "Registration Statement") pursuant to the Securities Act, and the
rules and regulations promulgated thereunder, with respect to the securities
being offered hereby. This Prospectus does not contain all the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information with respect to the Company and the securities offered hereby,
reference is made to the Registration Statement, including the exhibits filed
as a part thereof and otherwise incorporated therein. Statements made in this
Prospectus as to the contents of any contract, agreement or other document
referred to are necessarily summaries of the material elements of such
contract, agreement or document, and with respect to each contract, agreement
or other document filed as an exhibit to the Registration Statement, reference
is made to such exhibit for a more complete description of the matter
involved. Each such statement shall be deemed qualified in its entirety by
such reference. Copies of the Registration Statement and the exhibits may be
inspected, without charge, at the offices of the Commission, or obtained at
prescribed rates from the Public Reference Section of the Commission at the
address set forth above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission by the
Company pursuant to the Exchange Act are incorporated by reference in this
Prospectus and made a part hereof:
(a) the Company's Annual Report on Form 10-K for the fiscal year
ended February 28, 1997 as amended by Amendment No. 1 on Form 10-K/A
dated June 27, 1997;
(b) the Company's Quarterly Reports on Form 10-Q for the quarters
ended May 31, 1997 and August 31, 1997;
(c) the Company's Current Report on Form 8-K dated August 11, 1997;
and
(d) the Company's Current Report on Form 8-K dated November 7, 1997.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date hereof and prior to the
termination of the Offering shall be deemed to be incorporated by reference
herein and to be a part hereof from the date of filing of such documents. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any
other subsequently filed document which is also incorporated or deemed to be
incorporated by reference herein modifies, supersedes or replaces such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to any person to whom this
Prospectus is delivered, upon written or oral request of such person, a copy
of any or all of the documents which have been incorporated by reference in
this Prospectus, other than exhibits to such documents, unless such exhibits
are specifically incorporated by reference into the documents so incorporated.
Any such request should be directed to Investor Relations, Mark IV Industries,
Inc., 501 John James Audubon Parkway, P.O. Box 810, Amherst, New York
14226-0810. Telephone requests may be directed to (716) 689-4972.
<PAGE>
FORWARD LOOKING STATEMENTS
This Prospectus, including certain information incorporated by reference
herein, may include "forwardlooking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Any statements with regard
to the Company's expectations as to industry conditions and its financial
results, demand for or pricing of its products and other aspects of its
business may constitute forward-looking statements. Although the Company makes
such statements based on assumptions which it believes to be reasonable, there
can be no assurance that actual results will not differ materially from the
Company's expectations. Accordingly, the Company hereby identifies the
following important factors, among others, which could cause its results to
differ from any results which might be projected, forecasted or estimated in
any such forward-looking statements: (i) general economic and competitive
conditions in the markets and countries in which the Company operates, and the
risks inherent in international operations and joint ventures; (ii) the
Company's ability to continue to control and reduce its costs of production;
(iii) the level of consumer demand for new vehicles equipped with the
Company's products; (iv) the level of consumer demand for the Company's
aftermarket products, which varies based on such factors as the severity of
winter weather, the age of automobiles in the Company's markets and the impact
of improvements or changes in original equipment products; (v) the effect of
changes in the distribution channels for the Company's aftermarket and
industrial products; and (vi) the strength of the U.S. dollar against
currencies of other countries where the Company operates, as well as
cross-currencies between the Company's operations outside of the United States
and other countries with whom they transact business. Should one or more of
these risks or uncertainties materialize, or should underlying assumptions
prove incorrect, actual results may vary materially from those described in
the forward-looking statements. The Company does not intend to update
forward-looking statements.
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS, INCLUDING THE NOTES THERETO, APPEARING
ELSEWHERE OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS. UNLESS THE CONTEXT
OTHERWISE REQUIRES, ALL REFERENCES HEREIN TO THE "COMPANY" OR "MARK IV"
INCLUDE MARK IV INDUSTRIES, INC. AND ITS SUBSIDIARIES.
THE COMPANY
Mark IV is a diversified manufacturer of a broad range of proprietary and
other power and fluid transfer products and systems which serve primarily
automotive and industrial markets. Many of Mark IV's product groups have a
significant, and in certain instances the leading, share of their respective
markets. Products manufactured by Mark IV principally serve specialized needs
in markets in which relatively few manufacturers compete. These products are
sold primarily directly, but also through independent distributors, to other
manufacturers, commercial users and resellers in the United States and Europe
and, to a lesser extent, in Canada, Latin America and the Far East. Mark IV
operates 68 manufacturing facilities and 45 distribution and sales locations
and employs approximately 16,200 people in 19 countries.
Mark IV's business strategy is focused on building its worldwide
Automotive and Industrial business segments through internal growth and
selective strategic acquisitions, and the continuation of cost control and
quality improvement programs. The Company's operating strategy emphasizes
establishing cooperative programs with customers to engineer, design and
develop higher value-added systems in addition to individual products, the
introduction of new, more cost effective and durable products, and management
for continuous improvement.
In furtherance of these strategies, over its last five fiscal years, Mark
IV has: (i) enhanced its ability to provide a broader range of products to its
existing customers through its acquisition of Purolator Products Company, a
leading manufacturer of automotive and industrial filtration products and
systems in late-fiscal 1995; (ii) established a joint venture in Brazil and is
in the process of establishing manufacturing facilities in Argentina and
Brazil; (iii) established distribution centers to serve markets in Latin
America and the Pacific Rim, and acquired manufacturing and distribution
facilities in Mexico; (iv) increased its industrial hose and couplings
production capacity and strengthened its position in the hose and couplings
products market through its acquisition of Imperial Eastman at the beginning
of fiscal 1997; (v) emphasized continuous product development, with a
significant amount of its current sales arising from the introduction of new
products or products which have been redesigned; (vi) initiated during fiscal
1997 a restructuring of the Company's manufacturing and distribution
facilities to make them more focused and cost effective; and (vii) expanded
its Automotive segment with the October 1997 acquisition of LPI Systemes
Moteurs SA, a manufacturer of air handling systems in France.
<PAGE>
The Company's principal executive office is located at 501 John James
Audubon Parkway, P.O. Box 810, Amherst, New York 14226-0810 and its telephone
number is (716) 689-4972.
THE NOTES OFFERING
The Notes............................... The Private Notes were sold by the
Company on August 11, 1997 to Bear,
Stearns & Co. Inc. (the "Initial
Purchaser") pursuant to a Purchase
Agreement dated August 6, 1997 (the
"Purchase Agreement"). The Initial
Purchaser subsequently resold the
Private Notes (i) to qualified
institutional buyers in reliance on
Rule 144A under the Securities Act,
(ii) to a limited number of
institutional accredited investors
pursuant to Regulation D under the
Securities Act and (iii) to
Non-U.S. persons in offshore
transactions pursuant to Regulation
S under the Securities Act.
Registration Rights Agreement........... Pursuant to the Purchase Agreement,
the Company and the Initial
Purchaser entered into a
Registration Rights Agreement dated
August 11, 1997 (the "Registration
Rights Agreement"), which grants
the holder of the Private Notes
certain exchange and registration
rights. The Exchange Offer is
intended to satisfy such exchange
rights which will terminate upon
consummation of the Exchange Offer
except under certain limited
circumstances. See "The Exchange
Offer-- Termination of Certain
Rights".
THE EXCHANGE OFFER
The Exchange Offer...................... The Company is hereby offering to
exchange $1,000 of Exchange Notes
for each $1,000 of Private Notes
that are properly tendered and
accepted. The Company will issue
Exchange Notes on or promptly after
the Expiration Date. As of the date
hereof, $250,000,000 aggregate
principal amount of Private Notes
are outstanding. See "The Exchange
Offer-- Purpose of the Exchange
Offer."
Based on an interpretation by the
staff of the Commission set forth
in no-action letters issued to
third parties, the Company believes
that the Exchange Notes issued
pursuant to the Exchange Offer in
exchange for Private Notes may be
offered for resale, resold and
otherwise transferred by a holder
thereof (other than (i) an
"affiliate" of the Company within
the meaning of Rule 405 under the
Securities Act, (ii) a broker-
dealer who acquired Private Notes
directly from the Company to resell
pursuant to Rule 144A or any other
available exemption under the
Securities Act or (iii) a
broker-dealer who acquired Private
Notes as a result of market making
or other trading activities),
without compliance with the
registration and prospectus
delivery requirements of the
Securities Act; PROVIDED that the
holder is acquiring Exchange Notes
in the ordinary course of its
business and is not participating,
and has no arrangement or
understanding with any person to
participate, in the distribution of
the Exchange Notes. Holders of
Private Notes wishing to accept the
Exchange Offer must represent to
the Company, as required by the
Registration Rights Agreement, that
such conditions have been met. The
Company believes that none of the
registered holders of the Private
Notes is an affiliate (as such term
is defined in Rule 405 under the
Securities Act) of the Company. Any
broker-dealer that resells Exchange
Notes that were received by it for
its own account pursuant to the
Exchange Offer and any broker or
dealer that participates in the
distribution of such Exchange Notes
may be deemed to be an
"underwriter" within the meaning of
the Securities Act and any profit
on any such resale of Exchange
Notes and any commissions or
concessions received by any such
persons may be deemed to be
underwriting compensation under the
Securities Act.
Each broker-dealer that receives
Exchange Notes for its own account
in exchange for Private Notes must
acknowledge that it will deliver a
prospectus in connection with any
resale of such Exchange Notes. The
Letter of Transmittal states that
by so acknowledging and by
delivering a prospectus, a
broker-dealer will not be deemed to
admit that it is an "underwriter"
within the meaning of the
Securities Act. This Prospectus, as
it may be amended or supplemented
from time to time, may be used by a
broker-dealer in connection with
resales of Exchange Notes received
in exchange for Private Notes,
where such Private Notes were
acquired by such broker-dealer as a
result of market-making or other
trading activities. The Company has
agreed to make this Prospectus (as
it may be amended or supplemented)
available to any broker-dealer,
upon request, for use in connection
with any such resale, for a period
of one year after the Registration
Statement is declared effective by
the Commission or until such
earlier date on which all the
Exchange Notes are freely
tradeable. However, any
broker-dealer who acquired the
Private Notes directly from the
Company other than as a result of
market-making activities or
ordinary trading activities may not
fulfill its prospectus delivery
requirements with this Prospectus,
but must comply with the
registration and prospectus
delivery requirements of the
Securities Act. See "The Exchange
Offer--Resale of the Exchange
Notes."
Consequences of Failure to Exchange..... Holders of Private Notes who do not
tender their Private Notes in the
Exchange Offer will continue to
hold such Private Notes and will be
entitled to all the rights and
limitations applicable thereto
under the Indenture. All
untendered, and tendered but not
unaccepted, Private Notes will
continue to be subject to the
restrictions on transfer provided
for in the Private Notes and the
Indenture. To the extent that
Private Notes are tendered and
accepted in the Exchange Offer, the
trading market, if any, for the
Private Notes could be adversely
affected. See "The Exchange
Offer--Consequence of Failure to
Exchange."
Expiration Date.......................... The Exchange Offer will expire at
5:00 p.m., New York City time, on
December 15, 1997, unless the
Exchange Offer is extended by the
Company, in its sole discretion, in
which case the term "Expiration
Date" shall mean the latest date
and time to which the Exchange
Offer is extended. See "The
Exchange Offer--Expiration Date;
Extensions; Amendments."
Accrued Interest on the Exchange
Notes and the Private Notes.............. The Exchange Notes will bear
interest from and including the
date of issuance of the Private
Notes (August 11, 1997). Holders
whose Private Notes are accepted
for exchange will be deemed to have
waived the right to receive any
interest accrued on the Private
Notes. See "The Exchange Offer--
Interest on the Exchange Notes."
Conditions to the Exchange Offer......... The Exchange Offer is subject to
certain customary conditions that
may be waived by the Company. The
Exchange Offer is not conditioned
upon any minimum aggregate amount
of Private Notes being tendered for
exchange. See "The Exchange
Offer--Conditions."
Procedures for Tendering Private Notes.... Each Holder of Private Notes
wishing to accept the Exchange
Offer must complete, sign and date
the Letter of Transmittal, or a
facsimile thereof, in accordance
with the instructions contained
herein and therein, and mail or
otherwise deliver such Letter of
Transmittal, or such facsimile,
together with such Private Notes
and any other required
documentation to Marine Midland
Bank, as exchange agent (the
"Exchange Agent"), at its address
set forth herein. By executing the
Letter of Transmittal, the holder
will represent to and agree with
the Company that, among other
things, (i) the Exchange Notes to
be acquired by such holder of
Private Notes in connection with
the Exchange Offer are being
acquired by such holder in the
ordinary course of its business,
(ii) such holder is not currently
participating and has no
arrangement or understanding with
any person to participate in a
distribution of the Exchange Notes,
(iii) if such holder is a
broker-dealer registered under the
Exchange Act or is participating in
the Exchange Offer for the purposes
of distributing the Exchange Notes,
such holder will comply with the
registration and prospectus
delivery requirements of the
Securities Act in connection with a
secondary resale transaction of the
Exchange Notes acquired by such
person and cannot rely on the
position of the staff of the
Commission set forth in noaction
letters (see "The Exchange
Offer--Resale of Exchange Notes"),
(iv) such holder understands that a
secondary resale transaction
described in clause (iii) above and
any resales of Exchange Notes
obtained by such holder in exchange
for Private Notes acquired by such
holder directly from the Company
should be covered by an effective
registration statement containing
the selling security holder
information required by Item 507 of
Regulation S-K of the Commission
and (v) such holder is not an
"affiliate," as defined in Rule 405
under the Securities Act, of the
Company. If the holder is a
broker-dealer that will receive
Exchange Notes for its own account
in exchange for Private Notes that
were acquired as a result of
market-making activities or other
trading activities, such holder
will be required to acknowledge in
the Letter of Transmittal that such
holder will deliver a prospectus in
connection with any resale of such
Exchange Notes; however, by so
acknowledging and by delivering a
prospectus, such holder will not be
deemed to admit that it is an
"underwriter" within the meaning of
the Securities Act. See "The
Exchange Offer--Procedures for
Tendering."
Special Procedures for Beneficial
Owners................................ Any beneficial owner whose Private
Notes are registered in the name of
a broker, commercial bank, trust
company or other nominee and who
wishes to tender such Private Notes
in the Exchange Offer should
contact such registered holder
promptly and instruct such
registered holder to tender on such
beneficial owner's behalf. If such
beneficial owner wishes to tender
on such owner's own behalf, such
owner must, prior to completing and
executing the Letter of Transmittal
and delivering such owner's Private
Notes, either make appropriate
arrangements to register ownership
of the Private Notes in such
owner's name or obtain a properly
completed bond power from the
registered holder. The transfer of
registered ownership may take
considerable time and may not be
able to be completed prior to the
Expiration Date. See "The Exchange
Offer--Procedures for Tendering."
Guaranteed Delivery Procedures.......... Holders of Private Notes who wish
to tender their Private Notes and
whose Private Notes are not
immediately available or who cannot
deliver their Private Notes, the
Letter of Transmittal or any other
documentation required by the
Letter of Transmittal to the
Exchange Agent prior to the
Expiration Date must tender their
Private Notes according to the
guaranteed delivery procedures set
forth under "The Exchange
Offer--Guaranteed Delivery
Procedures."
Acceptance of the Private Notes and
Delivery of the Exchange Notes........... Subject to the satisfaction or
waiver of the conditions to the
Exchange Offer, the Company will
accept for exchange any and all
Private Notes that are properly
tendered in the Exchange Offer
prior to the Expiration Date. The
Exchange Notes issued pursuant to
the Exchange Offer will be
delivered on the earliest
practicable date following the
Expiration Date. See "The Exchange
Offer--Terms of the Exchange
Offer."
Withdrawal Rights........................ Tenders of Private Notes may be
withdrawn at any time prior to the
Expiration Date. See "The Exchange
Offer-- Withdrawal of Tenders."
Certain Federal Income Tax
Considerations........................... For a discussion of certain
material federal income tax
considerations relating to the
exchange of the Exchange Notes for
the Private Notes, see "Certain
Federal Income Tax Considerations."
Exchange Agent........................... Marine Midland Bank is serving as
the Exchange Agent in connection
with the Exchange Offer.
Use of Proceeds.......................... The Company will not receive any
cash proceeds from the issuance of
the Exchange Notes offered hereby.
See "Use of Proceeds."
TERMS OF THE EXCHANGE NOTES
The Exchange Offer applies to
$250,000,000 aggregate principal
amount of the Private Notes. The
form and terms of the Exchange
Notes are substantially identical
in all respects (including
principal amount, interest rate,
maturity and ranking) to the form
and terms of the Private Notes,
except that (i) the Exchange Notes
will have been registered under the
Securities Act and, therefore, will
not bear legends restricting the
transfer thereof; and (ii) holders
of the Exchange Notes will not be
entitled to certain rights of
holders of the Private Notes under
the Registration Rights Agreement,
which rights will terminate upon
consummation of the Exchange Offer.
The Exchange Notes will evidence
the same obligations as the Private
Notes and will be issued pursuant
to, and entitled to the benefits
of, the Indenture governing the
Private Notes. The Exchange Offer
is being made to satisfy the
obligations of the Company under
the Registration Rights Agreement
relating to the Private Notes. For
further information and for
definitions of certain capitalized
terms used below, see "The Exchange
Offer" and "Description of the
Exchange Notes."
Issuer................................... Mark IV Industries, Inc.
Securities Offered....................... Exchange Notes
Maturity Date............................ September 1, 2007.
Interest Rate............................ The Exchange Notes will bear
interest at a rate of 71/2% per
annum.
Interest Payment Dates................... Interest will accrue on the
Exchange Notes from the date of the
initial issuance of the Private
Notes (August 11, 1997) and will be
payable semi-annually on each March
1 and September 1 of each year,
commencing March 1, 1998.
Record Dates.............................. February 15 and August 15.
Subordination............................. The Exchange Notes will be
unsecured obligations of the
Company, will be subordinated in
right of payment to the prior
payment in full of all Senior
Indebtedness of the Company, will
be senior in right of payment to,
or rank pari passu in right of
payment with, any existing and
future Senior Subordinated
Indebtedness of the Company. At
August 31, 1997, Senior
Indebtedness of the Company and its
subsidiaries was approximately
$79,700,000 and Senior Subordinated
Indebtedness of the Company
(including the Private Notes) was
approximately $755,300,000. In
addition, because the Company's
operations are conducted primarily
through its operating subsidiaries,
claims of creditors and holders of
indebtedness of such subsidiaries
will have priority with respect to
the assets and earnings of such
subsidiaries over the claims of
creditors of the Company, including
holders of the Notes. As of August
31, 1997, the aggregate liabilities
of such subsidiaries were
approximately $625,000,000. On
October 29, 1997, the Company sold
in a transaction exempt from
registration under the Securities
Act $275,000,000 principal amount
of 43/4% Convertible Subordinated
Notes due 2004 (the "Convertible
Notes") which are subordinated in
right of payment to the Notes. The
Company intends to use the net
proceeds from the sale of the
Convertible Notes to repurchase or
redeem or defease or otherwise
retire all of the Company's
outstanding $258,000,000 principal
amount of 83/4% Senior Subordinated
Notes due 2003 (the "83/4% Notes")
which rank PARI PASSU with the
Notes. See "Business--Recent
Developments". The Indenture
pursuant to which the Notes will be
issued does not restrict the
Company and its subsidiaries from
incurring additional indebtedness.
See "Description of the Exchange
Notes--Subordination."
Absence of Market for the Exchange
Notes..................................... There is currently no market for
the Exchange Notes. Although the
Initial Purchaser has informed the
Company that it currently intends
to make a market in the Exchange
Notes, the Initial Purchaser is not
obligated to do so, and any such
market making may be discontinued
at any time without notice.
Accordingly, there can be no
assurance as to the development or
liquidity of any market for the
Exchange Notes. See "Plan of
Distribution."
<PAGE>
CAPITALIZATION
The following table sets forth the unaudited consolidated capitalization
of the Company as of August 31, 1997, which reflects the sale of the Private
Notes on August 11, 1997 and the application of a portion of the net proceeds
thereof to repay amounts outstanding under the Company's Credit Agreement and
domestic notes payable, and as adjusted to give effect to the sale of
$275,000,000 principal amount of Convertible Notes on October 29, 1997 and the
application of the net proceeds thereof to fund the retirement of the
Company's outstanding $258,000,000 principal amount of 83/4% Notes. See "Use
of Proceeds."
<TABLE>
<CAPTION>
AUGUST 31, 1997
ACTUAL As Adjusted
(Dollars In Thousands)
<S> <C> <C>
Short-term debt:
Notes payable (1)............................................................ $ 58,600 $ 58,600
Current maturities of long-term debt......................................... 8,500 8,500
------- -------
Total short-term debt................................................... $ 67,100 $ 67,100
======== ========
Long-term debt, excluding current maturities:
Senior debt:
Credit Agreement (2)......................................................... $-- $--
Other . 12,600 12,600
-------- --------
Total senior debt....................................................... 12,600 12,600
-------- --------
Subordinated debt:
8 3/4% Senior Subordinated Notes due April 1, 2003 258,000 --
7 3/4% Senior Subordinated Notes due April 1, 2006 248,600 248,600
7 1/2% Senior Subordinated Notes due September 1, 2007 248,700 248,700
4 3/4% Convertible Subordinated Notes due November 1, 2004 -- 275,000
-------- --------
Total subordinated debt................................................. 755,300 772,300
-------- --------
Total long-term debt.................................................... 767,900 784,900
-------- --------
Stockholders' equity
Preferred stock, $.01 par value: authorized 10 million shares: no
issued shares -- --
Common stock, $.01 par value: authorized 200 million shares: 63.7 million
issued shares.............................................................. 600 600
Additional paid in capital................................................... 633,600 633,600
Retained Earnings............................................................ 131,900 131,900(3)
Foreign currently translation adjustment..................................... (24,900) (24,900)
--------- ---------
Total stockholders' equity.............................................. 741,200 741,200
--------- ---------
Total Capitalization............................................... $ 1,509,100 $ 1,526,100
=========== ===========
(1) Consists primarily of notes payable of foreign subsidiaries of the
Company.
(2) The Company's Credit Agreement, which expires on March 8, 2001, provides
for a revolving credit facility with borrowing availability of
$400,000,000 under a domestic facility and $100,000,000 under a
multi-currency facility. If any amounts were outstanding under the Credit
Agreement, the interest rate on such borrowings currently would be in a
range of 6.0% to 6.25% per annum.
(3) Excluding any redemption premium (net of tax benefit) related to the
retirement of the 83/4% Notes.
</TABLE>
<PAGE>
SELECTED FINANCIAL DATA
The following tables set forth selected consolidated financial information
of the Company for each of the five fiscal years in the period ended February
28, 1997 and for the six-month periods ended August 31, 1996 and 1997.
Information for the six-month periods ended August 31, 1996 and 1997 is
unaudited but, in the opinion of management, includes all adjustments,
consisting only of normal recurring accruals, necessary for a fair presentation.
The results of operations for the six-month period ended August 31, 1997 are not
necessarily indicative of the results to be expected for the full year. These
tables should be read in conjunction with the Company's Consolidated Financial
Statements incorporated by reference herein.
<TABLE>
<CAPTION>
Six-Months Ended
YEAR ENDED LAST DAY OF FEBRUARY, AUGUST 31,
------------------------------ ----------
1993(1) 1994(1) 1995(1) 1996(1) 1997 1996(1) 1997
------- ------- ------- ------ ---- ------- ----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales from continuing operations $ 806,700 $ 958,900 $ 1,306,400 $ 1,779,200 $ 2,076,000 $ 1,035,200 $ 1,091,200
========= ========= =========== =========== =========== =========== ===========
Operating income(2)................. $ 86,700 $ 104,100 $ 135,500 $ 188,300 $ 223,200 $ 114,800 $ 124,100
Restructuring charge................ -- -- -- -- 112,500 -- --
Interest expense.................... 44,400 43,100 46,300 52,600 59,000 30,300 29,900
--------- --------- ----------- ---------- ----------- ----------- -----------
Income from continuing operations before
provision for taxes............... $ 42,300 $ 61,000 $ 89,200 $ 135,700 $ 51,700 $ 84,500 $ 94,200
========= ========= =========== =========== =========== =========== ===========
Income from continuing operations(3):
Before restructuring charge $ 26,700 $ 38,200 $ 55,000 $ 82,800 $ 100,200 $ 51,500 $ 57,600
Restructuring charge:............... -- -- -- -- (67,500) -- --
--------- --------- ----------- ---------- ----------- ----------- -----------
Total continuing.................... 26,700 38,200 55,000 82,800 32,700 51,500 57,600
--------- --------- ----------- ---------- ----------- ----------- -----------
Income from discontinued operations(3):
From operations..................... 16,000 12,900 12,900 9,600 5,900 3,800 --
Gain on divestitures................ -- -- -- -- 17,500 -- --
--------- --------- ----------- ---------- ----------- ----------- -----------
Total discontinued.................. 16,000 12,900 12,900 9,600 23,400 3,800 --
--------- --------- ----------- ---------- ----------- ----------- -----------
Extraordinary loss from early
extinguishment of debt(3) (3,700) (21,700) (1,100) -- -- -- --
Cumulative effect of accounting
change(3)......................... -- (26,000) -- -- -- -- --
--------- --------- ----------- ---------- ----------- ----------- -----------
Net income.......................... $ 39,000 $ 3,400 $ 66,800 $ 92,400 $ 56,100 $ 55,300 $ 57,600
========= ========= =========== =========== =========== =========== ===========
OTHER FINANCIAL DATA (UNAUDITED):
EBITDA(4)(5)........................ $ 112,000 $ 139,000 $ 179,800 $ 247,500 $ 292,200 $ 148,700 $ 161,100
Ratio of EBITDA to interest expense 2.52x 3.23x 3.88x 4.71x 4.95x 4.91x 5.39x
Ratio of earnings to fixed charges(6) 1.86x 2.30x 2.75x 3.34x 3.48x 3.55x 3.82x
</TABLE>
<TABLE>
<CAPTION>
August 31,
AS OF THE LAST DAY OF FEBRUARY, 1997
--------------------------------- ----
1993 1994 1995 1996 1997
------- ------- ------ ---- -----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital.................................. $275,400 $312,800 $379,700 $404,900 $364,600 $556,800
Total assets..................................... $1,124,800 $1,282,300 $1,846,400 $2,013,100 $1,974,600 $2,174,600
Long-term debt, excluding current maturities..... $497,100 $567,200 $610,700 $642,500 $528,500 $767,900
Stockholders' equity............................. $345,600 $345,400 $635,500 $725,500 $758,400 $741,200
(1) Income Statement amounts have been restated to reflect discontinued
operations.
(2) Represents income from continuing operations before the restructuring
charge, interest expense and taxes.
(3) Net of related tax effects.
(4) "EBITDA" is defined as income from continuing operations before interest
expense, taxes and depreciation and amortization. EBITDA is presented
because it is a widely accepted indicator of funds available to service
debt, although it is not a U.S. generally accepted accounting principles
("GAAP") based measure of liquidity or financial performance. The Company
believes that EBITDA, while providing useful information, should not be
considered in isolation or as an alternative to net income and cash flows
as determined under GAAP.
(5) Excluding the restructuring charge in fiscal 1997.
(6) For the purpose of calculating the ratio of earnings to fixed charges, (i)
earnings consist of income from continuing operations before income taxes
and the restructuring charge, plus fixed charges and (ii) fixed charges
consist of interest expense incurred, capitalized interest, amortization
of debt expense and 15% of the rental payments under operating leases (an
amount estimated by management to be the interest component of such
rentals). If the restructuring charge were included in the ratio
determination for fiscal 1997, the actual ratio would be 1.76x.
</TABLE>
<PAGE>
BUSINESS
Mark IV is a diversified manufacturer of a broad range of proprietary and
other power and fluid transfer products and systems which serve primarily
automotive and industrial markets. Many of Mark IV's product groups have a
significant, and in certain instances the leading, share of their respective
markets. Products manufactured by Mark IV principally serve specialized needs
in markets in which relatively few manufacturers compete. These products are
sold primarily directly, but also through independent distributors, to other
manufacturers, commercial users and resellers in the United States and Europe
and, to a lesser extent, in Canada, Latin America and the Far East. Mark IV
operates 68 manufacturing facilities and 45 distribution and sales locations
and employs approximately 16,200 people in 19 countries.
The Company classifies its operations into the following two business
segments: (i) Mark IV Automotive, which includes the design, manufacture and
distribution of (a) fuel, power transmission, and fluid handling systems and
components, and (b) filters and filtration systems, for the global automotive
aftermarket and OEM (original equipment manufacturers) market; and (ii) Mark
IV Industrial, which includes the design, manufacture and distribution of
power and fluid management systems and components for industrial OEM and
distribution markets worldwide.
Mark IV's business strategy is focused on building its worldwide
Automotive and Industrial business segments through internal growth and
selective strategic acquisitions, and the continuation of cost control and
quality improvement programs. The Company's operating strategy emphasizes
establishing cooperative programs with customers to engineer, design and
develop higher value-added systems in addition to individual products, the
introduction of new, more cost effective and durable products, and management
for continuous improvement.
In furtherance of these strategies, over its last five fiscal years, Mark
IV has: (i) enhanced its ability to provide a broader range of products to its
existing customers through its $286.3 million acquisition of Purolator
Products Company, a leading manufacturer of automotive and industrial
filtration products and systems in late-fiscal 1995; (ii) established a joint
venture in Brazil and is in the process of establishing manufacturing
facilities in Argentina and Brazil; (iii) established distribution centers to
serve markets in Latin America and the Pacific Rim, and acquired manufacturing
and distribution facilities in Mexico; (iv) increased its industrial hose and
couplings production capacity and strengthened its position in the hose and
couplings products market through its $78.0 million acquisition of Imperial
Eastman at the beginning of fiscal 1997; (v) emphasized continuous product
development, with a significant amount of its current sales arising from the
introduction of new products or products which have been redesigned; and (vi)
initiated during fiscal 1997 a restructuring of the Company's manufacturing
and distribution facilities to make them more focused and cost effective.
RECENT DEVELOPMENTS
As part of the Company's strategy to become more focused within its
Industrial business segment, the Company sold its Professional Audio, Vapor
Corporation, Interstate Highway Sign, and Eagle Signal businesses and certain
other non-operating assets during fiscal 1997. Shortly after the end of the
fiscal year, the Company also sold its Gulton Data Systems and LFE Industrial
Systems businesses. The total of all of these divestitures generated gross
proceeds of approximately $313 million.
During fiscal 1997, the Company also initiated a restructuring of its
manufacturing and distribution facilities, which is expected to improve
customer service, reduce costs and dedicate its facilities to either the
Automotive or Industrial business segments. The restructuring resulted in a
pre-tax charge against earnings of $112.5 million, with $51.8 million related
to cash expenditures required to be made primarily over a two-year period. The
remaining $60.7 million non-cash portion of the charge represents primarily
asset write-offs and pension benefits to be paid out of the Company's pension
fund. The Company believes that the restructuring will result in an annual
pre-tax cost savings of between $40.0 million and $45.0 million, with some
benefit beginning in the second half of the current fiscal year.
In October 1997, as a part of its strategy to pursue selective strategic
acquisitions and expand its international presence, the Company acquired LPI
Systemes Moteurs, SA ("LPI") for a cash purchase price of approximately $60
million. LPI operates three manufacturing facilities in France, and supplies
plastic air admission systems, which include air intake manifolds and cooling
modules produced by injection, welding and blow molding technologies, for the
automotive OEM markets. The LPI acquisition enables the Company's Automotive
segment to expand its systems capabilities to include air handling systems in
addition to the segment's existing fuel and fluid handling capabilities.
On October 29, 1997, the Company sold to Bear, Stearns & Co. Inc., as
Initial Purchaser, $275,000,000 principal amount of the Convertible Notes in a
transaction exempt from registration under the Securities Act. The Initial
Purchaser subsequently resold the Convertible Notes (i) to qualified
institutional buyers in reliance on Rule 144A under the Securities Act, (ii)
to a limited number of institutional accredited investors pursuant to
Regulation D under the Securities Act and (iii) to non-U.S. persons in
offshore transactions pursuant to Regulation S under the Securities Act. The
Company intends to use the net proceeds from the sale of the Convertible
Notes, which are subordinated in right of payment to the Notes, to repurchase
or redeem or defease or otherwise retire all of the Company's outstanding
$258,000,000 principal amount of 83/4% Notes which rank PARI PASSU with the
Notes and are redeemable beginning on April 2, 1998 at 104.375% of their
aggregate principal amount.
USE OF PROCEEDS
The Exchange Offer is intended to satisfy certain of the Company's
obligations under the Registration Rights Agreement. The Company will not
receive any cash proceeds from the issuance of the Exchange Notes in the
Exchange Offer.
The net proceeds to the Company from the offering of the Private Notes
(after payment of the Initial Purchaser's discount and estimated expenses of
the offering) was $245,977,500. A portion of the net proceeds from the sale of
the Private Notes was used to repay amounts outstanding of Senior Indebtedness
under the Company's Credit Agreement and domestic notes payable. The balance
of the net proceeds from sale of the Private Notes was added to working
capital and will be used for general corporate purposes.
<PAGE>
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
The Private Notes were sold by the Company on August 11, 1997 (the "Issue
Date") to the Initial Purchaser pursuant to the Purchase Agreement. The
Initial Purchaser subsequently sold the Private Notes to (i) "qualified
institutional buyers" ("QIBs"), as defined in Rule 144A under the Securities
Act ("Rule 144A"), in reliance on Rule 144A, (ii) to institutional "accredited
investors" within the meaning of subparagraph (a)(1), (2) (3) or (7) of Rule
501 under the Securities Act and (iii) to non-U.S. persons in offshore
transactions pursuant to Regulation S under the Securities Act. As a condition
to the sale of the Private Notes, the Company and the Initial Purchaser
entered into the Registration Rights Agreement on August 11, 1997. Pursuant to
the Registration Rights Agreement, the Company agreed that, unless the
Exchange Offer is not permitted by applicable law or Commission policy, it
would (i) file with the Commission a Registration Statement under the
Securities Act with respect to the Exchange Notes within 45 days after the
Issue Date, (ii) use its best efforts to cause such Registration Statement to
become effective under the Securities Act within 120 days after the Issue Date
and (iii) use its best efforts to consummate the Exchange Offer within 150
days after the Issue Date. A copy of the Registration Rights Agreement has
been filed as an exhibit to the Registration Statement. The Registration
Statement is intended to satisfy certain of the Company's obligations under
the Registration Rights Agreement and the Purchase Agreement.
RESALE OF THE EXCHANGE NOTES
With respect to the Exchange Notes, based upon an interpretation by the
staff of the Commission set forth in certain no-action letters issued to third
parties, the Company believes that a holder (other than (i) a broker-dealer
who purchased such Exchange Notes directly from the Company to resell pursuant
to Rule 144A or any other available exemption under the Securities Act, (ii)
any such holder that is an "affiliate" of the Company within the meaning of
Rule 405 under the Securities Act or (iii) a broker-dealer who acquired
Private Notes as a result of market making or other trading activities) who
exchanges Private Notes for Exchange Notes in the ordinary course of business
and who is not participating, does not intend to participate, and has no
arrangement with any person to participate, in a distribution of the Exchange
Notes, will be allowed to resell Exchange Notes to the public without further
registration under the Securities Act and without delivering to the purchasers
of the Exchange Notes a prospectus that satisfies the requirements of Section
10 of the Securities Act. However, if any holder acquires Exchange Notes in
the Exchange Offer for the purpose of distributing or participating in the
distribution of the Exchange Notes or is a broker-dealer, such holder cannot
rely on the position of the staff of the Commission enumerated in certain
noaction letters issued to third parties and must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with
any resale transaction, unless an exemption from registration is otherwise
available. Each broker-dealer that receives Exchange Notes for its own account
in exchange for Private Notes, where such Private Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes. The Letter of Transmittal states that
by so acknowledging and by delivering a prospectus, a broker-dealer will not
be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with resales of
Exchange Notes received in exchange for Private Notes where such Private Notes
were acquired by such broker-dealer as a result of market-making or other
trading activities. Pursuant to the Registration Rights Agreement, the Company
has agreed to make this Prospectus, as it may be amended or supplemented from
time to time, available to broker-dealers for use in connection with any
resale for a period of one year after the Registration Statement is declared
effective or until such earlier date on which the Exchange Notes are freely
tradable. See "Plan of Distribution."
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all Private
Notes validly tendered and not withdrawn prior to the Expiration Date. The
Company will issue $1,000 principal amount of Exchange Notes in exchange for
each $1,000 principal amount of outstanding Private Notes surrendered pursuant
to the Exchange Offer. Private Notes may be tendered in integral multiples of
$1,000.
The form and terms of the Exchange Notes are the same as the form and
terms of the Private Notes except that (i) the exchange will be registered
under the Securities Act and, therefore, the Exchange Notes will not bear
legends restricting the transfer thereof, (ii) holders of the Exchange Notes
will not be entitled to any of the rights of holders of Private Notes under
the Registration Rights Agreement, which rights will terminate upon the
consummation of the Exchange Offer except under certain limited circumstances.
See "--Termination of Certain Rights." The Exchange Notes will evidence the
same obligations as the Private Notes (which they replace) and will be issued
under, and be entitled to the benefits of, the Indenture, which also
authorized the issuance of the Private Notes, such that both series of Notes
will be treated as a single class of securities under the Indenture.
As of the date of this Prospectus, $250,000,000 in aggregate principal
amount of the Private Notes are outstanding and registered in the name of Cede
& Co., as nominee for DTC. Only a registered holder of the Private Notes (or
such holder's legal representative or attorney-in-fact) as reflected on the
records of the Trustee under the Indenture may participate in the Exchange
Offer. There will be no fixed record date for determining registered holders
of the Private Notes entitled to participate in the Exchange Offer.
Holders of the Private Notes do not have any appraisal or dissenters'
rights under the Indenture in connection with the Exchange Offer. The Company
intends to conduct the Exchange Offer in accordance with the provisions of the
Registration Rights Agreement and the applicable requirements of the
Securities Act, the Exchange Act and the rules and regulations of the
Commission thereunder.
The Company shall be deemed to have accepted validly tendered Private
Notes when, as and if the Company has given oral or written notice thereof to
the Exchange Agent. The Exchange Agent will act as agent for the tendering
holders of Private Notes for the purposes of receiving the Exchange Notes from
the Company.
Holders who tender Private Notes in the Exchange Offer will not be
required to pay brokerage commissions or fees or, subject to the instructions
in the Letter of Transmittal, transfer taxes with respect to the exchange of
Private Notes pursuant to the Exchange Offer. The Company will pay all charges
and expenses, other than certain applicable taxes described below, in
connection with the Exchange Offer. See "--Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time on
December 15, 1997 unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended.
In order to extend the Exchange Offer, the Company will (i) notify the
Exchange Agent of any extension by oral or written notice, (ii) mail to the
registered holders an announcement thereof and (iii) issue a press release or
other public announcement, which shall include disclosure of the approximate
number of Private Notes deposited to date, each prior to 9:00 a.m., New York
City time, on the next business day after the previously scheduled Expiration
Date. Without limiting the manner in which the Company may choose to make a
public announcement of any delay, extension, amendment or termination of the
Exchange Offer, the Company shall have no obligation to publish, advertise, or
otherwise communicate any such public announcement, other than by making a
timely press release to an appropriate news agency.
The Company reserves the right, in its reasonable discretion, (i) to
delay accepting any Private Notes, (ii) to extend the Exchange Offer or (iii)
if any conditions set forth below under "--Conditions" shall not have been
satisfied, to terminate the Exchange Offer by giving oral or written notice of
such delay, extension or termination to the Exchange Agent. Any such delay in
acceptance, extension, termination or amendment will be followed as promptly
as practicable by oral or written notice thereof to the registered holders. If
the Exchange Offer is amended in a manner determined by the Company to
constitute a material change, the Company will promptly disclose such
amendment by means of a prospectus supplement that will be distributed to the
registered holders, and the Company will extend the Exchange Offer for a
period of five to ten business days, depending upon the significance of the
amendment and the manner of disclosure to the registered holders, if the
Exchange Offer would otherwise expire during such five to ten business day
period.
INTEREST ON THE EXCHANGE NOTES
The Exchange Notes will bear interest at a rate equal to 71/2% per annum.
Interest on the Exchange Notes will be payable semi-annually in arrears on
each March 1 and September 1, commencing March 1, 1998. Holders of Exchange
Notes will receive interest on March 1, 1998 from the date of initial issuance
of the Exchange Notes, plus an amount equal to the accrued interest on the
Private Notes from August 11, 1997, the date of initial issuance of the
Private Notes, to the date of exchange thereof for Exchange Notes. Holders of
Private Notes that are accepted for exchange will be deemed to have waived the
right to receive any interest accrued on the Private Notes.
PROCEDURES FOR TENDERING
Only a registered holder of Private Notes may tender such Private Notes
in the Exchange Offer. To tender in the Exchange Offer, a holder of Private
Notes must either, (i) complete, sign and date the Letter of Transmittal, or a
facsimile thereof, have the signatures thereon guaranteed if required by the
Letter of Transmittal, and mail or otherwise deliver such Letter of
Transmittal or such facsimile to the Exchange Agent at the address set forth
below under "--Exchange Agent", or (ii) if such Private Notes are tendered
pursuant to the procedures for book-entry transfer set forth below, a holder
tendering Private Notes may transmit an Agent's Message (defined herein) to
the Exchange Agent in lieu of the Letter of Transmittal, in either case prior
to the Expiration Date. In addition, either (i) certificates for such Private
Notes must be received by the Exchange Agent along with the Letter of
Transmittal, (ii) a timely confirmation of a book-entry transfer (a
"Book-Entry Confirmation") of such Private Notes, if such procedure is
available, into the Exchange Agent's account at the Depositary pursuant to the
procedure for book-entry transfer described below, must be received by the
Exchange Agent prior to the Expiration Date or (iii) the holder must comply
with the guaranteed delivery procedures described below. The term "Agent's
Message" means a message, transmitted to the Book-Entry Transfer Facility and
received by the Exchange Agent and forming a part of the Book-Entry
Confirmation, which states that the Book-Entry Transfer Facility has received
an express acknowledgement from the tendering participant in the Book-Entry
Transfer Facility that such participant has received and agrees to be bound by
the Letter of Transmittal and that the Company may enforce the Letter of
Transmittal against such participant.
The tender by a holder that is not withdrawn prior to the Expiration Date
will constitute an agreement between such holder and the Company in accordance
with the terms and subject to the conditions set forth herein and in the
Letter of Transmittal.
THE METHOD OF DELIVERY OF PRIVATE NOTES AND THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK
OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE
AN OVERNIGHT OR HAND DELIVERY SERVICE, PROPERLY INSURED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT
BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR PRIVATE NOTES SHOULD
BE SENT TO THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS,
COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS
FOR SUCH HOLDERS.
Any beneficial owner(s) of the Private Notes whose Private Notes are
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee and who wishes to tender should contact the registered holder
promptly and instruct such registered holder to tender on such beneficial
owner's behalf. If such beneficial owner wishes to tender on such owner's own
behalf, such owner must, prior to completing and executing the Letter of
Transmittal and delivering such owner's Private Notes, either make appropriate
arrangements to register ownership of the Private Notes in such owner's name
or obtain a properly completed bond power from the registered holder. The
transfer of registered ownership may take considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal described
below (see "--Withdrawal of Tenders"), as the case may be, must be guaranteed
by an Eligible Institution (as defined) unless the Private Notes tendered
pursuant thereto are tendered (i) by a registered holder who has not completed
the box titled "Special Delivery Instructions" on the Letter of Transmittal or
(ii) for the account of an Eligible Institution. In the event that signatures
on a Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantee must be made by a member firm of a
registered national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or company having an office or
correspondent in the United States or an "eligible guarantor institution"
within the meaning of Rule 17Ad-15 under the Exchange Act which is a member of
one of the recognized signature guarantee programs identified in the Letter of
Transmittal (an "Eligible Institution").
If the Letter of Transmittal is signed by a person other than the
registered holder of any Private Notes listed therein, such Private Notes must
be endorsed or accompanied by a properly completed bond power, signed by such
registered holder as such registered holder's name appears on such Private
Notes.
<PAGE>
If the Letter of Transmittal or any Private Notes or bond powers are
signed by Trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and unless waived by
the Company, evidence satisfactory to the Company of their authority to so act
must be submitted with the Letter of Transmittal.
The Exchange Agent and the Depositary have confirmed that any financial
institution that is a participant in the Depositary's system may utilize the
Depositary's Automated Tender Offer Program to tender Private Notes.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Private Notes will be
determined by the Company in its reasonable discretion, which determination
will be final and binding. The Company reserves the absolute right to reject
any and all Private Notes not properly tendered or any Private Notes the
Company's acceptance of which would, in the opinion of counsel for the
Company, be unlawful. The Company also reserves the right to waive any
defects, irregularities or conditions of tender as to particular Private
Notes. The Company's interpretation of the terms and conditions of the
Exchange Offer (including the instructions in the Letter of Transmittal) will
be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Private Notes must be cured
within such time as the Company shall determine. Although the Company intends
to notify holders of defects or irregularities with respect to tenders of
Private Notes, neither the Company, the Exchange Agent nor any other person
shall incur any liability for failure to give such notification. Tenders of
Private Notes will not be deemed to have been made until such defects or
irregularities have been cured or waived.
While the Company has no present plan to acquire any Private Notes that
are not tendered in the Exchange Offer or to file a registration statement to
permit resales of any Private Notes that are not tendered pursuant to the
Exchange Offer, the Company reserves the right in its sole discretion to
purchase or make offers for any Private Notes that remain outstanding
subsequent to the Expiration Date or, as set forth below under "--Conditions,"
to terminate the Exchange Offer and, to the extent permitted by applicable
law, purchase Private Notes in the open market, in privately negotiated
transactions or otherwise. The terms of any such purchases or offers could
differ from the terms of the Exchange Offer.
By tendering, each holder of Private Notes will represent to the Company
that, among other things, (i) Exchange Notes to be acquired by such holder of
Private Notes in connection with the Exchange Offer are being acquired by such
holder in the ordinary course of business of such holder, (ii) such holder has
no arrangement or understanding with any person to participate in the
distribution of the Exchange Notes, (iii) such holder acknowledges and agrees
that any person who is a broker-dealer registered under the Exchange Act or is
participating in the Exchange Offer for the purposes of distributing the
Exchange Notes must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction of the Exchange Notes, acquired by such person and cannot rely on
the position of the staff of the Commission set forth in certain no-action
letters, (iv) such holder understands that a secondary resale transaction
described in clause (iii) above and any resales of Exchange Notes obtained by
such holder in exchange for Private Notes acquired by such holder directly
from the Company should be covered by an effective registration statement
containing the selling security holder information required by Item 507, as
applicable, of Regulation S-K of the Commission and (v) such holder is not an
"affiliate," as defined in Rule 405 under the Securities Act, of the Company.
If the holder is a broker-dealer that will receive Exchange Notes for such
holder's own account in exchange for Private Notes that were acquired as a
result of market-making activities or other trading activities, such holder
will be required to acknowledge in the Letter of Transmittal that such holder
will deliver a copy of this Prospectus (as it may be supplemented or amended)
in connection with any resale of such Exchange Notes; however, by so
acknowledging and by delivering a prospectus, such holder will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
RETURN OF PRIVATE NOTES
If any tendered Private Notes are not accepted for any reason set forth
in the terms and conditions of the Exchange Offer or if Private Notes are
withdrawn or are submitted for a greater principal amount than the holders
desire to exchange, such unaccepted, withdrawn or non-exchanged Private Notes
will be returned without expense to the tendering holder thereof (or, in the
case of Private Notes tendered by book-entry transfer into the Exchange
Agent's account at the Depositary pursuant to the book-entry transfer
procedures described below, such Private Notes will be credited to an account
maintained with the Depositary) as promptly as practicable.
<PAGE>
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with
respect to the Private Notes at DTC for purposes of the Exchange Offer within
two business days after the date of this Prospectus, and any financial
institution that is a participant in the Depositary's systems may make
book-entry delivery of Private Notes by causing DTC to transfer such Private
Notes into the Exchange Agent's account at DTC in accordance with DTC's
procedures for transfer. However, although delivery of Private Notes may be
effected through book-entry transfer at DTC, the Letter of Transmittal or
facsimile thereof, with any required signature guarantees, or an Agent's
Message in lieu of a Letter of Transmittal, and any other required documents,
must, in any case, be transmitted to and received by the Exchange Agent at the
address set forth below under "--Exchange Agent" on or prior to the Expiration
Date or pursuant to the guaranteed delivery procedures described below.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Private Notes and (i) whose Private
Notes are not immediately available or (ii) who cannot deliver their Private
Notes, the Letter of Transmittal or any other required documents to the
Exchange Agent prior to the Expiration Date, may effect a tender if:
(a) The tender is made through an Eligible Institution;
(b) Prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed Notice
of Guaranteed Delivery substantially in the form provided by the Company
(by facsimile transmission, mail or hand delivery) setting forth the name
and address of the holder, the certificate number(s) of such Private
Notes and the principal amount of Private Notes tendered, stating that
the tender is being made thereby and guaranteeing that, within five New
York Stock Exchange trading days after the Expiration Date, the Letter of
Transmittal (or a facsimile thereof), together with the certificate(s)
representing the Private Notes in proper form for transfer or a BookEntry
Confirmation, as the case may be, and any other documents required by the
Letter of Transmittal, will be deposited by the Eligible Institution with
the Exchange Agent; and
(c) Such properly executed Letter of Transmittal (or facsimile
thereof), as well as the certificate(s) representing all tendered Private
Notes in proper form for transfer and all other documents required by the
Letter of Transmittal are received by the Exchange Agent within five New
York Stock Exchange trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will
be sent to holders who wish to tender their Private Notes according to the
guaranteed delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Private Notes may be
withdrawn at any time prior to the Expiration Date.
To withdraw a tender of Private Notes in the Exchange Offer, a written or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth herein prior to the Expiration Date. Any such
notice of withdrawal must (i) specify the name of the person having deposited
the Private Notes to be withdrawn (the "Depositor"), (ii) identify the Private
Notes to be withdrawn (including the certificate number or numbers and
principal amount of such Private Notes) and (iii) be signed by the holder in
the same manner as the original signature on the Letter of Transmittal by
which such Private Notes were tendered (including any required signature
guarantees). All questions as to the validity, form and eligibility (including
time of receipt) of such notices will be determined by the Company, in its
sole discretion, whose determination shall be final and binding on all
parties. Any Private Notes so withdrawn will be deemed not to have been
validly tendered for purposes of the Exchange Offer and no Exchange Notes will
be issued with respect thereto unless the Private Notes so withdrawn are
validly retendered. Properly withdrawn Private Notes may be retendered by
following one of the procedures described above under "The Exchange
Offer--Procedures for Tendering" at any time prior to the Expiration Date.
<PAGE>
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Company shall
not be required to accept for exchange, or exchange the Exchange Notes for,
any Private Notes, and may terminate the Exchange Offer as provided herein
before the acceptance of such Private Notes, if the Exchange Offer violates
applicable law, rules or regulations or an applicable interpretation of the
staff of the Commission.
If the Company determines in its reasonable discretion that any of these
conditions are not satisfied, the Company may (i) refuse to accept any Private
Notes and return all tendered Private Notes to the tendering holders, (ii)
extend the Exchange Offer and retain all Private Notes tendered prior to the
expiration of the Exchange Offer, subject, however, to the rights of holders
to withdraw such Private Notes (see "-- Withdrawal of Tenders") or (iii) waive
such unsatisfied conditions with respect to the Exchange Offer and accept all
properly tendered Private Notes that have not been withdrawn. If such waiver
constitutes a material change to the Exchange Offer, the Company will promptly
disclose such waiver by means of a prospectus supplement that will be
distributed to the registered holders of the Private Notes, and the Company
will extend the Exchange Offer for a period of five to ten business days,
depending upon the significance of the waiver and the manner of disclosure to
the registered holders, if the Exchange Offer would otherwise expire during
such five to ten business day period.
TERMINATION OF CERTAIN RIGHTS
All rights under the Registration Rights Agreement (including
registration rights) of holders of the Private Notes eligible to participate
in the Exchange Offer will terminate upon consummation of the Exchange Offer
except with respect to the Company's continuing obligations (i) to indemnify
such holders (including any broker-dealers) and certain parties related to
such holders against certain liabilities (including liabilities under the
Securities Act), (ii) to provide, upon the request of any holder of a
transfer-restricted Private Note, the information required by Rule 144A(d)(4)
under the Securities Act in order to permit resales of such Private Notes
pursuant to Rule 144A, (iii) to use its best efforts to keep the Registration
Statement effective to the extent necessary to ensure that it is available for
resales of Exchange Notes by broker-dealers for a period of up to one year
from the date the Registration Statement is declared effective or until such
earlier date on which the Exchange Notes are freely tradeable and to provide
copies of the latest version of the Prospectus to such broker-dealers upon
their request during such period and (iv) to file a shelf registration
statement as required by the Registration Rights Agreement if any holder of
transfer-restricted Notes notifies the Company within 20 business days of the
consummation of the Exchange Offer that (A) such holder is prohibited by
applicable law or Commission policy from participating in the Exchange Offer,
or (B) such holder may not resell the Exchange Notes acquired by it in the
Exchange Offer to the public without delivering a prospectus and that this
Prospectus is not appropriate or available for such resales by such holder, or
(C) that such holder is a broker-dealer and holds Private Notes acquired
directly from the Company or one of its affiliate (see "--Additional
Interest").
ADDITIONAL INTEREST
The Registration Rights Agreement provides that (i) the Company will use
its best efforts file the Registration Statement with the Commission on or
prior to 45 days after the Closing Date, (ii) the Company will use its best
efforts to have the Registration Statement declared effective by the
Commission on or prior to 120 days after the Issue Date, (iii) unless the
Exchange Offer would not be permitted by applicable law or Commission policy,
the Company will use its best efforts to consummate the exchange offer within
150 days after the Issue Date and (iv) if obligated to file a shelf
registration statement pursuant to the terms of the Registration Rights
Agreement (the "Shelf Registration Statement" and, collectively with the
Registration Statement, the "Registration Statements"), the Company will use
its best efforts to file such Shelf Registration Statement with the Commission
on or prior to 45 days after such filing obligation arises and to cause the
Shelf Registration to be declared effective by the Commission on or prior to
120 days after such obligation arises. If (a) the Company fails to file the
Exchange Offer Registration Statement or the Shelf Registration Statement on
or prior to the 45th Calendar day after the Issue Date then commencing on the
day following such required filing date, additional interest shall accrue on
the principal amount of the Private Notes at a rate of 0.50% per annum, (b)
neither the Exchange Offer Registration Statement nor a Shelf Registration
Statement is declared effective by the Commission on or prior to the 75th
calendar day after the applicable required filing date or, notwithstanding
that the Company has consummated or will consummate an Exchange Offer, the
Company is required to file a Shelf Registration Statement and such Shelf
Registration Statement is not declared effective by the Commission on or prior
to the 75th Calendar day after the date such Shelf Registration Statement was
required to be filed, then, commencing on the 76th Calendar day after the
applicable required filing date, additional interest shall accrue on the
principal amount of the Private Notes at a rate of 0.50% per annum or (c) the
Company fails to exchange Exchange Notes for all Private Notes on or prior to
<PAGE>
the 150th Calendar day after the Issue Date or, if applicable, the Shelf
Registration Statement has been declared effective and such Shelf Registration
Statement ceases to be effective at any time prior to the second anniversary
of its effective date, then commencing the 151st Calendar day after such issue
date or such date that the Shelf Registration ceases to be effective
additional interest shall accrue on the principal amount of the Private Notes
at a rate of 0.50% per annum. The additional interest rate on the Private
Notes may not exceed in the aggregate 0.50% per annum. Any amounts of
additional interest due pursuant to clause (a), (b) or (c) above will be
payable in cash on March 1 and September 1 of each year to the holders of
record on the preceding February 15 or August 15, respectively. Following the
cure of all Registration Defaults, the accrual of additional interest will
cease.
Holders of Notes will be required to make certain representations to the
Company (as described in the Registration Rights Agreement) in order to
participate in the Exchange Offer and will be required to deliver information
to be used in connection with the Shelf Registration Statement and to provide
comments on the Shelf Registration Statement within the time periods set forth
in the Registration Rights Agreement in order to have their Private Notes
included in the Shelf Registration Statement and benefit from the provisions
regarding Additional Interest set forth above.
FEES AND EXPENSES
The expenses incident to the Company's compliance with its obligations
under the Registration Rights Agreement will be borne by the Company. The
expenses of soliciting tenders will be borne by the Company. The principal
solicitation is being made by mail; however, additional solicitation may be
made by telegraph, telephone or in person by officers and regular employees of
the Company and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay
the Exchange Agent reasonable and customary fees for its services and will
reimburse it for its reasonable out-of-pocket expenses in connection
therewith.
The cash expenses to be incurred in connection with the Exchange Offer
will be paid by the Company and are estimated in the aggregate to be $200,000.
Such expenses include registration fees, fees and expenses of the Exchange
Agent and the Trustee, accounting and legal fees and printing costs, among
others.
The Company will pay all transfer taxes, if any, applicable to the
exchange of Private Notes pursuant to the Exchange Offer. If, however, a
transfer tax is imposed for any reason other than the exchange of the Private
Notes pursuant to the Exchange Offer, then the amount of any such transfer
taxes (whether imposed on the registered holder or any other persons) will be
payable by the tendering holder. If satisfactory evidence of payment of such
taxes or exemption therefrom is not submitted with the Letter of Transmittal,
the amount of such transfer taxes will be billed directly to such tendering
holder.
CONSEQUENCE OF FAILURE TO EXCHANGE
Participation in the Exchange Offer is voluntary. Holders of the Private
Notes are urged to consult their financial and tax advisors in making their
own decisions on what action to take.
The Private Notes that are not exchanged for the Exchange Notes pursuant
to the Exchange Offer will remain restricted securities. Accordingly, such
Private Notes may be resold only (i) to a person whom the seller reasonably
believes is a QIB in a transaction meeting the requirements of Rule 144A, (ii)
in a transaction meeting the requirements of Rule 144 under the Securities
Act, (iii) outside the United States to a foreign person in a transaction
meeting the requirements of Rule 904 under the Securities Act, (iv) in
accordance with another exemption from the registration requirements of the
Securities Act (and based upon an opinion of counsel if the Company so
requests), (v) to the Company or (vi) pursuant to an effective registration
statement and, in each case, in accordance with any applicable securities laws
of any state of the United States or any other applicable jurisdiction.
ACCOUNTING TREATMENT
For accounting purposes, the Company will recognize no gain or loss as a
result of the Exchange Offer. The expenses of the Exchange Offer will be
amortized over the term of the Exchange Notes.
<PAGE>
EXCHANGE AGENT
Marine Midland Bank has been appointed Exchange Agent for the Exchange
Offer. Delivery of the Letters of Transmittal and any other required
documents, questions, requests for assistance and requests for additional
copies of this Prospectus or of the Letter of Transmittal should be directed
to the Exchange Agent as follows:
BY REGISTERED OR CERTIFIED MAIL:
Marine Midland Bank
140 Broadway, Level A
New York, New York 10005
Attn: Corporate Trust Operations
CONFIRM BY TELEPHONE: (212) 658-5931
CONFIRM BY FAX: (212) 658-2292
Delivery to other than the above
addresses or facsimile number will not constitute a valid delivery.
DESCRIPTION OF THE EXCHANGE NOTES
GENERAL
The Exchange Notes will be issued pursuant to an indenture (the
"Indenture") dated as of August 11, 1997 between the Company and Marine
Midland Bank, as trustee (the "Trustee"). The terms of the Exchange Notes
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939 (the "Trust Indenture Act") as in
effect on the date of the Indenture. The Exchange Notes are subject to all
such terms and holders of the Exchange Notes are referred to the Indenture and
the Trust Indenture Act for a statement thereof. The following summary of
certain provisions of the Indenture does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, the provisions
of the Indenture, including the definitions therein of certain terms used
below. A copy of the form of Indenture and Registration Rights Agreement is
available as set forth under "--Additional Information." The definitions of
certain terms used in the following summary are set forth below under "--
Certain Definitions." For purposes of this section, references to the
"Company" include only the Company and not its subsidiaries and references to
the "Notes" include the Private Notes and Exchange Notes.
The Exchange Notes will be general unsecured obligations of the Company,
will be subordinated in right of payment to the prior payment in full of all
existing and future Senior Indebtedness of the Company, will be senior in
right of payment to, or PARI PASSU in right of payment with, any existing and
future Senior Subordinated Indebtedness of the Company, and will be
effectively subordinated to the indebtedness of the Company's subsidiaries.
See "--Subordination."
PRINCIPAL, MATURITY AND INTEREST
The Exchange Notes are limited in aggregate principal amount to
$250,000,000 and will mature on September 1, 2007. Interest on the Notes will
accrue at the rate of 71/2% per annum and will be payable semi-annually on
each March 1 and September 1 commencing on March 1, 1998, to holders of record
of the Notes ("Holders") on the immediately preceding February 15 and August
15, whether or not a business day. Interest on the Notes will accrue from the
most recent date to which interest has been paid or, if no interest has been
paid, from the Issue Date. Interest will be computed on the basis of a 360-day
year comprised of twelve 30-day months.
<PAGE>
Principal of, and interest on, the Notes will be payable at the office or
agency of the Company maintained for such purpose within or without the City
and State of New York or, at the option of the Company, payment of interest
and principal may be made by check mailed to the Holders at their respective
addresses set forth in the register of the Holders; provided that all payments
with respect to Global Notes and Certificated Securities held by Holders who
have given wire transfer instructions to the Company will be required to be
made by wire transfer of same day funds to the accounts specified by the
Holders thereof. Unless otherwise designated by the Company, the Company's
office or agency in New York will be the office of the Trustee maintained for
such purpose. The Notes will be issued only in registered form, without
coupons, in denominations of $1,000 and integral multiples thereof.
CERTAIN COVENANTS
MERGER, CONSOLIDATION OR SALE OF ASSETS
The Company, without the consent of the Holders of Notes then
outstanding, may consolidate or merge with or into, or convey, transfer or
lease its properties and assets substantially as an entirety to any Person
which is a corporation, partnership or trust organized and validly existing
under the laws of any domestic jurisdiction, provided that (1) any successor
Person assumes by supplemental indenture the Company's obligations on the
Notes and under the Indenture, (2) after giving effect to the transaction, no
Event of Default, and no event which, after notice or lapse of time, would
become an Event of Default, shall have occurred and be continuing under the
Indenture and (3) the Company shall have delivered an officer's certificate
and an opinion of counsel, each stating that such transaction or supplemental
indenture, complies with the Indenture.
ANTI-LAYERING
The Indenture provides that the Company will not incur, create, issue,
assume, guarantee or otherwise become liable for any Indebtedness that is
subordinate or junior in right of payment to any Senior Indebtedness and
senior in any respect in right of payment to the Notes, including having a
stated maturity earlier than the Notes.
EVENTS OF DEFAULT AND REMEDIES
The following events are defined in the Indenture as "Events of Default"
with respect to the Notes: (1) failure to pay any interest on any Note when
due and payable, continued for 30 days; (2) failure to pay principal of any
Note at its maturity; (3) failure to perform any other covenant of the Company
in the Indenture, continued for 60 days after written notice as provided in
the Indenture; (4) default under any indenture or instrument (other than the
Indenture or any Note) under which the Company shall have outstanding or shall
have guaranteed the payment of at least $25.0 million aggregate principal
amount of indebtedness for money borrowed which default (a) is caused by
failure to pay the principal of, or interest on, such indebtedness prior to
the expiration of the grace period provided in such indebtedness on the date
of such default or (b) results in acceleration of such indebtedness prior to
its express maturity and such acceleration has not been annulled within ten
days after written notice as provided in the Indenture; and (5) certain events
in bankruptcy, insolvency or reorganization involving the Company.
If an Event of Default occurs and is continuing, then either the Trustee
or the Holders of at least 25% in aggregate principal amount of the Notes then
outstanding by notice as provided in the Indenture may declare the principal
amount of all of the Notes to be due and payable immediately. Subject to the
subordination provisions described below, at any time after a declaration of
acceleration with respect to Notes has been made, but before a judgment or
decree for payment of money has been obtained by the Trustee, the Holders of a
majority in aggregate principal amount of the Notes then outstanding may,
under certain circumstances, rescind and annul such acceleration.
The Indenture provides that, subject to the duty of the Trustee during
default to act with the required standard of care, the Trustee will be under
no obligation to exercise any of its rights or powers under the Indenture at
the request or direction of any of the Holders, unless such Holders shall have
offered to the Trustee reasonable indemnity. Subject to such provisions for
the indemnification of the Trustee, the Holders of a majority in aggregate
principal amount of the Notes then outstanding will have the right to direct
the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee, with respect to the Notes.
<PAGE>
The Company is required to furnish to the Trustee annually a statement as
to the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance.
DEFEASANCE AND DISCHARGE OF THE INDENTURE AND THE NOTES
If the Company irrevocably deposits, or causes to be deposited with the
Trustee or the Paying Agent, at any time prior to the stated maturity of the
Notes, as trust funds in trust, money or direct noncallable obligations of or
guaranteed by the United States of America in amounts (including interest, but
without consideration of any reinvestment of such interest) and maturities
sufficient to pay timely and discharge the entire principal of the then
outstanding Notes and all interest then due in cash, the Indenture shall cease
to be of further effect as to all outstanding Notes (except, among other
things, as to (i) remaining rights of registration of transfer and
substitution and exchange of the Notes, (ii) rights of holders to receive
payment of principal of and interest on the Notes, and (iii) the rights,
obligations and immunities of the Trustee).
SUBORDINATION
The Notes will be general unsecured obligations of the Company, will be
subordinated in right of payment to the prior payment in full of all existing
and future Senior Indebtedness of the Company, will be senior in right of
payment to, or PARI PASSU in right of payment with, any existing and future
Senior Subordinated Indebtedness of the Company. At August 31, 1997, Senior
Indebtedness of the Company and its subsidiaries was approximately $79,700,000
and Senior Subordinated Indebtedness of the Company (including the Private
Notes) was approximately $755,300,000. In addition, because the Company's
operations are conducted primarily through its operating subsidiaries, claims
of creditors and holders of indebtedness of such subsidiaries will have
priority with respect to the assets and earnings of such subsidiaries over the
claims of creditors of the Company, including holders of the Notes. As of
August 31, 1997, the aggregate liabilities of such subsidiaries were
approximately $625,000,000. On October 29, 1997, the Company sold in a
transaction exempt from registration under the Securities Act $275,000,000
principal amount of its Convertible Notes which are subordinated in right of
payment to the Notes. The Company intends to use the net proceeds from the
sale of the Convertible Notes to repurchase or redeem or defease or otherwise
retire all of the Company's outstanding $258,000,000 principal amount of 83/4%
Notes which rank PARI PASSU with the Notes. See "Business--Recent
Developments".
Upon any bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to the Company or its properties, or any assignment for
the benefit of creditors or marshalling of the assets and liabilities or the
Company or any distribution to creditors or a liquidation or dissolution of
the Company, the holders of Senior Indebtedness will be entitled to receive
payment in full in cash or, at the option of such holders, cash equivalents of
all obligations with respect to Senior Indebtedness, before the Holders
receive any payment of principal or interest on the Notes or receive any
distributions to which the Holders would otherwise be entitled.
Upon the maturity of any Senior Indebtedness by lapse of time,
acceleration (unless waived, rescinded or annulled) or otherwise, all
principal thereof and interest thereon shall first be paid in full in cash, or
such payment duly provided for in cash or in a manner satisfactory to the
holders of such Senior Indebtedness, before any payment is made on account of
principal, interest, fees or expenses on the Notes.
The Company may not, directly or indirectly, pay principal or interest on
the Notes and may not acquire any Notes for cash or property or make any other
distribution with respect to the Notes if (i) a default in the payment of
principal or interest on any Senior Indebtedness occurs and is continuing (a
"Payment Default") unless and until such default has been cured or waived; or
(ii) a default, other than a Payment Default, on any Senior Indebtedness
occurs and is continuing that permits the holders (or the agent) of such
Senior Indebtedness to accelerate its maturity (a "Non-Payment Default"), and
such default is either the subject of judicial proceedings or the Trustee or
the Paying Agent receives a notice of the default from a person who may give
it pursuant to the terms of the Indenture at least two business days prior to
the relevant payment date; PROVIDED, HOWEVER, that only one such notice
relating to the same event of default or any other default existing at the
time of such notice under the Senior Indebtedness may be given during any
365-consecutive- day period.
The Company shall resume payments on the Notes and may acquire them upon
the earlier of when (a) the default is cured or waived, or (b) in the case of
a default referred to in clause (ii) in the immediately preceding paragraph,
the 179th day after receipt of the notice referred to therein if the default
is not the subject of judicial proceedings.
<PAGE>
A Payment Default or Non-Payment Default with respect to the Senior
Indebtedness does not suspend the rights of the Trustee or the Holders to take
any action to accelerate the maturity of the Notes; PROVIDED, HOWEVER, that
all Senior Indebtedness then or thereafter due shall be paid first. In
addition, any acceleration of the maturity of the Notes as a result of the
failure by the Company to make any payment of principal or interest on the
Notes as a result of the foregoing subordination provisions shall be
automatically rescinded if (i) all defaults on Senior Indebtedness are
permanently cured or waived and (ii) the payment or payments, the omission of
which gave rise to the Event of Default, is or are made within 179 days after
the Trustee received notice of the default or defaults on Senior Indebtedness
and at the time of such recision no other Default or Event of Default shall
have occurred and be continuing. See "Events of Default and Remedies."
As a result of the subordination provisions described above, in the event
of insolvency of the Company, funds that would otherwise be payable to Holders
will be paid or turned over to the holders of Senior Indebtedness to the
extent necessary to pay the Senior Indebtedness in full, and the Company may
be unable to make all payments due under the Notes. Additionally, in such
event, Holders may recover less ratably than general creditors of the Company
or the general creditors of the Company's subsidiaries to whom the Notes are
structurally subordinated.
TRANSFER AND EXCHANGE
A holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar may require a holder, among other things, to furnish appropriate
endorsements and transfer documents, and to pay any taxes and fees required by
law or permitted by the Indenture. The registered holder of a Note will be
treated as the owner of it for all purposes.
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company
and the Trustee with the consent of the Holders of not less than a majority in
aggregate principal amount of the outstanding Notes; PROVIDED, HOWEVER, that
no such modification or amendment may, without the consent of the Holder of
each Note affected thereby, change the fixed maturity of the principal of, or
any installment of principal of or interest on any Note, reduce the principal
amount of, or interest on, any Note, change the place of payment where or coin
or currency in which the principal of, or interest on, any Notes is payable,
impair the right to institute suit for the enforcement of any payment on or
with respect to any Note, make any change in the subordination provisions of
the Indenture that adversely affects the rights of any holders of the Notes or
any change to any other section of the Indenture that adversely affects the
rights of any holder of the Notes under the subordination provisions of the
Indenture, reduce the percentage in principal amount of outstanding Notes, the
consent of the Holders of which is required for modification or amendment of
the Indenture or for waiver of compliance with certain provisions of the
Indenture or for waiver of certain defaults or modify any of the above
provisions.
The Holders of not less than a majority in aggregate principal amount of
the outstanding Notes may, on behalf of the Holders of all Notes, waive
compliance by the Company with certain restrictive provisions of the
Indenture. The Holders of not less than a majority in aggregate principal
amount of the outstanding Notes may, on behalf of the Holders of all Notes,
waive any past default under the Indenture, except a default (1) in the
payment of principal of, or interest on, any Note, or (2) in respect of a
covenant or provision of the Indenture which cannot be modified or amended
without the consent of the Holder of each Note.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any
such claim as security or otherwise. The Trustee will be permitted to engage
in other transactions; however, if it acquires any conflicting interest it
must eliminate such conflict within 90 days, or apply to the Commission for
permission to continue or resign.
The holders of a majority in principal amount of the then outstanding
Notes will have the right to direct the time, method and place of conducting
any proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
shall occur (which shall not be cured), the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the
conduct of his own affairs. Subject to such provisions, the Trustee will be
under no obligation to exercise any of its rights or powers under the
Indenture at the request of any of the holders of the Notes, unless they shall
have offered to the Trustee security or indemnity satisfactory to it against
any loss, liability or expense.
<PAGE>
BOOK-ENTRY; DELIVERY AND FORM
The certificates representing the Notes will be issued in fully
registered form, without coupons. Except as described below, the Notes will be
deposited with, or on behalf of, The Depository Trust Company ("DTC"), New
York, New York, as depositary (the "Depositary"), and registered in the name
of Cede & Co., as DTC's nominee, in the form of one or more global Note
certificates (the "Global Note").
GLOBAL NOTES. Ownership of beneficial interests in a Global Note will be
limited to persons who have accounts with DTC ("participants") or persons who
hold interests through participants. Ownership of beneficial interests in the
Global Notes will be shown on, and the transfer of these ownership interests
will be effected only through, records maintained by DTC or its nominee (with
respect to interests of participants) and the records of participants (with
respect to interests of persons other than participants).
So long as DTC, or its nominee, is the registered owner or holder of a
Global Note, DTC or such nominee, as the case may be, will be considered the
sole owner or holders of the Notes represented by such Global Note for all
purposes under the Indenture and the Notes. In addition, no beneficial owner
of an interest in a Global Note will be able to transfer that interest except
in accordance with DTC's applicable procedures (in addition to those under the
Indenture referred to herein).
Payments on Global Notes will be made to DTC, or its nominee, as the
registered owner thereof. Neither the Company, the Trustee nor any paying
agent will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests in
the Global Notes or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
The Company expects that DTC, or its nominee, upon receipt of any payment
in respect of a Global Note representing any Notes held by it or its nominee,
will immediately credit participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of such Global Note for such Notes as shown on the records of DTC or its
nominee. The Company also expects that payments by participants to owners of
beneficial interests in such Global Note held through such participants will
be governed by standing instructions and customary practices, as is now the
case with securities held for the accounts of customers registered in the
names of nominees for such customers. Such payments will be the responsibility
of such participants.
Transfers between participants in DTC will be effected in the ordinary
way in accordance with DTC rules. The laws of some states require that certain
persons take physical delivery of securities in definitive form. Consequently,
the ability to transfer beneficial interests in a Global Note to such persons
may be limited. Because DTC can only act on behalf of participants, who in
turn act on behalf of indirect participants (defined below) and certain banks,
the ability of a person having a beneficial interest in a Global Note to
pledge such interest to persons or entities that do not participate in the DTC
system or otherwise take actions in respect of such interest, may be affected
by the lack of a physical certificate of such interest.
The Company believes that it is the policy of DTC that it will take any
action permitted to be taken by a holder of Notes (including the presentation
of Notes for exchange) only at the direction of one or more participants to
whose account interests in the Global Notes are credited and only in respect
of such portion of the aggregate principal amount of the Notes as to which
such participant or participants has or have given such direction.
DTC has advised the Company as follows: DTC is a limited-purpose trust
company organized under the New York Banking Law, a "banking organization"
within the meaning of the New York Banking Law, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the New York
Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of section 17A of the Exchange Act. DTC holds securities that its
participants deposit with DTC and facilitates the settlement among
participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Direct participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations. Access to the DTC system is also available to others such as
securities brokers and dealers, banks and trust companies that clear through
or maintain a custodial relationship with a direct participant, either
directly or indirectly ("indirect participants"). The rules applicable to DTC
and its participants are on file with the Commission.
<PAGE>
Although DTC has agreed to the foregoing procedures in order to
facilitate transfers of interests in the Global Notes among participants of
DTC, it is under no obligation to perform or continue to perform such
procedures, and such procedures may be discontinued at any time. Neither the
Company nor the Trustee will have any responsibility for the performance by
DTC or its participants or indirect participants of their respective
obligations under the rules and procedures governing their operations.
CERTIFICATED SECURITIES
Subject to certain conditions, any person having a beneficial interest in
the Global Note may, upon request to the Trustee, exchange such beneficial
interest for Notes in the form of Certificated Securities. Upon any such
issuance, the Trustee is required to register such Certificated Securities in
the name of, and cause the same to be delivered to, such person or persons (or
the nominee of any thereof). In addition, if (i) the Company notifies the
Trustee in writing that the Depositary is no longer willing or able to act as
a depositary and the Company is unable to locate a qualified successor within
90 days or (ii) the Company, at its option, notifies the Trustee in writing
that it elects to cause the issuance of Notes in the form of Certificated
Securities under the Indenture, then, upon surrender by the Global Note Holder
of its Global Note, Notes in such form will be issued to each person that the
Global Note Holder and the Depositary identify as being the beneficial owner
of the related Notes.
Neither the Company nor the Trustee will be liable for any delay by the
Global Note Holder or the Depositary in identifying the beneficial owners of
Notes and the Company and the Trustee may conclusively rely on, and will be
protected in relying on, instructions from the Global Note Holder or the
Depositary for all purposes.
In case any Note shall become mutilated, defaced, destroyed, lost or
stolen, the Company will execute and, upon the Company's request, the Trustee
will authenticate and deliver a new Note, of like tenor and equal principal
amount in exchange and substitution for such Note (upon surrender and
cancellation thereof) or in lieu of an substitution for such Note. In case
such Note is destroyed, lost or stolen, the applicant for a substituted Note
shall furnish to the Company and the Trustee such security or indemnity as may
be required by them to hold each of them harmless, and, in every case of
destruction, loss or theft of such Note, the applicant shall also furnish to
the Company or the Trustee satisfactory evidence of the destruction, loss or
theft of such Note and of the ownership thereof. Upon the issuance of any
substituted Note, the Company may require the payment by the registered holder
thereof of a sum sufficient to cover fees and expenses connected therewith.
SAME-DAY SETTLEMENT AND PAYMENT
The Indenture will require that payments in respect of the Notes
represented by the Global Note (including principal and interest) be made in
immediately available same day funds. With respect to Certificated Securities,
however, the Company will make all payments of principal and interest by
mailing a check to each Holder's registered address. Secondary trading in
long-term notes and debentures of corporate issuers is generally settled by
clearing-house or next-day funds. In contrast, the Notes represented by the
Global Note are expected to be eligible to trade in the PORTAL Market and to
trade in the Depositary's Same-Day Funds Settlement System, and any permitted
secondary market trading activity in such Notes will, therefore, be required
by the Depositary to be settled in immediately available funds. The Company
expects that secondary trading in the Certificated Securities will also be
settled in immediately available funds.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture.
Reference is made to the Indenture for a full disclosure of all such terms, as
well as any other capitalized terms used herein for which no definition is
provided.
"Capital Lease Obligation" means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease which
would at such time be so required to be capitalized on the balance sheet in
accordance with GAAP.
"Credit Agreement" means the Amended and Restated Credit and Guarantee
Agreement, dated as of March 8, 1996, as amended from time to time, by and
among the Company and Dayco PTI S.p.A., as Borrowers, and certain other
subsidiaries of the Company, as Guarantors, The Chase Manhattan Bank, as
Administrator and Bid Agent, Bank of America National Trust and Savings
Association, as Documentation Agent, and the banks and other financial
institutions that are signatories thereto, and any refinancings or
replacements thereof providing for Indebtedness in principal amount of up to
$500,000,000, less, in the case of any such refinancings or replacements, the
amount of all permanent reductions thereunder.
<PAGE>
"83/4% Notes" means the Company's 83/4% Senior Subordinated Notes due
April 1, 2003 issued pursuant to the Indenture, dated as of March 15, 1993,
between the Company and Citibank, N.A., as trustee.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as approved by a significant segment of the accounting
profession, from time to time.
"Indebtedness" of any person means any indebtedness, contingent or
otherwise, in respect of borrowed money (whether or not the recourse of the
lender is to the whole of the assets of such Person or only to a portion
thereof), or evidenced by bonds, notes, debentures or similar instruments or
letters of credit (or reimbursement obligations with respect thereto) or
representing the balance deferred and unpaid of the purchase price of any
property (including pursuant to Capital Lease Obligations), if and to the
extent any of the foregoing indebtedness would appear as a liability upon a
balance sheet of such Person prepared in accordance with GAAP (except that any
such balance that constitutes a trade payable and/or an accrued liability
arising in the ordinary course of business shall not be considered
Indebtedness), and shall also include, to the extent not otherwise included,
any Capital Lease Obligations, the maximum fixed repurchase price of any
Redeemable Stock, indebtedness secured by a Lien to which the property or
assets owned or held by such Person is subject, whether or not the obligations
secured thereby shall have been assumed, guarantees of items that would be
included within this definition to the extent of such guarantees (exclusive of
whether such items would appear upon such balance sheet), and net liabilities
in respect of Interest Rate Protection Obligations. For purposes of the
preceding sentence, the maximum fixed repurchase price of any Redeemable Stock
which does not have a fixed repurchase price shall be calculated in accordance
with the terms of such Redeemable Stock as if such Redeemable Stock were
repurchased on any date on which Indebtedness shall be required to be
determined pursuant to the Indenture, provided that if such Redeemable Stock
is not then permitted to be repurchased, the repurchase price shall be the
book value of such Redeemable Stock. The amount of Indebtedness of any person
at any date shall be, without duplication, (i) the outstanding balance at such
date of all unconditional obligations as described above and the maximum
liability of any such contingent obligations at such date and (ii) in the case
of Indebtedness of others secured by a Lien to which the property or assets
owned or held by such Person is subject, the lesser of the fair market value
at such date of any asset subject to a Lien securing the Indebtedness of
others and the amount of the Indebtedness secured.
"Interest Rate Protection Obligations" means the obligations of any
Person pursuant to any arrangement with any other Person whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest
on a stated notional amount in exchange for periodic payments made by such
Person calculated by applying a fixed or a floating rate of interest on the
same notional amount and shall include without limitation, interest rate
swaps, caps, floors, collars and similar agreements.
"Lien" means any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind, whether or not filed, recorded or otherwise perfected
under applicable law (including any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other agreement to
sell or give any security interest in and any filing or other agreement to
give any financing statement under the Uniform Commercial Code (or equivalent
statutes) of any jurisdiction).
"Person" means any individual, corporation, partnership, joint venture,
incorporated or unincorporated association, joint-stock company, trust,
unincorporated organization or government or other agency or political
subdivision thereof or other entity of any kind.
"Redeemable Stock" means any capital stock or other equity interest
which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable before the stated maturity of the
Notes), or upon the happening of any event, matures or is mandatorily
redeemable, in whole or in part, prior to the stated maturity of the Notes.
<PAGE>
"Senior Indebtedness" means the principal of, premium, if any, and
interest on any Indebtedness of the Company, whether outstanding on the date
of the Indenture or thereafter created, incurred, assumed or guaranteed,
unless, in the case of any particular Indebtedness, the instrument under which
such Indebtedness is created, incurred, assumed or guaranteed expressly
provides that such Indebtedness shall not be senior or superior in right of
payment to the Notes. Without limiting the generality of the foregoing,
"Senior Indebtedness" shall include the principal of, premium, if any, and
interest on all obligations of every nature of the Company from time to time
owed to the lenders under the Credit Agreement, including, without limitation,
principal of and interest on, and all fees and expenses payable under the
Credit Agreement. Notwithstanding anything to the contrary contained in this
Indenture or the Notes, "Senior Indebtedness" shall not include any
Indebtedness represented by the 83/4% Notes or the 73/4% Notes.
"73/4% Notes" means the Company's 73/4% Senior Subordinated Notes due
April 1, 2006 issued pursuant to the Indenture, dated as of March 11, 1996,
between the Company and Fleet National Bank, as trustee.
"Senior Subordinated Indebtedness" means Indebtedness (i) represented by
the 83/4% Notes and the 73/4% Notes and (ii) any other Indebtedness which is
PARI PASSU with the Notes and expressly provides that it is subordinated to
Senior Indebtedness.
DESCRIPTION OF PRIVATE NOTES
The terms of the Private Notes are identical in all material respects to
the Exchange Notes, except that (i) the Private Notes have not been registered
under the Securities Act, are subject to certain restrictions on transfer and
are entitled to certain rights under the applicable Registration Rights
Agreement (which rights will terminate upon consummation of the Exchange
Offer, except under limited circumstances) and (ii) the Exchange Notes will
not provide for payment of Additional Interest thereon. The Private Notes
provide that, in the event that the Exchange Offer is not consummated within
150 days after August 11, 1997 or, in certain limited circumstances, in the
event of a shelf registration statement (the "Shelf Registration Statement")
with respect to the resale of the Private Notes is not declared effective on
or prior to the 75th calendar day after the date such Shelf Registration
Statement was required to be filed, then Additional Interest will accrue (in
addition to the stated interest rate on the Private Notes) at the rate of
0.50% per annum on the principal amount of the Private Notes. See "The
Exchange Offer--Additional Interest."
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a brief summary of certain U.S. federal income tax
consequences associated with the acquisition, ownership and disposition of the
Notes applicable to initial purchasers of Notes. The summary is based upon the
Internal Revenue Code of 1986, as amended (the "Code"), regulations, rulings
and judicial decisions, all as of the date hereof and all of which are subject
to change, possibly with retroactive effect. The discussion below does not
address all aspects of U.S. federal income taxation that may be relevant to
particular holders in the context of their specific investment circumstances
(for example, persons holding Notes as a hedge against currency risks or as
part of a straddle or conversion transaction) or to certain types of holders
subject to special treatment under such laws (for example, financial
institutions, tax-exempt organizations and insurance companies). In addition,
the discussion does not address any aspect of state, local or foreign taxation
and assumes that such purchasers of the Notes will hold them as "capital
assets" within the meaning of Section 1221 of the Code.
For purposes of this discussion, a "U.S. holder" is an individual who is
a citizen or resident of the United States, a corporation (or other entity
taxable as a corporation) or partnership created under the laws of the United
States or any political subdivision thereof (except, in the case of a
partnership, to the extent Treasury Department regulations provide otherwise),
an estate that is subject to U.S. federal income taxation on its worldwide
income regardless of its source, or a trust other than a trust described in
Section 7701(a)(31) of the Code.
PROSPECTIVE PURCHASERS OF THE NOTES ARE URGED TO CONSULT THEIR OWN TAX
ADVISORS CONCERNING THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF
ACQUIRING, OWNING AND DISPOSING OF THE NOTES AS WELL AS THE APPLICATION OF
STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX LAWS.
<PAGE>
U.S. HOLDERS
Interest payable on the Notes will be includable as ordinary income in
the income of a U.S. holder as received or accrued, in accordance with such
holder's regular method of accounting. If a Note is sold or otherwise disposed
of, a U.S. holder generally will recognize gain or loss equal to the
difference between the amount realized on the disposition (except to the
extent attributable to accrued but unpaid interest) and such holder's tax
basis in the Note. Such gain or loss will generally be capital gain or loss.
Under recently enacted legislation, the net capital gain of an individual
derived in respect of the Notes generally will be taxable at a maximum rate of
28% if the holding period for the Notes was greater than one year but not more
than 18 months, or 20% if the holding period was greater than 18 months.
A U.S. holder of a Note may be subject to information reporting and
possibly backup withholding. If applicable, backup withholding would apply at
a rate of 31% with respect to interest on, or the proceeds of a sale,
exchange, redemption, retirement, or other disposition of, such Note, unless
(i) such U.S. holder is a corporation or comes within certain other exempt
categories and, when required, demonstrates this fact, or (ii) provides a
taxpayer identification number, certifies as to no loss of exemption from
backup withholding, and otherwise complies with applicable backup withholding
rules. Amounts withheld under the backup withholding rules from payment to a
U.S. holder will be allowed as a credit against such holder's U.S. federal
income tax and may entitle the holder to a refund, provided that the required
information is provided to the Internal Revenue Service.
Recently issued Treasury Department regulations (the "Final Withholding
Regulations"), which are generally effective with respect to payments made
after December 31, 1998, modify the currently effective information reporting
and backup withholding procedures and requirements, and provide certain
presumptions regarding the status of holders when payments to the holders
cannot be reliably associated with appropriate documentation provided to the
payor. To avoid backup withholding with respect to payments made after
December 31, 1998, initial U.S. holders will be required to provide
certification, if applicable, that conforms to the requirements of the Final
Withholding Regulations, subject to certain transitional rules which may apply
to extend until December 31, 1999 a certification given in accordance with
prior Treasury Department regulations. Because the application of the Final
Withholding Regulations will vary depending on the U.S. holder's particular
circumstances, U.S. holders are urged to consult their own tax advisors
regarding the application of the Final Withholding Regulations to them.
NON-U.S. HOLDERS
Payments of interest to a person other than a U.S. holder (a "Non-U.S.
Holder") with respect to a Note generally will not be subject to U.S. federal
income tax and a withholding tax if (a) the interest is not effectively
connected with the conduct by such holder of a trade or business in the United
States, (b) either (i) the beneficial owner of the Note certifies to the
Company or its agent, under penalties of perjury, that it is not a U.S. person
and provides its name and address on an Internal Revenue Service Form W-8 (or
a suitable substitute form) or (ii) a securities clearing organization, bank
or other financial organization that holds customers' securities in the
ordinary course of business (a "financial institution") and holds the Note
certifies under penalties of perjury that such a Form W-8 (or suitable
substitute form) has been received from the beneficial owner by it or by a
financial institution between it and the beneficial owner and furnishes the
payor with a copy thereof, and (c) the person does not actually or
constructively own 10% or more of the voting power of all voting stock of the
Company and is not a controlled foreign corporation for U.S. tax purposes that
is related to the Company through stock ownership. The Final Withholding
Regulations consolidate and modify the current certification requirements and
means by which a Non-U.S. holder may claim exemption from U.S. federal income
tax withholding. A Non-U.S. holder must provide certification that complies
with the procedures in the Final Withholding Regulations, where required, by
the first payment date after the effective date of those regulations, subject
to certain transitional rules which may extend certifications previously
provided by such Non-U.S. holder in accordance with the currently effective
Treasury Department regulations until December 31, 1999. Non-U.S. holders
claiming benefits under an income tax treaty may be required to obtain a
taxpayer identification number ("TIN") and to certify their eligibility under
the applicable treaty's limitations on benefits article in order to comply
with the Final Withholding Regulations' certification requirements. All
Non-U.S. holders should consult their tax advisors regarding the application
of the Final Withholding Regulations, which are generally effective with
respect to payments made after December 31, 1998.
Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a Note by a person other than a U.S. holder generally
will not be subject to U.S. federal income tax provided (i) such gain is not
effectively connected with the conduct by such holder of a trade or business
in the United States, and (ii) in the case of gains derived by an individual,
such individual is not in the United States for 183 days or more in the
taxable year of the disposition.
<PAGE>
Payments on the Notes made by the Company or any paying agent of the
Company to Non-U.S. holders generally should not be subject to information
reporting and backup withholding at the rate of 31% if the holder certifies as
to its Non-U.S. holder status or otherwise establishes an exemption from
information reporting and backup withholding and the payor does not have
actual knowledge that the holder is a U.S. holder. Payment of proceeds from a
sale of a Note to or through the U.S. office of a broker is subject to
information reporting and backup withholding unless the Non-U.S. holder
certifies as to its Non-U.S. holder status or otherwise establishes an
exemption from information reporting and backup withholding. Payment outside
the U.S. of the proceeds of the sale of a Note to or through a foreign office
of a "broker" (as defined in applicable U.S. Treasury Department regulations)
should not be subject to information reporting or backup withholding, except
that if the broker is a U.S. person, a controlled foreign corporation for U.S.
federal income tax purposes or a foreign person 50% or more of whose gross
income is from a U.S. trade or business, information reporting should apply to
such payment unless the broker has documentary evidence in its records that
the beneficial owner is not a U.S. holder and certain other conditions are not
met or the beneficial owner otherwise establishes an exemption. All Non-U.S.
holders are urged to consult their own tax advisors regarding the possible
application of information reporting and backup withholding in light of their
particular circumstances under the Final Withholding Regulations.
EXCHANGE OFFER
A holder should not recognize any taxable gain or loss on the exchange of
the Private Notes for Exchange Notes pursuant to the Exchange Offer. The
Exchange Notes should have the same issue price as the Private Notes, and a
holder should have the same adjusted tax basis and holding period in the
Exchange Notes as the holder had in the Private Notes immediately before the
exchange.
PLAN OF DISTRIBUTION
Based on an interpretation by the staff of the Commission set forth in
no-action letters issued to third parties, the Company believes that the
Exchange Notes issued pursuant to the Exchange Offer in exchange for Private
Notes may be offered for resale, resold and otherwise transferred by a holder
thereof (other than (i) an "affiliate" of the Company within the meaning of
Rule 405 under the Securities Act, (ii) a broker-dealer who acquired Private
Notes directly from the Company to resell pursuant to Rule 144A or any other
available exemption under the Securities Act or (iii) a broker-dealer who
acquired Private Notes as a result of market making or other trading
activities), without compliance with the registration and prospectus delivery
requirements of the Securities Act; PROVIDED that the holder is acquiring
Exchange Notes in the ordinary course of its business and is not
participating, and has no arrangement or understanding with any person to
participate, in the distribution of the Exchange Notes. Holders of Private
Notes wishing to accept the Exchange Offer must represent to the Company, as
required by the Registration Rights Agreement, that such conditions have been
met. The Company believes that none of the registered holders of the Private
Notes is an affiliate (as such term is defined in Rule 405 under the
Securities Act) of the Company.
Each broker-dealer that receives Exchange Notes for its own account in
exchange for Private Notes must acknowledge that it will deliver a prospectus
in connection with any resale of such Exchange Notes. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of Exchange Notes received in exchange for Private Notes, where
such Private Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Company has agreed
to make this Prospectus (as it may be amended or supplemented) available to
any broker-dealer, upon request, for use in connection with any such resale,
for a period of one year after the Registration Statement is declared
effective by the Commission or until such earlier date on which all the
Exchange Notes are freely tradeable. However, any broker-dealer who acquired
the Notes directly from the Company may not fulfill its prospectus delivery
requirements with this Prospectus, but must comply with the registration and
prospectus delivery requirements of the Securities Act.
The Company will not receive any proceeds from any sale of the Exchange
Notes by broker-dealers or any other persons. Exchange Notes received by
broker-dealers for their own accounts pursuant to the Exchange Offer may be
sold for time to time in one or more transactions in the over-the-counter
market, in negotiated transactions, through the writing of options on the
Exchange Notes or a combination of such methods of resale, at market prices
prevailing at the time of such resale, at prices related to such prevailing
market prices or at negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer and/or
purchasers of any such Exchange Notes. Any broker-dealer that resells Exchange
Notes that were received by it for its own account pursuant to the Exchange
Offer and any broker or dealer that participates in the distribution of such
<PAGE>
Exchange Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of Exchange Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
By acceptance of this Exchange Offer, each broker-dealer that receives
Exchange Notes pursuant to the Exchange Offer agrees that, upon receipt of
notice from the Company of the happening of any event which makes any
statement in the Prospectus untrue in any material respect or which requires
the making of any changes in the Prospectus in order to make the statements
therein not misleading (which notice the Company agrees to deliver promptly to
such broker-dealer), such broker-dealer will suspend use of the Prospectus
until the Company has amended or supplemented the Prospectus to correct such
misstatement or omission and has furnished copies of the amended or
supplemented Prospectus to such broker-dealer. If the Company shall give any
such notice to suspend the use of the Prospectus, it shall extend the one-year
period referred to above by the number of days during the period from and
including the date of the giving of such notice to and including the date when
the broker-dealers shall have received copies of the supplemented or amended
Prospectus necessary to permit resales of the Exchange Notes.
The Company has agreed to pay all expenses incident to the Company's
performance of, or compliance with, the Registration Rights Agreement and will
indemnify the holders (including any broker-dealers) and certain parties
related to the holders against certain liabilities, including liabilities
under the Securities Act.
LEGAL MATTERS
Certain legal matters with respect to the validity of the Exchange Notes
will be passed upon on behalf of the Company by Stroock & Stroock & Lavan LLP,
New York, New York, special counsel to the Company.
EXPERTS
The consolidated balance sheets as of February 28, 1997 and February 29,
1996 and the related consolidated statements of income, stockholders' equity
and cash flows for each of the three years in the period ended February 28,
1997 incorporated by reference into this Prospectus, have been incorporated
herein in reliance on the report of Coopers & Lybrand L.L.P., independent
accountants, given on the authority of that firm as experts in accounting and
auditing.
