<PAGE>
Filed Pursuant to Rule 424b(5)
Registration No. 333-65535
PROSPECTUS SUPPLEMENT
(To Prospectus dated January 21, 1999)
$350,000,000
[LOGO OF COMDISCO APPEARS HERE]
6% Senior Notes Due January 30, 2002
------------
We will pay interest on the Notes twice a year on January 30 and July 30,
beginning July 30, 1999. We may not redeem the Notes prior to maturity.
If we default, your right to payment under the Notes will be junior to our
secured debt, equal to our unsecured and unsubordinated debt, and senior to our
subordinated debt, in each case whether current or future.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these Notes or determined if this
Prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
------------
<TABLE>
<CAPTION>
Per Note Total
-------- ------------
<S> <C> <C>
Public offering price.................................... 99.749% $349,121,500
Underwriting discount.................................... .400% $ 1,400,000
Proceeds to Comdisco, Inc. (before expenses)............. 99.349% $347,721,500
</TABLE>
------------
The underwriters will offer the Notes on a firm commitment basis, subject to
various conditions. The underwriters expect to deliver the Notes in book-entry
form only through the facilities of The Depository Trust Company against
payment in New York, New York on January 26, 1999.
------------
Salomon Smith Barney
Bear, Stearns & Co. Inc.
Merrill Lynch & Co.
NationsBanc Montgomery Securities LLC
Warburg Dillon Read LLC
Barclays Capital
Credit Lyonnais Securities
January 21, 1999
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
This document is in two parts. The first part is the Prospectus Supplement,
which describes the specific terms of the Notes we are offering. The second
part, the base Prospectus, gives more general information, some of which may
not apply to the Notes we are offering. Generally, when we refer only to the
"Prospectus," we are referring to both parts combined.
If the description of your Notes varies between the Prospectus Supplement
and the accompanying Prospectus, you should rely on the information in the
Prospectus Supplement.
You should rely only on the information contained in or incorporated by
reference in this Prospectus. We have not authorized anyone to provide you with
different information. We are not making an offer of the Notes in any state
where the offer is not permitted. You should not assume that the information
contained in or incorporated by reference in this Prospectus is accurate as of
any date later than January 21, 1999.
------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
Prospectus Supplement
<S> <C>
Description of Notes........................................................ S-3
Use of Proceeds............................................................. S-4
Underwriting................................................................ S-4
</TABLE>
Prospectus
<TABLE>
<S> <C>
About This Prospectus...................................................... 2
Where You Can Find More Information........................................ 2
The Company................................................................ 3
Ratio of Earnings to Fixed Charges......................................... 3
Use of Proceeds............................................................ 4
Forward-Looking Statements................................................. 4
Description of the Debt Securities......................................... 6
Description of the Company's Common Stock.................................. 13
Delaware General Corporation Law and the Company's Certificate of
Incorporation and Bylaws.................................................. 16
Plan of Distribution....................................................... 18
Legal Opinions............................................................. 19
Experts.................................................................... 19
</TABLE>
S-2
<PAGE>
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes supplements
and, to the extent inconsistent, replaces the description of the general terms
and provisions of the Debt Securities set forth in the accompanying Prospectus.
Certain terms are defined in the Prospectus.
General
The Notes will be:
. unsecured general obligations of Comdisco;
. limited to $350 million principal amount; and
. issued in book-entry form only.
The Notes will mature on January 30, 2002 and are not redeemable prior to
maturity.
The Notes will bear interest from January 26, 1999 or from the most recent
Interest Payment Date to which interest has been paid or provided for, at the
rate of 6% per annum, payable semi-annually on January 30 and July 30,
commencing on July 30, 1999, to the persons in whose names the Notes are
registered at the close of business on the preceding January 15 and July 15,
respectively.
The Notes will constitute Senior Debt Securities as described in the
Prospectus, will be issued under the Fuji Senior Indenture and will constitute
a separate series for purposes of the Fuji Senior Indenture.
Payment of the principal and interest on the Notes will rank equally with
all our other unsubordinated debt. The Fuji Senior Indenture does not limit the
amount of Senior Debt Securities that may be issued and provides that Senior
Debt Securities may be issued from time to time in one or more series.
On January 19, 1999 we designated $600 million in Senior Debt Securities as
"Senior Medium-Term Notes, Series H" to be issued under our outstanding $1.5
billion shelf registration statement. We have not issued any of those notes to
date. We will also issue the Notes under that shelf registration statement,
leaving $550 million in Debt Securities unallocated under the shelf. The Senior
Fuji Indenture does not limit the amount of additional indebtedness we or any
of our subsidiaries may incur.
Book-Entry System
The Notes initially will be represented by one or more global certificates
("Global Securities") deposited with DTC and registered in the name of Cede &
Co., as nominee of DTC. The Global Securities may not be transferred except as
a whole by DTC to a nominee of DTC or by a nominee of DTC to DTC or another
nominee of DTC or by DTC or any nominee to a successor of DTC or a nominee of
such successor.
To facilitate subsequent transfers, all Notes deposited by Participants with
DTC are registered in the name of DTC's partnership nominee, Cede & Co. The
deposit of Notes with DTC and their registration in the name of Cede & Co.
effect no change in beneficial ownership. DTC has no knowledge of the actual
beneficial owners of the Notes; DTC's records reflect only the identity of the
Direct Participants to whose accounts such Notes are credited, which may or may
not be the beneficial owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Notes will not be issued in certificated form unless:
. DTC notifies us that it is unwilling or unable to continue as depository
or it otherwise ceases to be a qualified clearing agency and we do not
appoint a successor depository; or
S-3
<PAGE>
. we make a decision to permit Notes to be issued in certificated form and
notify the Trustee of that decision.
Additional information concerning the depositary arrangements are summarized
beginning at page 10 in the Prospectus.
Same-Day Settlement And Payment
Settlement for the Notes will be made by the Underwriters in immediately
available funds. So long as the Notes are represented by Global Securities
registered in the name of DTC or its nominee, all payments of principal and
interest will be made by the Company in immediately available funds. In
addition, so long as the Notes are represented by such Global Securities, the
Notes will trade in DTC's Same-Day Funds Settlement System, and secondary
market trading activity in the Notes will therefore be required by DTC to
settle in immediately available funds. No assurance can be given as to the
effect, if any, of settlement in immediately available funds on trading
activity in the Notes.
USE OF PROCEEDS
We intend to use the net proceeds from the sale of the Notes to reduce
domestic short-term indebtedness and for other general corporate purposes. On
December 31, 1998, we had outstanding approximately $676 million of domestic
short-term indebtedness, with a weighted average maturity of approximately 37
days and bearing a weighted average interest rate of approximately 5.88% per
annum. If we do not use the net proceeds immediately, we may temporarily invest
them in short-term interest bearing obligations.
UNDERWRITING
We are selling $350,000,000 face amount of the Notes to the Underwriters
named below under an Underwriting Agreement dated January 21, 1999. The
Underwriters, and the amount of the Notes each of them has agreed to purchase
from us, are as follows:
<TABLE>
<CAPTION>
Principal
Amount Of
Underwriter Notes
----------- ------------
<S> <C>
Salomon Smith Barney Inc.................................... $175,000,000
Bear, Stearns & Co. Inc..................................... 35,000,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated....................................... 35,000,000
NationsBanc Montgomery Securities LLC....................... 35,000,000
Warburg Dillon Read LLC..................................... 35,000,000
Barclays Capital Inc........................................ 17,500,000
Credit Lyonnais Securities (USA) Inc........................ 17,500,000
------------
Total................................................... $350,000,000
============
</TABLE>
Under the terms and conditions of the Underwriting Agreement, if the
Underwriters take any of the Notes, then they are obligated to take and pay for
all of the Notes.
The Notes are a new issue of securities with no established trading market.
We do not intend to list the Notes on any national securities exchange. The
Underwriters have advised us that they intend to make a market in the Notes,
but they have no obligation to do so, and may discontinue market making at any
time without providing any notice. We cannot assure you as to the depth or
liquidity of any trading market that may develop for the Notes.
The Underwriters initially propose to offer the Notes directly to the public
at the public offering price set forth on the cover page and part to certain
dealers at a price that represents a concession not in excess of .25%
S-4
<PAGE>
of the principal amount of the Notes. Any Underwriter may allow, and any dealer
may reallow, a concession not in excess of .15% of the principal amount of the
Notes to certain dealers. After the initial offering of the Notes to the
public, the Underwriters may, from time to time, vary the offering price and
other selling terms.
In order to facilitate the offering of the Notes, the Underwriters may
engage in transactions that stabilize, maintain or otherwise affect the price
of the Notes. Specifically, the Underwriters may overallot in connection with
the offering, creating a short position in the Notes for their own account. In
addition, the Underwriters may bid for, and purchase, Notes in the open market
to cover short positions created by the Underwriters in connection with the
offering or to stabilize the offering. Finally, the Underwriters may reclaim
selling concessions allowed for distributing the Notes in the offering, if the
Underwriters repurchase previously distributed Notes in transactions to cover
short positions, in stabilization transactions or otherwise. Any of these
activities may stabilize or maintain the market prices of the Notes above
independent market levels. The Underwriters are not required to engage in any
of these activities and may end these activities at any time.
We estimate that we will spend approximately $200,000 for printing, rating
agency, trustee and legal fees, and other expenses related to this offering.
In the ordinary course of their respective businesses, the Underwriters and
their affiliates have engaged, and may in the future engage, in commercial
banking and/or investment banking transactions with us and our affiliates.
We have agreed to indemnify the Underwriters and certain other persons
against certain liabilities, including liabilities under the Securities Act, or
to make contribution to certain payments in respect thereof.
S-5
<PAGE>
PROSPECTUS
- --------------------------------------------------------------------------------
COMDISCO, INC.
6111 N. River Road
Rosemont, Illinois 60018
(847) 698-3000
We will provide the specific terms
of each series or issue of Debt
Securities we issue in supplements
$1,500,000,000 to this prospectus. You should read
this prospectus and the supplements
carefully before you invest.
Debt Securities
We may offer the securities directly or through underwriters, agents or
dealers. The prospectus supplement will designate the terms of that plan of
distribution. "Plan of Distribution" below also provides more information on
this topic.
The information in this prospectus is incomplete and may be changed. We
may not sell these securities until a registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted. We may not
use this prospectus to sell Debt Securities unless we also give prospective
investors a prospectus supplement.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these Debt Securities or determined
if this prospectus or any accompanying prospectus supplement or pricing
supplement is truthful or complete. Any representation to the contrary is a
criminal offense.
January 21, 1999
<PAGE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement (Reg. No. 333-65535)
that we filed with the Securities and Exchange Commission (the "SEC") utilizing
a "shelf" registration process. Under this shelf registration process, we may,
over the next two years, sell the combination of the Debt Securities described
in this prospectus in one or more offerings up to a total dollar amount of
$1,500,000,000. This prospectus provides you with a general description of the
securities we may offer. Each time we sell securities, we will provide a
prospectus supplement that will contain specific information about the terms of
that offering. The prospectus supplement may also add, update or change
information contained in this prospectus. It is important for you to consider
the information contained in this prospectus and any prospectus supplement
together with additional information described under the next heading WHERE YOU
CAN FIND MORE INFORMATION in making your investment decision.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at our web site at http://www.comdisco.com and the SEC's web site at
http://www.sec.gov. You may also read and copy any document we file at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms and their copy charges. Our Common
Stock is listed on the New York Stock Exchange. You can also obtain information
about us from the Exchange at 20 Broad Street, New York, New York 10005.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings made
with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934 until we, or our agents, sell all of the Debt Securities.
l Our Annual Report on Form 10-K for the year ended September 30,
1998;
l Our Current Reports on Form 8-K filed with the SEC on January 15,
1999 and January 20, 1999; and
l The descriptions of the Company's Common Stock and related Common
Stock Purchase Rights included in the registration statements filed
under the Securities Exchange Act of 1934 under File No. 1-7725,
including all amendments or reports filed for the purpose of
updating such description.
You may request a copy of these filings at no cost, by writing or calling
us at the following address:
Comdisco, Inc.
6111 N. River Road
Rosemont, IL 60018
(847) 698-3000
Attention: Corporate Secretary
You should rely only on the information incorporated by reference or
provided in this prospectus, any prospectus supplement or any pricing
supplement. We have not authorized anyone else to provide you with different
information. You should not assume that the information in this prospectus, any
prospectus supplement or any pricing supplement is accurate as of any date
other than the date on the front of those documents.
2
<PAGE>
THE COMPANY
We are a technology services company. Our purpose as a technology
services company is to discover options that enable our customers to maximize
the business benefits of technology, while reducing technology cost and risk.
These services include:
l asset management;
l continuity;
l network; and
l equipment leasing and remarketing.
We design our services to provide integrated, long-term, cost effective
asset and technological planning, as well as data and voice availability and
recovery, to users of high technology equipment. We operate in one industry
segment, business services.
We provide our customers with available technical, financial and recovery
alternatives, regardless of hardware platform or manufacturer. We work with our
customers to develop strategies governing:
l when to acquire equipment;
l how to track equipment;
l when to upgrade existing equipment; and
l when to order new equipment to take advantage of current
technology.
We also provide continuity services for customers' data, voice and
network systems. We also have the ability to act as an outlet for equipment
being displaced.
Our business is diversified by customer, customer type, equipment
segments, geographic location of our customers and maturity of our lease
receivables. Our customers include "Fortune 1000" corporations or companies of
a similar size as well as smaller organizations. We do not depend on any single
customer or on any single source for the purchasing, selling or leasing of
equipment, or in connection with our services.
Our executive offices are located in the Chicago area, at 6111 North
River Road, Rosemont, Illinois 60018, telephone number (847) 698-3000. At
September 30, 1998 we had approximately 2,800 full-time employees.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Fiscal year ended September 30,
-------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C>
1.71 1.67 1.64 1.55 1.29
</TABLE>
These computations include the Company and our subsidiaries, and
companies in which we own 50% or less equity. For these ratios, "earnings" is
determined by adding "total fixed charges" (excluding interest capitalized),
income taxes, minority common stockholders equity in net income and
amortization of interest capitalized to income from continuing operations after
eliminating equity in undistributed earnings and adding back losses of
companies in which we own at least 20% but less than 50% equity. For this
purpose, "total fixed charges" consists of (1) interest on all indebtedness and
amortization of debt discount and expense, and (2) an interest factor
attributable to rentals.
3
<PAGE>
USE OF PROCEEDS
Unless we tell you otherwise in an accompanying prospectus supplement, we
will use net proceeds from the sale of the Debt Securities for general
corporate purposes. General corporate purposes may include repayment of debt,
equipment acquisitions, additions to working capital and capital expenditures.
If we do not use the net proceeds immediately, we temporarily invest them in
short-term interest-bearing obligations. For current information on our
commercial paper balances and average interest rates, see our most recent Form
10-K and 10-Q or the prospectus supplement. See WHERE YOU CAN FIND MORE
INFORMATION in this prospectus.
FORWARD-LOOKING STATEMENTS
Some of the statements contained in this prospectus, any prospectus
supplements and any pricing supplements, including information incorporated by
reference, discuss future expectations, contain projections of results of
operation or financial condition or state other forward-looking information.
These statements are "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, and we intend that such forward-
looking statements have the benefits of the safe harbors created by those Acts.
The words and phrases "looking ahead," "we are confident," "should be," "will
be," "predicted," "believe," "expect," "anticipate" and similar expressions
identify forward-looking statements.
These forward-looking statements reflect our current views with respect
to future events and financial performance, but are subject to many
uncertainties and factors relating to our operations and business environment
which may cause our actual results to be materially different from any future
results expressed or implied by such forward-looking statements.
Our actual revenues and results of operations could differ materially
from those anticipated in these forward-looking statements as a result of
certain factors, including those set forth in the following risk factors.
Potential Fluctuations in Operating Results: Our operating results are
subject to quarterly fluctuations resulting from a variety of factors,
including the volume of leases for new equipment ("New Leases"), earnings
contributions from remarketing activities, product announcements by
manufacturers, variations in the financial mix of leases written and economic
conditions. The financial mix of leases written is a result of a combination of
factors, including, but not limited to, changes in customer demands and/or
requirements, new product announcements, price changes, changes in delivery
dates, changes in maintenance policies and the pricing policies of equipment
manufacturers, and price competition from other lessors and finance companies.
Earnings Contributions from Leasing: The growth in leasing volume during
the three fiscal years ended September 1998, 1997 and 1996 had the effect of
increasing the proportion of New Leases to total leases. New Leases
traditionally have lower earnings contributions than leases with remarketed
equipment. Therefore, increasing lease volume activities initially has the
impact of putting pressure on leasing margins. The impact of New Leases,
coupled with lower margins on large systems transactions (mainframes and
related peripherals, including DASD and tape drives), has resulted in lower
margins on leasing, particularly for operating leases. There can be no
assurance regarding the growth of New Leases in future periods or our ability
to accurately predict future declines in the fair market values of large
systems equipment.
To meet our earnings goals for fiscal 1999, remarketing contributions
have to be at approximately the level achieved in fiscal 1998. While we have a
larger lease portfolio for
4
<PAGE>
remarketing and are devoting resources to our remarketing activities, there can
be no assurance that we will achieve the appropriate level of activity
necessary to meet our desired operating results. Attaining the expected level
of remarketing will require equipment for remarketing, appropriate sales force
education and incentive and a knowledge of the customer and customer
requirements.
Our results can also be impacted by the fair market value volatility in
large systems. We continue to monitor volatility in large systems fair market
values which, during the last twenty-four months in particular, have declined
faster and exhibited greater volatility than historical trends would have
otherwise indicated. As a result, there is no assurance that fair market values
on large systems will stabilize or that further rapid declines in the value of
such systems will not occur in the near term. To the extent that declines in
fair market values exceed our current estimates, there could be an adverse
effect on our operating results.
The costs to address Year 2000 issues may have a negative impact on
equipment volume in fiscal 1999 if customers defer other information technology
projects due to the Year 2000 efforts or if Year 2000 remediation costs
increase as a percentage of the total information technology budget, thereby
reducing capital expenditures on new technology.
Earnings Contributions from Services: As a result of the evolving nature
of our services business, particularly the emerging desktop management and
managed network services, we have limited meaningful historical data on which
to base the planned operating expenses for our services business. Accordingly,
a significant portion of the expense levels (investment in continuity
facilities and hardware, consultants, experts and back office personnel) are
based in part on our expectations as to future services revenues, including
millennium testing services revenue, and are, to a large extent, fixed.
Conversely, our revenue base has become more diverse with the growth of other
technology services revenue, and therefore less recurring and less predictable
than in prior years. To attain our services earnings contribution goals for
fiscal 1999, we will have to expand its contract subscription base through new
contract signings and contract renewals, increase its revenues from other
technology services, attain millennium testing services revenue and contain
costs. There can be no assurance that we will be able to maintain and/or
increase our margins on technology services in fiscal 1999.
One of the impacts of our changing business model is the lengthening of
the sales cycle--the length of time between initial sales contact and final
delivery of contracts--as compared to the traditional leasing business. This
increase in sales cycle results in an increase in "backlog" (or negotiations in
progress) which ultimately impacts the timing of revenue, earnings and volume
recognition. In addition, our ability to obtain new business from customers
depends on our ability to anticipate technological changes, successfully
compete with organizations offering similar services, develop services to meet
customer requirements and to achieve delivery of services that meet customer
requirements.
Economic Conditions and the Asian Economy: With respect to economic
conditions, a recession can cause customers to put off new investments and
increase our bad debt experience. In addition, the recent economic turmoil in
Asia may have an impact on the region's semiconductor manufacturing industry,
which in turn would have an impact on our diversified technology business.
Continued pressures on credit in Asia and the Asian economy in general, could
also impact the domestic economy and/or our multinational customer base.
Other Factors: Other uncertainties include continued business conditions,
trend of movement to client/server environment, competition, including price
competition from other technology service providers, reductions in technology
budgets and related spending plans (either because of economic conditions or
because of Year 2000 issues), our ability to attract and retain qualified
personnel in a job market that is very competitive domestically and the Year
2000 readiness of our customers, suppliers and business partners, our ability
to expand globally in general and our ability to develop new remarketing
strategies for PCs, acceptance in Europe of desktop management services,
including life cycle management, efficiencies and cost containment in
continuity and managed network services, and price
5
<PAGE>
competition from other technology service providers, continued growth of the
semiconductor and healthcare industries (including the migration by hospitals
from film to digital technology), increased acceptance of leasing as an
alternative to buying, particularly in the pharmaceutical industry, continued
growth in computer networks; our ability to successfully partner with market
leading software developers to provide state-of-the-art tools for desktop
management, market acceptance of advanced recovery, millennium testing
services, trading floor and distributed systems program management (and our
ability to sell and deliver such services), growth of the communications
equipment arena, and stabilization in the fair market values of mainframes and
related equipment.
We do not promise to publicly update or revise any forward-looking
statements whether as a result of new information, further events or other
factors that could affect those statements.
DESCRIPTION OF THE DEBT SECURITIES
The Securities We May Offer
We may offer unsecured senior or subordinated debt securities in an
aggregate principal amount of up to $1,500,000,000. A prospectus supplement
will describe the specific amounts, prices and terms of any securities we
offer.
Throughout this Prospectus:
l the term "Senior Debt Securities" refers to our unsecured senior
debt securities;
l the term "Subordinated Debt Securities" refers to our unsecured
subordinated debt securities; and
l the term "Debt Securities" refers to Senior Debt Securities and
Subordinated Debt Securities.
We also may issue convertible Subordinated Debt Securities that pay no
interest or below-market interest at a substantial discount from their stated
principal amount. We will refer to these convertible Subordinated Debt
Securities as Zero-Coupon Convertibles here and in any prospectus supplement or
pricing supplement.
Issuance of Debt Securities under the Indentures
We will issue Debt Securities in one or more series under one or more
separate indentures between us and a U.S. banking institution, as Trustee. We
will issue Senior Debt Securities under a "Senior Indenture" and Subordinated
Debt Securities under a "Subordinated Indenture." Zero Coupon Convertibles will
be issued under a "Zero-Coupon Indenture." We will refer to the Senior
Indentures, the Subordinated Indentures, and the Zero-Coupon Indentures
together as "Indentures" here and in any prospectus supplement or pricing
supplement.
We have summarized selected provisions of the Indentures below. The
summary is not complete. You should read the Indentures for provisions that may
be important to you.
We will initially issue Senior Debt Securities under a Senior Indenture
dated as of December 15, 1998, between us and The Fuji Bank and Trust Company,
as Senior Trustee (the "Fuji Senior Indenture"). We have filed the form of the
Fuji Senior Indenture as an exhibit to the registration statement that we filed
with the SEC. We will file the forms of any other Indentures with the SEC at
the time we use them. Capitalized terms used in the summary have the meanings
specified in the Indentures.
6
<PAGE>
Terms
We will describe specific terms relating to any new series of Debt
Securities in a prospectus supplement or pricing supplement. These terms will
include the following:
l title of the series and whether they are Senior Debt Securities,
Subordinated Debt Securities or Zero Coupon Convertibles;
l any limit on the total principal amount of the series;
l the price or prices at which we will sell the Debt Securities;
l maturity date or dates;
l the per annum interest rate or rates, if any, on the series and the
date or dates from which any such interest will accrue;
l whether the amount of payments of principal of (and premium, if
any) or interest on the Debt Securities may be determined with
reference to any index, formula or other method, such as one or
more currencies, commodities, equity indices or other indices, and
the manner of determining the amount of such payments;
l the dates on which we will pay interest on the Debt Securities and
the regular record date for determining who is entitled to the
interest payable on any interest payment date;
l the place or places where the principal of (and premium, if any)
and interest on the Debt Securities will be payable;
l any redemption dates, prices, obligations and restrictions;
l any sinking fund or other provisions that would obligate us to
repurchase or otherwise redeem the series;
l the denominations in which the Debt Securities will be issued, if
other than $1,000 and integral multiples of $1,000;
l the currency, currencies or currency unit in which we will pay the
principal of (and premium, if any) or interest, if any, on the Debt
Securities, if not United States dollars;
l provisions, if any, granting special rights to holders of the Debt
Securities upon the occurrence of specified events;
l any deletions from, modifications of or additions to the Events of
Default or our covenants with respect to the applicable series of
Debt Securities, and whether or not such Events of Default or
covenants are consistent with those contained in the Indenture;
l any trustees, authenticating or paying agents, transfer agents or
registrars or other agents with respect to the Debt Securities;
l any conversion or exchange features;
l any special tax implications of the series; and
l any other terms of the series.
None of the Indentures will limit the amount of Debt Securities that we
may issue. We may issue Debt Securities under each Indenture up to the
principal amount that we are authorized to issue by our Board of Directors from
time to time.
Senior Debt Securities will rank equally with all of our other senior and
unsubordinated debt. Subordinated Debt Securities will have a junior position
to all of our Senior Debt as described below under the heading "Subordination"
on page 13.
7
<PAGE>
We may sell Debt Securities at a discount below their stated principal
amount, bearing no interest or interest at a rate which at the time of issuance
is below market rates. We may also sell Debt Securities that are convertible
into or exchangeable for our Common Stock. If we issue these kinds of Debt
Securities, we will provide you with additional information in a prospectus
supplement or pricing supplement.
When we refer here and in any prospectus supplement or pricing supplement
to the principal of and premium, if any, and interest, if any, on Debt
Securities, we also mean to include mention of the payment of additional
amounts, if any, which we are required to pay under the Indenture or the Debt
Securities in respect of certain taxes, assessments or other governmental
charges imposed on the holders of such Debt Securities.
Form, Transfer and Exchange
We will normally denominate Debt Securities in U.S. dollars and we
normally will pay principal, interest and any premium in U.S. dollars. If we
sell Debt Securities in foreign currencies or foreign currency units or pay the
principal of, premium or any interest on any series of Debt Securities in
foreign currencies or foreign currency units, we will provide you with further
information about those Debt Securities in a prospectus supplement or pricing
supplement.
We will normally issue the Debt Securities in book-entry only form. This
means that one or more permanent global certificates registered in the name of
The Depository Trust Company, New York, New York ("DTC"), or its nominee, will
represent the Debt Securities. We will refer to this form here and in any
prospectus supplement as "book-entry only."
Alternatively, we may issue the Debt Securities in (1) certificated form
registered in the name of the holder of the Debt Securities, or (2) in bearer
form, with or without coupons attached. We will refer to these forms here and
in any prospectus supplement as "registered" or "bearer," as applicable. If we
issue Debt Securities in registered or bearer form, holders will receive
certificates representing the Debt Securities. We will normally issue Debt
Securities in registered form only in increments of $1,000 and Debt Securities
in bearer form only in increments of $5,000. Debt Securities in bearer form are
subject to other limitations which we will describe in any prospectus
supplement.
You can transfer or exchange Debt Securities in registered form without
charge except for reimbursement of taxes, if any. If we issue a series of Debt
Securities in both bearer and registered form, you may exchange bearer form for
registered form in a similar manner. You can transfer or exchange Debt
Securities at the corporate trust office of the appropriate Trustee or at any
other office or agency maintained by us for such purposes that we identify in
any prospectus supplement.
Payment
We will pay principal, interest and any premium on Debt Securities in
book-entry only form as provided under the heading "Book-Entry Procedures" in
this prospectus.
We will pay principal, interest and any premium on Debt Securities issued
solely in registered form at the New York, New York corporate trust office of
the appropriate Trustee, or at any other office or agency maintained by us for
such purposes that we identify in any prospectus supplement. We also may, at
our option, pay interest on Debt Securities issued in registered form (1) by
check mailed to the person in whose name the Debt Securities are registered on
days specified in the Indentures or any prospectus supplement or (2) by wire
transfer to such person's U.S. account.
We will make payments on Debt Securities in other forms at a place
designated by us and specified in any prospectus supplement.
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If we authorize any other person to make payments on Debt Securities for
us, we will identify them in any prospectus supplement.
Events of Default
Unless we tell you otherwise in an accompanying prospectus supplement,
"Event of Default," when used in an Indenture, will mean any of the following:
l a failure to pay the principal or any premium on any Debt Security
when due;
l a failure to deposit any sinking fund payment when due;
l a failure to pay interest or any additional amounts on any Debt
Security for 30 days;
l a failure to perform any other covenant in the Indenture that
continues for 60 days after we have been given written notice of
such failure;
l acceleration of a debt (other than any Debt Securities issued under
the Indenture or non-recourse indebtedness) in principal amount
more than 5% of our consolidated worth not rescinded before a
judgment is obtained; or
l certain events in bankruptcy, insolvency or reorganization of the
Company.
An Event of Default for a particular series of Debt Securities does not
necessarily constitute an Event of Default for any other series of Debt
Securities issued under an Indenture. The Trustee may withhold notice to the
holders of Debt Securities of any default (except in the payment of principal
or interest) if it considers such action to be in the best interests of the
holders.
If an Event of Default for any series of Debt Securities occurs and
continues, the Trustee, or the holders of at least 25% in aggregate principal
amount of the Debt Securities of the series, may declare the entire principal
of all the Debt Securities of that series to be due and payable immediately. If
this happens, subject to certain conditions, the holders of a majority of the
aggregate principal amount of the Debt Securities of that series can void the
declaration of acceleration.
Other than its duties in case of a default, a Trustee has no obligation
to exercise any of its rights or powers under any Indenture at the request,
order or direction of any holders, unless the holders offer the Trustee
reasonable indemnity. If they provide this reasonable indemnification, the
holders of a majority in principal amount of any series of Debt Securities may
direct the time, method and place of conducting any proceeding or any remedy
available to the Trustee, or exercising any power conferred upon the Trustee,
for any series of Debt Securities.
Covenants
Under each Indenture, we will:
l pay the principal, interest and any premium on the Debt Securities
when due;
l maintain a place of payment;
l deliver a report to the Trustee at the end of each fiscal year
reviewing our obligations under the Indenture; and
l deposit sufficient funds with any paying agent on or before the due
date for any principal, interest or any premium.
The Indentures will not limit our ability to incur additional debt,
unless we tell you this in any prospectus supplement.
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Book-Entry Procedures
The following discussion pertains to Debt Securities that we issue in
book-entry only form.
We will issue one or more global securities (currently limited in
individual amount to $200 million) to DTC or its nominee, Cede & Co. DTC will
keep a computerized record of its participants (for example, your broker)
whose clients have purchased the Debt Securities. The participant would then
keep a record of its clients who purchased the Debt Securities. A global
security may not be transferred, except that DTC, its nominees and their
successors may transfer an entire global security to one another.
If we use the book-entry only form, we will not deliver securities in
certificate form to individual purchasers of the Debt Securities, and no
person holding a beneficial interest in a global security will be treated as a
holder for any purpose under the Indenture. Accordingly, holders of such
beneficial interests must rely on the procedures of DTC and the participant
through which such person owns its interest in order to exercise any rights of
a Holder under such global security or the Indenture. Beneficial interests in
global securities will be shown on, and transfers of global securities will be
made only through, records maintained by DTC and its participants. The laws of
some jurisdictions require that certain purchasers of securities take physical
delivery of such securities in certificated form. Such limits and laws may
impair the ability to transfer beneficial interests in a global security
representing book-entry only securities.
DTC has provided us with the following information: 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
United States Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered under Section 17A of the Securities Exchange Act of 1934. DTC holds
securities that its participants ("Direct Participants") deposit with DTC. DTC
also facilitates the settlement among Direct Participants of securities
transactions, such as transfers and pledges, in deposited securities through
computerized records for Direct Participants' accounts. This eliminates the
need to exchange certificates. Direct Participants include securities brokers
and dealers, banks, trust companies, clearing corporations and certain other
organizations.
Other organizations such as securities brokers and dealers, banks and
trust companies that work through a Direct Participant, also use DTC's book-
entry system. The rules that apply to DTC and its participants are on file
with the SEC.
A number of Direct Participants, together with the New York Stock
Exchange, Inc., The American Stock Exchange, Inc. and the National Association
of Securities Dealers, Inc. own DTC.
We will wire principal and interest payments to DTC's nominee. We and
the Trustee will treat DTC's nominee as the owner of the global securities for
all purposes. Accordingly, we and the Trustee will have no direct
responsibility or liability to pay amounts due on the securities to owners of
beneficial interests in the global securities.
It is DTC's current practice, when it receives any payment of principal
or interest, to credit Direct Participants' accounts on the payment date
according to their respective holdings of beneficial interests in the global
securities as shown on DTC's records. In addition, it is DTC's current
practice to assign any consenting or voting rights to Direct Participants
whose accounts are credited with securities on a record date, by using an
omnibus proxy. Customary practices between the participants and owners of
beneficial interests, as is the case with securities held for the account of
customers registered in "street name," will govern payments by participants to
owners of beneficial interests in the global securities, and voting by
participants. However, these payments will be the responsibility of the
participants and not of DTC, the Trustee, or us.
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Debt Securities represented by a global security will be exchangeable for
Debt Securities in registered form with the same terms in authorized
denominations only if:
l DTC notifies us that it is unwilling or unable to continue as
depository or if DTC ceases to be a clearing agency registered
under applicable law and we do not appoint a successor depository
within 90 days; or
l we instruct the Trustee that the global security is now
exchangeable.
If applicable, redemption notices shall be sent to Cede & Co. If less
than all of the book-entry securities of like tenor and terms are being
redeemed, DTC's practice is to determine by lot the amount of the interest of
each Direct Participant in such issue to be redeemed.
A beneficial owner shall give notice of any option to elect to have its
book-entry securities repaid by us, through its participant, to the Trustee,
and shall effect delivery of such book-entry securities by causing the Direct
Participant to transfer the participant's interest in the global security or
securities representing such book-entry securities, on DTC's records, to the
Trustee. The requirement for physical delivery of book-entry securities in
connection with a demand for repayment will be deemed satisfied when the
ownership rights in the global security or securities representing such book-
entry securities transferred by Direct Participants on the DTC's records.
Management of the DTC is aware that some computer applications, systems
and the like for processing data ("Systems") that are dependent upon calendar
dates, including dates before, on, and after January 1, 2000, may encounter
"Year 2000 problems." The DTC has informed participants and other members of
the financial community (the "Industry") that it has developed and is
implementing a program so that its Systems, as the same relate to the timely
payment of distributions (including principal and interest payments) to
securityholders, book-entry deliveries, and settlement of trades within DTC
("DTC Services"), continue to function appropriately. This program includes a
technical assessment and a remediation plan, each of which is complete.
Additionally, DTC's plan includes a testing phase, which is expected to be
completed within appropriate time frames.
However, the DTC's ability to perform properly its services is also
dependent upon other parties, including, but not limited to, issuers and their
agents, as well as DTC's participants, third party vendors from whom the DTC
licenses software and hardware, and third party vendors on whom DTC relies for
information or the provision of services, including telecommunication and
electrical utility service providers, among others. DTC has informed the
Industry that it is contacting (and will continue to contact) third party
vendors from whom the DTC acquires services to: (1) impress upon them the
importance of such services being Year 2000 compliant; and (2) determine the
extent of their efforts for Year 2000 remediation (and, as appropriate,
testing) of their services. In addition, DTC is in the process of developing
such contingency plans as it deems appropriate.
According to DTC, the information in the preceding two paragraphs with
respect to DTC has been provided to the Industry for informational purposes
only and is not intended to serve as a representation, warranty, or contract
modification of any kind.
DTC may discontinue providing its services as securities depository with
respect to book-entry securities at any time by giving reasonable notice to us
or the Trustee. Under such circumstances, in the event that a successor
securities depository is not obtained, securities in certificated form are
required to be printed and delivered.
We may decide to discontinue use of the system of book-entry transfers
through DTC (or a successor securities depository). In that event, securities
in certificated form will be printed and delivered.
The information in this section concerning DTC and DTC's system has been
obtained from sources that we believe to be reliable, but we take no
responsibility for the accuracy thereof.
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Subordination
Payment of the principal, interest and any premium on the Subordinated
Debt Securities will, when stated in a Subordinated Indenture and the
applicable prospectus supplement, be subordinated and junior in right of
payment to the prior payment in full of all Senior Indebtedness. Under the
Indenture, "Senior Indebtedness" means all notes or other unsecured evidences
of our indebtedness, whether outstanding on the date of the Indenture or
created, assumed or incurred at a later date, for money we borrow (including
all indebtedness of any other person for money borrowed which we guarantee) not
expressed to be subordinate or junior in right of payment to any other or our
indebtedness.
Each Subordinated Indenture will provide that we may not pay principal,
interest and any premium on the Subordinated Debt Securities in the event:
l of any insolvency, bankruptcy or similar proceeding involving the
Company or our property; or
l we fail to pay the principal, interest, any premium or any other
amounts on any Senior Indebtedness when due.
In such event, any payment or distribution under the Subordinated Debt
Securities, whether in cash, securities or other property, which would
otherwise (but for the subordination provisions) be payable or deliverable in
respect of the Subordinated Debt Securities, will be paid or delivered directly
to the holders of Senior Indebtedness in accordance with the priorities then
existing among such holders until all Senior Indebtedness has been paid in
full. If any payment or distribution under the Subordinated Debt Securities is
received by any holder of any Subordinated Debt Securities in contravention of
any of the terms of the Indenture and before all the Senior Indebtedness has
been paid in full, such payment or distribution or security will be received in
trust for the benefit of, and paid over or delivered and transferred to, the
holders of the Senior Indebtedness at the time outstanding in accordance with
the priorities then existing among such holders for application to the payment
of all Senior Indebtedness remaining unpaid to the extent necessary to pay all
such Senior Indebtedness in full.
As of September 30, 1998, we had approximately $3.85 billion of Senior
Indebtedness outstanding. Subordinated Indentures will not limit the amount of
Senior Indebtedness that we may incur.
Redemption Provisions, Sinking Fund and Defeasance
We may redeem some or all of the Debt Securities at our option subject to
the conditions stated in the prospectus supplement relating to that series of
Debt Securities. If a series of Debt Securities is subject to a sinking fund,
the prospectus supplement will describe those terms.
The Indenture permits us to discharge or "defease" certain of our
obligations on any series of Debt Securities at any time. We may defease a
certain series of Debt Securities by depositing with the Trustee sufficient
cash or government securities to pay all sums due on that series of Debt
Securities.
Consolidation, Merger or Sale
We may not merge with another company or sell or transfer all or
substantially all of our property to another company unless:
l we are the continuing corporation; or
l the successor corporation or purchaser is a corporation organized
under the laws of the United States, any state within the United
States, or the District of Columbia which expressly assumes:
--payment of principal, interest and any premium on the Debt
Securities; and
--performance and observance of all covenants and conditions in the
Indenture;
and in either case, immediately after the transaction, no Event of
Default and no event which, if notice was given and/or a certain period of time
passed, would become an Event of Default, shall exist.
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If we are not the continuing corporation, we will have no further
liabilities or obligations under any Indenture or the Debt Securities.
Changes to the Indenture
Holders who own more than 50% in principal amount of the outstanding Debt
Securities of each series affected can agree to change the Indenture. However,
no change can affect your principal or interest payment terms, or the
percentage required to change other terms of the Indenture, without your
consent, as well as the consent of others similarly affected. In addition, no
supplemental indenture may directly or indirectly modify the Indenture in any
manner which might alter the subordination of the outstanding Debt Securities.
We may enter into supplemental indentures for other specified purposes
which would not materially adversely affect your interests, including the
creation of any new series of Debt Securities, without the consent of any
holder of Debt Securities.
Concerning the Initial Senior Trustee
The Fuji Bank and Trust Company serves as trustee under the Fuji
Indenture. Its principal office is located at Two World Trade Center, New York,
New York. We lease equipment to The Fuji Bank and Trust Company and provide it
with business continuity services. We also have commercial banking
relationships with The Fuji Bank and Trust Company and certain of its
affiliates.
DESCRIPTION OF THE COMPANY'S COMMON STOCK
The following statements with respect to the Company's common stock and
common stock purchase rights summarize more detailed provisions of our restated
certificate of incorporation, as amended (the "Certificate of Incorporation"),
and bylaws, as amended (the "Bylaws"), and the Rights Agreement identified
below. The summary is not complete. You should read the Certificate of
Incorporation, the Bylaws and the Rights Agreement for provisions which may be
important to you. We filed each of these documents with the SEC and
incorporated them by reference as exhibits to the registration statement. The
summary also reflects the effect of a May 22, 1998 two-for-one stock split of
our Common Stock.
General
As of September 30, 1998, our authorized capital stock was 850,000,000
shares. Those shares consisted of: (a) 100,000,000 shares of preferred stock,
none of which were outstanding; and (b) 750,000,000 shares of common stock,
$0.10 par value ("Common Stock") of which 221,509,066 shares were outstanding.
Listing
We list our outstanding shares of Common Stock on the New York Stock
Exchange and the Chicago Stock Exchange under the symbol "CDO". We will also
list any additional Common Stock we issue on these exchanges.
Dividends
Common Stockholders may receive dividends when declared by the Board of
Directors. We may pay dividends in cash, stock or other form.
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Fully Paid
All outstanding shares of Common Stock are fully paid and non-assessable.
Any additional Common Stock we issue will also be fully paid and non-
assessable.
Voting Rights
Each share of Common Stock has one vote in the election of directors and
other matters. Common Stockholders have no preemptive or cumulative voting
rights.
Other Rights
We will notify common Stockholders of any Stockholders' meetings
according to applicable law. If we liquidate, dissolve or wind-up our business,
either voluntarily or not, common Stockholders will share equally in the assets
remaining after we pay our creditors and preferred Stockholders, if any.
Transfer Agents and Registrars
We, along with ChaseMellon Stockholder Services, are transfer agent and
registrar for the Common Stock. You may contact us at the address listed on
page 3 or ChaseMellon located in Ridgefield, New Jersey.
Preferred Stock Purchase Rights
On November 4, 1997, the Board of Directors of the Company declared a
dividend of one preferred stock purchase right (a "Right") for each outstanding
share of our Common Stock payable to holders of record as of the close of
business on November 17, 1997. Shares of Common Stock issued after November 17,
1997 and before the Distribution Date (as defined below) have, or will have, a
Right attached. A Rights Agreement dated as of November 4, 1997 between the
Company and ChaseMellon Stockholder Services, L.L.C., of New York, as Rights
Agent, contains the terms and conditions of the Rights. We have filed a copy of
the Rights Agreement with the SEC. We have listed the Rights on the New York
Stock Exchange.
A Distribution Date will occur upon the earliest of:
l 10 days following a public announcement (the date of such
announcement being the "Stock Acquisition Date") that a person or
group has become an Acquiring Person; or
l the close of business on the 10th business day (or such later date
as the Board of Directors determine) after the date a person or
group makes a tender or exchange offer which if completed would
result in such person or group being the beneficial owner of 15% or
more of our outstanding Common Stock; or
l the close of business on the 10th business day after the Board of
Directors declares a person to be an Adverse Person.
An Acquiring Person generally is a person or group which beneficially
owns 15% or more of our outstanding Common Stock. An Acquiring Person does not
include any person or group who beneficially owned 20% or more of our
outstanding Common Stock on November 17, 1997 ("Existing Holder"), until such
time as such Existing Holder acquires beneficial ownership of 30% or more of
the outstanding Common Stock. An Adverse Person is a person or group, other
than an Existing Holder, (1) which beneficially owns 10% or more of our
outstanding Common Stock and (2) which the Board of Directors has determined
has interests adverse to those of the Company (based on requirements set out in
the Rights Agreement).
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Before the Distribution Date:
l Common Stock certificates will evidence the Rights;
l Rights will transfer with the Common Stock;
l registered holders of the Common Stock will be deemed to hold the
associated Rights; and
l the Rights are not exercisable.
After the Distribution Date:
l the Rights Agent (as defined below) will mail separate certificates
evidencing the Rights to each record holder of our Common Stock as
of the close of business on the Distribution Date;
l each Right will be exercisable to purchase, for $75 (the "Purchase
Price"), one one-thousandth of a share of Series C Junior
Participating Preferred Stock;
l Rights will be transferable separately from the Common Stock; and
l unless directed by the Board of Directors, we will only issue
Rights with shares of Common Stock:
--issued on exercise of stock options or as awards under employee
benefit plans, granted as of the Distribution Date; or
--upon conversion of securities issued after November 17, 1997.
If any person becomes an Acquiring Person or an Adverse Person, each
Right (other than Rights beneficially owned by the Acquiring Person or Adverse
Person and certain affiliated persons) will entitle the holder to purchase, for
the Purchase Price, a number of shares of Common Stock having a market value of
twice the Purchase Price.
If, after any person has become an Acquiring Person or an Adverse Person,
(1) we are involved in a merger or other business combination in which we are
not the surviving company or our Common Stock is exchanged for other securities
or assets, or (2) we sell or otherwise transfers assets or earning power
aggregating more than 50% of our consolidated assets or earning power, then
each Right (other than Rights beneficially owned by the Acquiring Person or
Adverse Person and certain affiliated persons) will entitle the holder to
purchase, for the Purchase Price, a number of shares of common stock of the
other party to such business combination or sale (or in certain circumstances,
an affiliate) having a market value of twice the Purchase Price.
At any time after any person has become an Acquiring Person or an Adverse
Person, the Board of Directors may exchange all or part of the Rights (other
than Rights beneficially owned by an Acquiring Person or Adverse Person and
certain affiliated persons) for shares of Common Stock at an exchange ratio of
one share of Common Stock per Right.
The Board of Directors may redeem all of the Rights at a price of $.005
per Right at any time prior to the close of business on the 15th day after the
Stock Acquisition Date.
The Rights have certain antitakeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire us without
conditioning the offer on a substantial number of Rights being acquired.
Accordingly, the existence of the Rights may deter certain acquirors from
making takeover proposals or tender offers. However, the Rights are not
intended to prevent a takeover. Rather, they are designed to enhance the
ability of the Board of Directors to negotiate with an acquiror on behalf of
all of the stockholders. In addition, the Rights should not interfere with a
proxy contest.
The Rights will expire on November 17, 2007, unless earlier exchanged or
redeemed.
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DELAWARE GENERAL CORPORATION LAW AND THE COMPANY'S
CERTIFICATE OF INCORPORATION AND BYLAWS
General
We are a Delaware corporation subject to the Delaware General Corporation
Law (the "DGCL"). Provisions of the DGCL, in addition to provisions of our
Certificate of Incorporation and Bylaws, address corporate governance issues,
including the rights of stockholders. Some of these provisions could hinder
management changes while others could have an anti-takeover effect.
We have summarized the key provisions below. The descriptions are not
complete. You should read the actual provisions of our Certificate of
Incorporation and Bylaws and the DGCL.
Business Combinations
The DGCL and our Certificate of Incorporation generally require that at
least 50% our outstanding Common Stock vote to approve any merger, share
exchange or sale of substantially all of our assets.
Under the DGCL, we generally may not engage in a business combination
with any stockholder that beneficially owns (together with affiliates and
associates) 15% or more of our outstanding Common Stock (for these purposes an
"interested stockholder") for three years after such stockholder becomes an
interested stockholder. This prohibition does not apply if :
l the Board of Directors approves the business combination or the
transaction that results in the stockholder becoming an interested
stockholder stock before the stockholder becomes an interested
stockholder;
l the interested stockholder owns at least 85% of our outstanding
Common Stock (other than Common Stock held by our employee
directors and certain employee stock plans) upon completion of the
transaction by which the stockholder becomes an interested
stockholder; or
l the Board of Directors and 66 2/3% of our outstanding Common Stock
not owned by the interested stockholder vote to approve the
business combination.
Our Certificate of Incorporation requires that at least 66 2/3% of our
outstanding Common Stock not owned by a "substantial stockholder" vote to
approve certain business combinations and certain other transactions with a
substantial stockholder unless certain minimum price and procedural
requirements are met. A substantial stockholder is defined as any person or
entity that acquires at least 10% of our outstanding Common Stock, excluding
any member of the Board of Directors as of September 30, 1985, or any of our
employee benefit plans. Such super-majority approval is not required if:
l the business combination is solely between us and another
corporation in which we own 50% or more stock and a substantial
stockholder owns none, or
l all following conditions are satisfied:
(1)holders of Common Stock receive consideration with a cash or fair market
value not less than the higher of
--the highest per share price paid by such substantial stockholder in
acquiring any Common Stock, or
--the highest per share market price of our Common Stock during the
three-month period before the date of the proxy statement described
in clause (3) below or, if none, the six-month period before the
business combination is consummated;
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(2)after becoming a substantial stockholder and before the business
combination is consummated
--such substantial stockholder has not acquired any newly issued
shares of capital stock from us except proportionately as a
stockholder or upon compliance with our Certificate of
Incorporation; and
--such substantial stockholder has not received the benefit (except
proportionately as a stockholder) of any loans or other financial
assistance provided by us, or made any major change in our equity
capital structure; and
(3)if such proposal otherwise requires stockholder approval, a proxy
statement meeting the requirements of the Exchange Act shall be mailed to
our stockholders for the purpose of soliciting stockholder approval of such
business combination.
Board Of Directors
Members of our Board of Directors serve staggered three year terms. This
means we elect only one-third of our directors in each year.
Stockholder Proposals And Director Nominations
Our stockholders can submit stockholder proposals and nominate candidates
for the Board of Directors if the stockholders follow advance notice procedures
described in our Bylaws.
To nominate directors, stockholders must submit a written notice to our
corporate secretary not less than 120 days nor more than 150 days before the
first anniversary of the date of the mailing of the proxy statement for our
last annual meeting. The notice must include the name and address of the
Stockholder and of the nominee, a description of any arrangements between the
stockholder and the nominee, information about the nominee required by the SEC,
the written consent of the nominee to serve as a director and other
information.
Stockholders must submit proposals to our corporate secretary not less
than 120 days and more than 150 days before the first anniversary of the date
of the mailing of the proxy statement for our last annual meeting. The notice
must include:
l a description of the proposal;
l the reasons for presenting the proposal at the annual meeting;
l the text of any resolutions to be presented;
l the stockholder's name and address and number of shares held; and
l any material interest of the stockholder in the proposal.
We may reject director nominations and stockholder proposals that are
late or that do not include all required information. This could prevent
stockholders from bringing certain matters before an annual or special meeting,
including making nominations for directors.
Meetings of Stockholders
Our Certificate of Incorporation and Bylaws do not permit any of our
stockholders to call a special meeting, regardless of the percentage of voting
stock held by such stockholders.
These provisions could have the effect of delaying until the next annual
stockholders' meeting stockholder actions that holders of a majority of our
Common Stock favor.
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Indemnification of Directors
We indemnify our officers and directors to the fullest extent permitted
under Delaware law against all liabilities incurred in connection with their
service to us.
Limitation of Liability of Directors
Our Certificate of Incorporation provides that our directors will not be
personally liable for monetary damages to us for breaches of their fiduciary
duty as directors, unless they:
l violated their duty of loyalty to us or our stockholders;
l acted in bad faith;
l knowingly or intentionally violated the law;
l authorized illegal dividends or redemptions; or
l derived an improper personal benefit from their action as
directors.
This provision applies only to claims against directors arising out of
their role as directors and not in any other capacity (such as an officer or
employee). Directors remain liable for violations of the federal securities
laws and we retain the right to pursue legal remedies other than monetary
damages, such as an injunction or rescission for breach of the director's duty
of care.
PLAN OF DISTRIBUTION
We may sell any series of Debt Securities:
l through underwriters or dealers;
l through agents; or
l directly to one or more purchasers.
The prospectus supplement will include:
l the initial public offering price;
l the names of any underwriters, dealers or agents;
l the purchase price of the Debt Securities;
l our proceeds from the sale of the Debt Securities;
l any underwriting discounts or agency fees and other underwriters'
or agents' compensation; and
l any discounts or concessions allowed or reallowed or paid to
dealers.
If we use underwriters in the sale, they will buy the Debt Securities for
their own account. The underwriters may then resell the Debt Securities in one
or more transactions at a fixed public offering price or at varying prices
determined at the time of sale.
The obligations of the underwriters to purchase the Debt Securities will
be subject to certain conditions. The underwriters will be obligated to
purchase all the Debt Securities offered if they purchase any Debt Securities.
Any initial public offering price and any discounts or concessions allowed or
re-allowed or paid to dealers may be changed from time to time.
If we use agents in the sale, they will use their reasonable best efforts
to solicit purchases for the period of their appointment.
If we sell directly no underwriters or agents would be involved.
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We are not making an offer of Debt Securities in any state that does not
permit such an offer.
Underwriters, dealers and agents that participate in the distribution of
the Debt Securities may be underwriters as defined in the Securities Act of
1933. Any discounts or commissions that we pay them and any profit they
receive when they resell the Debt Securities may be treated as underwriting
discounts and commissions under that Act. We may have agreements with
underwriters, dealers and agents to indemnify them against certain civil
liabilities, including liabilities under the Securities Act of 1933, or to
contribute with respect to payments that they may be required to make.
Underwriters, dealers and agents may be our customers or may engage in
transactions with us or perform services for us in the ordinary course of
business.
Any underwriter may engage in over-allotment, stabilizing transactions,
short covering transactions and penalty bids in accordance with Regulation M
under the Securities Exchange Act of 1934. Over-allotment involves sales in
excess of the offering size, which creates a short position. Stabilizing
transactions permit bids to purchase the underlying security so long as the
stabilizing bids do not exceed a specified maximum. Short covering
transactions involve purchases of the securities in the open market after the
distribution is completed to cover short positions. Penalty bids permit the
underwriters to reclaim a selling concession from a dealer when the securities
originally sold by the dealer are purchased in a covering transaction to cover
short positions. Those activities may cause the price of the securities to be
higher than it would otherwise be. If commenced, the underwriters may
discontinue those activities at any time.
LEGAL OPINIONS
Jeremiah M. Fitzgerald, Esq., our Vice President and General Counsel, or
another of our lawyers, will issue an opinion about the legality of the
securities for us. Mr. Fitzgerald owns 74,082 shares of the Company's Common
Stock and holds options granted under the Company's stock option plan to
purchase an additional 134,108 shares of Common Stock. We expect Brown & Wood
LLP, New York, New York to advise any underwriters, agents and dealers.
EXPERTS
KPMG Peat Marwick LLP, independent certified public accountants, audited
and reported on our financial statements and schedules incorporated by
reference in this prospectus and elsewhere in the registration statement. We
have incorporated these documents by reference in reliance upon the authority
of KPMG Peat Marwick LLP as experts in accounting and auditing in giving the
report.
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$350,000,000
6% Senior Notes Due January 30, 2002
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PROSPECTUS SUPPLEMENT
January 21, 1999
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Salomon Smith Barney
Bear, Stearns & Co. Inc.
Merrill Lynch & Co.
NationsBanc Montgomery Securities LLC
Warburg Dillon Read LLC
Barclays Capital
Credit Lyonnais Securities
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